Mad Money 07/29/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Crane America. Other people, my friends, I'm just trying to save you some money. My job is not just to entertain, but to put days like today in context because they're very difficult. So call me at 1800743 CNBC or tweet me at Jim Kramer. Darn inflation. It's here. It's got to be taken seriously now. Even if you think that it's being caused by a war that now seems endless and is driving up the cost of oil, killing any hope of lower rates. We expected the Fed would talk tough at its meeting today about how it won't let inflation get out of control. Give us that warning, >> the House of Bane. >> Instead, we got a business as usual Fed, maybe even a tad complacent Fed, and we're in anything but complacent times. And that's why the averages, after initial fake higher, got crushed later in the day. Dow plunging 1,153 points, S&P going down 1.52% and the NASDAQ finishing down 1.74%. >> The house of fame. >> Why is it so poignant to so many people about interest rates? Because of memories. That's why. When the 30-year Treasury went down in price and up in yield today with a level of speed that I found astonishing, rates climbed to 5.2%. That's the highest since 2007, which in itself was a pretty ignominious year when you think about it. The steep increase was the bond market's way of saying to the new Fed chief, Kevin Walsh, hey chief, show a little more gumption. In fact, I'm going to go a step further and as an old bond trader, yes, I used to trade them. I'm going to challenge what's the conventional wisdom. The bond market genuinely fears a real inflation comeback in part because prices for many items keep creeping up. It's not like we have a president who seems really concerned about inflation. After today, I think the conventional wisdom is just plain wrong. If Walsh wants to calm this bond market, he should have tightened today or at least promise to tighten if long rates don't go down. So now we're in no man's slam where investors seem nervous that there wasn't any talk of raising rates. Now, normally I don't have to go this deep into the weeds of the bond market. Not cuz it's boring. I got to take it seriously. But but normally we're not stuck in an intractable war with Iran that keeps pushing up the price of oil. That makes it difficult for a new Fed chief. He really does. I I feel for him. He I mean he has the consensus of the Fed with him. But I wonder if they would have changed their minds after they saw the hideous action in wake of what they did. When the Fed speaks, we always listen around here because the Fed matters in the stock market. They can declare war against business if it wants to because that's how they can get inflation under control. The Fed didn't want to. And the bond market didn't like that. Big jumps in long rates like we saw today. Long rates being the 20, the 30-year uh will impact much of the stock market, making buyers more uncomfortable than if there had been a rate hike. They rather, you know, it can really turn buyers into sellers. It's too bad because the last thing this stock market needs is an interest rate jolt. Why? Because the stocks that have been working lately have been the ones that do well only when rates are quesesscent. I tend not to look or parse the statements of feds. I I think that that's for those who do nothing but follow on. You hang on every Fed's word. I can't do that. I'm trying to make money for you. My usual posture seems well-intentioned today until the bond market fell apart and then the stock market fell apart with it. It might seem absurd to even ponder what's worth buying after day today. It's tough to buy the drugs or the foods or the banks. Those have been the places where people have gone because they haven't liked tech. But I also know the market can turn in favor of certain types of tech on a dime. Remember the dime? I think Roosevelt's on it. We've been bashing the heck out of enterprise software not that long ago. It been a really good call, but when a group stops going down, you have to take notice. And this group, even after what happened with the bond market today, has stopped going down. The software rally started with service down delivering a very good quarter. Remember that was Bill Mcderman on our show where we went through it and we like what we saw. Now, if the stock had been higher, I don't know if it really considered to be that good a quarter because it was slower than what I'm used to seeing from the company. Still, given where the stock's been trading, hey, listen, the market has spoken. It likes it. So, Service Now stock became began a sustained run. That triggered a run in all the software stocks, including Salesforce, which has now shot up from 146 to the end of June, moving to 189 today. And that one seems to know no quit. Hey, get no quit. Think about this. two of the the CEO and the CFO of Adobe quit and that stock has done really well. Yes, there's no one behind the wheel at Adobe. Still, the stocks had a monster move from $190 to $263 despite what you can only see as being >> don't buy. Don't buy. Don't buy. >> When you think of the stock market, I mean the bond market. I mean, the bond market is saying don't buy. >> Why do I spend some what I think some people would think be a waste of time on some stocks that were buying by gone? because they've got so cheap they started rallying like crazy after service now reported that quarter. That means you got to think about this. That means the same thing can happen to tech hardware stocks if they keep going lower like they have the last few days. Case in point is a company called Vertive. That's a company that provides the most basic parts of a data center aside from semiconductors. The stock of Vertive traded at $379 3 months ago. Now it's at $221. still expensive, 34 times this year's earnings estimates. However, what you need to know is what whatever the heck really drove the rallies in service now and Salesforce Adobe that can change going right back to the data center provided we have the basics in place. So, we're going to listen to Verdive tonight and we're going to make a decision. Maybe it's time. Finally, many stocks in other parts of tech have come down as low as Salesforce and Adobe that we know they can bounce too. Maybe, and I know this is a huge maybe, a stock like Microsoft, by the way, which remember is a software company like Surface Dow, like sales, like Salesforce. Now, they could do it because they're like doing horrible. Anyway, u Microsoft reported a clean top and bottom line beat after the close today. And I think it can start leading the parade of rising software companies. This was a genuinely strong quarter and the market lapped it up. Started gating after hours even after the bond trauma. Why? Well, first of all, Microsoft posted a big earnings beat and Azure, their allimportant cloud infrastructure business, saw its revenue growth accelerate to 43% on a constant currency basis. Do you know that's the fastest pace in four years? I wasn't looking for that. Free cash flow solidly positive as well. So, even though Microsoft spending is big on data centers, they're not spending beyond their means. Oh, Microsoft 365 co-pilot reached 30 million paid seats, up from over 20 million 3 months ago. With Microsoft, you can never be sure until the conference call is over, but numbers for the quarter look good, and I trust this management to do what's right. All right, I hate to use this same paragraph. Do I trust Meta's management? Well, let's just say that quote was less impressive. Clear bottom line miss. Although, if not for $2.4 billion in legal contingencies, the earnings would have been better than expected. That said, the guidance for the current quarter was not so hot and they narrowed their fullear capex forecast, effectively raising it slightly. So, the stock got killed in after hours. Now, we've owned this stock from my travel charge for years and years. Lately, it's been trying my patience like that. They need to be more rigorous in their spend and they need to take maybe take more J&J like scorched earth posture on lawsuits, fighting them individually if they have to. Right now, I will hold I'm we're going to hold it. Okay. Uh, I want to use their I would like them to see their AI AI spend be a little more creative like say Elon Musk and while they are at it, do you mind starting to monetize WhatsApp just kind of sits there and does nothing except for be great for consumers and make you nothing? That said, now that the Fed's meeting behind us and we're not fighting the Fed, uh, we do have to feel more confident about the newly down andout meta. Certainly, uh, let's say it's trying my confidence, but made back more confident. Here's the bottom line. This month, we've seen a remarkable resurgence in the once-hat hated enterprise software stocks and a complete evisceration of data center players. But the lower these stocks get, the more enticing they do become and the easier for a single great earnings report to turn the entire complex around. Would that earnings report be from Microsoft? I don't know. By now, the data center plays have really created though, bringing us close to one piece of good news that could change everything. Hey, we saw it happen with software and nobody believed it could happen to hardware, too. I want to start the questions by going to Randy in California. Randy boy kick a environment, symbol AVAV, buy, sell, or hold. >> You know, that one's gotten too controversial for me. Uh, when I think about defense, I say to myself, you know what? That group's gotten very, very tough. I'm not going to stick my head in the into that lion's den. Too tough for me. All right. Anyway, the lower stocks get, the more attractive a lot of them get to buy. I mean, like I think let's just avert if maybe that's the case. Hopefully more prone to pop on any positive news. How's that? May money tonight. Chipotle's on the move after earnings. I'm sitting down with the CEO to get the latest in the quarter. Then I'm on the hunt for growth stocks and I think I found one in the retail sector of all places. Do not miss my deep dive on Ralph Lauren. And like I told you, Verdiv, Eye of the Data Center storm. Why don't we get the lowdown with the CEO and see if there isn't something worth buying in that stock? So stay with Kramer. >> Don't miss a second of MadMoney. Follow Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743CNBC. Miss something? Head to madmoney.cnbc.com. cnbc.com. Can the stock of Chipotle finally put in a sustainable bottom after the solid second quarter report? Here's a stock that's mostly been struggling since former CEO Brian Nickel left for greener pastures of Starbucks nearly two years ago. Since then, Chipotle has been cut in half, even as the stocks rebounded from its lows over the past few weeks. After the close say the company reported modestly better than expected quarter 1 cent earnings beat better than expected sales growth even better management raised their fullear same store sales outlook from roughly flat to up low single digits. That's pretty big. Will that be enough to sustain the stock's recent momentum? Let's check in with Scott Boatright. He's the CEO of Chipotle Mexican Grill to learn. Mr. B, welcome back to Mad Money. >> Hello Jim and thanks for having us on today. >> Of course. Now Scott, you you uh definitely had what I regard to be the great allround quarter because you didn't just grow from ticket, you also had great volume. Do you see it happening? Is this the turn that you told us last quarter is really going to be able to get rolling? >> It is, Jim. Our recipe for growth strategy, we saw the green shoots of the strategy really in Q1. We saw that continue that momentum continue into Q2. Uh we're also seeing that momentum continue into into third quarter which gives us confidence to raise the fullear guidance. We're still in early days of the strategy Jim and that's what gives me confidence in the growth ahead and as we continue to pull levers within the strategy to continue to move transactions uh similar to what we did in Q2. So give us some of the idea of what the labors are because I think people will be saying, "Hey, look, this is maybe my opportunity to get in, but I want to know exactly what they're what they're doing to make it so that he feels so confident." >> Yeah, great question, Jim. So, I think first and foremost, we're investing in our restaurant operations, specifically around execution to ensure we're delivering great experiences consistently every day. Those investments include things like the high efficiency equipment package, which is moving the needle on guest experience and total sales. uh as well as investments in technology related items like our new cook to needs tool uh that is now um and with an AIdriven tool behind it as well as um our new Chipotle kitchen which I talked about on the earnings call and that's rolling out to restaurants as we speak which is improving accuracy on time percentage as well as um uh overall guest satisfaction. So >> so we're really encouraged by the >> you're getting better throughput. We're getting better throughput and so what the high efficiency equipment package is doing exactly what we anticipated and we're moving the needle on transactions in those restaurants and our max 15 in a really meaningful way. The other growth levers we're leaning into Jim are really around menu innovation which I talked about a great deal in the last couple of quarters. We've accelerated menu innovation that's being wellreceived across all income cohorts and age groups which we're excited to see. We're also leaning into our brand communication in a more meaningful way. We're broadening and deepening our rewards engagement which I think is important and then leaning into group occasions. >> So talk to me about say the protein menu is a good example of what you're up to because I know the success is there. I'd love to hear how the health conscious consumers liking it. >> Yeah. So with the uptick on the high protein menu has been really extraordinary, Jim. We knew there was an emerging trend. Uh and who better to capitalize on that trend than Chipotle Mexican Grill. We believe we have the best uh proteins in the industry with the best animal husband husbandry welfare practices and so who better to capitalize on a on a moment uh which I think will sustain than us and so the high protein cup is an approachable price point I think is an extraordinary value and the consumers are taking us up on that value proposition. >> Okay. Well, talk to me about costs. I know that look there I can't they came in better than than I would have expected. Still they're not the margins are not where I'd like them to be and I'm sure not where you like to be. what is keeping the margins down a little bit that you can change uh coming in next quarter? >> Yeah, you're right, Jim. So, we uh we delivered a margin number that was better than we anticipated going into the quarter. Um we think that was really rely, you know, really around execution and supply chain initiatives that we have in flight. The dislocation you're seeing from last year is really driven by our underpricing inflation for the year. We talked about a slow and measured approach to pricing to continue to drive extraordinary value for our consumer. Uh so that dislocation is temporary and we'll we'll uh you know taper towards the end of the year as we roll over that pricing strategy. >> Now how about >> more importantly >> I'm sorry go ahead. >> I was just going to say Jim more importantly we're seeing strong value for the money scores in Q2 better than we've seen probably in the last couple of years and the value perception scores are moving forward in a meaningful way and then affordability amongst all age group and all income cohorts has moved up exponentially through the quarter as well. I was just going to ask you about what about younger consumers who are the most scrapped and are looking for uh uh looking for a bargain and a lot of people didn't think Chipotle could be a bargain but you've made some moves to make it so that like you know in the office at least you can mix and match but it seems like the younger consumer can find something that's not too expensive that they like now >> you're absolutely right whether it's an approachable or affordable price point Jim we think value is more than just discounting and a price point specifically what that consumer was looking for is meaningful menu innovation. They're looking looking for deeper rewards uh engagement and opportunities to be rewarded for their behavior. I think those things together are really driving meaningful affordability and value perceptions for the brand. >> Now, we also got avocado coming down. We know that the uh government has allowed Mexican beef, which is important. Some of the outfits that I deal with uh like Texas Roadhouse have managed to be able to say, "Listen, we're starting to get a little more vague here with beef." Are you seeing some breaks in some food uh food costs? You know, beef costs are still up year-over-year, Jim, and that's obviously because of the cattle herd being at an all-time low, plus the opportunities come with cattle coming over the border. We're seeing some inflation in uh in transportation, as you could imagine, because of oil uh and also in utilities. But other than that, everything seems to be moderated and we're running around the mid3s on inflation for the year. And of course, we've priced well under that number, which is creating the margin dislocation that we just talked about. >> Understood. Now Scott, I I know you said I want to be sure about this that actually the strength here has continued this month. Correct. >> It has. We've seen that momentum accelerate into the quarter, Jim. We did see a modest step back, but the recent conversation that's happened in social media around cycllospora, uh we think that's transitory at present. Um and we are we're still giving the fullear guide with that in mind. >> Now, I have to tell you, having been in the restaurant business for years, I know it's there by the grace of God. I mean, it's not like you can ever say, you know what, that guy uh he did it wrong. I'm doing it right. But your your company years ago did experience something like this and isn't experiencing now. What's the advice to consumers? Uh should they be a little more guarded with going to the other places or do you think that when there is this kind of of scare, everybody's a little on their game and we don't we kind of well, we kind of nip it in the bud. Yeah, here's what I would tell you, Jim, is when something like this happens, regardless of the brand, it really hurts the industry overall. And so, it's not good for anyone. What I would tell you is I would put your trust and faith in the CDC as well as the FDA and their abilities to navigate these challenges. They have demonstrated historically they can solve the challenge and move it out of the main mainstream supply chain and food food food supply for Americans. Um, that's where I'd put my bet. I'd listen to the FDA and I'd listen to the CDC. I will say though, having lived through the period of what happened last time that you guys uh switched the way you do things to make it so that you absolutely uh became the gold standard, have you changed anything this time? >> We haven't. We have. What we have done, Jim, is just double down on our food safety protocols and we're ensuring that whatever comes into our supply chain, we're monitoring very closely. And then how we handle our produce in restaurant hasn't changed. We've doubled down on our efforts. We've recommunicated the importance of our procedures in restaurant uh which I think will serve us well for many years to come. >> Excellent. And I know you guys were uh you made some big changes and if you double down on that's even better. Uh could explain why I think that that things have just continued to be good for you despite what we are hearing in some of the other places in the restaurant group. Scott, congratulations on the turn. I knew you'd do it. I knew you were buying back stock the whole way which I really like. So now we got a great basis going and I hope to see you soon. >> Thank you so much Jim. Have a great day. >> Okay, you too. Scott Boight, CEO of Chipotle with some numbers that were nice in a day with that wasn't too great for shareholders of any stock. Money's back for the break. >> Coming up, could an apparel stock be the next hot fashion on Wall Street? Kramer's unveiling his pick to rack up gains next. Tonight, I'm going to stick my neck out. In a market where the old winners, the AI data center plays, have become unreliable, we're on the hunt for great growth stocks outside of tech that can survive this environment. And there's one I like very much that's reporting next week. Oh my god, I'm going ahead of an earnings call. I like Ralph Lauren. Normally, I do not recommend stocks on this show going into earnings. I try to teach you to think long term. So, capturing the gains from a single earnings report is rarely worth the risk that it could blow up in your face or certainly my face. But Ralph Lauren's been a huge winner for us for a long time now. And the stocks recently pulled back from its highs over the past 6 weeks. So, I s I smell some opportunity here. However, it's why because in the past four years, RL has rallied over 280% trouncing the S&P, which has gained only 77% in that same period. Now, that didn't happen by accident. Ralph Lauren's been pulling up some really putting up some incredible performance under the CEO Patrice L, who I think is really smart. In the past three fiscal years, its earnings have doubled. Magnificent growth, especially for an apparel company, even for a tech company. Just two months ago, I pounded the table on this one because it's the last quarter was one of the best I'd seen from any retailer. It was stunning 17% same store sales growth. A tremendous full year forecast. Remember, a 7 to 8% same store sales growth is considered terrific in this market. This stock's had a choppy start to 2026. That's mostly due to big picture worries as the war with Iran spiked oil prices and everyone's lost confidence in the consumer. I think that's wrong. The last time Ralph Lauren reported, the stock jumped 14% in a single session, and it kept running over the next few weeks, charging to an all-time high of $421 in midJune, not that long ago. Since then though, the stock has cooled along with the market falling nearly 11% to $375. The source of the weakness, honestly, I don't see any company specific issues here. Just like earlier in the year, the weakness in Ralph Lauren is all macro, not micro. The war in Iran has restarted. Oil prices have gone up again and interest rates are going higher. And that's caused a new wave of concern about the consumer. Remember, the Fed failed to raise rates on the short end today. And bond sellers swarmed in because they wanted a Fed chief to be tough on inflation. And the way you do that is either raise short rates or at least say, "Listen, I'm going to have to raise give us a heads up." Still, macro concerns have been ill- advised reasons to sell Ralph Lauren stock in the spring. And I think it's a bad reason to sell. Now, keep in mind, Ralph Lauren has spent years repositioning itself as more of a luxury brand. Why? Because luxury brands tend to be more insulated from broader swings in the economy. And it's true, they are. Rich people are less likely to put off their purchases because the price of gasoline is more expensive. Hey, they may not even notice what they're paying at the pump. Meanwhile, Ralph Lauren has more pricing power than ever, and that translates into much higher margins. There's a reason this company's gross margins have expanded from 64.9% to 69.9% in the past three years. And I've got to tell you, that's highly unusual. Most have shrunk or done nothing. At the same time, Ralph Laurens made a big push into direct to consumer sales, meaning both sales through its stores and through its website. Again, there's multiple benefits to this. First, obviously, they get higher margins when they cut out the retail middleman. Second, it fits into the broader luxury repositioning narrative. The brand is perceived as more valuable when there aren't as many Ralph Lauren polos on the shelves at Kohl's or the racks at J at TJ Maxx. And believe me, I remember before Lou came in, when I would go to Kohl's to buy Ralph Lauren, I was always horrified it was there. They called it chaps. I thought that was strange, but I bought it. On top of everything else, these guys are doing great in both North America and the rest of the world. Make no mistake, this is an iconic American company. North America has been very strong companies constant currency revenue growth accelerating North America in each of the last two years reaching 9.1% in their 2026 fiscal year with North American same sort sales up 11%. But the best growth best growth for the past few years has come unlike almost everybody else from Asia which had 21.5% constant currency growth last year 20% same shore sales growth the one concern on the in on this whole international front is Europe where growth was ahead of North America for a few years but pulled back a bit last year still with 8.7% constant currency growth in Europe last year and 6 point 6 point same uh same source sales 6% same store sales with I got to say Ralph Lauren's doing pretty well if that's their worst geography and it is like everything else their overseas success is not an accident it's driven in part by a thoughtful approach to the international markets that it competes in Ralph Lauren focuses its marketing and advertising on the top 30 markets across the world and create specific messaging and experiences for those focused regions they have unbelievable social media and by the way they're they've now laying the foundation for the next 20 markets that they'll be focusing on in the future. So, there is great growth coming, I believe. That's not all. Ralph Lauren expanding into new categories to fuel that growth. Management's already called out their success in accessories, outear, women's apparel, and products for younger consumers in recent quarters. Put it all together, and you've got a terrific long-term growth story. Of course, I'm not the only one who's bullish on Ralph Lauren after the stock's recent pullback. Last week, analysts at Raymond James upgraded it to an outperform media buy ready as part of a broader earnings preview on the soft lines retail sector. They gave us positive reads on website traffic, mobile app data. I'm telling you that stuff is really important because these guys are very social media oriented. Google trends again social media more generally they continue growth for average unit retail quote strong momentum in China and quote improvement in Europe and further margin expansion. I agreed momentum in China is not easy to come by. Finally, let me give you a quick note on valuation. After this pullback, Ralph Lauren's stock intern, it currently trades at at just under 21 times the earnings estimates for the 2027 fiscal year. The stock certainly been rerated over the past few years back in late 2022 when it started marching higher. It was trading with a PE in the low teens, but I'd argue that Ralph Lauren deserves every point of that rerating. And even with the stock selling at 21 times Ford earnings, it's far from expensive. In fact, look, earlier this year, the stock was selling for 25 times earnings. That's why I wanted to get in ahead of the quarter. I like PE I like that PE contraction. Uh look, when the numbers are this strong, it's worth owning before it reports next Thursday, even with these longer rates, which is again what destroyed the market today was the interest rates. So, here's the bottom line. I am indeed sticking my neck out twice with the guillotine already with this call because there's always a chance that the quarter doesn't go well. But Ralph Lauren has so much going for it that I feel comfortable about taking this risk. Lately, the stock's been pulling back on macro worries. But I don't think there's anything wrong with the business. That's why I expect Ralph Lauren to surprise the upside when it reports next week. And you'll be rewarded with a higher stock price if it does. Let's go to Terry in New Jersey. Terry, >> good evening. Jim, how are you, sir? >> I am doing fine, Terry. A little jammed here today because there's so much going on, but I got time for terror. No doubt. >> All right. No, no problem. Great. Jim, I wanted to get your feedback on TJX. It's part of your charitable trust and being part of the investment club, it's part of my portfolio. But looking at TJX, it seems to be dragging a little comparison to two other closeout retailers, Burlington and Ross. Why should I not replace TJX with one of those two? >> All right. First of all, that is a great call. It's really worth asking about. Ross Stores does have a new manager, Jim Conroy. It's doing amazing well. I think that my analysis of TGX is a multi-long-term year, not just this year, multi-long-term year move. And with that, I'm sticking by TJ, but I do not blame him for questioning my analysis with Ross. The others, no, Ross is the one that is doing incredibly well, but I am sticking with TGX because it's for long-term. I'm talking about 10 years. It's been amazing. Ralph Lauren stock has so much going for it. I'm hoping it pulls back after so you can get a chance to buy even more. Hey, much more bad money headcling my exclusive with data center player Verdictive. Wow, that stock got hammered. Then one thing is driving this market lately and it's not the way I like it. I'll reveal and explain what you can do about it and all your calls rapid fire tonight's edition of the lighting round. So stay with Kramerly. Gez, what the heck happened to the stock of Verd of Holdings today? Now, this has been one of the hottest stocks out there. A company that provides power, cooling, controls, server racks, and more to the data center. Some people think it's the guts of the data center away from Nvidia. At its highs this May, Ver peaked at $379. Now, it's back to $223 if Savage beat down on anything related to the data center. But also, it did have a staggering 17% decline today alone. What happened? Well, verifi it reported this morning and its revenues came in we couldn't expected 18% organic sales growth. Analysts were looking for more than 23%. Mad said it was a minor timing shift with sales being delayed in the second half. Wall Street's no longer willing to give any data center stock the benefit of the doubt though. Didn't matter that verb delivered a 10-centent earnings beat off$142 basis or that the margins were excellent or that management raised their fullear forecast across the board. That was completely ignored. So was the stock therefore unfairly punished? Let's take a closer look with Gio Albertars. He's the CEO of Verdive Holdings to find out more. Mr. Albertars, welcome back to Mad Money. >> Well, thank you for having me. >> Okay, so Gio, first before we get into the nitty-gritty of what's going on, I want to make it clear that your chairman Dave Cody started with a couple of things that I think are that I want you to expound upon. He said, "The industry outlook is incredibly good because the digital age has decades to go. Our outlook is incredibly good and deservedly so as we provide the picks and shovels for the digital age. Nothing about what happened with this quarter has changed from that view. Correct. >> Correct. Nothing has changed in the long term of our trajectory. Indeed, the industry is very strong. Our pipelines are very very strong and you as you explained earlier uh our the performance in our second quarter is strong and we are have raised uh uh our guidance across uh across the board. So we continue to be very very optimistic about the future and we have very strong backlog supporting that. >> Okay. Now people are going to say wait a second a lot of these companies are beating the revenue forecast play by big amounts because business is so good. We had that last night with Seagate but uh your revenue at 3.27 27 billion did miss the $3 3.38 billion estimate. Now I know we're going to talk about the timing issue, but that is a big miss. Is it big enough to worry people who have seen only huge upside surprise for Vera since she became the CEO? Well, um what we what we've done uh with the rest of the year taken taken our our uh sales up more than compensate this timing element uh in the second quarter. I think that is testament to the fact that not only do we believe that this is a a timing issue, a temporary issue, but that we believe in a very strong second half as uh as we see more than 40% growth in the second half and and a long-term trajectory. So very confident that this is just a a temporary um let's say a timing issue with some uh some some projects ongoing right now but still a very strong yearon-year growth and the trajectory continues strong year on year growth. >> Okay. But you do sell complex complete infrastructure systems. Could this be something that might be a recurring challenge or do we really just say timing issue one time only? We believe that this is something that will uh will affect only the short term. In general, we see that that complexity of course continues to to be characterizing the type of industry in which we operate. But we are uh strengthening the way we operate and our um our forecast our guide going forward. expect that there could still be some uh some uh non-perfect execution somewhere because that's the nature of the big complex let's say very interconnected business and type of projects that we operate in. So we do not believe that that's something that will influence the future trajectory that we've guided the uh investors. >> Right. But you're guiding for 34 to 36% organic growth in the third quarter. How much of that acceleration depends on recovering the delayed second quarter revenue and how come how much comes from new capacity and new orders? >> It is a combination of all of the above. Uh clearly what we um the the the the project in Q2 the timing effect that I was uh explaining will be recouped in the second half but in the second half also we have more capacity uh coming on board and we have quite uh some more backlog that backs our trajectory. So it's really a combination of all the the the effects above. >> Okay. So can you um give us a sense of the industry itself? Are you in that same camp that everybody else sees, which is that there really is no letup? Uh, if anything, uh, companies are increasing their capex and how long that can last because at a certain point, do you think that some of your customers will be disciplined by a stock market that really crushes your stock if you spend too much? >> Well, uh, we believe that, uh, you know, the the trajectory continues. We see very well the market through our pipelines and our pipelines are stronger quarter on quarter year on year and that gives us a lot of confidence going forward as I vocally explain all the investors uh this uh this morning. >> Uh but but >> go ahead. I'm sorry. Go ahead. But at the same at the same time we believe this is a long-term trajectory because again this industry needs capacity and that capacity the availability of that capacity will generate the output in terms of tokens of uh for the industry. So that capacity is the necessary capacity for the growth monetization and uh evolution of the AI um AI economy. No, we believe that that's a long-term. >> Okay. Now, I lived through the 1999 2000 period where a lot of the suppliers, companies like you made fortunes, the customers kept buying and buying, buying, but then their customers didn't come through. So, the suppliers made a lot of money, the customers didn't. Are you uh of the belief that the customers are going to begin to make a lot of money either this year or next year? or could it be a little bit like 1999 where frankly we don't know if they're ever going to make money with all the different equipment they're buying? I believe that this is a different situation than uh let's say the the the 99 situation in the sense that this capacity is very much uh utilized and utilized every token is utilized every uh watt available is utilized and uh someone talked about dark fiber back then there are no dark GPUs right now. All right, that's very good because I know that increasingly what we're hearing is is that the companies are blind to what it ends in in the market, but I know they wouldn't be giving you such strong second half orders if they were beginning to worry that they weren't going to be making money with what they do. >> Well, uh we see uh some uh trajectories, very strong trajectory of growth and profit in many of uh of the AI companies. I will not go in details in details there. you know, that's something which anyway you and uh and and and your team do do very well, but we see that monetization come through and we believe that that's a long-term trend and more capacity will be needed for the long term. >> All right, that's what we want to hear. If those of you who own the positions in these, you want to hear exactly what Gio just said. Now, that's Gio Albertazi. He's the CEO of Vertive Holdings. Gio, thank you for coming on the show. >> Thank you. Thanks, Ella, for having me. >> All right, man. I'm going to be back after the break. It is time to light over the course and then the lighting round is over. Are you ready ski with Sharon in Tennessee? Sharon, >> hi Jim. I love your show and never miss it. And I know all the AI stocks have dropped, but one of my biggest disappointments has been Aster Labs. What changed in that story and do you still have confidence in our long term? Nothing changed. It is just a matter of sentiment. That stock has now been cut in half. It is doing well. I'm going to actually go for the first time. I am going to say >> Astero Labs got get cut in half and you're a good company. I'm going to like you. Tom in New York. Tom, >> hi Jim. How are you? I bought Spaghetti Computing back in May and I'm down 30% already. Uh, how long do you think it will take before I could get my uh recoup my at least my initial investment? >> Oh jeez, Tom, that's one I don't really care for, honestly. Uh, I'm going to have to say too long is the only answer I can give you. Let's go to Pashant in Ohio. Pashant. >> Hey, Booyah. Jim, how are you? I am doing well. How about you? >> Good, good, good. The stock is MMYT. It has 60% market share OTAA in India. >> Yeah. Okay. Make my trip. I'm actually going to take a pass on this and do some work on it. Why? Because I do not know make my trip. And rather just say, you know what? I don't want to make that trip. I'm going to say I'm going to work on it. Let's go to Dean in Pennsylvania. Dean. >> Hey Jim. I'm a new club member. >> Yes. You are You are an encyclopedia dressed as a man. I like that. Wow. >> That's better than being a dollar sign dressed as a man. I'm going to take it. Encyclopedia dresses. I like that. I like that a lot. >> I I I like your strategy of own don't trade. Should that apply >> to Eli Liy? >> Yeah, Eli Liy's classic. Own don't trade. By the way, a lot of my stocks are own don't trade because I don't like in trading. I don't believe in trading. I did it for many years and I don't think trading is the way to make money and Eli Liy is a good company and I want to own that for I've owned it for years. I'm going to continue on it for years because it's a great business with great drugs and that ladies and gentlemen is the conclusion of the LIGHTNING ROUND. >> THE LIGHTNING Round is sponsored by Charles Schwab. Coming up, with investors thinking more with their hearts than their heads, Kramer is explaining how to navigate the nightmare tech tape. Next, you can't underestimate the power of sentiment in this market. It's driving a lot of the action, much to the despair of the bulls. I like to teach on the show, especially if I have a chance to teach about any term that didn't make sense to me when I started working at Goldman Sachs more than 40 years ago. Back then, I kept hearing the term sentiment. And I thought it meant people were being sentimental in their trading activities. Wrong. Sentiment means how you view something at this at that moment and how that views color by the way you feel. Are you scared? Are you comfortable? Are you exuberant? In June, we felt pretty darn joyous about everything. We knew that OpenAI and Anthropic, the two biggest private companies, had raised a ton of money. That was positive. Open AAI even broke fundraising records. On June 2nd, Alphabet announced the largest fund raise in history, 84.75 billion, including a big slug of stock price to 355. That stock immediately went to a premium. And SpaceX came public pricing $555,555,000, you know, 555. Well, a ton of shares at $135 this year, but I don't know why he does that. That too immediately went to a premium. Trading as high as $225 on its third day of trading. It's kind of like a meme stock except for a trillion dollar meme stock. These were remarkable gains and they showed you that the market was willing to buy pretty much anything connected to the data center. Sentiment was terrific. Only the enterprise software stock performed badly. The Adobe leading them all down. Salesforce and service now rolled over too. As I said at the top of the show, one month later, sentiment has turned vicious and all the previously red hot stocks have become nightmares. If you didn't sell the Google when it ran, well, you're buried in Google. That's because Google raises capex forecast for the data center, which no one wanted to hear. We're trying to look for some frugality or at least some rigor. SpaceX, it's been cut in half. It nothing's changed. We just didn't want a space company if everyone else was selling. The big momentum stocks like the disc drives and DM makers, some of the largest one-year gainers in the history of the stock markets, all reported tremendous earnings, but their stocks have gotten crushed. Some of them down more than 50% from their highs on the same numbers that would have sent them into the stratosphere earlier this year. That was a sentiment change. Hey, same thing's happening to Intel. We wanted to hear about CPU growth and we got it. CPUs were growing like crazy, but now it doesn't even matter. We heard about open- source models that attack the profitability of incumbents like Anthropic and Alphabet. I am a gasast at decline, by the way, the stock of Intel. I'm not comforted in the decline invidia stock either. I'm glad right now that Anthropic is a private company and really happy that you don't know what price open AAI is selling for. Oracle, a major data center builder, unfortunately is not private. Its stocks been crushed along with Cororeweave. Most of tech is now hated. Only Adobe, Salesforce, and Service Now, and hopefully Microsoft have been able to rally. Adding insult to injury, the money moved over to companies with no real momentum. Companies like JM Smunker, the the maker of Twinkies, up 29% this year despite GOP-1s. Modly, the maker of Oreos and Chipsoy. Maybe GP-1 makes you like those. That's up 20%. Now, it's important to know that sentiment can turn on a dime. Maybe an anthropic comes out and says it's so profitable that it'll come public right away. Maybe OpenAI says, "Hey, what are you thinking here, Kramer? Business is booming." Maybe they're about to become profitable and they don't need the loan guarantees from Nvidia. We see a change in sentiment like you wouldn't believe. Maybe people will rejoice at Microsoft and say, "See, software beyond the down and outers can rally especially if they have a cloud business." But without it, we're going into August, especially weak month for tech, with about as negative a bias as I've seen in decades. It's incredible how quickly it changed. And it could change right back, too. I don't see that happening, though. Then again, it was hard to spot when the bear woke up, too. I'd like to say there's always a bull market summary. I promise I'd find it just for you. Radio Money. I'm Jim Kramer. See you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full MadMoney disclaimer, please visit cnbc.com/madmoney disclaimer.