Mad Money 08/24/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always [music] 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, my friends. I'm just trying to make a little bit of money here. My job, not just entertain, but to teach. Call me 1800 743 CBC. Tweet me at Jim Kramer. The data center thesis, perhaps the greatest investment theme in a generation, is now under attack, and it may never be the same. [screaming] We're now seeing mad scramble to invest in anything but data centers, insurers, banks, household products, you name it. And that's why the averages aren't collapsing. Dow advancing 140 points, S&P declining.8% 28% and the NASDAQ the home of many a data center related company losing 76%. So do you stick with the data center betting the buyers will come back or do you throw in the towel and go with the other sectors that are now winning? Let's pull this apart before we answer because it's a big question which you certainly felt if you own anything related to today's most meaningful actions and there was a lot lot happening. Hey, why don't we start talk with data center? Okay, before the election, rhetoric against data centers got really loud. That's a very new phenomena. We all assumed that the data center buildout would be the I'd say be investable for the long haul. >> Then all of a sudden, we got this resounding backlash against the data center. You either paid attention or you got slaughtered. Winners turn to losers overnight. The big switch that totally changed the dynamic, the governors of Pennsylvania and Texas, both of whom are up for real action. heard the drum beat switch sides going from unbridled support for data center to a much more restrictive set of rules if you're pro data center. One day the hyperscalers are informing towns that the data center is coming in. Maybe the local government can negotiate to prevent anything too rapacious. The next day governors across across the burger they're trying to shut you down. I want you to take a listen to what Greg Abbott he's the Republican governor of Texas told ABC News yesterday. these data centers are coming online uh that people didn't see coming. The other uh is is the way that the data centers they didn't do their job uh to get the support of people in local communities. Uh the gaining the support of people in local communities is essential because they did not do that. That's why I am now coming in as governor saying listen if you're a data center and you want to operate in Texas you have to first get the approval of those in local communities. Yep. He wants to force these companies to get local approval before they can build. Now, at first that seemed reasonable to me. Shouldn't the data center builders play with an open hand, talk about what they can do in return for allowing a data center in the vicinity? But we don't know how many localities would want data centers, and we don't know how long it'll take to roll out this new approval process. Abbott said these companies quote basically dug their own grave. And maybe he's got a point. I think AI needs better market because the biggest boosters of this technology love to tell you that it'll cause mass unemployment, possibly destroy the world. That's not a great pitch. In many ways, it was Governor Shapiro. It was his switch in Pennsylvania. I thought it was a much bigger deal. See, he is Democrat. He'd been a big backer. While he didn't shut down data centers, he did sign an executive order that that said they quote could harm Pennsylvania's right to clean air and pure water. End quote. As well as raise the price of utility bills. Wow. Bad. his message to data center developers, quote, "If you can't agree to our strict requirements to get the communities where you want to build to say yes, then you're not welcome. You're not go you're going to have the Commonwealth support either." Wow. So, no Commonwealth support. Not welcome from a guy who was welcoming and really encouraging everybody to come build data centers in Pennsylvania. All right. Not a blanket. No, but an echo about the water, air, and electricity concerns that have many that many builders have neglected even as some now have gotten religion. But I guess it's too late. Neither governor is saying no to data centers, but both have gone from boosters to critics in the time it takes to flip a coin. Politicians don't do that unless they think something's very, very unpopular. So, you can only imagine a wave of state and local leaders pushing to kill these projects going forward. We know that rules can be crafted and communities can be appeased, but the unbridled buildout is most likely over. [screaming] Given that there have been immense demand from all the builders and potential builders, it's easy to see that some orders will indeed be cancelled, if not many orders. But then again, what happens after the election? What happens if the hyperscalers get their act together and offer a code of conduct instead of being uh out there all by themselves cutting deals that are now regretted? Stranger things have happened than a code of conduct. It must happen if this issue is going to be tempered and not rockus in its disapproval. And I can't believe they haven't figured that out. That's why you have to look at certain companies that were thriving because of data center data centers companies like the biggest turban company uh that turns in natural gas into power. That's sheova. Now we own it for the travel trust and I now feel that the market won't pay up for its order book because maybe it's got soft. I don't want to get rid of it but I don't want to take a beating either. That's how I feel about a bunch of these companies. I fear after I get rid of them that the elections will occur and some of the governors who are pro data center steal the show. It is very disconcerting at this moment. Of course, to walk away from this theme is to walk away from stories like Micron where we were last week. When you see 8,000 workers crawling all over a construction site working six days a week, get the memory chips out in the first quarter of 2027. It's hard to believe the political push back and truly put a stop to this kind of buildout even as this was a fab not a data center. If anything, Micron can't possibly meet the demand now or in the future. It you know that's by the way regardless of what happens before the election. But here's the real issue, as I painstakingly explained in how to make money in any market. It's not the E, the earnings that's in play. It's the M, the multiple, meaning what people will pay for those earnings, the PE. Now, Micron already has a cheap multiple because people don't buyers don't want to pay up for something that's historically been a textbook boom and bust play. I've been saying that this time is different. The shortage is so severe that Micron now has more than 16 long-term supply agreements that will support the earnings for years to come. the contract take or pay, meaning the counterparty must pay no matter what. Ironclad doesn't matter if their deal was cancelled by some governor. But we know the multiple will shrink anyway because of the chatter, because of the rhetoric. Does that mean you need to sell your stocks that are involved with the data center? You be like us in the trust. I think you sell some. You can't be as heavily invested in this theme because the price earnings multiples are not going to expand. And if the dwindling supporters of data centers lose their positions the coming election, the people selling these stocks now will look like geniuses after the election. But let's say how about the money that's flowing into Proctor and Gamble and Coca-Cola or the United Health in the hinge house, the JP Morgans and the targets. Can the Alpha from Sandis, Western Digital, Seagate, and Micron among others keep their groups afloat? The answer is yes. Because it isn't just these stocks. The list is as long as your arm. Virtually anything healthcare works. Same with travel and leisure. People just want out of data center and these are the convenient places to put one saving grace though and it's a big one right now the cost of building a data center is being boosted by many companies constructing these things on spec not just the hyperscalers it's not a coincidence is it that the stocks of Amazon output Microsoft and Meta are ramping going up high furiously going to buy furiously by >> see they're the biggest beneficiaries because they can afford to compensate local communities and get their warehouses full of servers built while the spec builders will indeed get obliterated and they have the ability again to create that code of conduct. And if they weren't such a bunch of knuckleheads, they would. If you get rid of the smaller speculative builders, you get rid of the insane competition that's pushed up the price of everything from land to construction to labor, electricity, and of course the inside of of a data center like Nvidia, which reports Wednesday, and has now been down for seven straight days. I think largely because of worries about data center slowdowns. The Magnificent Four are the winners. All right, how about the fab form? It's probably better. I I think they'll keep winning as they've been the losers when people extrapolate the cost of building these data centers, right? They always think, oh, more capbacks, more capbacks, sell, sell, sell. This political push back might be a godsend for the hyperscalers. Only a couple of us are thinking that, but the stocks are moving. So, money won't just pivot to the Johnson's Johnson. Have you seen that stock? It will go to the actual hyperscalers that are being reviled. They can comply with these new rules. The small fry can't. Classic case of government regulation crushing the small fry and boosting the big boys. Here's the bottom line. This data center push back may be a victory for big tech. A real cynic would say that they should back the new rules. Clarity and a little money to each town along with electricity subsidy and a clean water commitment would suit them fine. Helping their bottom lines and crushing the smaller players that are trying to compete with them. New theory. Haven't heard it. I'll take credit. Mark in New Jersey. Mark >> Jim, >> here's a guy who's fired up on what's kind of like a just okay Monday. Tell me what's happening. >> Hey, listen. Uh when you said you sold your crypto after the uh IBM quantum uh rumors, I had just a few days before that went and sold my second car to buy bit uh derivative of Bitcoin because this is a four-year crash. I'm not sure if you're familiar with the four-year crash on Bitcoin, but it goes like clockwork. And a question for you. Have you heard of the Bitcoin power law? Because the floor is at 63,000 and it can't go lower than that. 2% of the time it's ever gone lower than the low of the Bitcoin power law. But here's what I'm doing with my play. Maximize risk at the floor by buying Micro Strategy. What do you think? >> Okay. I'm g Well, first I'm not in favor of my of uh I'm not in favor of of Mr. MSDR. That's what I call it because frankly they have too much debt. But I will talk about something that did happen. I bump into uh one of the Winkls twins recently uh out in uh in the Hamptons and they they were telling me well Cameron he was saying point blank listen uh there's going to be some good news in crypto. I think don't you hold on to it. And what I said to him was, you know what, I had second thoughts after I [music] heard what uh what I had second thoughts after I heard what the IBM CEO [music] said and said, you know what, I think it's going to be longer. And if it's going to be longer, I'm going [music] to risk owning it. I didn't I did not say that on air. I should have I should have said, I changed my mind. Why did I change my mind? Because I [music] think that quantum is happening way too late and I'm much less worried than I used to. I think it's just too far in the distance and I will adjust and so will Bitcoin. Anyway, I think the political push back against the data center is actually a godsend for hyperscalers. As long as they play by the new rules, it can actually help their bottom lines, but nobody's thinking like that. Maybe they should. That's why those stocks are going higher. I'll make my money tonight. Treasury yields have been dominating the market conversation lately. So, even though I know it's a boring [music] topic, let me make it let me bring it to life so you get that perspective on what's been happening. [music] I promise I won't bore you. I really do. Then the Fed's annual Jackson Su symposium is [music] upon us this week and I'm going to give you my top things to watch from this pivotal macro meeting that always does matter. And defense [music] tech company AEX has slumped after its market debut this year, but is a potential head for the stock. [music] I bet you're going to want to buy it after I listen after you listen to my interview with the CEO. Stick with Kramer. [music] Don't [music] miss a second of MadMoney. Follow Jim Kramer on X. Have a question? [music] Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743CNBC. Miss [music] something? Head to madmoney.cnbc.com. Normally, I don't like to talk about bonds because you don't want to hear about bonds. There are a few things more boring than the bond market. Unfortunately, it's very important now that long-term interest rates are on the rise. Even as federal government, Treasury Secretary Bess sure wish they weren't. Over the past six months, longerterm Treasury yields have been marching steadily higher. A lot of stuff priced off them, so to speak, like mortgage rates. The 10-year briefly fell below 4% in February. It's now up to 4.7%. The 30-year gone from 4.6% at the end of February to above 5.3% [groaning] at its highs last week and just uh over 5.2% today. These are levels we haven't seen since before the financial crisis. And that raises real issues. Now, some of that's thanks to the on to the war with Iran. The on again off again hostilities keep pushing up the price of oil and higher energy prices spread throughout the whole system. As you know, it's a key source of inflation. When inflation's too high, the Federal Reserve can't cut short rates for heaven's sake and may even be compelled to raise them through increasing the federal funds rate. We're now seeing that reality reflected long rates, too. At the same time, the tech titans have started borrowing so much money to build data centers that it's impacting the entire fixed income space. As more incremental dollars go to shares of bonds from hyperscaler, treasury yields have to creep higher in order to stay competitive. According to a recent analysis by S&P Global, worldwide bond issuance was up 11% in the first half of the year, including nearly 10-fold increase in bond issuance from the hyperscalers. That's crazy. It's not stopping. We've been dealing with these two issues now for a while. Uh then last week, suddenly we were forced to grapple with an old worry that tends to go in and out of style on Wall Street, the national debt. Now, aside from a brief period in the '90s, our government has spent like a drunken sailor for practically my entire life. [screaming] And it keeps getting worse. Nobody in the business cares when interest rates are low. But when interest rates go too high, the cost of that federal borrowing goes through the roof. and investors get mighty nervous. Now, we've seen that fear ramping up this month. Back on August 5th, we got the Treasury Department's quarterly refunding statement. That's a procedural announcement where they tell you how many bonds and bills and notes they're planning to sell. Nothing noteworthy. It It was almost the exact same mix as last quarter, but by August 13th, when they held a 30-year Treasury bond auction, it got real ugly with auction yields hitting their highest level since 2001. dog of a dog of an issuance. And even with those high yields, demand was weaker than in the previous month. And that is just plain not good. Now, in the days that followed that auction, the 30-year yield continued to climb higher. Again, real bad from a low of 5.18 on August 13th to a high of 5.324 last Tuesday, which brings me to last Wednesday when the Treasury Department made what I can only call a quizzical announcement. They doubled their plan to repurchase, not issue, but repurchase longerdated treasuries from two billion to at least four billion effective September 9th. And as Secretary Besson told Sarah Eisen on CNBC last Thursday, it could go even higher. Now you guys, what the heck is the point of that? This is a situation where the Treasury is robbing Peter to pay Paul. They have to sell more short-term paper in order to boost those buybacks for long-term paper. But regardless, you could tell that they were trying to bring down the yield on longer dated bonds like the 30-year and the 10ear. Now, at first, the announcement seemed to work. I mean, no kidding. Last Wednesday, after the announcement, the 30-year yield fell from 5.28 to 5.19, while the 10-year yield fell from 4.7 to about 4.64. But then something interesting happened. The very next day, those moves were almost instantly undone and long rates kept climbing on Friday. [screaming] Now, today rates eased a bit in part because of an exclusive CNBC report that said the Treasury could use its nearly 1 trillion general account to help fund its bond repurchase plan. [snorts] Now, that does give them more room to maneuver certainly more than $4 billion worth, but those numbers still may not accomplish anything. The announcement certainly didn't help last week. Now, maybe there were some extenduating circumstances that worked their way into the market's response to the announcement last week. First, by coincidence, we learned about these longdated Treasury buybacks on the exact same day that the US national debt hit $40 trillion. Well, there's nothing special about that big round number. The symbolism certainly doesn't help, right? Also makes the occasional $4 billion bond buyback seem pretty darn poulry. There was something about 40 40 trillion that made people realize this is an intractable number. Now, as I mentioned at the top of last Thursday's show from Boise, it made Treasury Secretary Bessant look like the little Dutch boy trying to stop the flood by putting his finger in the dyke. The only real solution to this problem is to either cut spending or raise more revenue. And the Treasury can't do either of those two things on its own. The other extenduating circumstance, all this news about treasuries coincided with a report that Broadcom, a charitable trust holding, was looking to raise a significant amount of debt in order to support a planned chip financing deal. Great. Originally, Bloomberg reported uh that last Thursday that Bloomberg's debt offering could reach $100 billion in total. Though my squawk on the street compadre, David Faber said it's probably more like 70 80 billion. Either way, this was just still one more mega cap company planning to issue a big slug of debt that will compete with treasury bonds, making it still more difficult for our government to sell people treasuries. Now, I want you to put it all together. And the backdrop, frankly, is not encouraging. I get where Treasury Secretary Besson's coming from, but he really doesn't have the power to fix this. He can certainly talk a big game. Here's the bottom line. We want longerterm interest rates to go lower, but that's only going to happen if we can get inflation under control by reopening his straight remov. And that's a we know that's a tall order. Treasury Department's attempts to get this thing under control. I think they've only made investors more nervous. That's the situation with long rates. What about short rates that are much more or less controlled by the Fed? Stick around because [music] I want to talk about what new Fed chief Kevin Marsh will be facing when he makes his first speech [music] at Daniel Jackson Hall conference on Friday. Bad Money is back after the break. Coming up, Kramer is breaking down what he's hoping to hear from Fed Chief Kevin Worsh this week. Next. Yeah. Before the break, go into detail about the relentless rise in long-term interest rates and why it makes things tricky for the stock market or just bad. Now, I want to talk about the short race, the one set by the Federal Reserve itself. Because this Friday, we have this Fed annual pilgrimage to Jackson Hole. New chief Kevin Walsh makes his first Jackson Hole keynote on Friday at 10 a.m. and it's a big deal. Unfortunately, this one of those speeches that often moves the market because it gives the Fed chief chairman a chance to step back and offer some highlevel commentary. And if he's making news, I got to tell you, you're probably not going to like it. This year is legitimately difficult because in theory, the Fed could go either way. I don't think they're going to cut rates with inflation this high, but parts of the economy like housing are so soft. It would be the craziest thing in the world. At the same time, Kevin Marsh has now been on the job for nearly 4 months, and we still don't really know how he plans to approach things. That's making Fed watchers nervous. Why don't we do this? Let's start with the Fed's game plan. Uh, at the beginning of the year, a ton of investors figure we get a series of rate cuts. Things inflation finally come down. Remember, labor market was starting to show signs of weakness. Also, we got three rate cuts in a row late last year. Then we went to war with Iran and they shut down the straight of causing the price of oil to spike along with a bunch of other commodities. That brought inflation right back. The consumer price index came in at 3.4 in July, which is lower than it was in May or June, but still a full percentage point above what the Fed wants to see before it would ever consider cutting rates. At least the Wash Fed. If anything, when you've got 3.4% 4% inflation history says the Fed should be raising rates, not cutting them. But like I mentioned before, there are some very real arguments for why the Fed should start cutting again. The labor market softened up last year. It hasn't gotten any better. We lost 23,000 jobs last month for heaven's sake. And we've now had negative job growth in five of the last 12 months. Nothing to read home about. Meanwhile, we know the housing market is weak in large part because interest rates have that made mortgage rates expensive. While other financing dependent industries like automobiles construction heavy machinery have been resilient. I think they could do much better if rates were to come down substantially, particularly autos. When you look at the minutes from the Fed's late July meeting, you can see that there are already Fed officials on both sides of this debate. >> [screaming] >> While the open market committee officially voted 9 to3 to keep rates steady in July, there was much more disagreement rank or even open descent than there's been at any time that I can remember in the past couple of decades. And that's why this is such a tricky moment and it would be tricky for any Fed chair, but it's especially tricky for Walsh because this is his first Jackson address and I got no idea what he's going to say, nor does anybody else. Now, that does seem to be by design. The only real thing that we know about WS so far is that he wants to move away from some previous practices like uh giving lots of guidance about the Fed's next moves. In June, at the conclusion of the Fed's first open market committee under Walsh, he acts much of the forward-looking commentary from the FOMC's statement. June's meeting also included what's known as the summary of economic projections, a compilation document that shows Fed officials best estimates for economy going forward, including something known as the dot plot, which tells you where each individual Fed official believes the policy rate should be for the next few years. After the June meeting, W said proudly that the dot plot didn't include a submission from him because he doesn't find individual rate projections helpful. Well, that's okay. In his post meeting press conference in both June and July, Wsh has been almost gleeful in evading questions about his plans for the future. At the July press conference, he said, quote, I understand the desire for rolling forecasts and commentary from this committee, but for our part, we need to observe market reaction to developments direct and unfiltered. End quote. Now, of course, Walsh made it clear before and after he got the job that he thought the Fed was too noisy and that he'd be looking to effectively turn down the volume. I think he's partially right. It's definitely helpful to reign in rogue commentary from regional Fed presidents and governors particularly because they move the market all the time. But at some point we're going to need Wars to open up, share his thoughts and his plans or else it'll be hard to decide what to invest in. First and foremost, we need to know whether he and other Fed officials think that inflation flare up of the past few months is real and needs to be combed with policy or maybe it's transitory and not something the Fed needs to address itself. And with these recent developments in the bond market, which I mentioned before the break, it would also be very helpful to hear Worsh's view on longer term rates and how higher long rates would impact the economy. When Worsh held his last postmeating press conference in July, he mused openly about what he might talk about in Jackson Hall, saying that he could talk about near-term policy or he might instead just talk about broader principles. He also mentioned that he wants to check back in with some of the external task forces that he established. One of the biggest moves the he's made as Fed chairman and their input could craft his Jackson Hole speech. Fair enough. But the bottom line for now we really have no idea what to expect from Marshall on Friday. However, I certainly hope that as averse to guidance as this guy is, he'll still give us some color on what he expects the Fed to do going forward because we're kind of flying blind on that front. If he decided to totally ignore current events, including the flare up in inflation and the rise in near-term Treasury yields, I worry that he'll come off as oblivious and ended up hurting the market. But for now, we're clueless and clueless is not where we want to be. Let's go to Rich in Texas. Rich, >> hey Jim, thanks for taking my call. >> Of course, what's going Remember during the.com craze many companies failed because of problems with product or business models but the infrastructure of the internet was not going to go away and remain profitable. I feel we're in the same way in the same situation with AI. While people sort out the survival of a thousand different platforms they all require underlying AI infrastructure especially with an environment that may limit new data centers that will actually limit capex and limit supply. Okay. with with the massive >> with the massive demand, shouldn't we be rewarding best-in-class infrastructure and existing infrastructure such as coreweave? >> Okay. Okay. Uh look, as is so often the case, our viewers are really smart and uh Rich just laid out the case better than I could about what's going on. I think Cororeweave is a great spec. I say spec because his balance sheet is not such that I can recommend it as just a flatout buy. I couldn't do it for my charitable trust. I can't do it for you. But I think Michael Trader is very good and I think that Cororeweave is a terrific spec on the continued buildout. I want to go to Mike in New Jersey. Jersey. Mike. Mike. >> Hey Jim. How are you? Thanks for taking >> I am good. Mike, how are you? >> Good. Um, I bought Morgan Stanley in the summer of 2020. 48 $49 a share. >> Nice. >> It's up over 200%. sell it, keep it, or buy more. >> All right. I would not sell Morgan Stanley. Now, you could argue, wait a second, let's take some off the table just because you have such a big position in it. I'm not against that. But when I come to I mean, it's funny. I It's, you know, this is one of those things where I say, "What is Mike looking for?" Well, he's looking for me to say, "Is Morgan Stanley good?" And I'm going to say, "No, Morgan Stanley is great." Let's go to Buddy in Rhode Island, please. Buddy, >> hi Jim. How are you? >> I'm good, buddy. What's happening? >> Just want to give you a reminder. I've read How to Make Money in Any Market twice. I think it's a great great book. >> A Thank you. It's the great explanatory book that I wanted to write. I would have written it first, honestly. But the fact is is people need it and I keep finding people who do need it and people are starting to read it again. I really like that. How can I help? >> I'm just curious. I I bought Intel a while back. Cost me $93 a share. I'm curious to know about your recommendation for pyramiding now that it's down. >> Okay. I've been wrong on the price of Intel when I started to buy it. Uh I did not include the idea that the government's position which is able to be sold uh shortly would would really impact the stock. The cart was fabulous and it's just been straight down. At first I thought it was Leopolds. [music] We bought some the unwinding of the of uh of of that situation awareness fund and then I thought it was maybe a general selloff in tech. Uh, but what I realized is that there's a big government position and people just hate this kind of company. They're ringing the register even [music] as I think the CPUs are the secret and hope for robots. So anyway, that's where I am. I've been [music] wrong. It hurts. Uh, I went over this weekend what's hurt me and it's really humbling, but that's okay. This is a humbling business. [music] All right, we can't be sure what Walsh will discuss this Friday at Jackson Hole, but I'm hoping get some indication about what he thinks about the inflation flare up. It's really important that much more made money including my exclusive with [music] AEX which is a drone company that I think you'll really like. Then I'm reflecting on my recent trip out to Boise to visit [music] Micron's headquarters. It was really impactful for me and I want to tell you why I think shareholders are still undervaluing this giant which by the way was off a hideous hideous [music] $56 today. And all your calls rapid fire tonight's edition of the lighting route. So stay with [music] What the heck happened to a stock we really like? Ax. I mean, here's a company makes drones for the military, the single hottest part of the defense sector. Yet, it stocks been a, let's call it a roller coaster. Ax came public at $20 back in April, jumped nearly 35% first day of trading, ultimately running as high as $42 and changed a few days later. Now, though, it's fallen through the offer price coming down to $18. I can't find out why. Some of it's because AEX reported earlier this month and Wall Street, I guess, didn't like the numbers. Stock got slammed. Didn't matter. It was a huge revenue beat. The earnings and backlog. Both came in weaker than expected, but not that much. Still, I think demand remains strong. They keep winning a lot of new business. At the same time, AEX is trying to buy Black Sea Technologies for as much as 650 million stock in cash, which is a lot of money when you're a two billion dollar company. This would give them exposure to unmanned ships and submarines which they could tie into their drone software system. So, is this one worth circling back down here? Let's take a closer look with Roger Wills, CEO of AEX to find out. Mr. Wills, welcome to Mad Money. >> Hey, thanks Jim. Great to be here. >> Okay, so first before we get to I don't want to say what else has stopped because I think there isn't anything. It's just lower. Um why don't you give us a little description about give us an AX 101. >> Absolutely. So AX is one of the fastest growing autonomous unmanned systems companies. We deliver battlefieldproven air and maritime platforms at scale today. All of our systems are backed by a highly differentiated and deep technology stack that gives our systems the navigation and autonomy capabilities to operate at long ranges on a contested battlefield where GPS is being denied, communications are jammed, electronic warfare is deemed being deployed all while maintaining high degrees of operational effectiveness. >> Okay. So I is your company a company that makes everything here in the United States and can you do it without costing too much? >> Yeah, so we have uh extensive production and manufacturing systems in here. Our Tampa production facility can generate over a,000 systems of Tampa. >> Oh, Tampa. Okay. >> Thousand uh systems a month. We've recently expanded another 83,000 square feet to more than double our production in the coming months. and we've onshored the vast majority of our supply chain to ensure that we're building here in America, building the industrial base and investing for scale. >> Do you have drones that are as cheap as some of the ones that we're seeing in Ukraine? >> Yeah, we have uh meaningful drones in Ukraine. Uh you know, we we are executing one of the largest long range precision strike programs. We call it the Yukon deep strike program. And by the time we finish this fiscal year, we will have delivered over 9,000 systems to combat operations in Ukraine. many of our systems are are extremely affordable, especially compared to traditional weapon systems and believe that they offer economic asymmetry. >> Well, I'm glad you brought that up because I wanted to ask you how changed is the Pentagon? Now, I always felt the Pentagon was for, you know, long-term projects that are very expensive where you go to one of the big five and you say, "Listen, we need uh something that is going to be long range and they come back with very expensive missiles that we obviously have discovered we can't produce fast enough." >> Yeah. with a proliferation of of very affordable autonomous unmanned systems is absolutely revolutionizing warfare. We're going to see these kinds of systems structurally deployed in every major combat in every major force structure moving forward. What we are seeing is a lot of short cycle uh production under contracts faster. >> Yeah. Yeah. Faster as they try to get these systems out. And that's perfect for AEX. We've got the system, we've got the infrastructure, we've got the mature systems, and we've got the supply chain to do that. >> Okay. Then tell us why you needed this uh acquisition, which is a big acquisition. I found it quite exciting, frankly, because I I felt that this is the key uh piece of the puzzle, which is unmanned uh naval. >> Absolutely. We couldn't be more excited about the Black Sea acquisition, welcoming their uh their team to the AEX family and really creating as soon as this acquisition closes the largest pure play multi-dommain autonomous systems company in the United States with platforms across air surface and subsurface all battleproven all uh being built and deployed at scale. >> Are any of these being used right now uh in the Gulf? >> Absolutely. So, uh, Black Sea has, uh, deployed over 350 unmanned autonomous surface vessels. They're seeing action right now in the Gulf. Uh, AVX, uh, supports multiple different combatant commanders across m, uh, areas of operation worldwide. >> Now, I felt that when I tried to puzzle over the quarter and where the stock is, maybe people feel that you have a big deep strike program and that's going to run off and it's not going to be replaced necessarily by something in in Europe. >> Yeah. Well, we we do have a big uh Yukcom deep strike program. It's rolling off, but we're seeing an acceleration of production programs here in the US supporting US operations, supporting US objectives. That's accelerating and replacing the revenue that will be rolling off as part of the Yukon Deep Strike program. So, that transition was already well underway. >> Now, I know that the Black Sea people wanted stock. I mean, half stock, half cash. Perhaps people are concerned that when the deal closes, they're going to blow out all their stock. That I don't think that makes sense. No, look, I think we we structured the deal in a way that not only uh supports the long-term participation of the Black Sea teams, but also works to to increase and enhance shareholder value over time. We want them invested in the company working to uh generate value. >> All right. Now, once again, I need to ask this because I get so concerned. We have the manufacturing capability. We have the engineers. We have the workers, the blue and the white collars to do what you're doing in our country. We absolutely do. Now, we need to continue to do it faster. We need to continue to develop the industrial base to produce at scale on timelines that are operationally relevant. And AVEX is doing that. As I mentioned earlier, we are investing in increased footprint, capital, equipment, and most importantly, the team that's going to allow us to meet the demand signals that we see moving forward. >> Well, I mean, I'm a believer, you know, that we did that piece without knowing who you are. Now, and I've met you and I've talked with you uh in the interim and I look I'm call me confused about the stock price, but confused is good because I don't see anything wrong. That's Roger Wells, the CEO of AEX Corp. It's AE Vex, symbol AV X. Thank you, Roger. >> Great. Thank you, Jim. That money back. [music] It is time. It's time for the lighting round so byebye sold the corner of time. You're playing this town and then the lighting round is over. Are you ready? Let's start with Ron in California. Ron, >> hi Jim. Hi Jim. [music] Thanks for taking my call. I really appreciate it. >> Of course. I'm confused about one of the stocks I have. Um I've been reading a lot of very positive articles about this company. However, last month its CEO sold $82 million of his shares [music] of the stock. Should I follow this lead and sell my shares of Rocket Lab? >> Uh, I'm not a big fan of Rocket Lab. We like Hawkeye 360. Be careful. It does have a big lockup expiration. I think Rocket Lab is too speculative and I think that Wow, maybe you should follow the CEO. I did not know that. Let's go to Randy in Nevada, please. Randy. [music] >> Hi, Jim. I'm fairly new to the game, but I've become a good fan, man. >> [music] >> I recently bought 100 one I recently bought 100 shares of Canadian natural resources and [music] I would love to get your take on this stock. >> I like that. I think it's one of the better oil and gases. I also like Nbridge. By the way, there's big Thank you uh RBM for this big liqufied natural gas coming out of can Canada in the far west in the in British Columbia. And I think people should recognize that that's going to be terrific for all the Canadian natural gas companies. Let's go to Rocky in Massachusetts. Hockey >> Jim, how you doing? I'm a a new club member. >> Oh, excellent. >> I'm about halfway through your book. >> Ah, thank you. Thank you very much. >> And I and I guess my question revolves around valuation and talent here. Um, >> all right. >> Look, I got >> Go ahead. [music] >> Oh, I cut off rock. I didn't mean to do that. Okay, now here's the issue with Palanteer. I have been committed to say it was going to go up to 250, at least 200. I'm not backing away. They've had an amazing quarter. [music] It's a great spec, but it is a spec. And I know people pillared me when I came all the way back. Uh, but I stuck with it and I'm not I'm not leaving it. I think it's real good. What can I say? Let's [music] go to Carl in Indiana. Carl, >> how are you, Mr. Kramer? [music] >> I'm good, Carl. How are you doing? >> Oh, at 83. I'm doing fine. Thank you for taking my call >> from uh Indiana home with both the last undefeated teams in both college football and basketball. >> That's very true. Very true. >> I'm trying to uh stay away from uh AI stocks and uh I have a stock that has a forward PE of 28, a high gross margin. It's a national [music] uh uh PAT pipeline uh company. Bought another one just recently. >> And my stock trading at 10% down. [music] And my stock is Williams company. >> Oh boy, I love Williams. [music] You know, I'm going to throw in ET. And I still like Bueno even though it's had a gigantic move. I think Williams is terrific. EP. Uh you know what? It's funny. I'm going to give you all of them because I have a many of them in how to make money because this is where you got enterprise product partners. EPD is very good almost 6% yield. I've got a list of the [music] ones that have good yield natural gas but Williams is terrific and I applaud you. I think you're making great deal sets. Let's go to Mike in Florida. Mike, [music] >> Jim, I've been watching for 20 years and I'm an investment club member. >> Oh, thank you. You know, we're strug, you know, [music] we're trying so hard to do the right thing with the data center. We are torturing ourselves over this. We are torturing ourselves. But go ahead. Thank you. >> Um I was looking at an old school stock today with a 3% dividend yield and a price near one-year low. How about going old school and buy IBM? >> Uh IBM's rather I mean it's very tough. I think it's doing [music] better than people think. Uh it's all the way down. Uh but I have to tell you, I know that people hate the stock even though I don't think they should and I got to keep that in mind. And that ladies conclusion of the LIGHTNING ROUND. >> The lightning round is sponsored by Charles Schwab. Coming up, Kramer's putting Micron under the microscope to discern how the company can deliver for investors. Next. I do not envy the executives trying to appease shareholders with giant returns of capital. Most companies have a preset pattern. The average company, the S&P 500, returns a great deal of the profits to shareholders. Some companies take a pretty extreme approach. Apple returned roughly 94% of its profits, mostly in the form of buybacks, and it dramatically shrunk its share count. That worked fabulously for years as the buyback crunched on and on the stock ran consistent. Sanders has a similar playbook. At its August 13th investor day, the memory maker dazzled with the announcement that intends to return 100% of its asses cash to shareholders. Company rewarded shareholders with 4.5 billion in buybacks in its fiscal fourth quarter alone. Also added 14 billion to its its repurchase authorization. That's one reason why the stock's up 529% year to date. That's the number one performer in the S&P 500. It's like that they kind of issued a put a floor on the stock. Dell the third best performer up 244%. Wow. returned 1266% of his net income to shareers 126%. Both these were buybacks. Net income was 5.9 billion. Buybacks were about 7.5 billion. I know that sounds reckless, but Dell's operating cash flow is more than 11 billion. They can afford it. Which brings me to Micron where I visited last week. Now Micron's making a killing right now. It has a gross margin more than 80%. That's huge. One of the greatest in the entire market because Micron took money from the chips act to help build semiconductors here in America. it prohibited. They're prohibited from doing a large buyback until December 9th. What will the company do once it can start repurchasing stock in size again? Everything's on the table. Uh Sanjay Moro didn't really answer my question in a way that would satisfy shareholders who want a san approach. Keep in mind spending a fortune on semiconductor plants to build build up our domestic capacity, take share from the Korean competitors. What's the most responsible thing to do? All right. To me, it's exactly what Mro is doing. He's bending big to make sure Micron's the biggest and the best. However, I think some shareholders view that as a huge mistake. They prefer a big buyback that shrinks the flow like they got from Sanders. Less building, lower capex. I'm glad I don't have to make this decision. Micro's committed to investing $250 billion in the US through 2035, which would allow it to produce 40% of its DRAMs domestically. That could create 90,000 direct and indirect jobs. It could bring back whole towns like Clay, New York, where where Micron's building out this hundred billion dollar fab complex, the largest private investment ever in New York. There's some troubled history here. G built a television design and production site there uh in the 40s after the war. Thousands of workers toiled over multiple years. 1993, Loheed Martin took over the site. Loheed Martin's still there, but it's no longer the locust of big manufacturing jobs. Plus, neighboring Syracuse is one of the poorest midsize cities in the country. Carrier another big employer used to manufacture container refrigeration products a huge blueco collar operation that's gone now though carrier still maintains a big research facility together this idle workforce form these companies well could be it could be different for micron and for the uh their families too now that we're committed to bringing back manufacturing for critical materials I applaud that but this is mad money so we need to ask is it good for the shareholders is it good for you is it what you want now some shareholders don't want growth They want return. I think that like SKH Highix, the largest company in the memory space, that's a Korean company. Micron can do both. These guys have a long history of building things in the US in Boise and Clay, New York. Wow. It's part of their DNA. They aren't going to return capital if there's big money to be made expanding. So, if you own Micron hoping for a sandous like return of capital, you're probably not going to get it. The reason to own Micron is because it wants to innovate and bring out the best semis even if it costs a great deal of money. I support Micron strategy not just because it's good for American manufacturing but more importantly because it's good for the stock. IT'S UP 220%. It's the fourth best stock in the S&P 500 year today. Not bad for a big spender. I like to say there's always a market summary at P just for you money. [music] I'm Jim Kramer. I'll see you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable. But neither CNBC nor its affiliates 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.