Mad Money 08/03/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cray America. Other people want to make friends. I'm just trying to make you a little bit of money. My job is not just to entertain, but to teach. So call me 1800743 CBC or tweet me at Jim Kramer. The tech sector has found its savior and his name is Andy Jasse, the CEO of Amazon. Last week on his comp school, he patiently explained the economics of the data center and how patient shareholders could be rewarded with a huge return. One that could happen sooner than people think. See, until Jasse spoke, the market seemed highly skeptical of how these mega cap tech companies were spending their money. Because of him, I don't think that's anymore the case, which is why we could roar today with the Dow gaining 693 points as be jumping 1.4% in the NASDAQ poll voting 2.13%. Regular viewers of this show or anyone in the CBC Investing Club would know that I've been waiting months for Amazon to give us line of sight into something that can justify why they're spending so much money building all these data centers. Amazon's a large position in my chapel trust. So, I want to know if there's really a pot of gold at the end of the rainbow. I think I finally got through to them. As Jasse put it, quote, "At this level of spend and higher, we have clear line of sight to strong financial returns." End quote. All the money he's putting toward the data center may not be even enough to capitalize on the opportunity, even if the astronomical amount of 220 billion dollars in capital expenditures, up from 200 billion previously. Jasse says, quote, "We will not have enough capacity to meet all the demand we have in 2026." And I believe this dynamic will also be true in 2027, too. In fact, the demand we already have for 2028 is striking. >> House of Pleasure. >> Holy cow, that word striking changed a lot of people's minds as did his statement that Amazon Web Services could be a trillion dollar business now that it's augmented by AI. Trillion dollars. I know that many investors have been befuddled by Amazon's seemingly reckless decision to spend itself into having negative cash flow. But you have to remember that this is not the first time Jassis's had to spend more than Amazon took in initially in order to hit it big. Before placing founder Jeff Bezos's CEO in 2021, Jasse led the creation of Amazon Web Services, their cloud infrastructure division that's so lucrative, the cloud unit has now become Amazon's most profitable business, far surpassing Amazon Prime. Jasse thinks that the battle for returns from AI will come faster than the returns from the web services business did. Amazing. We sometimes forget how many years Amazon spent losing money in order to achieve its dominant position. Jasse knows from experience that Amazon has to go out on a limb periodically to keep the ground. This is the limb that must be revisited. I found it refreshing to hear a breakdown of where the AI spending goes with Jasse explaining again patiently that there are two major investments in a data center. The first is the construction of the data center building and the second is the compute which consists of servers and networking gear that go under the roof. Here's how he put it. Quote, once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30 plus years without having to spend that startup capital again. End quote. Apparently, it takes a little less than 3 years to break even on the investment in service and networking gear and then it's pure profit for another two to three years. Then they get to do the same cycle another four or five times. No wonder the hyperscalers are spending like crazy. That is a terrific investment. They'd be nuts not to do it. That's how I felt after this call. It was Jasse's calm, thoughtful presentation that allowed him to raise his capex budget 200 billion to 220 billion to to 220 billion a and still have Amazon stock soar to its biggest one-day gain in over a decade. Even though he raised the capex 20 billion, the stock jumped another 12 points and change again today. and now has joined the rarified $3 trillion club along with Nvidia, Alphabet, Apple, and Microsoft. Now, I want you to contrast Amazon's commentary with Google parent Alphabet. Back on July 22nd, Alphabet raised his capex guidance by a similar amount or up to $15 billion to a range of 195 to 205 billion. In response, the stock had its third worst day in the past two years. Despite liking the company very much, I made clear to club members that I was disappointed in Alphabet's conference call. They they simply didn't explain why they'd be willing to jeopardize their once pristine balance sheet on AI. Now, do not get me wrong. I was indeed blown away blown away by the 82% growth in Google's cloud business and said as much last week to you after I interviewed Thomas Curry and who runs that business, but they didn't hold your hand on the cops call like Amazon. No, maybe they didn't think it was their job. Maybe it isn't their job, but boy, I sure needed it. A descent into negative free cash flow is something that needs to be explained in depth, people. But Alpha was almost glib about it. I believe the same numbers explained differently would have sent that stock higher, not lower. In the end though, Amazon came to the rescue. Annie Jassy's calm commentary was a rising tide and it lifted all boats, including Alpha with a stock that's now trading above where it was when the company did its big fund raise not that long ago at $355 a share. It closed up $17 today. At the same time, Microsoft deserves a a lot of credit for reporting a blowout quarter last Wednesday night. Not only was Microsoft free cash flow positive despite it massive spending, they're doing much better on the front end, integrating their co-pilot AI assistant into the mix. I did not know this. Plus, Microsoft's Azure cloud business like Google Cloud and Amazon Web Services is totally on fire. The stock has continued to send pretty much in a straight line. Glad we held on for the travel trust even when Wall Street was highly skeptical. That stock closed up almost $23. Ah, the toughest one to follow. My former favorite. This is hard to swallow this one. Get this. Meta Meta the master spend explanation here was the weakest. In fact, it was non-existent. Meta is participating in the huge data center buildout, but it is no cloud service business to help monetize that investment. There have been chatter that the company might offer a web service business, but it seems like CEO Mark Zuckerberg wasn't sure whether Meta should use the massive compute it's building for itself or rent it out to others. Now, I was shocked. I was disappointed. I was disappointed that Meta didn't seem to have a plan. I came into the conference call expecting great things, including some projections of how quickly they could recoup their costs. I got none. Stocks beat down told me that I was not alone. I guess you can't make up the tens of billions lost just by selling souped-up ray bands. Still, Meta also benefited from the Amazon halo and the stock rallied more than $33 or 6% today. Not all is forgiven, though. It's still $50 below, a little bit more where it was just a couple weeks ago. But you never know. Maybe Meta will hear the thunder. Maybe they reveal a strategy of its own in the not too distant future. One more beneficiary, even as Amazon makes its own chips for the data center. It did mention his partnership with Nvidia that shattered that there's very strong demand for Nvidia chips. I I didn't know that was revoly led the stock of the biggest company in the world to an almost $6 gain or 2.93%. And that puts it back above the $5 trillion market cap level. Apple itself. Well, these hyperscalers have bid up the price of some of the most common chips to heights that Apple said will hurt sales going forward, but that's a bigger discussion than I can go over here. And it's one that I think actually could keep a lid on Apple stock for some time unless a new source of chips gets revealed that I can't think of. The bottom line, thanks to Amazon, and yes, to a lesser extent, Microsoft, the AI data center trade is back on because we finally know how these investments will actually help the hyperscalers make money. For me, it's in Jasse we trust, and we should thank him for explaining why spending hundreds of billions of dollars may be a pittance versus what shareholders can make holding on to his stock and perhaps the others, too. Let's go to Robert in New York. Robert, >> hey Jim, nice to thank you. Thank you for taking my call. I'm going about into it. I'm losing about 50% in my IRA, so I haven't sold it. And I'm just wondering, the fundamentals seem good to me. Uh so I don't know why the stock is down and also why it hasn't been a takeover candidate. >> Okay. Well, I don't know about takeover candidate but but when Sasson Gdari came on the show I thought he made a very good case that there many things that are going well. People feel somehow that AI is going to become the way that people do their taxes. I am with him at this at this price at $318. I think this stock is going to rally. I think there's been a major short rate against this company. A lot of people saying negative things. I can't prove the negatives. I think you're right. I think Robert from New York is smarter than all these hot shot hedge funds tell me in two it's going to zero. Let's go to Roger in Florida please. Roger. >> Hi Jim. Love your show. Ask you about >> need to ask you about Oracle please for the next 24 months or so. >> Okay. All right. >> I I have a good position on it. I bought it at a low price and I'm still holding on to it. So should I sell? I have a a guy who who writes with me, Matt Horween, and we were talking discussing this this weekend. He's been my uh colleague for 25 years, and we both think that perhaps Oracle is bottom. Now, I don't want to go out on him and say it definitely is bottom because if something happens and people replay the tape over and over again, the stock's better. I think it does matter. I I think that you should hold on to it. I don't believe that their investment grade uh right now I their credit's still very good. And I know this, like many other stocks, have been beaten down and perhaps overly beaten down. I think the stock can head higher. All right, today Amazon and Microsoft turned the AI data center trade back on. Let's see if it can keep running. And this is all just a carryover from last week. Well, made money tonight. Next power has transformed its solar business as it grows its data center pipeline. But has that hurt or helped the stock lately? I'm checking in on the sunny side of the things with the CEO who's going to be on the show for the first time in a little bit. Then July was a rough month for stocks. So what can we learn from the must action? I'm taking a look at the winners and the losers. And I'm sitting down with the CEO of one of the most surprising turnaround stories of our era. And that's Pney Bose. 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 1800743 CNNBC. Miss something, head to madmoney.cnbc.com. Let's talk about Nex Power, the world's leading solar tracker company. Now you might remember them as Nex Tracker from the previous appearances. Their hardware and software let solar panels follow the sun, making them much more efficient. Lately, they've moved into electrical systems, inverters, battery storage, and all sorts of solutions to help customers generate and deliver consistent electricity. This stock's been a terrific long-term performer, but it's down almost 24% since the end of June because a lot of these new businesses are connected to the data center, which until Amazon's conference call had fallen out of favor. Last week, Nexpar reported a mixed positive quarter with inline revenue, a 15-cent earnings beat off a dollar5 basis. management raised the low end of their fullear forecast but left the high end unchanged. They do have a ton of new business though. Earlier today, we checked in with Dan Sugar. He's the founder and CEO of Nex Power to get a better read on the situation. Take a look. Dan, it's been way too long. Many things have changed, including the name of the company. If you can just give us some of the narrative of what's changed, I think people will understand why I'm so excited to have you back on. Well, Jim, thanks for having us back on the program. You had us on a few years ago. We had it was shortly after our IPO. Our backlog was only about two billion. Today, it's well over 5.5 billion. What we've done is we've changed the name and the focus on the company from Next Tracker where we had two products a few years ago to Next Power and we're basically doing everything in a solar and battery power plant except making the solar panel. And so that's really helped us satisfy global demand where solar has been the dominant form of new power added to grids around the world. I think it's important to point out it's in the news today. You you're not in the commodity stuff. The actual panels is not where you want to be because it doesn't have enough intellectual property. One by one, you have answered what your clients have wanted and it has worked. Even as some of the analysts might be afraid that you've done too many acquisitions, it's something you're quite good at. Well, you know, we have a proven uh track record of acquiring talent, intellectual property, and then scaling those businesses and generating profit. The first acquisition we did way back was a machine learning company, and we created a whole software business called True Capture. And that's helped these solar power plants generate that much more energy proven. The other acquisitions we've done over the last few years are already generating revenue profit for the company. What's really the big latest thing, Jim, is we've gone from being a solar focused company to now having battery storage and power electronics. So we're making these critical DC to AC inverters. We're doing batteries. And what that's done is solar's really transitioned from an intermittent resource to a firm resource and something that is actually helping uh varying loads like data centers stay online reliably without waiting for long-term grid expansions. >> And I'm glad you mentioned data center. I know everyone's focused on it, maybe too focused on it, but if you can be base load or if you can be less intermittent as you said, you're a terrific backup to whatever say natural gas. Um because people want backup to be solar. We don't want it to be diesel. We want something clean. And I think there's a lot of forgetfulness about clean energy when it comes to the data center as if it doesn't matter anymore. Well, Jim, uh solar is a lot more than clean. Yes, it's clean, but it's also lower cost, available now, and much lower risk than anything that uh uses a fossil fuel or uranium. And let me explain what's happening right now. We just closed two weeks ago a battery storage company called Prevalon. We're in the middle of fulfilling a tier one data center where there's over 1.3 gawatts of power that's connected right up front of where the data center is. And solar and batteries can do things that gas can't. Gas is not fast enough to follow these data center loads that change really quickly. A battery with a modern power electronics is much more responsive and can work in conjunction with a limited grid capacity to help these data centers and other critical loads stay online. And people want it now. They don't want to wait four or 5 years. And so what we're doing is generating clean energy, yes, at lower risk and lower cost. Yes. But it's also available now. Now, I just want to back up for a second. If you look at let's start with the United States this year to date the first two quarters of this year solar and battery delivered 91% of the new power generation capacity brought online because of these merits. Next power we're also serving another 50 countries around the world and we're seeing solar and battery storage being the largest source of new power in most places around the world. So it it's we're really checking all the boxes and the clean attribute is great. People want clean air and clean water, but it's lower cost, available now, scaling, and lower risk than any other way to generate power. Well, when I was on your call, what I was astonished by, I thought that battery life I think is 2 hours, but you're talking about six, maybe going to even longer, which then suddenly creates a level of practicality that I think most people weren't aware of. Yeah, I want to give you a sense of scale. This is not some science experiment. Okay, so our company, Nex Power, first of all, let's just take stock. We've delivered over 160 gawatt. That's more than the peak load of Texas, which is 90 gawatt, and California, which is 40 gawatt combined. So, a company we founded for a few million dollars 12 years ago, has done more than California and Texas combined. Now, what hasn't happened in the last few years in Texas and California, the two largest grids in the country, you haven't heard about blackouts or brownouts or powers going out. Why is that? It's because batteries are at huge scale in Texas, California, and and increasingly around the world. There's over u 15 gawatt of batteries operating in Texas, California. And that's really helping keep the lights on. So what's happening the lowcost excess solar power during the day is charging the batteries and those batteries are being discharged well into the evening. Batteries a few years ago were 1 hour then they went to 2 hour then 4 hour. Now we're seeing 6 hours and 8 hours. And so now you've got a very reliable system that's much more responsive than a uh a rotating machine to generate power to the grid. And so I really think I mean the use cases now uh are growing exponentially because who would have thought you know these this whole data center thing would be such a major uh consumer of energy in the grid and and and driving so much uh demand growth. So I think we're going to see increasing use cases for uh storage battery storage uh powered by lowcost renewables like solar. >> All right. Well, Dan, we're going to have to wrap things up, but you were a visionary when you said, "Who thought this?" All I know is when you're on last, you said our grid is not in good shape and it can't handle uh new growth. And boy, did we ever have new growth. So, congratulations to you for being a visionary. There's a paper in 1991 where you actually talk about this. So, I mean, you're really not giving yourself enough credit. I looked it up. You were very much a visionary for solar for years. >> Jim Jim, I want to give some love back to you. You were visionary. You called early a few years ago that next power was going to grow grow and we did. We accomplished that. We we really got it done. We've we we're about meeting and beating expectations. This is the new opportunity for folks to come in, invest in the company because we've launched these new businesses with electronics >> with the battery and solar is going to power on. Jim, thanks for having us back. We look forward to welcoming you here to our solar center of excellence. >> I want to go very badly. Dan Sugar is the founder CEO at Next Power and it's a terrific situation. Dan, good to see you again. That's true. May have money back. Coming up, July certainly jostled the markets. So, with the dust settling, Kramer's looking back at the month's biggest movers next. Anyway, you think about it, July was a rough month. Even though the Dow and the SP were basically flat, the tech heavy NASDAQ 100 tumbled 6.6% as the AI data center stocks got obliterated and money rotated into the rest of the market. After the war of the rand flared up again, oil prices spiked, which is why the energy sector rallied 12.5% last month. The financials were up 6%. Not bad. Followed by real estate up 2.5%, healthcare up 2.2% and consumer staples up 1.9%. Consumer discretionary up8%, communication services up.5%. Meanwhile, the information technology IT sector was down 3.5%. With the industrials falling 3.1%, utilities losing 2 point losing 2.3%. And the material stocks, well, they dip 1.7%. I care more about individual stocks, you know that though. And I want to focus on the 10 best and 10 worst performers SP 500. Give you a better sense of the situation. Maybe there's some opportunities here for you. When you look at the biggest winners, many of them were the former victims of AI displacement. The AI displacement trade we call it. The best performers versus were cognizant tech and Accenture. Two tech consulting firms that were up nearly 43% and 33% respectively. These two have spent years drifting lower as Wall Street assumes they've lost their mojo in the age of Claude and ChatBT. Now look, I never believed wholeheartedly in that thesis, but it never seemed to matter whether I believed it or not. Just last month, Cogen announced an expanded partnership with Anthropic and Accenture unveiled a whole suite of Ventic AI solutions that it's selling in combination with Google Cloud. Sound like they're oblivious. In the end, it's all about sentiment though. When Accenture reported a not so odd quarter in June, it stock got clobbered and took Cogetit down with it. Then in late July, Cognit reported a very similar set of numbers and both stocks roared. Now, I want to see better numbers from these two before they pound the table. But if they can stabilize the results, the stocks are very cheap. Third best performing in the SP5. Another one in July. Another one shocker. PayPal that's up 32.5%. Now, while the company's certainly doing much better under Nusio Enrique Law than his previous co, the stock roared because PayPal apparently got an a takeover overture from the giant private fintech company called Stripe with the backing also of a big private equity firm. Now, they they haven't agreed to anything, but it hasn't been shot down. Quizzical. Fourth best performer in July was workday up 31%. Now this is an enterprise software stock that's also been hammered by the AI displacement trade and it's still down nearly 50% from its peak in early 2024. Now we know Service Now reported and roared when we saw those new numbers. It was just a couple weeks ago. Workday could do the same thing if his numbers impress us later this month. In fifth place was a company called Willis Towers Watson. I never talk about these guys. This is a major commercial insurance brokerage and employee benefits consultant. 28.5% gain in July. To the company's credit, they had a good report last week, but I think this one's mostly about interest rates. The entire insurance sector got a lot more interesting when rates go higher. They did beat the most recent sales and earnings estimates though and give them that credit. Now, in sixth place, there's the SIBO global market. That's CBOE big options market place is up 27.8%. And that's all about the volatility that gradually built throughout the month. SIBO also reported a solid quarter last Friday, giving it stock one more leg higher. I don't think it's expensive. In seventh place, Philip 66 was up 25%. Now, I am surprised that it is the only oil refiner in the top 10 because they're all on fire right now. Philip 66 reports on Wednesday based on what we heard from refining giant Valero last Thursday. I feel pretty darn confident that this quarter from Philip 66 could be excellent. Eighth place, Microsoft up 24.6% with most of that gain coming after the company reported blowout quarter last Wednesday night. Given how weak the stock had been for most of the year, it was a nice surprise. Their Azure cloud infrastructure business is on fire and lots of people are even paying for a co-pilot. Plus, Microsoft held the line on capital spending, hence the stunning gains in the stock. It's a big position for my travels trust. Those members of the CMC Investing Club know that. They also know that I had cool on it and saying that I hope they did a good job or we would have to re-evaluate owning the stock. Well, glad we held on to because they did a great job. The ninth best performer, HP Inc. up more than 24% without a clear catalyst. We know HP has badly lagged Dell for the past couple years because HP is a consumer play. Dell has tons of data center exposure. But in July, Dell was down about 6% while HP roared. Longterm though, I'd still rather own Dell. Finally, number 10 was Dexcom. Remember, we used to talk about them all the time. They make blood sugar monitors for people with diabetes. That stock was up almost 24% in July. Medtec stocks had been out of favor for a while, but that group caught fire as investors searched for tech growth away from the AI data center complex in the month of July. Plus, Techcom reported blow quarter last week. I I just wish the stock would be cheaper. Those are the winners. How about the losers where the opportunities are when you look at the 10 worst performers in the S&P 500, these losses all come down to Wall Street turning against the artificial intelligence trade, at least in the month of July. Sanders makes memory and data storage. It was down 46.6%. 6%. Multiple networking plays got hit with Corning down for nearly 46% second worst performer. Coherent down 33.4% sixth worst performer. Several semiconductor capital Equipment makers join the list. KLA down 39.4%. Lam research down 32.4%. Applied materials down almost 30%. We had them all on the show. The business is strong. A couple chip makers made the list like Marll Technologies one I've liked very much. Intel, charable trust name. They were the fourth and fifth worst down 37% and 35.4% 4% respectively. Generrack, they make backup power generations, no stranger to the show. They got a big data center business. Stock was down more than 32%. Flex, the ninth worst performer, down almost 30%. They're one of the big tech hardware manufacturers. Of course, late last month, we found out that at least some of the selloff had to do with the near collapse. Some people say total collapse, but it's all the way you look at it of a hedge fund situational awareness LP that had been printing big gains for most of the past two years, but got out got out over its skis, used too much leverage, then got in trouble when many of the AI stocks it owned pulled back from their highs. At the same time, they've been shorting many enterprise software stocks that suddenly got a boost. You see, they unwound. Boom. Now, that situational awareness has sold almost all of its public holdings. There's a temptation to give it all clear and say that most of the AI stocks will bounce right back. Well, I get that. But these AI data center plays will still need to regain their momentum. Remember, there are some serious issues here away from just the core business. The spike in interest rates hurt them. The emergence of new opensource AI models that could threaten pricing power for the leading AI labs. Those are real headwinds. Here's the bottom line. On the surface, July was a calm month, but when you look at the desperate performances of the major sectors, it was brutal. As we head toward the final uh months of the year, yeah, we are that late in the year. The key question is whether these humbled AI stocks can stabilize, regain their momentum, and even start rallying it hopefully a little less dramatically and a little more stair step. Remember, the parabolic moves that they have always spell trouble no matter how good the companies may actually be doing. Let's take calls. Let's start with Jill in Michigan. Jill, >> hi Jim. How are you tonight? >> I am good Jill. How about you? >> I'm doing great. I'm calling you about PaloAlto Networks. >> Oh jeez. About Nasha Aurora and Palo Alto. It's just it was up huge today. It deserves that. Palo Alto and Crowdstrike are really the companies that are going to protect us from this next uh wave of aentic AI. Palo Alto I think the Kesh is good. And hey, I saw Nesh play a LITTLE GOLF. HE'S PRETTY GOOD AT GOLF TOO. You never know. The guy can be he could be a triple threat. Who else knows what what else he's got up to? But I like Palo Alto. We own him for the trust now. Okay. Going into the rest of the year, I'll be curious to see if the AI stocks can make up for this sour July performance. I think the market will be too much more made money at quitting my Swiss with piggy bows. Then uh lots of stocks trade alongside each other often times for no reason at all. I'm explaining why and how you can take advantage of the action yourself and oil calls rapid fire in tonight's edition of the lighting round. So stay with Kramer. Today I want to check in on one of the most surprising turnaround stories out there. Pity Bose. This a company is best known for mail meters equipment that helps offices send postage. A business that's been challenged by the rise of digitization. But a couple years ago, an activist hedge fund got involved in the story, forcing Pittney Bose to cut costs and get into new businesses. In the spring of last year, the leader of that activist hedge fund, Kurt Wolf, was named CEO. By the time I spoke with Wolf last August, the stock had already had a great run, making it back to $12 and change at the time. He argued that the comeback still at legs. Now nearly a year later, the stock's at 18 and change, meaning he was dead right. So, can it keep running? Let's take a close look with Kurt Wol. He's the CEO of Pittney Bose to find out. Mr. Wolf, welcome back to Man Money. >> Thank you for having me again, Jim. >> Well, Kurt, you were very earnest talking about what could happen. I had been skeptical because Pittney Bose is a a story name that had obviously been challenged by uh by email by lots of ways but you had a lot of creative ways to be able to do things but at the same time you also recognized the balance sheets got to be fixed and you knew that there was a lot of cash you could buy back stock tell us the process of what you did and where you are now. Yeah, absolutely, Jim. So, first off, I think it's helpful to step back and talk just a bit about Pittney Bose. We have three businesses. Uh, our presort business, we are the dominant player in mail sortation. Our scene business. Uh, we have about 60 to 70% market share of the mail meter industry. Uh, we're also a leader in the shipping software space. Finally, we have a bank. We provide financial services and solutions to our roughly 500,000 customers. Um, so that that's, you know, essentially the business in a nutshell. As far as what we've done to turn things around, as you said, we've addressed, you know, balance sheet issues. We recently got a a double B minus rating from Fitch. We bought back a lot of stock and we've improved. >> Well, your balance sheet's perfect now. >> Thank you. Yes. We don't have any maturities now until 29. Absolutely. >> So, let me at the end of June, you announced that you're initiating the second fave of of phase of the strategic review process. Bring us up to date what's going on there. >> Yeah. So uh this is just a logical next step. We spent the last year uh you know fixing the business. So we addressed uh improving efficiency of the company uh instilling a culture of continuous improvement and we really identified a lot of avenues for growth for the company as as a next step. We did a lot of internal internal uh searching and developing and now what we're doing is we're looking external to the company. What can we do to deliver more value for our shareholders? >> Well talk to me about what kind of real growth you can have. Is that a reasonable goal? >> Absolutely. Yes. Yeah. So yeah, I would just point to two areas of our business. Shipping software is a growing space. As you know, with Amazon and e-commerce, shipping is growing. So that's >> and you want you want to root things in what the the most advantageous way at that moment, which to me is fantastic for a small mediumsized business. You're kind of a must. >> Absolutely. Completely agree. And then also our bank is another great opportunity and area for opportunity. We have, as you talked about small mid-size businesses. We have roughly 500,000 clients all have banking needs. We're currently providing some of their banking needs and we can certainly do more. >> Now would that be like kind of like what Square tries to do or block where they give a little bit of advances or you towards something or what what where does the bank go what does he what do you lend against? >> Yeah. So uh it varies by uh we we're running three pilots right now. Some of them do lend against. So uh with our presort customers we're starting to do asset based lending. Uh we're working with 3PL's which also involves some asset based lending there. But the other opportunity is as I mentioned shipping software, right? Uh the post office doesn't extend credit to customers when they ship. So that's something that we can do is that we can extend credit to those customers whether small business or large. And because we have a long history with these companies, some as long as 50 years, we have a pretty good idea of the credit risk we're taking when we do business with them. >> Okay. In your letter you talked about, look, you have a hedge fund business in the the Hesty Capital and they were selling it. I thought you were quite earnest again in saying, "Look, before you hit me on this, wait a second. I've like I'm the le I used to thought you might be the largest shareholder and you're not being compensated in shares. You you have a very low base salary and you're buying those shares in the open market." >> Yes. Yeah. So, I appreciate you saying that. A few things I'd point to. One, I do manage a deep value investment fund and there's, you know, what we have to do with our investors, you know, the commitments we make, the types of investments we make. But just because something is a good fit for Hestia doesn't mean it's a great value. Right. And I think that Pney Bose is which is why I've been taking distributions out of Hestia uh to take shares directly in the company as the CEO of Pitney Bose. I see a tremendous runway for this company. And as you said as well with compensation, I took the uh lowest legal salary that you can get in the state of Connecticut so that I could have almost all my incentive based on shares because I am incredibly excited about the opportunities for >> Okay. So how much of it depends on the gross domestic product and growth? I mean the small mediumsiz businesses some people say I mean like Shopify would tell you it's really good. Uh we know that uh paycheck says it's really good. How are your customers doing? >> Uh customers are doing great Jim. Um yeah, one thing I do love about this company is we're not very cyclical. So you know anybody looking at us something to keep in mind is that the economy uh takes a downturn. It doesn't really hit us much but we do have two se two parts of our business that are economically sensitive. uh within presort we have um we do marketing mail for customers and marketing tends to be more right uh cyclical more tied to the economy we're seeing no weakness there and then our bank obviously the the financial conditions of our customers weighs in on delinquency rates and other and we're seeing no signs of stress at all >> okay so I know that the uh you've turned things around but you you do expect to uh that has the decline is declining less can that break into the positive you think >> we think that it can so and in the short term And again, we try to be incredibly transparent. I'm an investor. >> No, no. I mean, >> yeah, I'm an investor in >> the whole way. You've been transparent. That's why I asked you because you could say I know you might just say, "Look, not yet, Jim." But you're obviously thinking it could. >> Yeah, absolutely. Uh, and I think it'll come primarily through the shipping software space. Uh, there's some other things. I won't get into the weeds too much. There's a mailstream on demand product we offer. There's opportunity there. Um, but you know, the mail meter business, we do expect to decline, but we see a lot of opportunities for growth. Uh we do face some short-term headwinds, but those are out outside of our core business. So, we're very optimistic about >> Tell people how many shares the company bought back. I thought that was really important. >> Uh I believe we bought back 50 million shares roughly. I should I should know, but about 50 million shares. >> No, that's the number I'm looking for. Anyway, I want to thank Kurt Wolf. He's the CEO of Pity Bose for delivering exactly what he said he did last time he came on. Maybe you can do it again. >> Absolutely. >> Why not? Money's back after the break. Thanks Jim. 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 by s of course that time gra and then the lightning round is over. Are you ready skiing daddy light start with James in Texas James >> Jimmy chill >> you betcha big NFC East Booya from the Lonear State good to have you on the show what's going on I want to get your take on a stock that IPO back in February this year is in the critical path for all data center buildouts power grid infrastructure and industrial facilities with energyintensive operations with IPO lockup expiring tomorrow and hyperscaler capex spending for data centers seemingly still speed ahead. Is it time to buy or is it a wait and see if management goes for a third post IPO sale? The company is forging Power Solutions, stock symbol FPS. I know it. I was surprised it hadn't gone up. I figured gez it just been unrecognized. But you bring up this idea of a lockup. I would tell you that this company is not cheap, but I think that the stock is right versus the others that are in the group. It hasn't moved. Let's go to Sam in Massachusetts. Sam, Jerem, listen. If we have a bottleneck in energy and the bottleneck in in uh memory, I've been looking at the company NVEC, it makes a more energy efficient type of way to to transmit um the data. So, I'm curious what you think about NVEC here at under a billion. Okay, this one is starting to, you know, it had it had a big move back. Let me do this. I I don't want to be glib about this. I need to know better. I need to know this company more because it just moved up so much. I can't just say it's it's fine. That wouldn't be right. Let's go to James in South Carolina. James, >> Jimmy, chill. >> Chill. I'm chilling. >> You're doing well. 10th time, long time, and club member. >> Wow. I mean, triple play there. What's up, >> Jimmy? The company that I'm calling you about, the co-CEO of this company, purchased $50 million worth of stock on June the 6th in the open market. The rest of senior management purchased well over $5 million. They are waiting on FDA approval, which should come anytime between November 14th or sooner. Their trials have produced much better results than the one company that's already selling this this drug. The company I'm calling about, Jimmy, is Summit Therapeutics. SMMT. >> Okay. Um, it has issues. Well, okay. Let's put it this way. It's a great spec. Okay. Let's leave it like that. This can be your spec. Remember in uh how to make money in any market I talk about how you can have a spec. Let that be your spec. I don't want to be more than one spec cuz you know what? There's so many good companies out there. I think every one out of every five, two out of every 10 if you're really pressing it. But that's how I feel about specs. You're okay to speculate. Let's go to Jake in Arizona. Jake >> booyah Jim Jacob from Phoenix. Carvana just posted another good good. Carvana just posted another record quarter. Is this a pullback or a buying opportunity or should investors wait? >> No, it it is a buying opportunity. I've got to tell you when I went over things I thought things were really good. I man sometimes the stock gets forced out there. People really hate Carbana. This was a good quarter. Ernie Garcia did a good job. And by the way, I thought the Shaq at the Shack said look at Shaq. Shaq looks different. Shaq you know good. Always a good spokesperson, Jack. He's He's winner. That should not influence your decision, but I do point it out. Let's go to Charlie in New York. Charlie. >> Booyah. Mr. Kramer. >> Whoa. Yeah, Charlie. What's up? Is it okay if I call you James? >> Why not? That's what Pop called me. >> All right, James. Reddit delivered strong numbers and the stock still got punished. As a shareholder, it's incredibly frustrating watching a company execute and get sold anyway. Is this a buying opportunity or is the market trying to tell me or don't the No, no. The market's saying that maybe they need to do a new deal with Google. We don't know what that deal is going to be. I I'm not a seller of Reddit here. I was surprised that the stock got hit as bad as it did. It should not have done so. I'm with you. And that, ladies and gentlemen, CONCLUSION OF THE LIGHTNING ROUND. >> THE LIGHTNING round is sponsored by Charles Schwab. Coming up, Kramer's running through how stock baskets are interfering with the gains from individual companies. Next, there's a silliness to the stock market that confounds those who focus on the fortunes of individual companies. I alluded to it this morning on Acts when I wrote, quote, "Diplomacy equals buy Boeing. Bombing equals sell Boeing." In reality, it's crazy to think Boeing's prospects hinge on the outcome of the war with Iran. Sure, there are some airlines from Gulf States that might not be able to buy or afford Boeing planes with the war hurting their finances. More generally, the airlines might not be able to afford as many new planes thanks to the rising cost of jet fuel. At least that's what people seem to think. Still, the stock did trade up $17, proving my pathy posted thesis. But Boeing, the company, not Boeing, the trading play thing, gets valued on cash flow and production, how many planes they can deliver per month, not on short-term concerns like the warrant. It's got a backlog of over 6,200 commercial planes, which is about 10 years of production. So, these kinds of considerations are meaningless on a day-to-day basis, though, that doesn't matter to Boeing, the stock. See, traders create baskets of stocks, including a basket for diplomacy and a basket for war. Almost every time President Trump says he's going to hit Iran hard, the basket gets h that has the Boeing in it gets hammered. Then this weekend, diplomacy prevailed and you knew the stock would sore, which is exactly what happened cuz well this is what you buy if there's diplomacy. Companies can't do much about these baskets even as they overinfluence the prices of their stocks. The only time the stocks seem to align with the underlying business is when the companies report. There's more signal than noise. Which brings me to the next set of war related distortions, the retailers. As Wall Street sees it, the retailers are very sensitive to the war. When the president says we're going to attack Iran, the money flow slows to the low price retailers that thrive when the price of oil rises, namely Costco and Walmart. When the war goes on hold, a different retail basket takes over, the discretionary retailers. Wasn't surprising to see the stocks of Target, Macy's, William running today. Traders who create these baskets regard those three as hostage to discretionary spending. and that gets hurt by higher gasoline prices. I think this kind of granularity is totally fatuous. Target just happens to be doing better ever since a management switch late last year. We have Sonoma benefit benefiting from the great work of CO Laura Albert. Macy's relatively new management has done a terrific job turning things around. Meanwhile, Costco and Walmart, they're both excellent evergreen retailers. You should own them regardless of the state of the war. Now, we know that earnings still matter and the power of the baskets recedes as you approach the actual day of reporting. For example, Ralph Lauren, the company reports Thursday that stock's been part of the discretionary spending basket. It seems to be trading on its own today, though out of fear perhaps that it might not make the numbers. I think it's headed for a good quarter. That said, Ralph Lawrence had such a great run that maybe it's due for a breather. These baskets are indeed a nightmare for people like me who actually do the homework and now companies are doing. Consider the case of situational awareness. That's a hedge fund that got hit with horrendous losses, became a victim of overlever. The performance of this fund was so legendary that there were baskets created to mimic the fund's moves. Leapole Ashen Brener, the boy genius manager, apparently believed that hardware was king and software was pawn. Both traded as baskets. The software basket underperformed the market regardless of the performance of the underlying fundamentals because hardware was linked to AI and software was seen as a victim of AI. That dynamic reversed itself last month with the demise of the Wonder Boys firm. And these stocks are now trading on the fundamentals again. Hence why service now which has the best fundamentals case of the software companies has sort of late. I think it's got further to run. The jailbreak has also unleashed the stock of Salesforce. Although Service Now is perceived to have more AI so therefore it's more of a winner. The worst thing about the baskets they control the trading on a daily basis. The best thing they create real opportunities as the stocks divorce themselves from the fundamentals until the company's report. There are big gains to be had when the worth of the baskets blows up in the face of real earnings. It's good to see that the fundamentals still matter even if it only happens during earning season just four times a year. Alexa, there's always more work. I promise just for you here made money. I'm Jim Kramer. See you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full MadMoney disclaimer, please visit cnbc.com/madmoney disclaimer.