Mad Money 09/02/26 | 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. My friends, I'm just trying to make a little bit of money. My job is not just to entertain, but to educate you. So call me at 1800743 CNBC or tweet me at Jim Kramer. Sometimes things get too expensive. So we buy something else. That's how we've been all taught to shop, right, for just about everything. And the stock market is no exception. When you don't have a lot of money money coming into the market and there is real competition, that's that 30-year Treasury is now paying you 5.26% virtually risk-f free. You want to steer clear of pricey stocks and you want to pile into the cheap ones. It's hard to discern this kind of rotation when you look at the averages. With the Dow gaining 295 points today, SB rising point46%, NASDAQ advancing 045%. But you can see it when you look underneath. You just need to know how to look. I think that lots of people who aren't that familiar with the stock market might not know how to judge what's cheap versus what's expensive. That's why I wrote the book, How to Make Money in Any Market, which you can get a signed copy of, by the way, if you join the CBC Investing Club. Now, unfortunately, many people are like my late mom, who looked at stock prices, I guess you call it, in a vacuum. As mom saw it, disc drive maker SanDisk at with a price of $1,553 would be considered far more expensive than enterprise software company MongoDB at $375. Nvidia priced at $224 might seem pricier to her than say service now at $136. But unlike when you're shopping at the supermarket or car dealership, the sticker price means very little in the stock market. We always want to compare stocks on an applesto apples basis. And there's nothing apples to apples about the share price. All these companies have different numbers of shares. They have different earnings per share. So where the stocks trading that it's a pure abstraction something it really doesn't tell you much at all. Now, if you want to truly to compare them, be able to figure out what's expensive, what's not, you need to figure out what the companies are supposed to earn for the next 12 months, readily available at almost any stock site, then you divide the stock price by the earnings, and you get something called the price toearnings multiple. Comparing PE multiples is the apples to apples weight to value one stock versus another. Or maybe you want to think about it algebraically. You want to figure out the M. You divide the stock price P by the earnings estimate E or P divided by E equals M. When you're valuing a stock, you're solving for M. And M is the secret sauce behind everything in this business. Let's look at at it in action. You'll understand. SanDisk is supposed to earn $212 a share. You divide the price of the stock by that estimate and you get a priced earnings foldable. Comes out about 7.3. Considering the average stock in the S&P sells 21 times earnings, that's a steal. Enterprise software company MongoDB on the other hand is supposed to earn just under $6.50. You divide that into the stock price and you get an M of nearly 58. Hm. Sandis trading at 7.5 times earning. That see that's a heck of a lot cheaper than MongoDB trading at almost 58 times earnings. No wonder the latter plunged 13.5% today after decent quarter. It's too rich in this market. and too rich equals sell. Same with the Nvidia versus Service Now comparison I gave you. When you divide Nvidia's $224 stock price by nine the $926 earnings estimate for this year, you get 24 times earnings. When you look at the $136 uh price of service now and you divide that by the $4.7 earnings estimate, you get 33.6. I know it's counterintuitive, but Nvidia with the $224 price target is target is It's just much cheaper than Service Now at 136. If you want a more aggressive way to compare two stocks, just go out a year. Nvidia is supposed to earn over $15 a share next year. That means it's selling for measly 14 times next year's earnings estimates. Service Now, on the other hand, it's a multiple of 27 times next year's earnings estimate. Much more expensive. I go into this E* M equals P exercise. And no one else does it because they're considered when they hear algebra, they hear math, they get scared. But I have to do it for you. I go into it because right now at this moment managers who run trillions of dollars are unmasked trying to select stocks that are relatively cheap, low price earnings multiple versus those with high price earnings multiples. They want to have less risk. It becomes too dicey otherwise. Nobody on Wall Street wants expensive stocks when the bond market is on the war path like this. So they sell the high multiple stocks and crowd into the low multiple stocks. Why is this price shopping comparison so important right now? Because there are some real misperceptions going on in this market. For example, and I hear these all the time. I hear investors are fleeing the artificial intelligence trade or they don't want to own any technology anymore or the data center's become a nightmare or worst of all the momentum trade is broken. Those are all wrong. Every one of those, you heard them all day and they're wrong. They're getting the symptoms right. These groups truly are going down, but missing the real cause. Very simply, what's going on right now is that big money managers are fleeing stocks with high price earnings multiples wherever they're found and they're too risky. Instead, they're rushing into say Dell, which sells for less than 20 times earnings. Dell reported a great quarter last night, and when the smoke clear, we sold that that it could earn $25 per share. That's a terrific low multiple price check. Buy buyers flocked in. That's why the stock closed at 492, up 16%. The buyers aren't fleeing for the data center or tech in general. They're just fearful of high multiple tech stocks. data center or not because they have to be perfect. MongoDB is a really good company but its quarter wasn't perfect so it got killed. Of course if stocks have to run up big you might get profit taking unless they report incredible blowouts. People might blanch at Palo Alto Network selling for 79 times earnings. So they're sellers but Nvidia is much cheaper 24 times earnings. They're buyers. Why do people ever buy higher priced earnings multiple stocks to begin with? Well there's a reason. Because when rates are low like they were, profits might be sluggish. So buyers are willing to pay extra for companies with powerful sales and earnings growth. High growth companies get higher multiples than lower growth companies. But there are anomalies. For example, what the heck is Nvidia doing with a with such a low price earnings multiple despite the phenomenal growth? What's it 14 times next year? Come on. The answer is that there are many money managers who believe Invidious numbers are peaking because of this circular reasoning stuff we keep hearing about. Others think it's because of a pause in spending uh because of political opposition to the data center. Therefore, the critics believe Nvidia is making all these investments in its customers just to keep the balls in the air, continue by continue to uh make money by paying its customers who then pay Nvidia back. This process is called circular financing. It's considered a real sign of danger because we saw these kinds of transactions in the leadup to the docom collapse. I vehemently disagree. Nvidia's Jensen Wong knows that the companies using his chips are starting to make a ton of money. So why not back them up? This is something I asked Dell's CFO last night. He confirmed that right here on this show. Companies are relying on Nvidia's equipment and they're making fortunes. We're finally at the moment where customers are beginning to clean up from this technology. That's why Dell's up so much. They told you that they're very good at supply chain management. Some of that supply chain management is about getting enough Nvidia because those chips are in short supply. Dell's multiple is low because people didn't believe they could make as much money with Nvidia's wares. Last night we found out and look what happened. So the bottom line when you I know it's complicated but I had to try it. When you put it all together, you realize there's no revulsion to the data center or the AI stocks or even moments. It's just that when bond yields go up, money managers dump their expensive stocks and swap into the cheaper ones with lower pees, price to earnings multiples. As it happens, many of the data center plays have high multiples, but the ones that don't, like Dell, they're doing just fine. >> Thomas and Georgia Thomas >> Jim Kramer, thank you very much. This is the second time that I've had an opportunity to speak with you and uh you always give me good information. Thank you for the book that I received and the autographs. That's something I'm going to always cherish. >> Uh you're really terrific, sir. Thank you. Good way to start the show off. How can I help you? >> Well, a couple of days ago, uh you raised my eyebrows when you announced that uh the club was letting go their position, Aquarium, to take advantage of the massive profits that you made and to wait until we can sort everything out with these data centers. I had taken positions in Coran back in June and July of this year when I'm thinking I'm buying on the dip. Now I'm down 24%. Should I take advantage of some tax harvest losses or this is now this is a very tough one and we thought long and hard about this because I've got a principal rule which is never turn a gain into a loss and I was fearful that corning and and other high price earnings multiple stocks would do that. And I said listen you know what I'm going to do I'm going to step out and then I'm going to get back in. I said we had to be more nimble. That's not my style anymore. That was my hedge fund. But I think it's going to come down more and then we're going to get back in. and and you're a member of the club and you'll know exactly when we say that to take say to do that. But that's a tough one. I know it's just that I was not going to turn a gain into a loss. That's too precious. Let's go to Jeff in New York. Jeff, >> uh hi Jim. Uh sentiment about Oracle stock is largely influenced by concern over their loans for the data center build. However, when you take into consideration the expanding moratoria and negative sentiment about data center center production, doesn't that increase the value of data centers that Oracle currently has approvals for and is currently building since the current sentiment will throttle the competing data center capacity? >> Well, Jeff, that's a good way to look at it. So, it's it's a little too optimistic. People have gotten comfortable with the idea that Oracle is going to put up as many as they can. So, anything that indicates that they're not going to be able to put up as many is going to make it so Oracle stocks go lower. Um, I would prefer to just stick right point blank with Nvidia. And, uh, by the way, I think Dell is still a terrific stock to own even all the way up here. All right. Now, I had to give it a try, people. I know it's very hard. And when I spent I spent years trying to explain this darn M, but I have to try to do it. You need to know what moves the stock. When bond yields go up, money managers rotate out of high multiple stocks and into cheaper ones. And that's what's going on. Now you know how to identify those. Hope you can take advantage of the moves. On May tonight, PG& has taken a beating this week. Has this utility lost its spark or is the self creating a buying opportunity? I've got the CEO. Then is it time to circle back to Cardinal Health? I'm checking the pulse of this healthcare heavyweight and whether the stock can keep delivering in this market. Plus, I'm getting the state of cyber security with the CEO of Rubric. 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. Boy, it's been a tough week if you own any Californiabased electric utilities. Last weekend, a deal to reform the way wildfire liabilities are treated fell through. Sending stocks like PG&E and Edison International, down roughly 20% over the past 3 days. Right now, if regulated utility in California causes a wildfire with its power lines, it can be held liable and on the hook for major financial penalties, even if they have insurance policies in place. The law lets the insurance company sue the utilities to recover the money to pay they pay out. Utilities have been trying to cap that amount they pay. And it looks like they've been able to get this through the legislature. But then, I don't know, at the last minute, the deal fell apart. Now, it's unclear what's going to happen. This morning, PG& the gas and electric utility in Northern California, said they're exploring strategic alternatives. They also announced they'll be cutting back on their capital spending next year. Not safety, capital spending. So, what's going on here? Is it possible the stock's worth buy on weakness? Let's check in with Patty Poppy. She's the CEO in PG&E to break things down. Miss Poppy, welcome back to Bad Money. >> Thank you, Jim Kramer. Great to be with you as always. >> Okay, so Patty, you know, because I contacted you this weekend, I found this very hard to understand. I also found it very wrong, but that let's leave that aside. Maybe you can just explain the core wildfire liability reform issue so that we at least know what's going on. >> Yeah. So, the this wildfire uh reform uh has been two years in the making. There was a a report drafted uh at the order of the governor two uh a year ago to describe the problem and everyone agrees the cost for our customers is too high of the wild wildfire liability construct. So given that cost being too high, reforms were possible. A couple lines of uh text in a a a proposed law would make all the difference in the world to my customers. And uh that fell through. >> Well, I I know that you've been incredibly diligent in getting your company's balance sheet back and also fixing wildfire problems and delivering great lower costs to your customers. I'm trying to figure out one, why you would possibly be uh let's say damaged by that because it seems like you're doing everything right and two, what could a strategic review accomplish? >> Yeah, you're not wrong, Jim. We've done the hard part. We've done the real work to transform this company. We're six years into a major transformation where we've reduced our wildfire risk dramatically. We've this is our fourth year without a major wildfire. We've lowered rates five times in the last two years. We've improved reliability by 30%. All that to say, we need this liability reform done to unlock the value uh and to bring the capital in from the capital markets. If if investors and banks see the risk too high, they charge more or they don't enter the stock at all. And it's actually just very targeted fixes to the current legislative framework that would make all the difference in the world for our customers. Our debt costs are too high specifically because we we made a real pathway toward investment grade coming out of bankruptcy six years ago. We've been on our track to investment grade credit ratings and we're just at the cusp and we've been in a holding pattern waiting for this legislative work to get done. That would save my customers $600 million just in the last two years of debt issuances. This is real savings for customers. It's a matter of a a a simple legislative fix and we're we're counting on the legislature to take that action. >> So, what does it do to to cut uh 2027 capital expenditures then? >> Yeah. So, we announced today our strategic review and as well as a $2 billion capital cut. We have a 11.4 billion capital plan after that $2 billion cut. So, it's not zero. We're not going to zero, but we've reduced it by $2 billion. And that's going to delay housing starts. That's going to delay renewable energy interconnections to the grid. That's going to delay our uh connections of new and growing load here in California. California is growing. And we power that. And we need access to lowcost debt and highquality investors to make that happen. And look, we're not done yet. Speaker Rivas yesterday held the bill as you suggested. He said they want to get back to work. They've scheduled some hearings. Governor Nuomo has been adamant that this work needs to get done. Uh we really are hopeful that they'll be able to find their way to get back to the table and uh finish the job for our customers. The people of California are waiting. >> Well, were they aware about how you put all that stock in the trust and you bang this? You had to hurt the shareholders. There was nothing you could do. You explained it very clearly what was going to happen. So it wasn't like someone came in and said, "I'm I'm shocked." Because you laid it out. But I had thought you had done the hard work. >> We've done the hard work. You are not wrong, Jim Kramer. We have done the hard work. Look at the fundamentals of this company have never been better. Our foundation of operational safety, wildfire safety, reliability, affordability. That that construct exists. My people have delivered for California. Now, we need our legislature to finish the job so we can take it to the next level and and let this racehorse out of the barn. We've got a a great company to serve the people of California, and we just need a simple legislative fix to get that done. >> Now, there were four that downgraded the stock. I guess they just kind of feel like I this it's just I can't I can't get a handle on it because I mean to me I wanted to say just go buy it but I myself did spend a lot of time on this and I came back and I said I really hope that Patty gets it. I really believe that the governor's for it but this California legislature from the day that I followed it as a reporter in 1978 has been very hard to gain. >> Well look they've done a lot of hard work in the years gone by. They've set up actually an industry-leading liability framework for wildfire. But there's a a real tail risk that has spooked investors that can be fixed. This tail risk can be addressed and a liquidity question can be resolved with some simple language, a simple fix. The the existing legislature needs to build on the actions of the past. The governor has led this process for eight years. I know he's been clear. the the uh California earthquake authority report was clear. Our CPU was clear. Everyone agrees the status quo doesn't work for customers. Let's get that done and then investors will be the beneficiaries of unlocking that value for customers, lowering rates, making our debt more affordable, and getting to investment grade once and for all. >> Okay. And tell our our viewers what it would mean to be investment grade. What would allow you to do? Well, it would allow us to pull that $2 billion back into the plan. It would allow us to grow our earnings at 9% plus every year. It would allow us to continue to grow our dividend. It would allow us to be one of the premier utilities in the world. I serve some of the best and brightest customers. I serve Northern California, the Bay Area, Silicon Valley, the Central Valley, the great bread basket of the world. I have the Diablo Canyon nuclear power plant. I know one of your favorite places. >> My favorite. I was there when I got commissioned. >> All of these assets are waiting and they're like trapped like, you know, we're a racehorse in the barn just waiting to get out and serve the people of California at a lower price, higher reliability, more safety, but we need to to get this legislative framework resolved once and for all. >> Well, I've got you because you're a trusted utility person from the CMS days. Um, the data centers are you still you I know you had room for them. I know if it's done right, it can't be bad. It's just that a lot of guys are a lot of people aren't as savvy as you and didn't know to be able to extract the worth on behalf of the other rateayers. How is that going for you? >> It's going great. We have 1.8 gawatts in our plan for 2030. That's preserved in spite of this capex reduction. Though the capex reduction will slow down, bringing on that beneficial load growth. >> It's a simple pricing. It's a simple pricing issue, Jim, on the on the data centers. If you price it right, it can be beneficial in everybody else's rights. We've got the pricing right in California. We've got the capacity on the grid waiting to serve. Now, we need to make sure we've got a liability framework that allows us to attract the capital to do that great work that we love to do and hook up those new customers and lower everybody's rates. >> Oh, just be sure. Now, this is a what we're talking about with wildfire legislation. This is literally could be happening right now. There may be something that happens tomorrow, right? It's not just because the legislaturator's closed does not mean it's over. They can do a special session. >> They can do a special session. I hope they do. It will take a couple days because they have to have 72 hours before a bill's in print before they vote. But that'll be a good signal to uh uh investors that if that uh bill hits the print and it meets the the minimum, the probability of it passing becomes really high. But they first need to get something in print uh and then call that special session and make sure that uh we finish the job. We're so close. We're so close. And uh I I just think that under the leadership of Gavin Newsome and uh uh Speaker Rivas, I think they can really do the the job to make it right for our utility customer. >> I followed your career. I followed your career all along. I've followed your career since you took over this place and saved it and saved it and saved the customers a lot of money. I have to believe they let you in. They have to let you win. This that's Patty Poppy, the CEO of PG&D Corp. Patty, thank you so much for speaking up. Thank you, Jim. We're always here for our customers. That's who we need to win. Our customers need to win. >> All right, everybody's back after the break. >> Coming up with the markets in motion, Kramer's making the case for Cardinal Health as the safe haven you want to be in next. This is a very different market from what we were dealing with just a week ago. Last Friday, our new Fed chief Kevin Morris went on the war path against inflation. And then this week, the war with Iran got explosive again, pushing up the price of oil. Now, all that means that bond yields are on the rise. When that happens, Wall Street loses faith in high growth expensive tech. even when major tech companies keep reporting spectacular earnings. Doesn't help that data centers have become pretty unpopular in this and election year. So, we've seen lots of money rotating out of expensive tech and going into sectors that really thrive when times are tougher like healthcare which brings me to one of my absolute favorites and that's Cardinal Health. That's a drug middleman that we own for the charitable trust. Middleman I should have put in quotes because people don't like to call it that. Cardinal along with McKeshen and Sincor the old Mercur Bergen are the three big drug distributors. Politicians from both parties love to criticize these guys but all three stocks have been incredibly great long-term performers. Why? Because they perform a valuable service for the drug makers. Cardinal and his compadres help handle the logistics side of the pharmaceutical industry. And within this group, Cardinal's been running circles around McKessan and Sakura. They consistently put up the best numbers because this company has gradually become less of a commoditized service provider and more of a specialized player, higher multiple. Cardinals been making major inroads with specialty pharma, meaning more complex drugs with unique handling requirements. And they made a big push into generics. At the same time, these guys have the small medical products distribution business. And lately, they've been getting into more auxiliary businesses, at home health solutions, nuclear medicines, patient services. These are areas with higher growth and higher margins than the traditional drug distributor business. Put it all together in Cardinal Health's been cleaning it up. After an odd pullback from early March through midmay, fueled in part by a misunderstood quarter in April, the stock started rebounding. Stock went from hated to love practically overnight. It had drifted below 180 at its lows and we bought some more for the travel trust after that April quarter. Then by the end of June, it it charged up to $240. It out stands at $245. But if you go back to March, the stock's been basically marking time since then, even as the underlying companies got a lot more attractive. And that's your opportunity. Late July, Cardinal announced a pair of very intriguing acquisitions. They bought this diabetes health business of Adapt Health and a company called Strive Medical, which is especially medical supply provider for a combined $235 million in cash. Smaller bold ones. These are exactly the kind of faster growing higher margin businesses that Card's been expanding into. Then three weeks ago, Carter reported very similar quarter to what we saw in the spring that they crushed the stock. They delivered a substantial revenue uh miss okay paired with a hefty earnings beat. Even when you exclude tariff refunds, this still would have been an 18 cent over $242 paces. Free cash flow was also up 11% and the analysts were expected to be negative. So why does Cardinal keep missing the revenue numbers and still beating the earnings numbers? Okay, first much of the revenue pressure comes from lower drug prices caused by the Medicare negotiation provision in Biden's inflation reduction act. That's a throwing the numbers off. Makes Cardinal sales look weaker. But because they operate on a fee for service model that relies more on drug volumes, it doesn't hurt the business. These guys take a fee for every unit they move, they don't need to care about weaker drug pricing. The other part of this is the Cardinals expand into generic drugs and biosimilars. Generics bring in lower revenue because they're cheaper by definition, but they're high margin for the drug distributors and they move a lot of volume. Remember, volume is where Cardinal really makes the money. Volume. Okay, that's why I keep shrugging off the revenue misses. Now, all the same time, Cardinal issued its fullear forecast for the 2027 fiscal year, which ends next June, and that forecast was excellent. While Cardinal Health doesn't offer sales guidance for the full company, management said they expect their core pharmacy and specialy solutions segment and their global medical products and distribution segment to both put up growth in the low to mid single digits. The company's other segment, which houses many of the higher growth businesses they've been expanding into, expect to put up low double digit growth. That's excellent. More importantly, Cardell said they can earn between uh 1240 to 1260 per share in 2027. Wall Street was looking for $128. That implies 13 to 15% earnings growth and they gave an excellent free cash flow uh free cash flow forecast. Now initially the stock soared in response to the quarter. It traded up nearly 9% at one point of the day reaching a new all-time high of 258 and change. That was strange. Then a wave of profit taking ensued and Cardinal ended up just up 1.3% to 240. Now there was some back and forth in the conference call about the drug pricing headwinds. Basically, the analyst press management whether price caps from Medicare negotiations would negotiations would result in drug makers negotiating lower fees from Cardinal and its peers. That might have contributed to the stock's decline from ties. But I thought the very smart CEO Jason Holler answered those concerns well, explaining that the company's in close contact with both its customers and the government and they sounded pretty confident about being able to maintain their fee structure. We wrote that up for charitable trust members. It is is a very good memo and that's why I think you're still getting a great entry point here. Cardinal Health had a good week, up a quick 10 points over the last two days, including a $6 gain today because money managers are rotating quickly into these high quality healthcare stocks away from the high high uh growth technology stocks. And we also know because of higher interest rates and higher oil. Still, even after this bounce, the stock sells for less than 20 times the midpoint of its fiscal 2027 earnings forecast. That's three turns, as they call it, below the average stock in the S&P 500, but it's much better than the average stock. As I see it, that's a very fair price for a company that should be able to put up earnings growth in the mid teens. Very few of those these days. Here's the bottom line. In a world where investors are terrified of higher oil and higher interest rates, I think a stock like Cardinal Health can be a big winner. This company's been doing very well lately, and the stock hasn't gotten enough credit for it. But now, we finally have a backdrop that makes Cardinal too attractive to ignore. Let's take some calls. Let's go to Gordy in Florida. Gordy, >> good afternoon, Jim. How you doing? >> I am doing well. How about you, Gordy? >> Fantastic. You're so smart. You're so intelligent on all these stocks. I got >> No, if I was so smart, I would have told people to buy Snowflake tonight. I didn't do that. So, tell But anyway, tell me what's going on. >> Okay, I got a stock that's been up 21% this year. They're raising the guidance from 790 to 810. Bullish outlook. um price target from Truis 118 all the way up to Jeffre 126 20 billion in technology over the next 10 years uh valuation 28 versus average 54 they're saying a 25% upside 3% dividend uh David Joyer is running a great company I think should I keep it for about a year Jim >> uh this is CVS Dave Joiner does a fantastic job I think you should own it u don't trade it it's a terrific stock and we want to buy it for the Travel Trust. That's how much we care about it. We think it's absolutely a sensational situation now. Oh, that's it. Oh, darn it. All right. In a market where oil and rates dominate the headlines, a stock like Cardinal Health is going under the radar and I think it could be a very, very big winner. Much more made money. I'm sitting down with the CEO of Rubric after earnings to see what's ahead for the cyber security company. Then the data center boom is plenty of critics. I'll tell you if their arguments hold weight and all your calls rapid fire tonight's edition of the lightning round. So stay with Kramer. What just happened to the stock of Rubric? That's the data security company Semile's very strong quarter last week. I see it stock drop 13% the next day. Aren't things been drifting lower ever since? Now this is kind of crazy people. Rubric posted a big revenue beat. earned 20 cents per share when the analysts were looking for 4 cents. They raised their fullear forecast for revenue. Uh they annual recurring revenue was sensational. Margins free cash flow good too. Stock got hurt. Now some of that's because Rubric's Billings some people say it came in a little light. I think it's supposedly because the stock had run up like crazy in the month for the quarter. It just came in maybe too hot. Stock stocks up 14% for the year. So are you getting a buying opportunity here? Let's check in with Pipple Sinhis the co-founder chairman and CEO of Rubric. Mr. Welcome back to Mad Money. >> Jim, so great to see you. >> Well, I've got to tell you the ones that I follow the most, your industry, which is your company, uh, Crowd Strike and Palo Alto, all been trading down. And I think a lot of that, this is my own judgment, is that it's been doing really, really well. And some people are kind of rotating into other areas. I I don't know what I could possibly missing. I think this quarter was excellent. >> This was our 10th consecutive quarter of outperformance. We have been beating and raising. And if you look at this quarter, we had an excellent result. Every aspect from topline to cash flow and profitability, we made significant advances. >> Well, some were saying when I was reading the re research portion, I kind of give up about what's happening here. Net retention slipping a bit, moderation in second half for the net new annual recurring revenue. I didn't see it, but that's what some of the analysts were saying. Look uh we have been at the intersection of AI and cyber security and what is happening with Mythos and frontier model it is bringing the rubric platform and cyber resilience front and center that's what is driving our business we are landing bigger deals than ever and we are our customers are coming and repeating purchase with us and so if you look at our results it reflects the demand in the marketplace and we are winning the cyber resiliency >> well and that's what look I talked to George Kurts today. He's the CE CEO of Crowd Strike and he's a partner of yours and he said the same. He said, "Look, this things are just going terrific." What are you and George doing at Crowd Strike? >> We have a great partnership with Crowd Strike. We just announced Crowd Strike agent calling Rubric agent to do the recovery for agentic identity. And this is the kind of work that we are doing together so that our joint customers can enjoy not only prot preventing and detecting attacks with crowdstrike but also doing cyber resilience and cyber recovery with rubric. >> So uh let's talk about that complete identity resilience platform so people understand you basically you're creating a twin. So if something bad happens you're able to rather radically be able to get back online much quicker than anybody realized possible. 100% the idea is that our customers would have confidence to continue to do AI transformation and not worry about AI attacking them and their business being down. So Charlotte is actually finding what is a bad identity and Rubric is undoing that bad identity so that our customers can continue to run their business. >> All right. So let's talk about a real life example that happened the open AI and hugging face. We've all heard this example now if you watch the network. Uh George talked about there's a window into what much worse attacks could look like. What will you be doing to make it so that there is uh resilience if one happens to one of your customers? >> What happened with OpenAI and hugging face is the the agents broke the guardrail that was built for them and Rubric has created a solution for agentic runtime security and agentic rewind should something like this happen. And this is just a precursor of what to come. We are now have entered a machine speed attack and machine speed compromise with agents. And our customers need to have the right technology and then the right agentic configurations to be able to deploy agents at a scale. >> All right. Now I know in your excellent deck you say point blank human speed recovery is no match. We can't do it anymore, can we? If a machine is attacking you and if you take 10 days to recover, you'll be out of business. So the when when I say AI is attacking you, you need to also have the AI speed recovery and that's what Rubric is delivering with our unique platform that combines data identity and AI. >> Now we know Nash Aurora, okay, from Palo Alto Networks was on this week and we know George Kers was on this week. The post mythos demand for these two gentlemen is extraordinary. It's almost as if someone just ran a commercial, a giant commercial for them. Uh you must be seeing a very similar reaction in your book of business. Look, MythOS and frontier models have proven that prevention and detection while important is not sufficient. I have been saying this for the last 7 8 years. We built rubric for this moment of cyber resiliency and we are seeing tremendous market demand for cyber resilience and we are winning this market. >> Right. And then one thing you I just wanted to be sure about this but uh it seems that software has gotten lumped together in this AI debate. Um but you're you're not a seatbased model. I mean you're the kind of model and software that we that that is very much in favor. Correct. >> Rubric is a data infrastructure for cyber security. So we are not selling seeds. We are we are actually helping our customer secure their data and all of their data and our growth is their data growth and security that is needed on their data. >> Well then I have to tell you like I said about crowd strike today like I said about palo alto networks I now say about rubric these are these stocks are being put on sale and it's your opportunity and you got to take it and I want to thank you so much to Bippolino co-founder chairman and co of rubric. Thank you for explaining everything sir I really appreciate it. Always a pleasure, Jim. >> Very good. Mad money's back for the break. Hey folks, before the lighting round, just a reminder, this is a great time to join the CBC Investing Club. Here's why. You're going to get my market analysis live daily morning meetings at 10:20 every day. You can follow the club portfolio. Just scan the QR code, go to cmbbc.com/cramerclub to learn more. I'm going to throw in a free signed copy of how to make money in any market. Uh, that's the one I talked about at the top of the show. And now it is time. It is time for the lightning round. Couy by no stock. My staff here playing the sound. And then the lightning round is over. Are you ready? Ski dy recent New York. Reese. Hey Jim, how are we doing? >> I'm doing well. Ree, how about you? >> Good, good. I'm a huge fan of Aerobont. We're sitting down about 65% from 52- week lows. I was wondering if you're thinking this is a good buying opportunity. >> I'm thinking even though the stock's down 40% that could the competition in their particular uh niche of defense work is so strong that I just have to say not yet, not now. Let's go to Eric in Michigan. Eric, >> Jim, I love the show. >> Thank you. >> Calling about a company that has a perception of being interest rate sensitive after their last quarter, which was their most profitable in the past four years with rates elevated, tells me the synergies of Red Fin and Mr. Cooper are working. Jim, can you imagine when rates stabilize or god forbid come down? I believe Rocket will be a $30 stock. Your thought? >> My problem is is that every time I've tried to imagine that, I've been wrong. And so I am not going to do that on this show. It's been a mistake and I'm not going to double down. Let's go to Matt in Ohio. Matt, >> hey Jim, thanks for taking my call. >> I I'm thinking about starting a position. I wanted to get your thoughts before I pulled the trigger one way or the other, but I'm thinking about starting a position in MP Materials. Let me know. >> I think it makes sense. Look, we we know we need those critical materials. That's the single best most investable play in the situation. Uh but I don't expect anything to happen very soon. And that's the problem. It's taking a very long time there. Let's go to Larry in Florida. Larry, >> hello. Hi, Jim. This is Larry. I'm a first time caller from Orlando. >> Okay. >> I recently retired and I found your book, How to Make Money in Any Market. Very helpful. >> Thank you. >> Thank you for helping a new person like me to get through just now getting started on my own. >> It's your teaching tool. You're not supposed to write teaching books, but I did it so well. I'm thrilled. It was great. What? So, how can I help you? >> Here's my question. >> Mhm. >> Two days ago, two days ago, Elon Musk said that Space X intends to cast its own natural gas turbine blaze and veins. Do you think this announcement would be a fatal blow to the growth success of Halmet Aerospace? >> No, I do not. Now, it was a high multiple stock. I will tell you this, they hurt the stock, but that is one of the best companies out there. It is a faster recumbent. It's highly unlikely that it'll hurt. It's being viewed as the best way to play aerospace because all the others have so are so fraught with difficulty. I say hold on to it or buy some. Uh let's go to Thomas in New York. Thomas. >> Hi Jim. Thank you so much for taking my call. >> Of course. >> I I wanted to get your thoughts on AAI stock. My cost basis is 530 cent 6 cents per share with ille acquisition expected to close by >> that that one's merging with Lily so I'm not sure there's a lot of upside when I do a spec I want max upside and I'm not sure that will give you that kind of thing and that ladies and gentlemen INCLUSION OF THE LIGHTNING ROUND the lightning round is sponsored by Charles Schwab coming up. Kramer is taking on the data center deniers head on as he makes the case they'll create more jobs. Next, I love to see common sense from anyone in any government these days. And when we saw it in space, when Treasury Secretary Bessant addressed the problems created by the great data center buildout, I cheered. >> I think that the AI companies, whether it is the builders of the data centers, whether it is the labs themselves, have done a horrendous job, horrendous job of explaining themselves to the American people. And I think we need a big reset on this. They're they're going to have to take some of the blame and they are going to have to convince the American people that all the benefits will not acrue to a small group. >> Couldn't agree more. I've got to ask h how did we get to the point where the data center became so controversial? First and foremost, somehow the government's local, state, and federal seem totally oblivious to the buildoff for the better part of two years. Sure, it would be great if the data centers would operate like Newport, which sites its new steel mills in towns desperately need the work and integrates itself to the community before breaking ground. That's what should have been done. It's not too late to make a pivot. I listened to the governor of West Virginia speak to Kelly Evans today talking about how West Virginia's open for data center business. He pointed out that they can create good jobs and can lower electric bills statewide. It's bothering me why other politicians just can't do the same thing instead of thoughtlessly trying to hold all these projects. I've also felt that it would be natural for the data center companies to offer goodies to local communities like oil and gas companies do when they buy mineral rights from land owners. So I mentioned this stuff this morning to David Faber acknowledging Besson's comments and he said that I'm actually kind of missing the point. It's not just that the data centers are dislike for pushing up your electric bill or damaging the environment which I don't think they do but that's okay. They're re somewhere they're really disdained because they're seen as a proxy for AI. He thinks a lot of this is an aversion to AI about the backlash over job losses. Now, David's probably right, but you can't stop AI from blocking some data centers. These warehouses full of servers will eventually be built somewhere. They're just too profitable to stop. If they can't get built in America, believe me, Mexico is happy to to have them. Corto is open for business. But let's take the jobs issue here head- on. Jensen Wong, perpathetic CEO of Nvidia, which admittedly has the most to lose if the data center buildout gets stopped, has said that the AI revolution will initially cost more jobs than it creates, but eventually, like previous industrial revolutions, he says it will create far more jobs than it destroys. I'm with him. Of course, Jensen's one of the few AI luminaries who actually knows how to talk about this good public relations. Now, we get the Labor Department's employment report on Friday. So far, there really hasn't been much job loss from AI that we can tell. The data center buildout will take years, making it an endless source of solid blue collar jobs, which is why the AFL CIO and lots of other unions have been pushing back against the moratorum. At the same time, Nvidia has been saying that robots powered by AI will be able to do the dull, dirty, and dangerous jobs people don't want. And look, because of reduced birth rates and immigration restrictions, we'll likely start seeing negative population growth in a few years. We might need AI just to compensate for the ensuing labor shortage, especially when it comes to those jobs that people are poor. As for the AI agents themselves, if one person can handle say 100 agents, I think that rather than fire 99 people to take advantage of that agent, it's possible that businesses hire more people because those workers have become dramatically more productive. You want more people to handle more agents, get more done, whether it be administrative, selling, whatever. What's most important is what AI can do to spur small business creation. So far, AI has spurred a huge number of new businesses because these tools make it much easier to start a company. Right now, we don't have enough trained people who can use all the benefits of AI. So, we can't tell how many businesses will be created. But the ability to simulate how much it might cost to start one and how it could work and how much more money it could make. And they boy, they help you when you use these things. It can be easily calculated. Uh that increases the possibility of success, which is very good news given how small businesses so many of them fail. So, while we can be worried and we do need guard rails, stopping AI by blocking data centers, that's a fool's iron. They'll just move the data center somewhere else and in the end I think that would be negative for us. We need them. We need them done right and we need the jobs that they will ultimately create. I like to say there's always a bull market somewhere and I promise to find it just for you right here on Midmoney. I'm Jim Kramer and I'll 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.