Mad Money 07/27/26 | 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 Kramer through my friends. I'm just trying to make you some money. My job is not just entertain, but it's to teach you. So call me at 1800743 CBC. Tweet me at Jim McCra. A spectre is haunting this market. The spectre of the year 2000, and it's very hard to talk people out of selling the stocks that resemble the casualties of the dot era. Even if you think that this time it's very different. Fortunately, unlike 26 years ago, there are so many alternatives to invest in that you can easily steer clear of the data center and still make money. In fact, right now, this market's saying that you should stay as far away from the data center as possible because the whole AI thesis hinges on a few companies spending way more money than they maybe should while others continue to finance them. Today may have seemed sedate when you look at the averages. Dow gaining 263 points, SB inching up 2% NASDAQ dipping. But there were a ton of powerful crossurrens that dominated the action. We got to discuss them. Why? because they are worrisome. The market as a whole was strong enough today because oil's down big 9% in one session courtesy of the pause and bombing the move. You know what that does? It moves interest rates down which in turn moves stocks up. That's doubly important because this week we have a Fed meeting and the decline in oil helps make the case that inflation could be transitory. Now, there's a term we've heard many times before during the previous Fed Chief's regime, but whether it's because the price of Brent crude went to the triple digits last week or because our military is running out of interceptors to block Iranian missiles, so things may be too dicey now to keep bombing. The White House is turning down the temperature. That's clear. See, I bring this up because I I've been pushing you to wean yourselves away from traditional tech and pivot to technological companies that are outside the tech sector. Think J&J for medtech. Honeywell aerospace for airplane tech. They'll down more than 50 points from its recent highs because of oil. Traders know to sell aerospace when oil goes up. Even though these aerospace stocks don't trade on jet fuel as much. They're not like the airlines themselves. They trade on cash FLOW AND PRODUCTION GROWTH. MORE ON Honeywell aerospace later in the show, but it is emblematic. Still, while I prefer to talk about what's working, we got to talk about what's not. At least in most cases to see if it if or when we could it could start working again. This weekend we saw a blitz of announcements about the tie-ups, combinations of partnerships with tech. Numbers are huge. Big hundred billion dollar deals involving data centers and the chips that fill them. Stories about suppliers and builders making potentially billions and billions of dollars. Something that drove the complex. But unlike previous times when we've seen big money flowing from customers like the hyperscalers to suppliers like Nvidia, AMD, the customer stocks are they're actually hanging in there. They've been getting really hurt this time. The suppliers are getting pulverized. Something that happened on Friday, too. Most of these supplier stocks started higher this session, but then they finished dramatically lower. That's a bad pattern. It's very daunting. Why aren't the suppliers getting the love that they still that they had recently? Well, instead of the hate that they're getting now. Simple. Some of us have seen this movie before 26 years ago. Back then, the telco equipment suppliers were some of the largest companies in the market. We thought they owned the future. Initially, the suppliers made fortunes and their stocks were among the best performers in the market. But the customers made very little or no money until one day the customers of the suppliers ran out of money and investors crushed the stocks of the suppliers beyond all recognition. Once the customers couldn't pay and defaulted on the financing that they had, particularly from the makers of the equipment, the whole.com edifice collapsed. Huge caveat here. The supplier companies we are talking about now are much much stronger than back then. They've got fabulous balance sheets, but the stock sellers, they don't care. They can't stop equating the two periods because the customers are losing gob zero on the spending like they did back then. Now, you may think that Nvidia guaranteeing $250 billion worth of financing for OpenAI data centers as was reported today makes sense given that OpenAI is one of their big customers. After all, these chips are insanely expensive, right? If there were no history in these kinds of transactions, you think, well, why not? But there is history, boatloads of it, and it is very negative. What we learned in 2000 is that you don't lend to customers who buy your goods. They might default and your earnings get smashed. This weekend we learned of multi-billion dollar dollar deals where Nvidia uh actually makes it possible for the purchase to occur. If the buyer in this case Open AI can actually afford to pay for these ships, perhaps because it comes public, perhaps because chat GBT becomes insanely popular, perhaps there are whole new features we don't know about, then Nvidia's in perfect shape and Nvidia stock sellers will look insanely stupid. But if the chip bar can't pay, well, that's a different story. Isn't OpenAI money good? Why should we worry? Well, first, they haven't come public. Second, we don't know how whether they can. Second, they're known to be burning a lot of cash. Third, they aren't considered investment grade. That makes it much more dicey. The reverberations here are immense, people. There are so many companies counting on the data center for their earnings. All sorts of suppliers. If the market decides it doesn't want to fund any more data centers, not give more cash, and the companies themselves don't have the money or they don't get paid, then we're back in year 2000. Why does it resonate so easily? Because in the dotcom era, the companies that bought the goods didn't have enough money to pay for them. Instead, the companies that made the goods ended up on the hook because they provided what's known as vendor financing. And that could be the case right now. Back then, it became a giant game of dominoes and everyone got annihilated, especially investors in these companies. Could you have seen it coming? Yes. If you paid attention to the balance sheets of the buyers like OpenAI, when they got grotesque, you had to sell. There's a reason my hedge fund got out of the docom stocks about a week before they peaked. The balance sheets of those who were buying supplies, well, they were so bad that they had to rely on the suppliers before the goods. That's what could be happening now. And the market hates it or the stock of Nvidia would not have been down 10 points. It might have been up 10 points. Yes, down 10 points today. Notice I'm not saying Nvidia doesn't have the money to guarantee sales or to provide vendor financing. They do. I think Nvidia's balance sheet is among the best in the world. The company's an amazing investor, too. But I lived through 2000 and even the strongest became awful stocks. Took them decades to revisit their previous highs. The stock market is telling you what it thinks of Nvidia because of these kinds of transactions. Even as plenty of people, including me, acknowledging Nvidia is a one heck of a great company. So many of the buyers of Nvidia AI chips had tremendous balance sheets a year ago, and that's no longer the case. Now, some desperately need more money to finish their data center buildouts, and it might not be available. Others are losing their investment grade status. That's going to send their stocks lower. Now, let me tell you what sticks in my crawl. Back in 1999, I begged the big suppliers not to do this kind of stuff. I saw it in action. And I pulled out of the stocks. So, I cannot sit here and say, "Don't worry about it." Cuz I was worried then. I have to help you anticipate what sellers, stock sellers will do. It's not all muscle memory. By the way, my friend Michael Symbolist, my favorite strategist, JP Morgan, he just did an amazing piece last week that compared this moment to the dotcom era. His conclusion, they're too close for comfort. I have to agree. It doesn't matter if your balance she's perfect. They all started that way. It doesn't matter if you HAVE BOUNTIFUL SALES. THEY ALL STARTED that way. History is brutal. I hope Nvidia is isn't actually making these kinds of transactions. I wish they'd just stay conservative and buy back their own stock. I wish they hadn't given ammo to the short sellers. I wish they'd spend more time thinking about the dotcom collapse. I know they may end up on the hook for nothing. Maybe this time is different. That's what I'm wishing for. But investing isn't about wishing. It's about knowledge. No matter how smart they may be, and they are much smarter than I am. Maybe they never took part in 2000. Maybe they were doing something else. I saw the movie. Heck, I was in a movie. Bottom line, I don't want the sequel. Nvidia shouldn't make these guarantees, even if it has all the money in the world. Just history. That's all. Just history. We say Nvidia at the club, don't trade it because we believe that we will see these kinds of deals aren't worth it. But the big institutions are not going to listen and they will continue to sell the stock. Why? Because history is on their side. Let's take questions. Let's go to Oliver in Connecticut. Oliver, >> hey Jim, how are you? >> I am good. Oliver, how about you? >> I'm doing great. Uh my question today is about intel. It's a quick two-part question. >> Okay. Uh, I'm a big fan of Intel. They they had good quarterly earnings and I think they're doing a lot of good things to write the ship. Um, so my question is when do you think Intel will get the respect it deserves and where do you think it'll end up the year? >> Well, I think it was getting some respect. Remember, it's up 148%. It was at 142. Now it's down to 91. We are buying it pretty aggressively for the CNBC Investing Club. Why are we doing that? One, because CPUs are going to start being uh used a lot more than GPUs, which is what Nvidia makes. Two, because Lip Boutan, the CEO is making packaging. Cadence Design tonight reported an amazing quarter for packaging. And three, the world is short foundry space and Lip Boutan knows how to make Foundry Space. So, we are buyers of Intel. We think it doesn't relate to Nvidia. They are very different. Now, we're going to go to Jerry in Missouri. Jerry, thanks for taking my call. >> What's up? As a member of a club, I use the portfolio page often. When a position goes up and exceeds the club's target price, why isn't the target price a for us to start taking more profits? The stock I'm talking to today is Crowd Strike. >> Okay, look, we like Crowd Strike very much and that's just my bad. If we're not raising the the price targets as we should, uh if we do like the stock, then we just have to stay on top of things. can't do everything is we have a really an amazing group but we're a small group and we're going to keep trying to do well for you. Crowd Strike is an incredible stock. I know the stock was down today because Microsoft's doing some cyber security things. Let me tell you, Crowd Strike is part of this group that wants an open model. It's very positive. George Curts is probably now the foremost person in cyber security in the world. Own Crowd Strike. All right. Now people, I still say own Nvidia. Don't trade it. But history is no longer on their side if they do these kinds of transactions I'm talking about and I believe they know that maybe they're not so good teach money tonight. American Express is selling off at virtual earnings as expected. So is now the time to buy? I'm taking a look at the quarter. Then I've been recommending Honeywell for ages. But how's it stack up post breakup? I'm doing some of the parts and letting you know. And in my quest to find stories away from tech, I ventured out to CR's choir to get up and per really upfront personal look at American innovation like you wouldn't believe. Don't miss my explosive interview and 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 1 800743cnbc. Miss something? Head to madmoney.cnbc.com. There are some patterns that pop up over and over again during earning season. Certain stocks tend to sell well in response to even good numbers before bouncing a day or two later. Stocks like American Express, as I predicted last week on the show, on Friday morning, AMX reported a strong set of numbers with inline revenue and a healthy earning speed. But the stock had a negative reaction, plunging 4.3% on Friday. They don't bounce to jump nearly 3% because this is what almost always happens with the stock of American Express. Given that the stock still hasn't erased its post earnings losses, I'm going to walk you through this one because I think you're getting a terrific buying opportunity as you always seem to do after they report. Why? Let's talk numbers for the second quarter. Americans build business jump 9% year-over-year. Coming in that's a bit above expectations. While the revenue was a tiny bit light, it was still up 10% and the company delivered a 13cent earnings beat off a $4.40 basis. That's not easy. Even better American Express slightly raised it fullear forecast it revenues although the company opted to maintain its existing earnings outlook and I think that's why the stock really sold off. When you beat on earnings then don't raise your guidance. Wall Street sees that as a deacto number cut. I'm not sweating that because when you check under the hood as we're about to do there were a ton of positives. First, their build business was very strong, which tells you that America's best card holders haven't really stopped spending at all. In fact, it's US consumer services business is still accelerating, up 11% year-over-year. That strength was broad-based with goods and services spending up 11% year-over-year and travel and entertainment spending up 13%. That's kind of monumental monumental, right? When you think of an economy that some companies say is breaking down and people aren't traveling, well, that just says that's not true. But the most encouraging thing about the US consumer bill business numbers was the breakdown demographically with millennials spending up 14% and Gen Z spending up an incredible 40%. 40%. When you're looking at companies to invest in for the future, what do you need to do? You want to find companies that that have the younger demographic. American Express is killing it there. And remember that's lifetime. These people aren't going to leave American Express. Just go on and on. New member acquisitions remain all uh steady in this purported quarter. 3 million cards acquired. More important, 75% of global new accounts were acquired on fee paying products. Many of Amazon's higher tier cards which come in with annual fees. Card holders now pay a hefty fee of $895 per year for that platinum card, but they're happy to do it because it's got incredible rewards program. That $895 fee, it's a bargain relative to what you get back in points of goodies. At the same time, Amazon's credit me metrics, gez, I don't know, man. They still look fantastic despite broader amorphous fears about the state of the consumer. Their write off rate remains steady at 2% where, by the way, was more or less where it's been for at least the past five quarters. The 30-day delency RATE ACTUALLY TICKED DOWN TO 1.2%. In fact, thanks to strengthen those credit card quality numbers, AMX was able to have a $191 million reserve release coming back into the bottom line which contributed to the earnings people. So, nothing to worry about on the credit front. In the end, the only big negative here is that the fact that didn't raise his full earnings forecast, hence the cell phone on Friday. I think that's totally misguided though and clearly Wall Street started to agree or the stock wouldn't be bouncing so seriously today. See, during the conference call, CEO Steve Squiry went into great detail explaining why even though the company's outperforming its own expectations, it's choosing to invest in business. And that's mainly perks for card holders. And because of those investments, American Express can't raise its earnings guidance. After strong start to the year, Squirre says Amx has a choice. They can either use their better thanex expected earnings to buy back more shares or they could, and I quote, invest to grow the business further through the wide range of attractive growth opportunities we have across our businesses end quote. He decided to do the latter because he thinks that's how American Express can create the most value for you, a shareholder. Their latest quarter just saw a 36% return on equity. So, I think I think he's making the right call. So, one year ago, Squirre decided uh to improve. See, he decided he wanted to spend big. Okay. He wanted to improve AMX's flagship platinum cards in the US. He figured that they quickly see an uptick in customer engagement followed by higher fee revenue and stronger credit metrics because better rewards at the high end attract wealthier consumers. And hey, that's exactly what has happened. The investments made last year have driven accelerated spending and revenue growth. That's what we want to see. The platinum card portfolio that AMX invested in last year is now the fastest growing in their US consumer business. Good choice by Squiry. He went on to add some very thoughtful commentary about American Express members, how they find value from the cards. Here's how he puts it and I love this quote. In essence, a great premium value proposition is not just a product. It's a multifaceted relationship between the brand and the customer. This is what our membership model delivers and it is very difficult to replicate on a global scale. To build deep enduring relationships with our premium customers, we've leaned into adding benefits they value and where they spend like travel, which is why we continue to expand our lounge and luxury hotel networks. End quote. That's what we want. In fact, America Express just announced a new global partnership with All AOR. That's the parent company of 45 worldwide hotel chains including Fairmont and Sopotel in Europe. They've acquired The Fork, an online restaurant booking platform, which will add 50,000 restaurants across 11 European countries to AMX's dining network. For business cards, there's a new $300 annual statement credit for CH GPT. Oh, it doesn't hurt the AMX case that oil may be breaking down, making travel cheaper, of course. Long story short, halfway through the year, Market Express is doing better than expected to be at this point. but they didn't raise their earnings guidance because they're taking that excess income and reinvesting it into the business. The goal is to keep doing what's gotten them this far, offering better rewards to attract more customers. Screwy says that with this playbook, his business quote compounds earnings more durably and at a faster pace than in the past. End quote. and that quote, "Compared to its historical performance, MXL has more momentum in both the top and bottom lines, a more premium fee paying customer base with stronger loyalty, less credit risk, and more younger customers who represent greater lifetime value." Yes, that's the point. Sounds great to me. Here's the bottom line. Based on Steve's Query's track record, I think he deserves the benefit of the doubt here, which is why I'd be a buyer. Especially American Express is down more than 13% from its all-time high set late last year. I think it's a terrific opportunity and one of the bestrun companies on Earth. Bed Money's back after the break. >> Coming up, Kramer's checking in on the status of Honeywell Technologies and Honeywell Aerospace to see if now is the time to buy. Next, About one month ago, Honeywell finally broke itself up into Honeywell Technologies for building controls and industrial automation and Honeywell Aerospace where they make all sorts of components for the commercial aerospace market. I've been recommending Honeywell for ages in part well because of I'm a big believer in backups. I thought we was much more than the uh what the thing is trading at from the beginning. Hey, I don't think the company's getting enough credit for the businesses buried inside of it. It's called the sum of the parts. They're worth more because they didn't belong under the same roof, SOTP. Sum of the parts. Wall Street prefers smaller, more bite-sized companies, and that's been true for decades. It's true now. Honeywell started breaking stuff up last fall when it spun off its special chemicals business as Solstice Advanced Materials at the end of October. Initially, there was a big win with Solstice jumping from below $50 on the first day to the 90s a few just a few months later. Then the company announced a big merger with Element Solutions and since then the stock's fallen back to 60 and change. I still think it's a buy, but it has not been smooth sailing. What's more frustrating is that Honeywell Technologies and Honeyball Aerospace haven't exactly been great performers since they separated at the end of June. Honeywell Aerospace shot hired first, but the excitement quickly faded. Musaki had its first official day of trading June 29th at $220. Then it made its high as $266 and change about a week later, but it's since come all the way back down to $210 for some really ugly trading over the past couple of weeks. Tough aerospace stocks when the price of oil soarses, although now it's coming right back down. Meanwhile, Honeywell Technologies had the exact opposite experience. The stock was initially I should say I was going to say hated, but let's go with unloved. Then July turned and the stock turned with it. Honeywell Technologies reported a strong quarter last weekend. The stock just bolded jumping to $245 and change as of today. On a standalone basis, Honeywell Technologies earned a $1.95 per share. Wall Street was only looking for a buck 83. That's an increase of 10% year-over-year. Sales came in higher than expected too, thanks to strength in both building automation and industrial automation, both divisions. Margins also got a real boost from cost cuts and product key improvement, and most people did not expect that to happen so quickly. Then there's the generous order book. Organic orders were up 16%, short cycle orders growing at a double digit pace across every segment of business. Total backlog increased 9% approximately $20 billion. Another surprise when Honeywell Technology started trading independently. Investors looked at this thing as a slow growth collection of leftover industrial assets. Some even said cats and dogs. Instead, the company delivered accelerating orders, expanding margins, strong cost discipline, and a growing backlog that allowed management to raise their fullear forecasts across the board. And these were substantial number bumps. Now, it looks like Honeyball Technologies can truly hit its long-term financial targets, which previously seemed like they were on the optimistic side. And if it can hit those targets, it deserves to trade at a higher price journeys, moldable, like its higher quality peers in the industrial space. That's why we stuck with it for the charitable trust. Although it's much harder for me to recommend at these levels now, the stock's had a big run. It's a great example of the kind of tech I like best right now, though. All right. Now, how about the more complicated Honeywell Aerospace Quizzical? Even though the stock got slammed this month, the aerospace business was the crown jewel of the old Honey Well, and that hasn't changed. The company makes all sorts of high-tech components for commercial aviation, business jets, defense, space, even helicopters. This is a big hard to replicate aerospace franchise. The portfolio is divided fairly even among three businesses. Electronic solutions represents about 39% of sales. Engines and power systems represent 31% and control systems accounts for remaining 30%. More than 75% of commercial flights begin with one of Honeywell's engine start systems. Once you have such an enormous installed base, it means you get many years of service revenue. These guys have enormous backlogs at both Boeing and Airbus, which are pretty much fully booked for the the next decade. Their defense and space business gives them exposure to higher military budgets, especially missile programs and fleet modernization spending. That's something we desperately need. You know that after the conflict with Iran at last month's investor day, management laid out the long-term case for owning the stock through 2030. Honeyville Aerospace expects to generate organic sales growth of 6 to8% annually and targeting more than $6.5 billion of earnings before interest and taxes with earnings growing faster than revenue. That's right. Those targets look achievable to me and there may be actually room for upside. I think commercial aircraft deliveries should continue increasing through the end of the decade. The aftermarket should benefit from growing air traffic and the fact that old planes are being kept in service longer. Defense spending remains strong. Honeywell also has pricing power because so many of his products are missionritical, soul source or deeply integrated into an aircraft. I've known this for years. Most aren't for other guys. The biggest question is execution. Honeywell Aerospace has more demand than it can handle. Well, that's supposed to be applause. Where there's a problem, it's getting enough parts and hitting its deadlines. But I think that should be easier now that this is an independent company. They're now aiming to stabilize production by managing the supply chain as one integrated system. The analysts don't seem to think that's possible. It is. Now, Honeywell Aerospace reports its first standalone quarter after the close August 5th. The first report could contain some noise because it won't be apples to apples with the aerospace numbers from the old Honeywell. But I think the stock's weakness heading to the earnings. That's the real opportunity. The darn thing trades at roughly 21 times next year's earnings estimates. By contrast, G aerospace, which I know everybody loves, it trades at 40 times earnings. RTX PR Pratt Whitney and Collins Aerospace, good competitor, sells for 28 times earnings. Honeywell Aerospace is a great company. Doesn't deserve to trade a discount to RTX. That's why my charitable trust has been using this pullback, which I have to tell you is very surprising to add to their position because it's just too going cheap versus the the rest of the stocks in his group. In the end, Honeywell Technologies is finally starting to get credit for the strength of its business. But Honeywell Aerospace, uh-uh, it's seen a stock fall by the wayside thanks to the recent jump in oil prices. Let me give you the bottom line here in this very complicated story. See, I'm still a huge believer in the great Honeywell breakup. We know Honeywell Technologies is doing just fine. And now you're getting an incredible buying opportunity in Honeywell Aerospace. Honestly, I'm hoping the ladder actually gets slam on reports next week. Why? So we can buy some more on this. I know we at the CBC Investing Club haven't been able to get enough stock in. If it goes lower, we will be certainly buying beside you. I need questions. I'm going to Kevin in Kentucky. Kevin, >> hey Jim, I've been watching for 20 years. Thanks for all that you do. >> Thank you. >> My question is around space. Thank you. My question is around SpaceX. I bought in at 150 and it has uh gone down. I bought some more and I wanted to get your thoughts on where >> Well, this is this is complicated and I'm glad you asked me about it. We're spending a lot of time thinking about ourselves. What you have to understand is they're long long-term believers in anything Elon Musk does. So if I tell you to sell it and then get back in lower, you're going to say, "Well, why did you do that when Elon gets it right?" So my take is we're not going to buy it for the trust, but it's Elon Musk and if you believe in Elon, you believe in space exploration tech. Is that a punt? No. That is exactly how you should look at that company. I'm still a great believer in the great Honeywell breakup and I think you can get in at a great price here. Maybe you wait for after the quarter coming up soon. Much more made money ahead. Is the data center growth story finally facing some cracks in his facade? Like I told you in the show, I'm going to survey the space, give you my advice for staying a float and it's important. It's personal fans. Then I'm taking all your calls. Rapid fires tonight. The lightning round. But first, coming to you from CR. Don't go anywhere. It's going to be a blast. Earlier today, I had a chance to visit CR. That's the largest producer of aggregates, rocks in North America at their Mount Hope Quarry in Northern New Jersey. We're talking the literal basic building blocks of the economy here, rocks, gravel. This stock's been a great long-term performer, up over 80% since it listed on the New York Stock Exchange nearly three years ago, but it's been hard hit this year, down nearly 18% thanks to higher oil prices and higher interest rates that have weighed on the entire building materials cohort. As you know, the company reports on the 30th of this month. But we wanted to take a longer term view on the company's business ahead of the report. And that's why I wanted to check in with Jim Mturn. He's the CEO of CR. Take a look. >> Jim, this is not my usual backdrop. Where the heck are we? >> Welcome, Jim, to our Mount Hope facility here in New Jersey. >> Thank you. >> Uh this is uh we have about 800 aggregate facilities in the US. This actually ranks three in terms of size. So, >> and that's aggregate being rock. >> That's rock. We produce about 4 million tons a year. This is one of the closest quaries to Manhattan and it's a hugely part of our network. >> At the same time, I understand it's not new. It's not new. This uh history goes back to the uh early 18th century. In fact, this was an iron ore facility and actually made some of the uh you know the blast for Washington's Continental Army. It was an IR facility right up to 1960. >> Okay. >> And then became a quarry in 1960 and became part of CR in around 2001. >> Now, uh if we were to look around in in Manhattan, how much would we think find out is from right here? >> A lot of it, Jim. I'd say well over half in Manhattan has been built by rock coming out of this quarry and some of the network and you think some of the real iconic projects the Mario Koma bridge laguardier Hudson Yards the the reinforcement the lower east side it's a rock coming out of here and it's network of quaries which is supplying all that material >> now one of the things that intrigues me about your business is here we are something that was used in the 18th century why hasn't it run out I mean we're going to blow something up today how come there's still something to blow up >> we do about 4 million tons here a year and we have still 120 years reserves left. So, this is a 1,000 acre site. It's a big facility. We're going to have a chance to see it shortly, but yeah, it's a lot of reserves here, >> but you are always uh replenishing or getting bigger. You've got a huge acquisition on the table and the Sarosa. Uh I think some people don't really understand it or they might say, listen, why do you keep buying things? But actually, your history is filled with acquisitions that have worked. >> Yeah, we we have we're the number one producer of aggregates in the US. We do about 230 million tons a year. We own about 24 billion tons of rock in the US. Now the AR coasta deal for us, it was straight down the middle of the fairway. It is uh 35 million tons of eggs and bringing us into two new high growth markets in Dallas and Phoenix which we weren't in >> arguably two of what the top five markets in the country. >> Yeah, certainly two of the top probably 10 anyhow in terms of growing in terms of MSA. So for us particularly significant. Now also Arosa had a secondary business which is their in their energy transmission. It's hugely complimentary to what we do today with the large utility companies. >> Now those are those things we see on the side of the road. They look like big men. >> They are that's exactly them and it's uh obviously in an area with the whole uh development of the energy transmission infrastructure which is a high growth area right now. >> Okay. So we hear aggregates we think rocks therefore no value added therefore can't anybody in this business. But that's precisely wrong isn't it? It is absolutely and that maybe you know for us we operate we call connected portfolio so >> connected portfolio >> yeah we just don't produce aggregates so we here we take those aggregates and we convert it into ashvalt here behind us we do about a million tons a year from the mount facility we with that ashwalt we pave roads we're the largest paver of roads in the US now you take the scale and the size of the US interstate program at the whole highway network we pave as much as the next five competitors together we've also then take that stone, we convert it into water infrastructure and energy infrastructure. And it's really that connected nature which drives the consistency of our performance year in year out. >> Now, we all know that we're in the per the golden age of capital investment. We have reshoring. We have giant data centers. We have buildings going up. For instance, in Ohio that where there was no infrastructure at all, where it's just prairie fields. When we want to build something, we need roads. We need aggregate for them. You're probably there given your dispersal in the country for a lot of those businesses. >> We are here now. We have about 2,000 locations. I think across the US we 50,000 employees. So we're actually within 25 miles of almost 90% of every data center that's been built in the US today. You mentioned Ohio. We're on we're on one of the very big semiconductor plants up in in Ohio in the last number of years. And that's again strikes to the core what we are doing. We're not just supplying the aggregates. We're often the very first person on site putting in the subterranean energy and water infrastructure. Then we come in with our cementitious product to stabilize the site and it's only then we bring in our aggregates or stone or our rock. Then we have our concrete. So these are multi-year projects for us. And >> well let me tell you triggered a word that I know you can't leave uh by me when you mention it water infrastructure. Many people in the country think that a data center makes it ruins the water. I've done a lot of work on this and I have told people over and over again that's not the case but I'm just some TV guy. Will you explain because you're at the heart of it. It doesn't mean water despoilation. No, I mean for us in terms of water infrastructure, we believe leading position of water infrastructure primarily in the uh uh collection and the early stage quality treatment in water right now data centers consume a lot of water you know from that perspective but for us it's hugely complimentary to what we do Jim that perspective but I think listen I think we can all agree right that you know the investment that's required in US infrastructure you can't build a 21st century economy with 20 with a 20th century uh you know infrastructure so there's very significant investment needed in transport, in water, and indeed energy infrastructure. >> Now, um you talked about roads. A lot of people get worried about rock companies. They seem to be so hit or miss because of they're connected with housing. Now, we know that housing is very interest. What we know also is that road building is not interest rate sensitive and the the nature of the repetitive business that is asphalt and how roads must be maintain could be a secret weapon for you. >> Absolutely. And that's exactly why we got into it maybe, you know, 40 years ago, right? That that repeatability, the predictability, particularly up here in New Jersey. You think of the severity of the winters, you know it well, Jim. >> Sure. >> The freeze to the roads get torn up by the winter. So, it's almost a repeatable recurring almost annuity-like income stream in terms of repaving the roads. Now, for us, you mentioned new build rails. That's the single smallest segment we have in CR and US. So you know we're we are way more dependent on publicly funded infrastructure and indeed private funded infrastructure. >> Now uh this acquisition again uh that helped you uh in areas that that are really the the highest growth but does that necessarily translate into you've done a lot of acquisitions into profits for for your company? >> It does. Yeah. I mean our coast deal as I said that we're super excited about it. Uh you know we've done about 1,200 acquisitions. That's one every two two weeks for over 50 years to put it in context right so you know and a lot of it stems from places like this you take till here in New Jersey you know the president who runs Tilcon he has a mandate to go out and grow the business through M&A we tried to foster that entrepreneurial spirit at a local level so last year is a very good example we did 38 deals in 25 30 of them bubbled up from locations like this you know if you're a family business selling your business we don't change the name we have a tremendous record of integrating and family members into our own senior leadership team and that's very significant that gets a lot of exclusive looks. >> There's still quaries that are independent around the country when you see these big holes that might be owned by you one day. >> In fact, only Yeah. The top 10 owners of rock only account for about 30% of total production. So, it's still a very fragmented industry across the US. >> Well, you know what I think we ought to do? I mean, I think that we should blow some stuff up so you can tell us what happens when we do. Let's go have a blast. Looking forward to it. >> Thank you, Jim Mur. CR CEO. >> What we're going to do here, Jim, when we give you the 10-second countdown, you're going to turn this key here. >> You're kidding me. >> Okay. >> All right. All right. Yeah. >> And then you're going to hit the on button. >> All right. >> And you're going to say, >> "No, don't press it now. It'll go. >> Fire in the hole." >> All right. Here we go. >> It's my second siren. >> That's one minute. >> It's tired. It's turned. >> Fire in the hole. Coming up, he's the fastest mind on Wall Street, so we're putting him to the test with your help. Bring on the lightning round next. It is time. It's time for the light round everybody. Of course, you say the name start tell by myself. So just know the course will stop question time. My staff prepares the graphics to the fly. When you hear this sound then the lightning round is over. Are you ready? Ski light. Let's go to Rachel in New York. Rachel. >> Hi Jib. Love your show. Thank you. >> My question hey my question is about cerebrros tickler symbol CBRS. So last week, Cloud Strike chose Cerebras to power their real time falcon AI detection. When George Kurt vouches for your infrance speed, isn't it time to stop treating Cerebras like a post IPO trade? And why? >> I think that it's certainly reasonable to say, you know, it's down so much the and the PO's not that high. It's just that I don't want to buy a lot of tech. The only one that I'm currently buying is Intel, which I think has better prospects than Cerebras. But I like your logic. Let's go to Bill and Masters. Bill >> Jimmy, I just want to do an honorable uh me uh mention about Regina Gilligan. When uh when you invited me down to the monthly meeting with the Jensen Wong, the CEO of Nvidia, I never imagined how hard the show was produced. Nothing but respect for you and her. Jim, I'm interested in a uh regional bank. First Horizon, please sir. >> Well, first I'm going to tell you the truth. This show doesn't work without her. Okay? And that's what you saw. doesn't work without her. Now, to your question, first Horizon, I think it's a terrific stock, very inexpensive, and I think you should buy it. Let's go to Maryanne in New York. Maryanne, >> hi Jim. I'd love to get your thoughts. Hi, how are you? >> Good. How are you doing? >> Good. Good. Um, I'd love to get your thoughts on Nike. >> I think Nike is okay. I mean, the problem with Nike is it's trying so hard to get things turned around, but there's a lot of competition. I think it's just okay. I we sold it for the travel test cuz it's just okay and we don't want to own just okay. Let's go to Will in Colorado. Will >> hey Jim I need a bottle of your Better House Mscow with all this market volatility now. Um I got to give that a try sometime. But want to know your thoughts about Keer Insurance KN&P. >> Um well first I think you should try the you should try the post for tequila if you want. But at Will and Caroline's wedding it was dynamite this week. Yes. My steps up fantastic. I need to say to you right now that Keer is not a stock I want to own. I don't want to own that 4% yield. I need growth. I don't have growth, so I'm not going to stick with it. But I will stick with Kramer. The Lightning Round is sponsored by Charles Schwab. Coming up, Kramer's issuing a dire warning about data center stocks. You would be wise to listen next. Hey Jim, your mission has been very successful in our family. >> I listen to your show multiple times a week for investing knowledge. >> I just want to say thanks. I love your show. Thanks for always looking out for the little guy. >> A huge thank you for all you've done to make me a better investor. >> I got to call Kramer because I can't make a move without this guy. I want to make people better investors. If they make money, fantastic. Let's go to work. Hey, how much of your business is a data center? Anytime I met a CEO, pretty much any CEO except for the obvious service companies, I always wanted to know the percentage of their business that flowed back to the greatest building boom, the golden age, the construction of these multi-billion dollar behemoths that generate all that compute. For a long time, it was an unmitigated positive. That's why I asked the question. These days though, I have to know how much of a company's business is data center. Not because of the growth, but because of the need to diversify away from the data center. So many companies are involved in building these projects that if something goes arai some customer maybe a hyperscaler decides it doesn't want to keep spending or can't afford to keep spending then that company's stock could be in tatters. Today I asked the CEO of a rock company how much data center business he has. He said in a small amount it helps but his stones primarily end up in roads. You can't let the roads run down. We all know pothole theory. You need CR to for the stones to resurface roads so the potholes DON'T BREAK YOUR CAR. YES, it provides the rock can be at the base of a data center, but it rock could be at the base of anything. Bridges, office complexes, semiconductor foundaries. They diversify because they're smart. At this moment, we weren't smart. Look, I run a charitable trust. We own positions in data center place where the pain is immense right now. But we've taken profits in so many of them that I sometimes feel like we're playing with the house's money. Other stocks we own like Apple are beneficiaries of all this computing because they never spent big on AI. They're reportedly paying Google a billion dollars to use their AI model, just a fraction of the 20 billion or so that Google pays to them as to be the default search engine on their iPhones. Software stocks are gaining steam again because they are more at oriented to well AI and their stocks have come down so much. I told people this morning that once again that we want tech, but not the kind of big tech investors used to buy. We want materials tech and we want science tech. I saw a guest on the show earlier today that sent a huge amount of the market is data center but there's not much else to buy. I say come on there's you just got to hunt a little for it. That doesn't mean it's a terrific market but it's a market of stocks and there's some that's going to go higher. Look at the Dow today. I talk about this endlessly and how to make money in any market because the kind of market well that we have is exactly what I was writing for. Now if you own terrific tech stocks and you're not on margin, you could be fine assuming you have can handle a little pain. If you're on margin get off it. I no longer feel that you're going to get out alive. If you're speculating, I know many of you are, then make it so you're speculating only one or two stocks depending on the size of your portfolio. Listen, when I see what's happening in tech, I can't help think of what happened when I brought a dot public company public in 1999. So many dot companies, adjacent companies were so confident that they do well in that environment. They were paying for things with basically free money or they thought it was. They were giving vendor financing so everybody at any customer could afford to keep paying for the product. Similar to what we're hearing right now with some of the big dogs. It all seemed terrific. Then in March of 2000, the market turn on a dime. By April was obvious that the companies that look like great credit risk were going to go under more than 330 of them did. Could it happen again? I don't know. I say maybe. But it won't be growth health companies or growth materials companies or growth retailers. These are easy to find. If you can't find any, join the CBC investing club. And if you are borrowing money to buy something related to the data center, okay, here's what you're going to do tomorrow morning, 9:30 a.m. Sell it no matter what. You will not regret it. Like I said, there's always a bull market somewhere. I promise to find it just for you right here on Money. I'm Jim Kramer. See you tomorrow. 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