Mad Money 10/13/26 | 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 Cray America. Other people, my friends, I'm just trying to make a little bit of money. My job is not just to entertain, but to teach you. So call me 1800743 CBC. Tweet me at Jim Kramer. No matter what I say, no matter what the street says, stocks keep getting more and more divorced from the companies they're supposed to represent pieces of. Today we had all sorts of semiconductor stocks in disarray. What they do at the moment is meaningless, but they're the ones that are dragging down the averages. Dow sinking 180 points, speed dipping 002%. NASDAQ climbed 0.15%. Right now this market has a ball and chain attached to it. The chain is interest rates which are trading in tandem with oil. Uh that's the ball and that means they're going higher when we don't want rates to go higher. We have moments like today where oil takes a breather and that allows the chain to go slack and the ball doesn't hurt us all that badly. But when oil pops higher, interest rates come with it. Given that the president doesn't seem to have a game plan to settle things with Iran, we never know when the chain will turn into the wrecking ball and crush the stock market. Even though the oil stocks went higher today, boy, they're setting records. Today marked a temporary reprieve in the action when we saw some crazy stuff going on the banks which are regarded as disappointment even though they're making a ton of money. The market doesn't even try to distinguish between the best and worst anymore. Plus, they have so many line items that it's tough to compare them. Instead, the whole group opened strong and then ended up getting slammed or at least giving up their gains. I'd argue that Wells Fargo should have been a winner, not a loser, especially because the CEO, Charlie Shariff, set the bank up to make money, much more money if rates go higher. And he gave you a good view of for next year. See, uh, we have to believe that the Fed won't be able to get inflation under control. And we are going to see rates go higher next year. Wells has good growth, excellent expenses. Nobody seemed to care. And well, look, the most confusing part of the market right now though isn't the isn't the banks, although they are trading so awfully. It's the once red-hot semiconductor space. The group is so visceral that you figure that they're going to cause pain even before trading starts. >> The house of pain. And that's exactly what happens as these stocks are so behind the eightball and they get crushed from the moment that the Cosby the Korean index gets annihilated which is in the middle of the night which is both the time when I get up and when I go to sleep. So I see the damage happening. It's being exported right here. For the past six days the semis have experienced one of the most harrowing gains on record. And that's rolling right into the averages. The SMH the VANX semiconductor index has now uh fallen 7.22% in these last six days. That's the longest losing streak since May of last year. The group has always been streaky with 10 longest losing streaks in the last 25 years, going from minus 33% back in 2021 to - 8% in May of 2006. In short, when the semis roll over, it tends to last for much longer than you might hope. So, don't presume we're about to have a serious bounce after the worst streak of the year. That said, the last three losing streaks did produce some spectacular gains. uh at least when they were through the SMH is up 17% since the last week ended this July, up 73% since the previous one ended last December and up 148% since that one before that which ended in May of 2025. So there is reason to be hopeful. >> The problem here is that the SMH ETF has wrapped up every important semi-ductor in the industry. So they all trade together led by SKH Highex, the memory giant that trades both here and in Korea. What can you do? SKHEX is so big that it's become the key to the semiconductor solar system. Not Nvidia, SKHX. The fact it's been down, down, and then down tells you all you need to know about the cell being exported from Korea to here. Our chipmakers are joined at the hip with SKHEX, not Nvidia. So we come in each day with a huge handicap because we know the initial direction of this important group and it's mighty hard to reverse that direction because it's controlled by SK Hinx. The problem is when you have this kind of joint at the hip relationship, we tend to forget why the heck we ever would own these stocks to begin with. But let's think about that. Let's think about what they really do. Today I went to this incredible Apple showroom where I saw interactive devices tied to my phone bound by Siri that uses knowledge about me that I give it, but I give it to no one else. It's a personal assistant that knows my predelections and it also knows my messages and it has what Apple calls calls broadworld knowledge. In practice, it makes me want to rip out the intrusive Alexa who's in my kitchen who thinks that Vagner is Wagner and she tried to sell me another kind of soap because I just bought a soap and welcome this new version of Siri into my home that doesn't want me to do buy anything. I like that. There's a beautiful HomePad mini that can recognize up to six users in a household by their voice. Exciting showroom. Get in sync with the doorbell camera to show who's there. Downward-facing camera showing you what they've brought for you. I love this stuff. If I want everything, I think about Apple and I know that the stock's a buy ahead of the iPhone Duo, the foldable two screen version. But what I don't think about is how much memory and CPU power goes into these kinds of devices. Let's talk memory for a second. After a lengthy period of massive outperformance, this group has been the most beaten up and most discouraging. It's driving people crazy with Micron at the heart of the disappointment. We read yesterday the Chinese might have a better memory trip and that could crush the entire group or that Microsoft's getting in the ship. Whatever. But let's use this let's use this Chinese example that they're getting in. It's going to hurt Micron. This is nonsense. See, no US-based company of any repute will accept Chinese memory without worrying about confident confidentiality. This is just stupid. Who writes these stories? Why they go to college and get stupid? I mean, honestly, why isn't there an editor saying let's kill this? I mean, is it that important to be wrong? Do you really have to fill her up like it's a gas station? More important, do people not know how many long-term contracts Micron has with its customers? How about 26, which uh cover revenue until 2030? Take or pay. You know what that means? It means you have to pay. Micron's currently negotiating for 2031. If the Chinese competition were so serious, why would anyone take these long-term leases? Are they idiots? Still, Micron stock has chained to SKH Highix because they both make memory shares. But SKH High business is much larger on Microns. But I say these long-term contracts put them in a much better position. If Micron had no agreements, then indeed I would be worried. Regardless, the point is to remind you where these chips go and the desperate need for them. A market contrast to what the stocks are saying. The biggest disparity comes from AMD and Intel. These two companies make the CPUs that are basic building blocks for practically every machine under the sun, including Apples. Of course, now Apple doesn't necessarily use their chips, okay? Although I think ultimately they may use some some Intels, but we know you can't make devices without these chips. Use Intel's foundry, I should say. And Apple's going to make an awful lot of these devices. These are going to be big sellers. It may not matter though to the stocks, though. Maybe we have another down day for the semi-index. There have been 10 big losing streaks since 2000. It's reason to expect a sharp pullback after how far these stocks traveled. Ultimately, I just think that when you see the devices, when you know the exploding use cases, you can understand why Micron or Intor AMD has been moving up wasn't all situational awareness that Wayward hedge fund that took so many semis up to unsustainable levels with borrowed money. A lot of it's just raw demand and that's going to include Micron even if it's joined at the hip to SK highinex. So, here's the bottom line. Before you decide to bail from the semis because you can't take the pain, >> the house of pain, >> go to see the showroom. Go see where these chips are really used. Go understand what really happens in this world. They appear in places you'd least expect them. Don't watch the semiconductor index. Watch the devices. Watch the business. It may turn out that you may like it and not just the action. >> The house of pain. >> Betsy in California. Betsy. Well, hey Jim, longtime member of the club and um the thing the thing that I that I'm pretty good at is retail stocks. And while TJX has been unfortunate in being negative 8.3 for the year, the stock I want to talk to you about is up 23 and a half%. You and I spoke about it in the beginning of the year because I follow Jim Conroy. When Jim left Boot Barn, it was in the toilet. Okay. The minute he left. Okay. Now, right now, there's 115 new stores for Ross, and they expect that the holiday margin is going to be an amazing 6 to 7%. >> Betsy, you're right. >> I think that's You're right, Betsy. Look, I've been sticking with the TGX forever. >> Uh, when I saw Conroy, whom I loved at Boo come over to Ross, I said she I don't really like Ross stores. I I like going to TGX. I like HomeGoods, but what I like turned out to be not as good as what Jim has done. I'm betting the TGX turns this around. But I got to tell you, if they don't turn around, I would be very disappointed because what would happen is I realize that Conroy comes in and he won. All right, do me a favor. Stop just looking at the uh semiconductor index and actually watch the devices. Watch the business. It's a lot better and you'll learn more. See how the semis are put to use. Oh man, tonight the power plays peaked over the summer. But is there any more room to run? I'm going to go off the charts on the energy stocks to find out. Then Johnson Johnson did exactly what I expected to do after the quarter, get crushed. But I'm not bailing out of this stock after post service decline. I actually would pretend to be a buyer. And you when you called in about a data center stock that just hit the public markets, I did my homework and now I'm ready to give you my take on Acceleration Holdings. I don't know. Is that really a good name? St 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. Boy, is this ever a great time to be alive. If you're in the power generation business, thanks to the enormous data center buildout, the demand for electricity is growing at the fastest pace in decades. It kind of reminds me of the 50s. When I was a kid, they built a beautiful nuclear power plant right near me. We could visit it all the time. Of course, all the power plays peaked over the summer. None of them ever been able to regain their old highs. But I think the energy renaissance is here to stay, even if it might be on hold until after the midterm elections because data centers are too politically toxic for state and local leaders to embrace. Uh even though I think that well they're pretty good for your town if you negotiate well. That's why tonight I want to go off the charts with the help of Bob Lag. He's the founder of explosive options.net. He's author of know your own options. He wants us to take a look at some pretty much heavy hitters when it comes to this business. Bloom Energy, Genova, and Vistra. Lang points out the AI infrastructure build has led to a situation where power demand is growing at an exponential rate. The overall demand is expected increase about 4.1% compound annual growth rate for the next four years. That's insane. Electricity demand was basically flat for the past two decades. And look, we're just scratching the surface at this point. Lang's data center power capacity set to go at 15.9% annual clip. That's a stunning market totally come out of left field. If you didn't see the AI data center buildout coming now, last year data centers needed 31 gawatt of electricity. Next year that should be more like 66 gawatt. Worldwide electric consumption set to rise 165% from 2023 to 2030. This is a level of growth that's almost unprecedented. Certainly not anything we've seen in recent history. So we got to take a look at Bloom Energy, Genova, and Vistra. That's three different ways to play data cent's voracious demand for energy. Now, we're going to start with the daily chart of a company that I feel like we should have nailed, but I didn't. It's called Bloom Energy. It's a lying favorite. There's a company that makes fuel cells, which convert everything from fossil fuels to hydrogen into electricity without actually burning anything fairly. They're fairly clean. They don't consume much water. They're very quiet. Basically, they're the perfect source of backup power for the data center. Two years ago, this stock was at 10. Now, it's at $263. He make you can't beat the stock market for making money. That's after pulling back from it $351 high in June. Boom was laid low when situational awareness that highly leveraged hedge fund that bet big on AI employer of the summer pulling back to 157 at its highs. Yeah, pretty much destroyed the darn stock. That's a chart of what happens when you have too much leverage. Okay. Since then though, Lang notes the stock's back in classic uptrend mode with a series of higher highs and higher lows. Bloom's also been working its way higher on really fairly strong volume. Remember, that's usually a sign to give the move is legitimate. It has staying power. And you can see, I mean, this is, you know, I mean, it's look, it's not overwhelming volume, but it's good enough to realize it's telling the truth. After it rebounded to crazy like crazy last month, the relative strength index or RSI up top important momentum indicator briefly went into overbought levels, meaning the stock had come up too far too fast. Since then, the RSI has pulled back to the middle of the range. That's not bad. Then there's the MACD. That's one that I actually love. That's a moving average convergence divergence. The MACD down here near the bottom making some strong readings. See, it's flipping there. uh even though it's currently not giving you a buy signal as Lang sees it, Bloom Energy has been making a bullish flag pattern. Okay, now this is one that I always like this. This is where the stock runs up practically in a straight line, then basically trades sideways to digest its gain. It's the flag. Eventually, it breaks out of the flag and the general direction is usually higher. If Bloom can break out past $300, that's almost yeah, it's about $400, $40 up from here. Then Lang says it would be pretty smooth sailing to $400. I don't know. That's would be quite a move because the momentum chasers who vanish in June and July would just come right back. He's also noticed strong option buying in the 350 and $400 calls for next January. Now, let me go over one last indicator that I've not used. It's called the TTM squeeze. And this is down at the apps at the bottom here. This is an indicator created by John Carter of Simpler Simpler Trading that helps spot low volatility periods of consolidation consolidation. Now, in order to help traders predict big moves, long story short, red dots on the zero line mean that we're in a period of consolidation. Okay, green dots means we're looking at a period of expanded volatility, which can lead to explosive rallies when conditions are right. At the moment, the TTM squeezes red, which tells Lang that bloom could be like a coiled spring. I'm not sure this indicator, but I felt that Bob going to give Bob the floor on that. He he thinks it's going to work. I'm not quite sure. Anyway, now next take a gander of the daily chart of GE Verova. That's the power business spun off by the old General Electric. It's also a CNBC investing club holding. Uh if you're building new power plants, you need their turbines. They call them turbines, not turbines. The wait list for these things is years long. At the moment, Lang says this is not a particularly bullish chart. But then last month, Eve Reova tested its floor of support at the 200 day moving average. And ever since then, the stock's been rebounding like crazy. You can see that the RSI, relative strength index, is showing signs of life. I think it's a little bit better than signs of life, but that's all right. The stock's been rallying on strong volume. volume here a little bit up versus what it's been. That tells you the buyers went in. The MACD line has been flashing at bullish crossover where the black line goes over the red line. Always looking for that right there. Bullish crossover. Uh and that's since midepptember and that's one of the most reliably positive signals you can get. The TTM squeeze indicator. It recently broke out of consolidation mode into expanded positive volatility. He says that's very bullish. Lang also says he's seeing very strong option buying in the January 1000 calls as well as the January 1,200 and January 1,250s. Those people better, they better pray. In the end, Genova is pushing up against the helium resistance formed from the downturn since the stocks June high. It looks like it could break out real soon. This is now a $1,04 stock. Langley, if it can go to 1,080, then it could be headed to 1,300. Like I said, my trust owns it and I would indeed blow it out if it got there. Finally, take a look at the chart of Vistra. That's one of America's largest independent power producers. Happens to own four different nuclear power plants. Lang points out that Vista was getting slammed until Google announced a big partnership with Constellation Energy. Gap up uh with lots of nuclear exposure. It was about stock gap from 145 to 151. That was just last Wednesday morning. Then finished the session at 160. I thought it was going to give up that gain. It did not. Lang likes that Vistra held the gap and it stock has now risen above its 200 day moving average with that move the MACD line and remember when we look at MACD we're always looking for the crossover there it is the MACD line made an incredibly bullish crossover and the same goes for this TTM squeeze that you like so much basically since last week Vistrus rallied hard on high volume creating a new uptrend practically overnight and here we got you can see this and there's very high volume that's what I'm looking for that's a that's a volume explosion right there okay according to Lang And the stock is a heavy ceiling resistance at 170, but if fish can clear this level, he sees the stock going to 220, maybe 240. Again, very strong call volume for the January 200s. All good signs. Here's the bottom line. The data center power generation plays have come down hard from their summer highs, but the charts interpreted by Bob Lang suggest that Bloom Energy, Genova, yes, club name, and Vistra could all be ready to run. Nad money's back after the break. Coming up. Worried about the move in Johnson and Johnson post earnings? Fear not. Kramer's got the bull case next. All right. What the heck just happened to the stock of Johnson and Johnson? >> Exactly what I predict what happened last Friday. The company reported decent numbers and then the stock sold off because J&J tends to be a terrible trader during earning season. Here's a great American company with a stock that had an incredible run from the middle of last year until early last month, climbing from 150 to $280 before pulling back from its highs. As of last night, it come down to $262. And after today's $15 or 5.7% beat down, it's fallen to $248. But you know what? I don't believe J&J deserve to get hit like this. I only stop for the child trust followed closely. So I can say with confidence that the court was fine. I will make that point at our monthly club meeting which you should join so you can see it. That's Thursday. As I explained to club members last week, this company just tends to get hammered after the company reports. While the quarter wasn't perfect, there was still a lot to like here. J&J reported a modest revenue beat with 6% growth on a constant currency basis. They earned $259 per share, a 5-cent beat, even as their earnings shrank 7.5% versus last year because of an accounting change related to an acquisition that closed in the quarter. Now, some parts of the business are performing better than the others. The United States 9.1% sales growth, much better than expected. International little soft most important disparity was between the company's two segments. The innovative medicine segment, which is the larger pharma business, exceeded expectations substantially, but J&J's medtech division came in light. By the way, the company acknowledged to me when I spoke to them that it was disappointing within farm of their immunology business putting up surprisingly strong numbers led by Trimfire. You probably see the ads for that for plaque, psoriasis, psoriatic arthritis, and Crohn's disease. That drug's replacement for Silera that was a huge seller lost patent protection in 2024. On the conference call, CEO Wen Dato said, quote, "This momentum reinforces our conviction in TRFIA as a foundational medicine in inflammatory bowel and seroriatic diseases and our belief that it can grow into a $10 billion franchise. They've also got another new drug for plaque psoriasis, iicotide. I think, oh boy, this could be big. Just got approved in March. 20,000 people are now taking the thing, up from 10,000 the last time the company reported. I think this one could actually be ultly bigger than shrimp fire because it's an oral medication as opposed to a shot. People like a pill. The largest piece of J&J's drug business remains on oncology which put up 16.4% growth that missed sales expectations though slightly. But it's tough to be upset about a cancer portfolio with a growth rate in the mid teens for a drug company. The third largest subdivision here is neuroscience which was up 17.3% thanks to some newer drugs like a nasal spray for depression. that is really selling well and potentially revolutionary schizophrenia treatment that put up 66% sales growth. Put it all together and the pharma side of the business had more positives than negatives. All right. Now, how about this medte thing? All right. Look, I said J&J's medical device business was a little disappointing largely thanks to weaker than expected results from the cardiovascular franchise. Surgery was flat year-over-year. It also missed expectations slightly, but orthopedics and vision care both outperformed versus expectations. Now there's some extenduating circumstances for J&J's medtech division. They temporarily lost some business in the Middle East because of the war. Management said believes that those sales were just merely delayed. At the same time, they're facing severe pricing pressure in China thanks to some new government policies. We saw that happen to Merc too. In the end though, I don't think we need to make excuses for medtech because pharmacy represents 65% of the business year and that's what really matters. And look, J&J still raised their full year of sales and earnings forecast. They didn't cut it. Management took up the low end of the sales outlook raising the midpoint by hund00 million and they raised their earnings per share guidance by 6 cents at the midpoint. Remember JJ had cut its fullear earnings forecast in late July, but that was more of a formality. That was an accounting move to an acquisition, Firefly Bio. Still, it was nice to see the earnings forecast start to go higher again. What else? All right, we got an update on J&J's plans for its or the disposal of its orthopedics business to Pew Synthesis. A year ago, they said they were looking into a sale or spin-off of DeW. Today, we learned that it'll be a spin-off, likely coming in the middle of next year. It sounds like J&J just wasn't getting the kind of takeover offer they wanted. So, they decided the best way to unlock the value would be a spin-off. I get that. If they sell it quickly to a private equity company, the private equity company merely flips it, they would look pretty stupid. In appearance on CBC this morning, CEO Joe Wal explained, quote, "We're not cash drafted. We don't have to pursue a deal that is maybe not optimal. If you think about some of the potential buyers of this business, medtech valuations are depressed right now. We can sit this out for a little bit, separate the business sometime next year, and I think owners of that company in a few years will benefit from the long term. End quote. Look, that makes sense to me. Again, though, it was considered disappointing because people thought they had a buyer all lined up. So, it was expectations that were dashed. So, how do we explain today's nearly 6% pullback in a stock after more or less uh maybe less solid quarter? Look, J&J had a huge run over the past 15 months. I thought it would sell off even if the numbers were phenomenal. That's what I thought told you Friday. So, there's nothing surprising about the fact that the stock got slammed on a good but imperfect quarter. Still, none of the negatives are going to change my mind. They're not. My overall thesis for J&J stands. I think this company is one of the best drug portfolios in the industry. I was thrilled by the things I heard about their immunology franchise, especially that Trimfi and Agatide. The cancer business still looks great to me even if Wall Street's expectations got too high this quarter. The medtech unit has plenty of bright spots and should get even brighter once the Pew spin-off is completed. They do have to work on on on a BAMED. That's a business they bought that I don't think is doing well enough at all. And you're getting all this in a stock that sells for just over 22 times the midpoint of the new earnings forecast for this year or just 20 times the earnings estimate for next year. J&J also yields decent 2.2%. It looks attractive in a world where even the the 5year treasury is above 5% but 2 and 2.2 isn't nothing. And alongside Microsoft J&J is one of our of only two companies with aa credit rating from the S&P meaning it's considered even more creditworthy than the US government. I would say much more creditw worthy. After today's tumble, J&J is now down almost 12% from its early September all-time high. The bottom line, I think this is a good chance to get into one of the best performing farming names out there, especially since the company has an investor day on December 8th. That could potentially be a positive catalyst. That's why I'm sticking with the J&J for the Charable Trust. If you missed all the previous gains here, it might be a good time to do some buying. I'm going to reiterate that at the club meeting on Thursday at noon. Let's go to Zach in Pennsylvania. Zack. Booyah. Ski daddy. This is Zach in Reading Pennsylvania. >> Fantastic, Zach. What's going on? Go. Well, yeah. Go birds. That's all right. What's going on? >> Yeah, rough week. Um, >> hey, look, they make it tough. Look, I'm a perfectionist. If I screw up, here's what I do. I come out, I say, man, did I screw up. I don't just say, "Oh, I blew that one." Okay, let's go. >> So, I had a question about PaloAlto. It's run up for me. I almost sold it earlier in the year, growing uh tired for it to to move, and it finally moved. Now it's about 10% of my portfolio. What do you think I should do with it? Trim some or >> cyber security? Cyber security rules. It's the only thing that's keeping us from the craziness of these companies that tell us all over the time all over the time the all they do is tell us, listen, we're going to destroy the world. Uh but they never slow it down. We need Palo Alto to protect us from these greedy people who just say, "Listen, we're going to destroy the world, but you know, hey man, we got to do an IPO." That is what it's like. Okay. No one wants to say except for me. I don't play for dinner. I think this pullback in J&J is actually a great chance to get in on one of the best performing pharma stocks on the market right now. Hey, much more money, including my look at the newly public data center name that you brought to my attention. And not all crises really deserve that moniker, and the enterprise software rebound has made that clear. I'm taking a look at another sector that's facing a similar dilemma. And of course, all your calls rapid fire tonight since the lightning round. So stay with cream. Last week, Max in Ohio called to ask me about a stock I never heard of. It's called Acceleration Holdings. So, I said I'd do some homework, get back to him. Now, this is a newly public company that makes and installs the electrical connections, cooling infrastructure, and support structures for servers inside the data center. Boy, there are way too many data center stocks. And that's one of the big reasons why the group IS JUST OFF SELL. >> Acceleration came public on September 30th at $18 well below the proposed price. Then open at $1755 as we had a sicken we sickening the data center related stocks because of those politicians who come out and say listen we can't do them anymore and a midterm election. Since then it's pulled back to just over $15. That is a really disappointing debut for companies selling you the AI infrastructure boom, but I can't call it a surprise given the fact that everyone's worried about political blowback these days. In the end, this is this is a time of persistently high oil prices and steadily rising interest rates and is no longer a great moment to come public. There's a reason OpenAI pushed its IPO to next year and Anthropic doesn't want to make its debut until November at the earliest. The smart ring company Aura was supposed to become public on this come public same day as a salivation but ended up pulling its IPO internally entirely. I have to tell you they shouldn't have done that. That was a big mistake. They should have brought it when it when it could because I don't know when a good time's going to come from. Plus, as much as I believe in the great AI data center buildout, there are some real issues with acceleration. When it came public, it sold 30 million shares. Okay. But only a third of those companies came the shares came for the company. The rest were from existing shareholders affiliated with their private equity backer Olympus Partners. In the end, the company only raised $17 million after underwriting fees. I call that bad form. Don't get me wrong, I like the business. Acceleration's work takes place in the room where the servers sit. AI computers and racks need electrical connections, cooling to keep them from overheating, and structures to hold the cables and pop pipes in place. The industry calls this part of a data center the white space. Customers can hire Acceleration to design a system around their building's dimensions and requirements, manufacture the components, then put everything together on site. On the electrical side, Acceleration makes power plants to distribute electricity near the server racks and pre-fabricated cables that make the final connections. The on the cooling side, it supplies barriers separating hot exhaust from cooler air coming in, but with manifolds that make liquid coolant around. It also makes the steel structures supporting all the equipment. Every data center needs this stuff. And Acceleration offers them a onestop shop. And look, the demand is impressive here. The company's revenue increased from $181 million in 2024 to 448 million in 2025. That's up 147%. In the first six months of 2026, sales were up 176% for a year earlier. Even if you exclude the impact of acquisitions, we're still talking about 143% uh apples to apples growth. Acceleration backlog reached 1.1 billion at the end of June compared with 419 million at the end of December. 165% increase in 6 months. Most of that comes from products launched since mid 2025. Who's buying? Acceleration serves hyperscalers, cloud companies, collocation operators, and the contractors working in the facilities. They list Amazon, Google, Microsoft, Meta Oracle Digital Really Service Now on the website. Those names get catch your attention, do they? But the IPO perspectus doesn't identify the largest customers by name. And two customers alone accounted for over 60% of sales last year. I certainly don't love that level of concentration. Most importantly, Acceleration is indeed making money. $19 million in gap net income in the first half of this year. That said, the gross margin got hammered during that same period. Thanks to high costs like labor and travel efficiencies, that tells me some of the work has been much harder to execute profitably than those guys expected. The way this industry works, when a job takes more time or more money, acceleration usually takes a hit. At the moment, they have negative free cash flow thanks to a bunch of as yet unbuild work, which is not ideal. That brings me to the balance sheet. In June, Acceleration borrowed an additional $346 million chiefly to fund a 299.4 million distribution to existing shareholders. Then it went public and earmarked the IPO proceeds for debt repayment. But of course, they only raised 171 million from the IPO. Worse though, the sequence of adventure, it bothers me. Feels like these guys borrowed a bunch of money to pay off the private equity sponsor, then used the IPO to pay back the debt, except they couldn't raise enough money to do that. Common problem private equity backed deals. Not something I like either. After accounting for the IPO and disclosed September property transactions, the filings imply imply that Acceleration has about a half a billion dollars of debt. Olympus Partners retains roughly 85% of the voting power, so the sponsor still calls the shots. On the encouraging side, CEO Michael Rivera personally bought 3.6 million shares. I I'm sorry. He bought $3.6 million uh worth of shares at the $18 offering price. I like that commitment, but he's just as captive to the private equity backers as any other shareholder. Let's talk valuation for a moment. Acceleration's market cap is now roughly 3.5 billion. The company did earn just over $100 million over the past 12 months, 1727 million in sales. Of course, given that the company grew at 176% clip in the first half, it's going to look much cheaper if you use the estimates for the outy years. And honestly, 34 times trailing earnings or less than five times trailing sales. It's not expensive to begin with. That said, you really got to wonder how much of a moat do these guys have. We go over these companies all the time. A bunch of big industrial verd Schneider Electric. They're all chasing various parts of the same business. Meanwhile, cooling methods and electrical ar uh architectures keep changing. So, they need to spend just to keep up. In the end, even though Acceleration's got an incredible growth rate, I'd rather stick with more established players like Verdiff or Eaton, which we're going to cover well on Thursday's conference call for the club because I have more confidence in their ability to hit the numbers. Hey, then there's Gene Vernova supplying power generation and grid equipment. Sterling Infrastructure helped build these facilities. We've had those companies on train supply cooling. We've had them on too. And then Oregon, the power plant builder I covered last night. They serve different parts of the system, but all stand to benefit from the same data center buildout. In the end, there are a ton of different ways to play the story. I rather go with the ones that have earned my confidence. Acceleration still has those troubled contracts winding down, and I really just like the fact that the private equity sponsor retains so much control over the business. Plus, if you're going to buy a data center supplier, I think you should wait 3 weeks until after the election. That's when I expect some of the political heat to die down. Here's the bottom line. Acceleration. It's an exciting story, but after it came public with a whimper, I am not too eager to jump on this one. If you're worried about delays, cost overruns with data center construction, that will really hit this company where it hurts. For now, I say, why don't we do this? Let's put acceleration on our watch list. See if management can deliver before we pull the trigger. We have money back after the break. Coming up, you've got questions, Kramer's got the answers. Get charged up for a fast fire lightning round. Next, it is time. It's time for the light. Bye bye bye. And then the lightning round is over. Are you ready? D time the light round driver. We'll start with John in South Carolina. John, >> hey Jim. Uh, this defensive compounder has pulled back roughly 11% year to date. The CEO personally bought over $7 million in May recently. They have inflation leak contracts. What are your thoughts on Waste Connection? >> You know what? I'm still going to send you to Waste Management. It's just a WM. I just think it's a better company even if it was insider buying WCN. I want to go to David in Washington. David. >> Hello, Professor Kramer. Long time listener. >> All right. Good to have you on the show. >> Good. I bought this stock earlier this year before a proposed merger was announced. I doubled down on the stock and then the merger was terminated. The current PE is around 50 and lately you've been recommending against higher PE stocks. What should I do with element solutions? >> Element hold on to melon solution. The solstice dealuted it really diluted solstice is nuclear and people thought element solution was being given away and I think they were right. Let's go to Vicram in California. Vicram, >> hi Jim, how are you? First time caller and short time listener. >> All right. >> Uh, thank you so much for having me. Uh, my question to you is regarding sale point ticker S A I L. Yeah, you know, this thing was this was supposed to be the Achilles heel of of enterprise software and yet it has hung in and as much I look I don't like the company but I got to tell you all the things that said it was going to go bankrupt. It was in really big trouble those were just talk. I was going to say lies but I'm a real diplomat tonight. Let's go to Brenda in California. Brenda, >> hi Jim. Thank you for taking my call. >> My pleasure. >> Um like to get your thoughts on um IN Limited. >> Okay. I understand that Ren has got this deal. We don't know for sure with Anthropic. I say if you want to be in that business of the Neocloud, the only one that I trust and want to be in is coreweave. No offense to Ren, but Cororeweave is the real deal. Michael and Trader. Let's go to Rob in Kentucky. Rob, man, sovereign Grandmaster of Cray America. Barry Sterling, CEO of Starwood, changed the name to Deadwood with its dismal performance down from a high of 27 to 1257 today. And is the dividend safe? Buy, sell, or hope. >> Um, I don't want to own that. Uh, it it doesn't it just doesn't compute. Uh, I know that that he is a a good investor, but this has not turned out to be a good investment. I don't know what else to say about it. Let's go to Bobby in Florida, please. Bobby. >> Hey. Booyah. >> Booyah. >> Professor Kramer. >> All right, man. What's up? >> Uh, I'm down here in Florida, sunny Florida, originally from New York. Um, my question is, uh, Penguin Solutions buys Arold. >> I I kind of like Penguin Solutions. I know it's kind of a meme stock. Uh, but I got to tell you, it's got real business. I'm going to say I I'm going to say you're okay. I'm going to say you can buy it. Let's go to Harry in Florida please Harry. Hello there, Jim. Thank you for having me on the lightning round. >> Absolutely. I'm throwing you on the lightning round. What's going on? >> Mazd MTZ. It's been cut in half. >> This thing has been crushed now. It's got the It had the worst pattern. It was like I you know, just look like Mount Everest. And you're all the way down at the bottom. You're like in base camp 4 now or whatever. >> 3 2 1 I don't know. Hey, you know where you are? You're in like some sort of creasse. I'm going to say you buy Masttec. I don't care. I think it should be bought. That's a new position for me. And if Jose wants to come on, I say terrific. And that, ladies and gentlemen, conclusion of the lightning round. >> The lightning round is sponsored by Charles Schwab. Coming up with software stocks bouncing back, Kramer's highlighting another sector that could stand to benefit next. Today was a good day for enterprise software, one of many. It's hard to miss the incredible run from Salesforce. It's going from 146 in June to 238 today. Viva Systems, the company digitized drug trials. We had one last week. Has popped from 150 to 301 as it business has gotten stronger and stronger. Workday has zoomed from 111 to 186 as this business grew stronger and we got the rumors of a potential takeover. Remember all three of these companies were supposed to be disrupted if not destroyed by Claude or Chad GPT or some vibe coded competitor. It never happened. When the enterprise software stock sold off hard earlier this year that turned out to be a fantastic buying opportunity. And let's not forget the other side of the story. When Wall Street started worrying about AI displacement in the software space, those fears extended to the private credit firms that backed these kinds of companies when they were taken over. As individuals became progressively more panicked about the kind of software that could be made obsolete by AI, they did everything they could to arrest their losses in these infernal bundles of lowquality loans. Even as the sponsors tried to console and cajol them to stay, they didn't let everyone sell when they opened the bundles for exits. and it caused panic everywhere, including the stock market. The private credit firms didn't take it lying down. Back in March, near the height of the panic, private equity giant Blackstone had more than 25 senior executives commit $150 million in personal capital voluntarily to help meet the demand for withdrawals. And lots of people felt that, you know, I I heard the same thing you did probably that these black investors were not ne or chumps or maybe they were just ordered to invest. But given that these private credit placements were heavily skewed to enterprise software and enterprise software had become endangered, it did seem like a real sucker play at the time. In retrospect though, the private credit collapse we were warned of never came true. The Blackstone investors didn't get blasted. Sure, there were very few companies that were like Medallia, a customer experience software play that succumb to a complete lender takeover in August. There are always some bad ones for heaven's sake and there were enough dis like wiser solutions anthology two software companies had to file for bankruptcy to generate real worry in the private credit space. What matters to me though is that if you go back to the times when we first heard people couldn't get out of these funds because they were inherently illquid. There was a sense of pending doom for the entire market not for those people. We read about it every day. Hey, it made us feel like Blackstone, Blue Owl, Aries, Apple, I mean Apollo, a KKR that they had to be in real trouble. Whatever counts as real trouble these days. Those stocks got crushed today, by the way, but not because of enterprise software investments. The problems haven't gone away, but you don't hear about them anymore because the publicly traded enterprise software stocks have been rebounding like crazy. So maybe the private ones should be doing so too. The panic is over because with the exception of Adobe, the enterprise software companies are do all doing incredibly well. Their stocks were broken, but their businesses were fine. It makes me wonder if the valuation these private credit funds might be higher than we think. I'm not going to recommend any of these funds to you. I never thought they had much upside and they're all about reaching for yield to begin with. That is not my thing. But in a world full of crisis, sometimes it pays to recognize that these crisis don't always end in disaster. Well, you could argue that the private credit crisis is still ongoing. I think the more likely scenario is that the Blackstone partners who bought in may have bought in at the low. And unless rates shoot up dramatically from here, it sure looks looks like they've stumbled on some pretty decent paper. And the private credit crisis, I'm going to downgrade it to a private credit concern. Why? Because while there's still plenty of people who still went out of these things, there are plenty of others who went in for the long haul. Now that this apocalypse has been taken off the table, it's not the type of business that's hurting these PE firms. It's the bomb market, and I bet they'll survive it. I like to say there's always a market somewhere and I promise I'd find it just for you right here on Money. I'm Jim Kramer. See you tomorrow. 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