Mad Money 09/28/26 | 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 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 save you some money. My job is not just to entertain you, but to teach. So call me at 1800743 CBC or tweet me at Jim Kramer. Wall Street hates nothing more than uncertainty. If the president would simply explain his plan for Iran, even if that plan includes enduring higher prices for pretty much everything until we somehow win, I think business would be in much better shape than it is. Instead, we have this drip torture where prices seem to go up a little each week impacting everything we buy at a Kroger or Lowe's or McDonald's. And we have no idea how long we're going to have to cope. Instead, we have this lack of strategy. So, everyone from the heads of households to CEOs of major companies all cringe. The prices have to be raised yet again. And that's how you get days like today where the Dow dips 347 points, S&P loses 77% and the Nasdaq drop.92%. I know it's not the kind of thing you do before an election, but if the president would just tell us to prepare for pain, it would provide clarity, although it would also make the Fed's chief Fed chief's job a lot clearer. Kevin Marsh would say, "Look, we have to tighten until the war ends because we are becoming a guns and oil economy, like a less palatable version of the guns and butter economy we had under President Johnson during the Vietnam War. That setup led to rampant inflation. Eventually, our government gave up on both the Vietnam War and the war on poverty. So, inflation slowly subsided for years until the end of the 70s when it came roaring back. Of course, we don't want any of that. Nor do we want to wear whip inflation now buttons like I did under President Gerald Ford after Nixon resigned. 12% inflation back then. A button didn't solve it. Only much higher Fedmandated interest rates did. That was painful for me as someone who's a stock picker. the lack of an endgame with no source of energy and tremend new sources at least and tremendous cost being pushed through the system. It makes it more difficult to find stocks that are worth owning. That's true. Members of the CBC Investing Club know I've been resolute though that that there are opportunities like the two stocks that I've been recommending now for the last month. Intel and Meta. I know it's boring when I repeat the same stocks relentlessly, but without the repetition, it just doesn't get through. And these have been winners. Why Intel? Why Meta? They fit the moment. That's why. First, the products are in such high demand, one new, one old, that there are no concerns about demand destruction, which is usually the end result when higher interest rates clash with higher prices. Second, they're each in a new product cycle. Meta has Muse, its personal agentic AI platform that could potentially have several billion users. Personal assistants, whether for consumers or for the enterprise, are irresistible when they're cheap. use is free as long as you don't use it too much. I think Meta crushed it with this and I bet it'll have much more market share than Open AI, which remains niche compared to the house that Zuckerberg built. By the way, we're going to find out all about the impact of this huge new product tomorrow when we sit down with Meta's president, Dina Pal McCormick. You do not want to miss that. Muse, like so many other agentic devices, is a workhorse that runs on CPUs. There are only three major CPU companies, Intel, AMD, and ARM Holdings. This market is so big that it it can use them all. Plus, Intel has a new foundry coming online with great specs, albeit not as great as Taiwan Semi. Intel CEO Lip Boutan has turned his company from a has been into a force to be reckoned with. Of course, Lisa Suz AMD has left them in the dust. More on that later. But Lip Buu can see in the dust. And unlike his still dreaming predecessor Pat Gellinger, he has a grip on what can be done and more important, what can't. Earlier this month, Reuters reported that Intel may be scaling back its Ohio memory chip factory, perhaps sharing it with SK Highness, Korean giant to staunch the bleeding. He's a disciplined investor comes from his time as a disciplined venture capitalist. I have total faith that his plan to return Intel to greatness will succeed. However, I acknowledge that balance sheet was wrecked by Gellzinger and the current turnaround only possible thanks to the resurgence of CPU demand. Intel stock dropped seven points today, something we are used to seeing after parabolic moves. It could end up being another good chance to get in. Let's go back though to the idea of what can work in an environment when oil's up, interest rates are up, and therefore stocks tend to go down like they did today. You have to see what companies have. They need demand. They need pricing power and they need scale. If they have all three, they won't be as impacted by higher interest rates courtesy of the war with Iran. Now, that doesn't I know I know it leaves us with a breath problem and not the kind that can be cured by Listerine. The oil complex represents the only stocks that are truly in demand. Chevron is the king with great offshore, terrific Venezuela, amazing Asia and Mediterranean and extraordinary perant assets. Best balance sheet, too. Okay, so you got that. You want yield? It's Enbridge with a 6% yield. They bring in all oil from Canada. President would be unwise to ban Canadian oil, although his disdain for Canada seems to know no bounds. So, who knows? Wouldn't be the first time he cuts his nose off despite his face. That concern helps explain why Enbridge has such a big yield. And I like the Nat Gas Liquids business which is just crushing America because all the problems in the Gulf, it's Enterprise Product Partners, EPD, which I read about positively and how to make money in any market if you want to have one. Now, here's the real irony. I know I should be worried about the breadth of the market. So few stocks are indeed working the fewest in terms of breath that we've had since yes the blow up of the docom period and that says we're in real trouble. But there were so many times in the last two decades that we've been in real trouble that I can't even count them. In these moments you try to find the stocks that work in the turbulent negative environment we find ourselves in. You don't abdicate. YOU DON'T SAY YOU KNOW WHAT WE'RE IN IMPOSSIBLE SITUATION. YOU DOUBLE DOWN ON THE WINNERS like we said to do on Met and Intel. The ideas are out there. Have you noticed Microsoft for instance? There's a company that's quietly becoming a force via co-pilot. Don't forget Apple. As someone who's buying a second line for the duo, a must with Starlink everywhere. I know I won't be alone. And of course, remember the other own don't trade stock Nvidia. Today it announced a sound plan based on engineering that could control the run among autonomous agents. We keep hearing about ones unleashed by anthropic and open AI. Many other big tech companies, including Anthropic, have joined Nvidia's effort. Plus, Nvidia announced a monster 150 billion buyback today. That's the biggest ever. Watchers in this show and members of the CBC Investing Club know I've been calling for that. Let's hope it's actively managed to take advantage of momentary dips. Here's the bottom line. In every period like this, when it's dark and dawn is not nigh, you have a choice. You can make hay while the moon shines or you can wait for the sun. Personally, I don't like to wait. I just want to try to make some money. Let's go to Sam in Pennsylvania. Sam. >> Jim, how are you? >> I am good, Sam. How about you? >> I'm good. You know, Jim, in a world of all this AI slop, I think a company like Thompson Reuters should becoming more valuable given the fact that it's got a good moat around the the reliability of the information that they're selling. So, I'm curious what you think about Thompson Reuters given the selloff that it's experienced as part of this software apocalypse. But I think this company is undervalued given the the moat around that information. It's it's you know it's it's regulated uh industries rely on it and that's not something that can be replaced by AI. I I think that's true. But what has happened is everything that is possibly considered to be uh replaced by uh by AI has to have its multiple shrink and this stock still sells at 28 times earnings. Until that multiple comes down and that yield goes up. Of course this is what happens when a stock declines. Uh it's not a bargain. And that's all. It's just not a bargain. Let's go to Dustin in Oklahoma. Dustin. >> Oh, yeah. Jimbo, how you doing, sir? >> Good, Dustin. How about you? Thank you. What's going on? >> Doing great. >> Blessed. Hey, I'm calling you back, my friend, on a company we've discussed before. Um, in the last two plus months, it's gone from all, you know, 52- week high to a 52- week low. Um, you know, they're in the process process of growing a lot at 185 new stores this year and possibly a real estate deal that may be falling through with Salad and Go. What are your thoughts right now on Dutch Bros? Because I'm a believer every time I'm there, it's busy. I'm ready to roll with it. >> You know, I tell you, I think this stock's being I think it's being raided. I'm not kidding. I know the price target's been cut by a couple, but I I think it's actually being pushed down. I'm not saying be manipulated. You're allowed to do whatever the heck you want, but I this company has terrific growth and it's been just crushed and I don't think it merged the crushing, but there are people who say you got to short it and go long something else. And that I think is a major reason why the stock is going down. It's a very well-run company. Let's go to Robert New York. Robert, >> Jim, thank you so much for having me tonight. I appreciate it very much. >> Thank you, Robert. Good to hear from you. >> Thank you, Jim. Jim, I was up in Buffalo last week and it's it's one question I get from a lot of the young people and they say, "Well, how do I make money in the market?" And there's two ways to make money in the market. I say, "You got to watch Kramer and you've got to go out and buy the book. How to make money in any market." And I tell these young people all the time, Jim, everywhere I go, buy the book. >> That's I mean, I'm trying to get people to understand why a STOCK IT'S WHY A STOCK GOES UP OR DOWN. I MEAN, NO ONE TELLS you it because no, it's it took me 200 pages just to DESCRIBE WHY A STOCK GOES UP a dollar, but it was worth it. >> And that's why the young people should buy this book across America because I appreciate you start this, Tim. If you started at 23, 24 years old, by the time they get to our age, they make millions of dollars if they start now. >> Well, that's what we want. We hope they do that. How can I help you tonight? >> We got to get to work. Okay, so this next company operates a chain of fast casual restaurants serving burritos, taco bowls, etc. They emphasize food with integrity sourcing high quality ingredients including naturally raised meats, organic produce. They have a growing digital platform to support online delivery mobile transactions. They're experiencing strong comparable restaurant sales growth. Now, Jim, they just appointed Sabir Sami to its board of directors. Sami previously held senior leadership roles at Yum Brands, including positions across major global quick service restaurant. He's an expert and the guy who's running the company, Scott Boat, right, is keeping the boat straight and right. The name of it is Chipotle. >> Um, I think Chipotle at 31, it seems to hold that level. I can't say it's cheap, but it's never been cheap. It has been at this price and bounced before, and I think it will do so again. I like the stock down here. Even as the restaurant group has gone completely out of favor, you can make hay while the moon shines. I prefer to do that than just sit on my hands and look at the screen on Money Tonight. AMD briefly entered the trillionaire club. So, what or who is behind this meteoric rise? I'm going to take a closer look. Then, as the Fed raises rates, are high yielding stocks still an area of opportunity? I'm going to investigate. And I'm digging deeper into Costco's latest quarter. Don't miss my take on this club name and stay with Kramer. >> Don't miss a second of MadMoney. Follow Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743cnbc. Miss something? Head to madmoney.cnbc.com. Last week, AMD rallied nearly 13%. Temporarily reaching a trillion dollar market cap, although it dipped out of the trillionaire's club today. Still, thanks to the launch of Meta's personal AI agent platform, anything connected to the CPU business caught fire because Agentic AI requires lots of high-end central processing units, CPUs, and AMD's arguably become the top dog in CPUs. Honestly, it's incredible how far this company's come under the leadership of Dr. Lisa Sue. She took over as CEO of AMD roughly 12 years ago, and at the time, this company was an afterthought, an asterisk. just a total also ran a semid company. One that spent nearly its entire existence living in the shadow of Intel for decades. I got the sense that Intel was going easy on him. Why? Because they let AMD go under. Well, they might get hit with an antitrust investigation by the Justice Department. I think it was the right call for Intel, but AMD was a just in a pitiful state for ages. When Lisa Sue came in near the end of 2014, this was a $3 and change stock with a pathetic market capitalization of just over $2.5 billion. practically a small cap and Wall Street didn't like the news of her appointment. The next day, the stock dropped 10%. Fall to just below $3. In retrospect, I bet those sellers are kicking themselves. They should be wearing like kick me signs on their butts. Since Lisa Suit came in, AMD's rallied an astonishing 18.433%. That's right. I'm going to repeat this. 18,433%. It now is a 9 $992 billion market cap, down from the trillion dollar club after today's beatdown from most of the AI and AI related stocks, including Intel, by the way. But back in 2014, this future was unimaginable. AMD was in dire straits. When Lisa suit took over, their core CPU business was losing market share in servers and PCs. Now, they bought this thing ATI Technologies in 2006, get into the graphics card game. That deal left them saddled with a mountain of debt. A lot of people thought that there was a risk of this company going bankrupt. Then Dr. Sue comes in and turns around pretty much everything. You know, it was a cold shot. When the stock was at $5, she met me for dinner. She told me she was going to crush Intel, that she'd overtake them, and I better get off the Intel train and jump on the AMD train. At first, I argued, then I shut up because I could tell she was serious and serious about her game. She schooled me. So, I got on the AMD train and avoided the oncoming Intel train wreck. Look, an engineer by trade with bachelor's, masters, and doctorate degrees in electrical engineering from MIT, which of course means she's smarter than all of us. Sue set out to beat Intel and then Nvidia at their own game by designing high performance chips for the end markets that AMD could truly compete in. That meant getting out of markets where AMD was not competitive enough. Things like chips for smartphones and sensors for so-called Internet of Things systems. They gave up on that stuff. They had not enough money in it. Since then, we've seen AMD move surgically from market to market using Italian houses or product lines, which is fine with me having just returned from Italy. First, they improved in core areas like CPUs for servers and PCs, quickly catching up to and then surpassing Intel. Technically, AMD's market capitalization caught up to Intel back in mid 2022. But the truth is, they've been running circles around Intel for years at that point. Now, AMD's with its spitting distance of that trillion dollar club that I mentioned. Intel's a $613 billion company. That's after Intel engineered its own remarkable turnaround. Remember last year, Intel had to be bought out by the feds uh in the form of $9 billion equity investment. At the same time, AMD became very competitive in graphic cards and systems on a chip solutions for video games. Now, more recently, AMD decided to do something really ambitious, which is to challenge Nvidia in the high-end GPU business that Nvidia dominates. That's AI training inference workloads. Of course, look, Nvidia is still the top dog. I no no one would dispute that. But AMD is making big money, too, and has some really solid products that are more than competitive than people think. Early on, Lisa soon realized that AI was the future. There would be enough room for multiple players in the high-end GPU space. Nvidia literally can't make it their own chips fast enough to satisfy the demand. Of course, there was room for AMD there and just a great business decision. Now, look, I don't want to make all this sound easy. Lisa Sue took over at AMD and basically never stopped working. The whole time she kept her head down. The only time she ever allowed herself a deserving break was her commencement address at MIT this year. A terrific victory lab. By the way, she also made one of the best pitches for AI that I've heard in a while. I'm going to quote it. It is not just a tool that can help us do things faster. It is deeper than that. It has the potential to accelerate discovery in every field and help us solve problems we have never been able to solve before. End quote. Now, that's a much easier cell than it'll take all your jobs and possibly destroy the world. Lisa has a beat on common sense. She deserves our trust. She certainly earned it. I am proud to know her. But getting to this point took a tremendous amount of hard work for a chipmaker. Product development cycles take they take multiple years. And it's not enough to have just strong oneoff products from time to time. You need to present a clear product roadmap that gives tech customers the confidence to design your chips into future iterations of their products. AMD did exactly that, gradually winning the conference of both customers and Wall Street. Dr. Sue made a huge bet on high performance computing not long after she took over. And well, for the last several years, it's just been money. Now, the latest leg hire, the one that brought brought AMD to the trillionaire dollar club, has been in part a stroke of good luck. Like I mentioned before, earlier this year, the focus for investors shifted from AI model training to inference and agentics. And it's become clear that demand for CPUs was going to explode because you need more CPUs to run these useful AI agents. Even though I fel feel much better about Intel these days under C new CEO Lip Bhan uh who took over last year, AMD remains the leader of CPUs, which is why people have been buying the stock handover fist. This one had a big but surprisingly quiet run this past spring, climbing for about $200 the end of March, roughly $500 by late May, and $580 by the end of June. As the agentic story really started playing out, at least in the enterprise, after taking a breather and pulling back a bit in July and August, AMD caught fire again this month when Meta launched Muse, its consumer agentic AI platform. The stock's now up almost 30% for the month of September alone. Of course, today we had another increase in oil prices, so interest rates ticked up and stocks pulled back, especially stocks of big gains. AMD sold off 3.6% 6% today, falling back below that trillion dollar measure. But man, what an incredible run. Thanks to Lisa Sue's understated dog and tenacious leadership, she transformed a $2.5 billion company into a nearly trillion dollar powerhouse. I let the hobgob goblin of diversification keep me from owning the stock for its latest spectacular run. I felt the charitable trust already had too much semiconductor exposure, but I've been kicking myself for the entire move. The diversification has cost my trust a lot of money. Here's the bottom line. Dr. Lisa Sue has orchestrated one of the greatest turnarounds in history at AMD. Arguably maybe the greatest of all time. And I see no sign that it's going to stop anytime soon. Madam Money is back after the break. Coming up, should you be turning to high yield stocks in this dicey market? Not so fast, says Kramer. He's explaining next. Not too long ago, whenever the economy hit a rough patch, investors were parked their money in the so-called safety stocks. And nothing offered more safety than a bountiful dividend. As those stocks came down along with the rest of the market, their yields, of course, would grow even larger. And eventually, that would lure buyers. In those days, a big dividend was like a trampoline underneath your stock. But lately, high yielders no longer represent safety. If anything, they represent complacency, even danger. Because who cares about a juicy dividend when the 10 years paying 5.24% virtually risk-free? When rates are high, dividend stocks simply can't compete with the bond market. Sell, sell, sell. >> We've seen this over and over again this year. Just look at the five highest yielders in the S&P 500 right now. We'll go into descending order. Start with Vch Properties, VICI, a real estate investment trust with a nearly 8% bountiful yield. This is a company that originally owned the real estate under a bunch of casinos. But over the years, it started expanding into wellness resorts, bowling alleys, water parks. It became a messier story. Doesn't help that the court casino business looks pretty dicey right now. With gas prices skyrocketing this year, it feels like a bad time to go to Vegas. Meanwhile, Beachy Properties has seen its growth slow to a crawl. We're talking low single digits. LSD. Really, the only thing this stock is going for it is it sky-high 7.93% yield. But with the stock down nearly 18% year to date, that dividend sure hasn't offered much protection, has it? If you bought it when it stocks yielded 6%, well, now you have no idea what to do with it now, do you? Second highest yielders, General Mills, the package food kingpin, 7.3% dividend yield. Last week, Mills reported a solid quarter, reaffirmed its fullear forecast. The stock initially rallied 1% response. Makes sense. But then it fell 2.8% the next day and then dropped another 3.4% the day after. Now, maybe Wall Street didn't like that they failed to raise their guidance. Maybe people were turned off by the company's declining sales and earnings or the fact that it's being hammered by high input costs. And then there's always the existential GLP-1 concern that no one seems to be able to beat. In the end, General Mills stock fell more than 7% last week. It's down down 28% year to date. If you bought this onetime safety stock hoping the dividend yield would protect you, well, you have taken a serious beating. Next up, there's United Parcel Services, UPS 7%. This iconic shipping stock has spent the past 4 and 1/2 years working its way lower, lower, lower. torn apart by labor disputes, lost Amazon business, and furious competition from FedEx, which has proven to be a better operator, which is a big reason why we are telling CBC Investing Club members to buy it down here. As a result, UPS has been seeing falling sales and earnings for three straight years now. The business was finally supposed to stabilize in 2026, but then we got hit with the Iran war that sent oil prices through the roof, and now the Federal Reserve's hitting the brakes on the economy. The stock's down 5% for the year and that 7.1% divid yield. Cold comfort. How about no comfort? The fourth highest yield in the S&P. Brutal. Edison International. The California based electric utility 6.8% yield. This one's down 26% over the last month. Although nearly all of that's from what happened with the California legislature, which killed a plan to partially protect utilities from wildfire liability. That's not Edison International's fault, but I think you'd have to be crazy to bet on a California utility year, no matter how big the dividend yield might be. You can't trust that legislature in California did the reasonable thing for everybody. Finally, the fifth highest yield in the SPF 500 is intriguing to me. It's Craft Hind, another iconic package food company. 6.8% yield. Of all these dividend stocks, I do think that Craft Times actually has the best story because it's now run by Steve Kaling, the man who broke up Kellogg and made his shareholders a fortune in the process. I actually think you can do the same thing at Craft Times. Although he wants to get the core business stabilized before even thinking about a breakup. Kane's spending heavily on advertising to breathe new life into his brands, but this could put a little uh pressure on the bottom line there. At the end of the day, I'm optimistic about craft hinds is dropped 8% over the past month, though. Hey, what exactly is that 6.8% yield protecting you from anything? There's simply no safety in these so-called safety stocks. Why is that? Like I mentioned before, a lot of this comes down to the fact that dividend stocks are sinners in the hands in the hand of an angry bond market. Right now, the 10ear is paying you more than 5.2%. And Wall Street seems pretty convinced that Treasury yields are going to keep heading higher. That's brutal for higher yielding stocks because bonds are their NATURAL COMPETITION. LET'S say you like I'll give you a good one. Let O reality income. It's a fine retail uh focused real estate investment trust. Pays a monthly dividend. Yields 5.9%. That yield offers an attractive premium versus the 10ear for the moment. But if you think the tenure is headed to 6% and reality income is not worth a second look, no wonder it stock is down nearly 10% so far this month. And it's a good company. The other issue is that many of the high yielders just don't have enough growth. And some have developed reputations for cutting earnings estimates in recent years. That's especially true for that package food stock. But they're not alone in this. Who cares about a high dividend yield if the earnings estimates are coming down? If things get bad enough, the company might even, yes, cut the dividend. And that's something that doesn't happen with treasuries. Of course, anytime you buy a high yer, you need to worry about the possibility of dividend cut. often super high yields are single that the payout simply can't be maintained. They are true red flags. But lately that abstract concern has become more real as several high-profile companies have indeed slashed their dividends including some that I I think really were on record as never wanting to do it. The Campbell company uh was the latest cutting its dividend by 36% earlier this month. For that the stock had been yielding 6.6%. I thought that dividend might be sacraane. Another package food company Kaggra Brands was yielding north of 10% for it cut its dividend in half in July with very few exceptions. A double digit dividend yield is a major red flag. Whirlpool has struggled for years and made a tough housing market and suspended its dividend early entirely in May. Every time something like this happens calls into question the safety of high yielding dividend plays and reaching for yield which is something I never like to do. So here's the bottom line. There was a time when high yielders were the ultimate safety stocks but that's no longer the case. Instead of safety stocks, these have become some of the most dangerous stocks in the market. Safety first. I say in this case, safety last and buyer beware. >> Lou and Faroo. >> Hello, Mr. Kramer. Thank you. Thank you. And thank you for taking my call. I appreciate it. I love your show. You're fantastic. >> Thank you, Lou. Thank you. >> I I I've been watching you for years over and over and it's it's just entertaining. It's fabulous. The energy >> you're terrific. I still try to bring it. You know, took a week vacation, come back and get charged up again. What's going on? >> Oh, nice. Uh, my question is, uh, on Pepsi, um, everything's down in the drains right now. It seems attractive to me, but you know, I have to appreciate your genius, Jean, and I wanted I Yeah, thank thank you. I wanted to call you out regarding this. thing you did, Lou. It was a com I actually had a conversation with Jeff Marx who runs the uh travel trust with me about PepsiCo. I felt that it would be beneficial to to when it got to 5% maybe to take a position. But if you take a look at the stock, what it's telling you is down 10% for the year that it that the dividend may not preserve or act as a trampoline I once thought it would. Why? Free to the business is a tough one right now and people don't want it. The only one of these stocks that I saw that was really having any any luck here is Proctor and Gamble. And that's because it has nothing to do with food. All right. Surprisingly, these high yielding stocks just don't offer safety anymore. In fact, there some of the most dangerous companies in the entire market. Much more mad money. What will it take to reignite Costco? I'm taking a look at the latest quarter for clues. Then the naysayers are back for SpaceX and I'm not having anything of it. I'm giving you my take on how this company could keep powering higher. And Oer calls rapid fire in tonight's edition of the lightning round. So stay with Kramer. For a while now, Costco's been stuck in a funk, making it one of the most frustrating names in my charitable trust. Stocks down over 6% over the past 6 months. A pair with the S&P 500 up nearly 21%. This underperformance is crushing me. So, I was relieved when Costco reported a seemingly strong quarter last Thursday, one that sent the stock up nearly 3%. But even though renewal rates improved, a chronic concern, membership growth is still slowing, and that's a major issue for a company that lives and dies by the size of its membership base. Makes the money on the card. Don't get me wrong, the headline numbers were pretty darn impressive, but Costco sells for more than 40 times earnings, which means the numbers need to be pretty much perfect, especially environment where you can collect a 5% return almost risk-free by parking your money in a tenure. Plus, P multiples historically get crunched in a rising rate environment like we have now. Now, I've stuck with Costco for the travel trust because I'm a big believer in their business model, and for years, that was the right call. These guys offer the best bargains out there because they buy a relatively small number of products in extreme bulk. Their Kirkland Signature Private Label brand is incredible. I regard Costco private label as being superior to the branded version both in quality and on price. I think the annual membership fee at $65 is a steal. So is the Costco City Visa card, by the way, which is with some more than competitive cashback rewards. Plus, it's just a great place to shop. I mean, I don't know if you've been to lately Costco lately, but but when you see the pack parking lot filled with surprising number of Beamers and Benzes, you wonder how the heck the stock could be such a dud. So, what's the real worry here? All right, first let me give credit where credit is due. On Thursday night, Costco reported a healthy top and bottom line beat, 15% earnings worthwhile membership renewals increased to 89.8% with the US and Canada rising from 92.2 to 92.3%. Now, that may not sound like much, but a lot of investors have been worried about weaker customer retention. Executive memberships, which cost $130, double the normal card, reach a record 42.3 million people. They now account for 75.6% of sales because that executive membership deal pays for itself as long as you do enough shopping. And maybe that that's why my wife spends so much money there. But in this big butt, Costco's total membership growth slowed again. They finished the quarter, which was the final quarter of Costco's fiscal 2026, with 84.1 million members. Uh, that's up 3.8% year-over-year. That's below expectations. Total membership growth was 5.2% in the first quarter of fiscal 2026, 4.8% in the second quarter, and 4.1% in the third quarter. That is a disconcerting cadence. Membership fee income rose 7.3% to $1.85 billion. That was a little light. Now Costco's membership base under 40 has grown nearly 60% since co currently representing more than a quarter of the total. Management says these younger members initially spend less then grow into bigger spenders over time assuming they stick around. The concern is keeping them as customers. See younger shoppers are more likely to join online and online signups renew at lower rates than warehouse signups. Costco offers incredible bargains but got you got to you're going to end up missing most of them if you don't go to the store. like that good deal for new Apple phones that I expect to get from T-Mobile. I'll get my second line and which will be for the duo from T-Mobile via Costco if they keep offering low prices for Apple products as they have in the past. Their web business is very strong with digitally enabled same store sales growing 19.5%. Website and app traffic up about 30%. Shopping numbers robust too. Total same store sales rose 9.4%. Wall Street was only looking for 9%. Most stores would kill for those numbers, but a lot of that was from gasoline. Comparable traffic increased 3.3% versus 2.4% in the prior quarter. Adjusted average ticket also rose 3.3%. Great number. Lots of strength in home furnishings, small appliances, and housewares. Costco estimates it saved members more than $3.2 billion versus average gasoline prices in its markets. They they make very little money at the pump, but cheap gas brings in customers. Still, put it all together that slowing membership growth is a real problem. And I am not hearing a convincing strategy from management about how they can get younger online focused members to reup. They sound too comfortable, complacent, even seeming to assume this problem is going to resolve itself. You know what? If you're going to pay 40 times earnings for a stock, that's not enough. You need management to give you a clear plan. Even great companies can get blindsided when a dependable business model starts changing. They often assume the warning signs will just disappear. Don't get me wrong, I have tremendous respect for Costco, which is why we still own this one for the Charle Trust. I just wish they'd addressed the membership growth slowing issue more directly. Fortunately, I think there's a solution. The Wall Street Journal recently captured Costco's treasure hunt appeal with a reader who went in for toilet paper, which huge seller for them, and left with a trampoline. Okay, that that's the experience I want younger online members to discover. Costco could test a simple offer. Sign up online and receive a coupon for a $50 rebate after you visit the warehouse twice. Give people reason to come through the doors. Then measure whether they shop more often and renew at higher rates. Of course, these incentives cost money. I'm not saying they're bullproof. I mean, it's just my plan. But something needs to be done to lock these people down. Get them to commit. Taste the free samples. Eat the $150 hot dog. Get a delicious roasted chicken. Those are really good. I'd rather hear management discuss a concrete plan to build that habit than assume that younger members will eventually behave like parents. The company has the merchandise that's got to value. They just need to get younger members in the store so they can see how terrific they are. Now, there's a reason that after the quarter, eight different firms cut their price targets despite the upside surprise uh versus just one that raised its price target. That tells you how demanding the expectations have become. A good quarter doesn't automatically justify paying more for Costco's earnings unlike most companies. That's our dilemma with the investing club. Look, we own the business we admire and this quarter gave us reasons to stick around. But at 40 times earnings, it's an Achilles heel, which is why I rate the stock at two a hold for the charitable trust and we lowered our price target from 1,100 to 1,50 at just under $923 here. Frankly, I'm not interested in buy anymore. Maybe in the 800s or if management gives us a clear plan to juice membership growth. Here's the bottom line. Like the late great Charlie Munger, Warren Buffet's old partner, I remain a Costco addict. But younger members need a stronger incentive to make that trip and discover the value that value for themselves. When they shop online, they just don't see all the incredible bargains. They don't partake in the treasure hunt experience. If Costco can give them more of a reason to show up in person, I bet they'll keep coming back and the stock will shake off the 900s and power much higher. Man, money's back after the break. Coming up, you've got questions, Kramer's got the answers. Get charged up for a fast fire lightning round. Next, it is time. It's over the light. Bye. Bye. Goodbye. And then the lightning round is over. Are you ready, Ski? D. Light round C. Let's start with Ken in Michigan. Ken, >> Dave, relatively new to the club, Jim, but I want to thank you for the education. My question today is Super Micro SMCI. >> Okay. Super Micro is is inexpensive company. It looks like it, but I rather tell you I think there's major structural problems internally in that. That's why I like Dell, which has really been a monster. Let's go to Brian in California. Brian. >> Brian. >> Hello, Jim. This is Otry Brian and a proud club. >> This is Otry Brian and I'm a proud club member. And I got to tell everybody, you are honest. You handle yourself with integrity and I am so proud to be a part of your club. >> Oh, thank you, man. Well, you know, we tell integrity means you got to admit you're wrong. When I'm wrong, I put a flag up. When I'm right, hey, that's good, too. How can I help? Well, and you will write on James Cook. All right. This stock is an underappreciated play on AI power balconet. The backlog booking acceleration is extraordinary and the capacity expansion could unlock another enormous earning setup like Exometry. This is Fortune Power Solutions. Thank you Jim. >> You know, I I happen to like Fortune Power Systems very much. I think maybe people don't like yours. It sells 27 times earnings, but I'm with you and I think you described it very well and I thank you for the kind words. Let's go to Chris in New York. Chris, >> hey Kramer, what's up? Booyah. >> Booyah. What's up? >> Calling about uh Symbotic Symf trying to catch a week, but okay. Now, this is a a good company actually makes money, but it sells at 100 times earnings. I I can't get behind anything like that. Now, I know that multiple seems inflated. Here's the issue. Once again, expensive stock in a rising rate environment is something I can't count. I can't count this. It's too likely to hurt you. Let's go to Ken in Texas. Ken, >> uh Jim, this Thursday I'm going to get a significant position in Vor when it spins out of Cortiva. Should I hold it or should I get rid of it? >> You know what? I've not looked at that company and I must do that. Uh I I feel uh it's just too dicey for me to say yes or no. Let me do some homework on that one and come back to you. Let's go to Jason in Massachusetts. Jason >> Jim, a super El Nino probably means a warm winter. Amid a trade war with Canada, the snowmobile manufacturer now yields almost as much as a 10-year Treasury at 5.2%. Polaris Jim. No, Polaris. You know, this is a good example of a situation where the yield's high, but that's because it's worrisome and I'm not going to go with Polaris. Matter of fact, I'm going to go against Polaris. I don't want to touch it. And that, ladies and gentlemen, is the CONCLUSION OF THE LIGHTNING ROUND. >> THE lightning round is sponsored by Charles Schwab. Coming up, Kramer's taking aim at SpaceX's doubters and breaking down why the stock is ready to launch next. >> Booyah, Jim. Your integrity makes you the booyah saint of Wall Street. >> Booyah, Jimmy. Booyah. Jimmy tell Jim >> quadruple. That's a lot of booya. The nitpickers never stop. I got pushed for an article this weekend about how retail investors buying individual stocks are first class idiots. The real theme seemed to be that home gamers have no right to buy stocks. If they do, they're all gambling fools. The fact that more and more individuals are selecting individual stocks, 20% of the volume of all stocks versus 10% not that long ago indicated to the author, there's just way too much speculation. They think these individuals better get ready for some real big losses. And it's a crying shame they don't stick with index funds. The author didn't stop there. The chief indictment, individuals were swarming to buy perhaps the most overvalued stock on Earth, SpaceX, the profitless $2 trillion behemoth run by Elon Musk. The author claims it's a classic example what happens when you let individuals run a muck and buy anything they want regardless of the fundamentals. I'm calling BS. There are perfectly legitimate reasons to believe that SpaceX could have an incredibly bright future. What makes me say that? Well, let's start anecdotally. Let's start with my trip to Italy that just concluded. We own this house in Tuscany and after a completely outrageous electric bill, our next biggest monthly charge has been the spotty, inconsistent, totally maddening wifi bill. We rent the place out and any renter these days demands uninterrupted phone calls, high-speed internet, and all the cable they can handle. For that, we were paying $200 a month. And it wasn't good. IT WAS TERRIBLE. IT GOT SO bad that we were losing valued customers because of the ridiculous Wi-Fi cable situation. Yes, it's that important to people. It can't keep going down. We complain repeatedly to anyone who would listen. Somehow, despite the egregious language barrier, it got through to them because one day, a man in uniform who represented Starling showed up and told us that we could get everything we wanted for $50. I was dubious. Nice house. How much drilling are they going to do? How unsightly? It was only on this latest trip that I even found where the satellite dish was hidden deep in the woods. Saving $150 a month wasn't nearly as important as keeping paying clients. Small price to pay. And man, is it fast. Coming home, I knew I had an 8 and 1/2 hour trip. And I had eight and a half hours where the books and shows all downloaded. All I really wanted was to watch the NFL football games and not that game cast version. Luckily, somehow in the last 10 days, the airline had gotten Starlink. Suddenly, I was they lose WITH FLY FOOTBALL EVERY GAME. I didn't even want to get off the plane until at least I saw that the Cowboys were beaten. Now, I know that my experience won't be everyone's experience, but Starlink's an incredible service. It's my favorite part of SpaceX, even if it's not the most important part. The more substantive business decision to buy a huge number of GPUs from Nvidia is already paying off as Elon Musk is renting them out to Google at an 11 billion a year run rate. And he has a similar deal with Anthropic at a $15 billion run rate starting in October. That's $2.17 billion a month just for renting out some compute that Elon Musk had the vision to know to buy. But wait, there's more. When Musk first started talking about putting a data center in space, I mean, it was a laugh line, right? Last week though in Jensen Wong in an interview with New York Times Ezra Clyde, he said power is so important, so expensive that maybe we got to take the these orbital data data centers seriously. I know it sounds crazy, but the way Jensen casually mentioned it made me feel like the doubters will be the ones with egg on their faces. Sure, you'll need a bunch of rockets, but SpaceX just launched their new Starship into orbit today where it deployed 26 Starlink satellites. Who else could do that? I think the real win for Musk will be humanoid robots, but that's Tesla's business. Still though, there's nothing stopping him from merging Tesla with SpaceX. Call me an optimist, but the combined company could end up making a lot of money someday. The electric driverless cars, the robo taxis, and the batteries all could be long-term wins, but nothing on the order of robots. I read lots of stories about how robots could cost as much as 20,000 piece. However, I have no doubt that Elon Musk will drive that price down. GPUs for hire rockets Starlink robots driverless electric cars, batteries that can hold charges longer than most. Who knows what that's all worth? But I can tell you this. Anyone who thinks that it can't be worth much, much more than it sells for at least is thinking too small. It's not reckless to imagine a much higher stock price for this company if you have patience and a longerterm vision. Doesn't mean you need to buy SpaceX now. There's still a ton of restricted stock that'll be hitting the market over the next year. But the business, it's good and it will only get better over time. Alexa said, as always, the bull market. My prom just for you right here on 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 or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. 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