Mad Money 10/07/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Crazy. My job, not just to entertain, but educate, do some teaching. Call me 1800 743 CBC. Tweet me Jim Kramer. Back in the day, we used to just sit on our hands until we got the Treasury bond auction results. I can't believe it, but we're doing it again. That's right. A little more than 30 years ago, with interest rates higher than they are now, the US government seemed constant to be issuing new treasuries to pay its bills. We had nowhere near the debt we have now. In fact, the government was well on its way to balancing the budget. Almost seems quaint in respect. But we know one thing at my old hedge fund where I traded stocks and bonds with abandoned. If we had a bad treasury auction, one that was poorly received and interest rates instantly moved higher, then we were chumps if we had bought any stocks we liked before those results had come out. After a bad treasury auction, rates would sore and the stock market would get slammed. Back then, we had to wait until 2 p.m. to get the results. Now, we get them at 1:00. Today's auction was okay, but it wasn't inspirational and we ended up having a similarly just okay session with the Dow sinking 341 points, speed dipping 222%, NASDAQ declining 222%. Now, if the auction had gone better though, we probably would have had a much better day. >> Now, let's understand each other. Any market where you need to wait to see the results of a Treasury auction is simply not as good a market where you don't care about them. Every time you add a new variable to the equation, it makes owning stocks tougher. Anything that makes stocks tougher to own will push money onto the sidelines, especially after the sidelines start paying real good money. Why did stocks react so quickly to the sudden bomb movements after auctions back then? Why did they go down almost every time an auction was weak? Because bonds pervaded everything back then. So many companies depend on credit either for themselves or their customers. And credit costs for everything and everyone would go up every time we had a lousy treasury auction. If the US government had to pay higher interest rates to get money to pay its bills, you better believe so would Caterpillar, Ford, Macy's or IBM. There's one difference now from back then though. Almost every company ran on credit back then and the credit correlated with the strength or weakness in the American economy as well as interest rates. But that's no longer the case. Now we have two classes of companies in this country. We have old school companies that need credit and suddenly find it hard to get, all the while paying more for it if the auctions go sour. And that's the vast majority of the S&P 500. And then we have another group of companies. I call them sainted companies. Companies that even though they might need credit, definitely don't need to pay the going rate. You know which beloved companies I'm talking about? Yes, the artificial intelligence companies. They seem to be able to borrow at their leisure. They're crowding out other borrowers with demand for money. And with the sole exception of Oracle, they're considered terrific payers. Nothing we ever have to worry about. For example, we learned this morning of SpaceX trying to borrow $40 billion to buy Nvidia chips. Oh, they'll set them up in data centers, most likely sell the computing power that they create to others who need it. I like they're already doing what Google Anthropic very profitably. When it comes to creditworthiness, companies are rated by entities that do nothing but great paper. SpaceX is rated triple B. Okay, not great. And 40 billion is a huge amount of money. If there any non-data center uh related company, its interest rates cost would skyrocket, especially if we're the treasury auctions. But not the data centers. Nope. I bet that SpaceX, more on them later, doesn't have to pay that much over treasuries as it's called when you borrow close to government rates because the future for AI is considered so spectacular by the stock market compared and by the bond market. Compare that with the bonds just issued by Paramount. Now, Sky Dance, the heavily indebted entertainment company that's buying Warner Brothers. Skyance is totally hostage to the economy. The company issued a similar amount of bonds to what SpaceX is looking for. And even though the rates seem relatively attractive at around 8%, those who bought the bonds were immediately clubbed. Their losses were horrific. Why? Because the movie and television business are considered discretionary. You don't have to go to the movies, which by the way have gotten pretty darn expensive. And television disappearing advertisers are rel cutting and young people who don't even they never even had a cable bill. WHAT IS THAT ABOUT? Uh even though it has a double B rating, only a little worse than SpaceX, no one would touch those bonds. There are two takeaways here. First, there's a gigantic part of the economy, finance, housing, utilities entertainment retail autos industrials that still totally correlated to credit. Then there are other areas, data centers, semiconductors that make AI possible, power companies, and cyber security that basically have nothing to do with these credit concerns. Nothing at all. So you can pay less attention to the credit markets and more to their prospects. You know, I don't like to talk about bonds. You don't like it either. They're boring and hard to understand and we hear about them all day and it's like my wife says I snore. Higher rates are bad for the economy. And how do you know you snore? You're asleep. Higher rates are bad for the economy. Lower rates are good. But some companies in some sectors have lower rates than you'd expect given their credit rating. AI companies. After I saw the hoopla about this Treasury auction, however, it made me reminisce about a time when I read magazines or even watch movies until I saw the results of the US Treasury auctions because my head trader would say, "Go do something, anything, but don't look at the market. It will only tell you the truth after the auction's over with and done with." It was true then and today I think it's going to be true again except for the AI related names. Even though they were down today, believe me, those stocks are saying it. You don't have to wait to hear about the Treasury bond auction to buy them. Here's the bottom line. The AI data center stocks, maybe aside from Oracle, have nothing to do with what price the federal government borrows at. They only have to do with a future that's considered so bright that it obscures any problems, any bumps, and even any pimples. The rest of corporate America should be so lucky. Let's go to Chuck in Florida. Chuck, >> hey Jim, thanks for taking my call. >> My pleasure. >> A happy club member. >> Hey, Western Yeah, Western Digital. I've been buying the thing on the way down and I'm seriously underwater on it now and it still keeps going down. But >> Toshiba throwing the word out there didn't help us. What do you think? Will it pop or should I get out? >> Well, okay. Um, Western D up 135% for the year. So, when you see that, you say to yourself, "Wow, I mean like either I missed it or easy money's been made." But the way I look at Western Digital is it's not as good as Micron. Micron's much cheaper. We know Micron really well here. We like it a lot. We think it could go much higher. I'm a swapper of Western Digital, which I did at one point own almost 5% of and going. That's when I was able to own stocks. Now I'm allowed to own a checking account. It looks really good. Uh but Western Digital is not as good as Micron. Let's kind of funny. Let's go to Ben in New York. Ben, >> hey. Hey, Jim. I I was hoping to get your opinion on Veritative and if you had any concerns about these data center infrastructure. >> No, no. I think Veritive is a good company. I think they've got a great order book. I think if you believe in the data center, then I think you have to believe in Vertive. I think it's a really good company. I like to buy it when it's down. And I've got to tell you, it's not even it's not a spec. It's a very good situation, though. And I want to be really clear about this. If you had to buy one other than GE Bernova that handles the whole soup to nuts and it's down a lot, I would buy Virgin. All right. Listen to me. AI stocks are the only ones that don't have to pay attention to the stock market and certainly you know if you've been to the uh treasury auctions. I can't believe we're back doing that again though on man money tonight. Levi Strauss is on the move after just reporter. Don't miss my suits with co and constellation branch reported yesterday. So is it time to get a little more high-spirited about this stock? I'm breaking down the numbers. Inviva systems is one of the best performers the SP500 last month. I'm finding out what the hype is all about when I sit down with the CEO. So stay with Kramer. >> Don't miss a second of MadMoney. Follow at 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. What do we make of these just reported numbers from the vice straousing company? The iconic denim focused apparel. This stock had been having a great year until 2 months ago when it started selling off along with basically every other consumer discretionary name. Everybody assumed Levis's will be crushed by high gas prices, but not all apparel companies are equal. Tonight, the company reported a technically mixed quarter that I thought was pretty darn positive. Levis's posted a small revenue miss, but some of that was driven by currency fluctuations. You can't control those. Their organic growth was more in line with expectations. On the other hand, they delivered a large earnings per share beat, but part of that was driven by tariff refunds. While Levis's raised its fullear earnings forecast, the boost was a little bit smaller than some expected, but I still thought it was pretty darn good. There's a lot of nuance here, so let's dig deep with Michelle Gosh. She's the president CEO of Levi Strowy Company. to learn more. Gus, welcome back to Man Money. >> Thanks, Jim. Great to be here. >> All right, so Michelle, I saw A KIND OF A DIFFERENT mix from what I'm used to. Your wholesale business, which is a really terrific business, showed great growth. Your DTC business, not as good growth. What do you make of the disparities here, and what can we learn going forward? >> Yeah, you bet, Jim. So, as you were saying earlier, so we did come in at the top end of our guides. We guided four to five organic growth. We came in about five. Um but the quarter came in a little differently. Uh wholesale was up 6%, international was really strong 8%. And I do think that that demonstrates the core of our strategies and the power of this diversified portfolio that we've been building. So the wholesale beat, you know, the international growth did offset some weakness that we saw in DTC which was up only 2%. That's isolated to a couple of markets, important markets, Europe, US. We'll get into the details there, Jim, but I will tell you the team got after the issues and we're already seeing a rebound. Um, US is positive. Um, overall global DDC in September is back up to mid-s singledigit growth and we expect the year to be back up to high singledigit growth. So, uh, we're feeling good. This is not about a trend. This is a point in time and like I said, we've already rebounded. >> Okay. Well, that matters. Did did you think there was something off at the beginning uh with DTC that has since been corrected and uh you're back to the strength if not even better strength than we expected? >> Yes. No, that that's right. So um it really was specifically in Europe in the US um DTC specifically. So if you take Europe, I think everybody knows it was pretty darn warm this summer. And while we had plenty of, you know, shorts and tanks and tees, it still hurt the business. Our wholesale business in Europe was very strong. So Europe as a as a region did quite well. They were up mid-s single digits at 5%. But in DTC, as the temperatures moderated, as it got cooler, the business rebounded. So it's positive now quarter to date, we're feeling great. And then in the US, it was something different. So, you know, I would say, Jim, that in terms of our campaign, our marketing campaign for back to school, it didn't meet our expectations. Okay. Um, >> yeah, I'll tell you a little more about that. I mean, we um we felt it was a strong campaign and we were featuring some of our top sellers in the loose category because loose has been a big trend, a big macro trend in denim, but for the US consumer, they were actually going lower in lowrise. And we do have those products. we just weren't talking about them as loudly as we needed to. So, we pivoted. This is all retail. It's about detail and it's about moving. And so, when we saw this shift, the team got after it. We have the benefit of the tariff refunds. We are reinvesting. We talk more about that, but a big chunk of that we're reinvesting back into the consumer to create demand. So, we're increasing our marketing so we can focus on those products that the consumer wants right now, which is low. We have low loose, we got super low, we got straight low, we got low of any type you want. And that's happening as we speak. And that's been behind um the acceleration that we're seeing, as I said, with the US NDTC back to positive um quarter to date here in Q4. >> Well, look, I appreciate it because if you had not been transparent, I have to say I don't know what's going on, but the fact that you're both transparent that it didn't necessarily work well at the beginning and that it's come on strong is great. One area that everyone's doing terribly and frankly is China. And yet I did not see a terrible number from China. I saw a good one. Why are you able to do well in China and everybody else has really sputter? >> Yeah, we have a lot going for us in China. China was up 13% this quarter and it has been doing well all year. Um, first I would say we have a great leader, we have a great team and they are executing. Number two, we've changed the product strategy and we have, you know, more of a focus of, I'll call it a global icons balanced with um product made tailored to the Chinese consumer. And I'd say in the past that was a little bit more flip-flop. So, as we brought that more in line, the consumers responding. We're really focusing on execution in our stores, uh merchandising the stores differently, and in some cases, we're moving stores. We're getting out of some real estate. We're getting into new high-profile real estate. So, like I said, team doing a great job. And then we had um a big winner in in China and overall Asia, which is Rosie. We have this phenomenal partnership with this global K-pop star. Um she's got over 90 million followers globally, but she is incredible in Asia. She's been showing up in these pop-up stores. I mean, we've had thousands of people showing up for these over three billion impressions from the media that's been created. And it's been a huge tailwind for us all over Asia, including in China. >> All right. Now, I do want to ask about a division that maybe I shouldn't bother to anymore, but it was good. Um, which is uh y your yoga brand, Beyond Yoga. Now, I know it's very small, and you can say, Jim, any second you waste on this is probably a mistake, but I haven't seen anyone who delivered any numbers that were kind of in line or better, and you guys just did it. Is there something a foot? >> Yeah. Yeah. know, you know, that the Beyond Yoga team is making great progress and as we talk about expanding into more of a lifestyle company, you know, Levis's isn't going to go into active wear. That's where Beyond Yoga fits and they delivered another strong quarter. Um, it's a combination of strength in our e-commerce. We are building more stores. I don't know, Jim, if you've been to the popup in New York, um, but it's it's doing really well. And importantly with their category, yes, they're yoga, but there's so much more. And the categories that are really winning are in the lifestyle categories whether they're travel pants, sweaters, layering pieces along with um some new performance gear called clo glow zone. So team is executing really well and you know it's a smaller business for us but it's growing handily. >> Now you know in Wall Street we take uh we do a lot of thesis kind of thinking and pattern recognition. We say that when gasoline is going up well we stop buying discretionary. Uh, I never know really what discretionary is and whether jeans are discretionary or they something that you wear when you don't have as much money. Are you seeing any impact or relating any impact to what the gas pump is doing to uh apparel? You >> know, our our consumer continues to prove resilient. Like I said, our our issues in the US were DTC and those were our issues. And on the flip side, our US wholesale business was positive in the quarter. So, you know, even when things get tighter, you just you have to work harder um because they're still going to spend. You just have to be that much more relevant, more innovative. And so, that's what our teams are doing are find way finding ways to really connect with the consumer. You know, in our in our world, too, you know, we're really going after segmentation. So, we have our core red tab classic Levis's, which is also a great value. I mean, quality, durability, I think those matter, those those things matter even more at times like these. But we've got our signature brand by Levi Strauss that was up 13%. That's a big business for us and a lot of you know consumers can buy that at Walmart and um you know they're they've been doing really well. So and then on the high end we've got Blu-Tap. So now we're getting into products that are $200. Small business for us today but growing double digits. So, it's really about um meeting the consumer where they want to be met, whether it's, you know, like I said, a blue tab or a signature and our core red tab, but we'll be be there for them. >> All right. Well, look, I care about what's going to happen in the future, and honestly, what what already happened. I think the people who uh decide, you know what, I I don't like what happened in the first two months of DC TTC. So, look at what happened with the stock, which completely reflected that, but does not reflect the comeback, which is what I care about. Michelle Goss is the president CI of Le CEO of Levi Strauss. Michelle, I thank you so much for coming on the show. >> Thanks so much, Jim. >> Okay. Uh, everyone again, I mean, take a look at Constellation Brand to see when they they said things weren't so good and then they said it got better and the stock went up huge. I think the same thing's going to happen here with Levi Strauss and Michelle Gosh. Man, money's back. >> Coming up, Kramer doesn't think it's last call for Constellation Brands. He's explaining why investors should feel confident. Next. Has the long struggling constellation brands STZ finally found its footing? Last night, the beer and liquor company best known for popular Mexican imports like Medel, Corona, the very popular Pacific, now top 10, and the well reported the market reacted like this was just another discouraging number from Constellation. Santo stock dramatically lowering after hours trading. I mean, it was getting clobbered before it be the conference call began. Then something interesting happened. Constellation reversed in pre-market trading this morning and ultimately ended up rallying hard today, finishing up over 2%. I mean, it wasn't a good day for the market. It's been a long time since this company got the benefit of the doubt after an imperfect earnings report. Constellation peaked at nearly $275 in April of 2024. It's been downhill ever since, including a 38% decline last year, 14% decline year-to- date for 2026, now sits at $118 today's bounce. Now, I've gone over this story before. Like many other booze plays, these guys have been hit by the rise of GOP-1 drugs, which on top of reducing cravings for food, also reduces cravings for alcohol. On top of that, the younger generation's more health conscious in 24 states have legalized cannabis for recreation. Plus, Constellation's customer base leans Hispanic. With the Trump administration's immigration crackdown, that's a demographic that's probably not buying as much beer as they used to. In short, the company's been struggling for a long time to the point where they brought in a new CEO, Nick Frink, from Fortune Brands Innovations. Now, before Fortune Brands, by the way, Frink was an executive at Beam Centtory. Uh so he did have some alcohol experience. He did very well at Jim Beam uh before focusing on faucets and fortune brands. Something definitely needed to change here. But the new leadership hasn't been able to turn the stock or at least not yet. The darn thing had just kept sinking lower and lower. It doesn't help that gas prices remain high. The bane of all consumer stocks, especially ones that sell uh they sell beer at convenience stores adjacent to the pub. Plus high interest rates make constellations 3.5% dividend yield look a little less enticing, doesn't it? So then what happened? What happened this morning? What happened last night? Looking at the numbers, Constellation actually reported a much better than fear quarter. Uh their net sales came in higher than expected, up 6% year-over-year. They they posted 19 earnings beat off $355 basis. Really good cash flow, although that translates to just a 1% growth. Not that much. As I dug deeper into the quarter though, I saw another steady performance from the stalward beer segment with shipments up 5.5% much better than expected. Constellations various brands were mixed going by depletions, the volume of product moving from wholesalers to retailers. That's the real indicator in this business. Medel especi uh was down 2% and Corona extra was down 5%. But that was mostly offset, believe it or not, by Pacific up 19%. Victoria, really new here, not in Mexico, up 15%. And Modell, Chelada, Lemon, ESA, up 5%. Management said the beer business took the most uh market share this quarter. Whether we're talking about terms of dollars or volume especi brand in America by dollar sales. Pacificico and Victoria are both taking share aggressively. As I mentioned, overall, the beer business looks good. And surprisingly, Constellation's much smaller wine and spirits division was even better. Now, when I spoke to NickFink back in August, I was shocked shocked to hear that he was so positive in that part of the business. It's a bit terrible. But now I see why. Wine and spirit shipments were up 15.4%. Analysts were only expecting they were expecting a point4% decline. Net sales grew 17% year-over-year. A huge beat. They even put up a small operating profit. Constellation called out two brands in particular for this newfound strength. Kim Crawford wine which had 11% depletions growth and this is the this is the big one tequila this was up 51%. Turns out they're doing much better than the average wine and spirits company. Tequila by the way is the lone bright spot in hard liquor. Agave Spirits Constellation is cashing in. At the same time Constellation announced a new acquisition. They're paying $75 million upfront and as much as 278 million in contingent consideration over the next five years to acquire spiked aid uh spit like Gatorade spiked aid which makes sports drink spike with vodka. Now this is apparently one of the fastest growing areas in the industry. Some of the younger members of the mad money team tell me that spike date is pretty good. So maybe I don't know I you work out and you take it. I don't know. I got to learn about this thing. And look, even if Constellation is just chasing a trend, you're they don't have to pay very much if Spike fails to hit its milestones and ready to drink uh drinks right now are the hottest thing in the entire industry. So why did the stocks sell off so hard in response? Then at one point this morning, just before the conference call started, Constellation was down more than 7%. Simple. Even though the results were better than expected, management didn't raise did not raise any part of the fullear forecast. When you beat numbers but leave your guidance untouched, Wall Street does the math and assumes that the rest of the year is going to be weaker than expected. Constellation is now two quarters into their 2027 fiscal year. And a lot of people assume that management lacked confidence in the following two quarters. That's why they didn't raise. But then the confl starts at 8 a.m. this morning. And right off the bat, at the very beginning, CEO Fin said a few words that changed everything. Listen to this quote. First, we are reiterating our fiscal 2027 guidance and if the positive September trends that we saw continue, we would expect to land at the high end of the range. He went on to add the Constellation's marketing investments are working and its inventory levels are look very healthy after the company spent much of the last 6 months rebuilding distributor inventory levels. Bingo. That's all that was needed. Well, Constellation isn't formally raising it guidance. They did have a good September and assuming they'll slow it down from here, they expect to land at the high end of their forecast for the year. They left the numbers unchanged but informally raised the low end of the guidance. With that worry taken off the table, the stock started rebounding like crazy. So now we got to ask despite this back and forth is the worst behind Constellation Brands? I think it's far too soon to say something definitive because this is a liquor business. But this was the best overall quarterly update that I've gotten from Constellation in quite a long time. With the stock still trading just over 10 times this year's earnings estimate for today, I don't blame anyone for feeling tempted to buy. Although I wouldn't go that far myself. The secular headwinds for the beer and liquor industry are real, but they're also well understood at this point. And they didn't stop Constellation from putting up a strong quarter, even if the company got a boost from the World Cup and also the Knicks Championship run. Here's the bottom line. For me, the most encouraging part of this story is that Constellation brand stock initially sold off like crazy and after hours trading before rebounding and finishing today well into the black. While I'm not ready to start pounding the table on Constellation again, let's just say this. I feel much better about this stock than I did 24 hours ago. Cordale in Ohio. Cordell, >> hey, good evening, Jim. >> What are you doing, man? What's going on? >> How you doing? I'm calling in on a company that's trading around uh levels that it did in February of 2021. Um I was just wondering is CMG going to reach lower lows before it reach higher highs? >> You know what CMG I still think Scott Boatright's getting it right. But you know what the restaurant group is going help just so out of favor it's incredible. Now some of that is because of gasoline and inflation. Some of that is because of belief that anything that costs more than $15 for dinner is too expensive in this country. And it's not just Chipotle that's being hit by that. Me, I think this too shall pass, but I know I'm loan probably very one of the few people who thinks that $30 is a good level to buy CMG. All right, listen to me. I'm not yet ready to pound the tip. We have any of that spike day cuz I'm going to work out tonight and I think you take it during the workout. What do you do? Constellation Brands. I sure feel better about it today than I did before reported. Hey, by the way, much more man Monday, including my scoop, one of the hottest stocks in the S&P right now, Viva Systems. Then Goldman just raised his price target on a certain stock by $10. I'm explaining why that $10 means everything to this name. And of course, oiler calls rapid fire tonight's edition of the lightning round. So stay with Kramer. After a brutal beatdown over the past couple of years, the cloud software stocks came roaring back this summer. This whole group had been weighed down by worries that AI would let their customers basically write their own software and the selling was totally indiscriminate. Taking Viva Systems the best of its business makes software for the farm and biotech industries. Their platform helps capture the whole clinical trial process where mistakes have really serious consequences. So this was never going to be an easy business to disrupt. They reported a truly great quarter at the end of August which sent the stock up 15% single session. It's now been able to rally nearly 50% over the last three months. One of the best performers in the entire market. Not only were the results phenomenal, Viva's even competing against Salesforce for a piece of the pharma customer relationship management. Basically sales rep software recently won some business from Eli Liy Amgen Biogen Regener. Bit of a dog fight. They're also using AI themselves to handle repetitive tasks for customers. So can the stock keep running? Let's check in with Peter Gastra. He's the f founder and CEO of Viva Systems to find out. Mr. Castro, WELCOME BACK TO BAD MONEY. >> JIM, thanks for having me and great to see you. >> All right, so Peter, I think you're the textbook here. There are people who come up with theories and one of the theories was, you know what, they're going to vibe code. They'll beat Viva. Drug companies will be able to beat Viva. Uh there wasn't an ounce of truth about it, Peter. Not one ounce. HOW DOES THIS HAPPEN? I'VE known you for 15 years. THERE'S NOT ONE OUNCE OF TRUTH ABOUT IT. WELL, you know, people get spun off on things, Jim, and and they believe the dream SAS apocalypse or whatever. It never made any sense to me. And I I'll tell you why. These are critical industry specific applications you use to run your clinical trials to manufacture medicines. You're not going to do that with Claude or Gemini. So, it it never made any sense to me. So, we just kept heads down executing and and let all that noise go by the wayside. Now, in reality, of course, not only does it can you not do it that way, but the fact is if you do it wrong, you could end or blow billions of dollars of your drug company. Correct. >> Yeah. I mean, this is a serious thing. Yes, money is on the line, but also these are patients, Jim. You You know, a clinical trial is a serious thing. It can be a life or death thing. Medicine that is injected into your veins, right? This is serious stuff. So yeah, it's like flying an airplane. You don't you don't mess around with it. And our customers know that that right, they need reliable things because it's about the patient. >> And how about confidentiality? I just going to put it out there or if I use Viva, I have a pretty good sense that my data won't be discovered. >> Oh, absolutely. Right. These are, you know, recipes for unpatented medicines, right? This is highly confidential stuff. So that's why Jim, I never really thought this SAS apocalypse thing, maybe it applied to some people, it certainly didn't apply to Viva. >> Now, how about a Falcon and getting work done? Viva's Falcon AI agents. I've not talked to you since this product has come out. >> Yeah, super exciting, you know. So, what we're building, Jim, is the industry cloud for life sciences. So, as you mentioned, we have big pharmaceutical customers, Lily, Fizer, Amgen, etc. But also small biotechs, very nimble. We make these cloud applications for them. We make data. We do consulting to change our business processes across from manufacturing to clinical but also AI solutions. It's what we call industry specific AI solutions or industry AI. And that's what I'm most excited about because you know I've been in tech since the mainframe gym. I've been around for a while and this this AI hardware and software it's the biggest tech disruption we've ever seen. And yes, there can be issues in the world and you know what Bill Gates says, etc. I get that and I am in sync with that. But what we can do is use it for the good of our customers and do tremendous things. And you're right. Now we have Falcon. We had Viva Vault applications. Now we have Falcon agents that do can do some of the repetitive work in life sciences so that people can do different work and not that repetitive work. >> You I'm starting to see some of the diagnostics companies that have just been horrendous. their stocks are are going up. Some of the smaller biotechs are coming up. Uh is it possible that we are finally seeing some magic from AI in the in the lab? >> Well, I think Jim is what's happening is people coming back and realizing, oh, this life sciences sector is a good sector. Why? Because patients need it. And the other reason the actual core biology is accelerating. So you're going to have more medicines curing more diseases and on the other side the patients able to educate themselves more with AI. So they're going to be able to find that medicine. So I think it's people are realizing medicine is going to do more good in the world. Better medicine that finds more patients. Therefore the value will accumulate to these companies. I think they just lost sight of that macro trend for a while. Now, one last thing I while people were telling me that your business was dead because I could go vibe code it. You're talking about a road to $6 billion. Now, that would be an incredible run rate and would make your stock, even after this big run, be very undervalued. >> Yeah. Well, you know, stock valuation, that's really your business. I We're focused on the execution. I can tell you what I'm excited about, the success our customers are having and the innovation and bringing AI to our cloud. That's how we can get there. there. And Jim, you know, $6 billion revenue. Yes, that's our goal. And yes, we're on track, but I view that as look how much value Viva can bring to the patients and the world and the life sciences industry because $6 billion if we're getting that revenue, Jim, I want to include I want to produce at least double that value for the world. >> Wow, that would be incredible. And one last thing, can the smaller biotech companies afford you? Can they go to Viva and say, "Listen, you know, we don't have that much money, but we got something." >> Absolutely, Jim. And I'm going to tell you something about what we call Viva Basics. We started 3 years ago. We have almost 200 customers on Viva Basics. It's super affordable. And here's the thing, Jim. It's an outstanding innovation. They use our product, but they also use our processes. They don't have to configure a thing. So, they get going right away. That's very efficient. It can help them defer their hiring. It also makes them a much easier acquisition target because as you know if a biotech has a very innovative venison they either can get bought and get put into a bigger company to reach more patients or they have to scale up their own operations. So Viva Basics has been just a a wonderful thing for the biotech industry. >> All right that's terrific and great to know because there are a lot of companies in that position uh and they have to be able to bring something to market or exactly what you said or they actually could run out of money. We certainly don't want that to happen. That's Peter Gastron, the founder and CEO of Viva Systems. What an amazing comeback of the stock, but the business was always great. Thank you, Peter. >> Thank you, Jim. >> Everybody's back from break. >> Coming up, he's the fastest mind on Wall Street, so we're putting him to the test with your help. Bring on the lightning round next. It is time. It's time for the lightning round by social. You play the sound and then the lightning round is over. Are you ready? Ski J. Craig in Missouri. Craig. Hi Jim. I my question is over. uh stock that just went public in March. Um it's currently being divested from its parent company is Minet M. >> Oh, Metronic got rid of that and I don't want anything to do with I do like Metronic, but I do not like Minet. I didn't even like it in the old days. Let's go to Harvey in New York. Harvey, >> hey Jim, first time long time listener. My mother is 12, mind you. She passed. Anyway, we have we have a question about RMDS. Hold a sell or a buy. >> You know, it's never really intrigued me. There's no real catalyst. It just kind of sits there. I see no reason to buy it. Let's go to John in Florida, please. John. Booyah. Jim. Booyah. John, what's going on? >> Hey, man. I'm a longtime listener. I'm a longtime club member. I'm even a little bit crazy. I'm even a little bit crazy because I'm looking at an industry that's in bare market territory that stocks at a 52- week low, but they just got a new CEO and they got themselves a $6 billion contract for the federal government. Am I crazy to want to start a position in L3 Harris? >> You're completely bad. No, actually, I kind of like L3 Harris to tell you the truth. I actually been looking at it and I've been saying this. It just isn't that bad. I mean, it sells it like 10 times or eight. Well, no, it's it's it's got it's got a discount to the S&P vult, but it just shouldn't be going down and down and down. Where do you pick a bottom? I don't know. We talk about this a lot at the club. How do you pick a bottom in a stock like L3 Harris? You don't. You say you want to buy 100 shares, buy 25 here, and then you use three five point increments to be able to get it's $230 stock. You divide it by 10, look at it like a $23 stock. Buy your first at 23 and then you buy it down to 20. And I think you're going to find you got to bought him in a good in a really good basis. There's an analysis for you, but he said he was crazy. I gave him a crazy analysis. Let's go to Steve in Florida. Steve, >> hey Jim, I'm about a small cap company. How are you tonight anyway? >> Oh, thank you for asking. >> Great. Thanks. Hey, I'm going about a small small cap company. Giga Cloud Tech symbol GCT. >> I I I actually met these guys. I mean, I got to tell you, this thing is such a rocket ship. This is one of the most speculative stocks on earth. If you want speculation, I SAY GIGA CLOUD. Let's go right now to Max in Ohio. Max, >> hi Jim. Thank you for taking my call. My question is about acceleration ACZV. Is it good for the long term? >> If I heard of it, I could answer the question, but it's the first time for me. Acceleration. Huh? That's kind of like acceleration. Excavation. I don't know. Let me do some work. I'm looking at Ben Sto right now. He's going to be tasked with acceleration. I like the name, but I guess that's not enough. Let's go to Carl. Look, for a lot of people on TV, it's enough. It's not enough for me. Let's go to Carl in Indiana. Carl. Hi, Mr. Kramer. Good evening. Good evening, Carl. What's going on? >> Well, I have some extra money in my Roth after taking some profit in Nvidia. Uh, don't worry, I have a lot left. Um, I like to find something that uh is not dependent on AI. And the stock I'm looking at has a 14.25 uh forward PE, which is high for their group, but a 5% down right now. Uh, it has a good dividend. Uh, but can it grow? My stock is Archer Daniels, ADM. >> Okay. Archer Daniels has kind of done nothing for a very long time until now and I actually think it's a terrific idea for I also like John Deere. I like the a business and not just cuz it's midterm elections. I think Archer Daniel's time has come and boy believe me those who know me in the 80s and 90s and hundreds said when I used to say when is it going to happen? I think the future is now. Okay, let's go to Anthony in Florida. Anthony >> Jim, thank you very much for taking my call. I've been watching BW Babcock and I I'm looking at the uh industry. I'm looking at the company, the management, their backlog, and I'm willing to uh invest uh a year to a year and a half. Am I making a mistake by buying it here? >> No. No. I mean, you you know, you didn't catch the bubble. It's all the way down. It's a pretty good spec at five bucks. Don't put too much money into it, but I think it's a nice speculation. And that, ladies and gentlemen, conclusion of the lightning round. >> The lightning round is sponsored by Charles Schwab. Coming up, Kramer's analyzing why SpaceX's price targets keep taking off and why you should believe them. Next, sometimes price targets seem like a total waste of time. I mean, they get raised when stocks go higher, cut when your stocks go lower. You don't see many research analysts and portfolio managers actually go against the grain. That, by the way, includes me from my chable trust, whereas club members know we present price targets, too. So, therefore, are these price targets worth anything at all? Overall, actually, yes. When you see a stock go down after it reports, but analysts raise their price targets on mass, that's a sign that the stock probably shouldn't be going down at all. Many commentators take their cue from what I call the action. They see the stock down at reports and presume something must be wrong with the quarter because why else is it getting slammed? But the market and its commentators get things wrong all of the time. Stocks often sell off on good numbers, especially if they're already up big when they shouldn't even be down. See, that's called profit taking. In fact, when I'm looking for an entry point in a stock I like, I always measure the disparity between analyst coverage and that stock's performance. Let's say if there are 10 analysts who cover a company and all 10 raise their price targets after a quarter, even as a stock's going lower, then I want to bet that the analysts were going to be right. And I >> for the most part I don't pay much attention to the intraquarter unrelated to earnings price target changes but periodically something happens that just stuns me into realizing maybe there's something big a foot. Yesterday for example Goldman Sachs put out this really incredibly thoughtful piece about SpaceX Elon Musk. Now I've been adamant this is a real company with real numbers and a real business many businesses even. I've defended against endless snipes about how it's overvalued because I have confidence in Elon Musk leadership. And he's made some very smart moves like renting out the company's excess computing power that he got from by buying Nvidia chips for what I regard as almost extortionate prices. For the most part, it doesn't matter. SpaceX is by most pros a considered a retail stock and they say that with contempt, meaning a stock that only unsophisticated investors would ever own. Most of the pundits consider it ridiculously expensive, overvalued, even with huge revenue now coming in from Anthropic and Google thanks to those compute deals. Of all the data in the Goldman Sachs, SpaceX piece, here's the line that really jumped out at me. Quote, we reiterate our buy rating and raise our 12 month price target from $220 to $230 for SpaceX shares. End quote. I know. What can you really learn from that? Simple. That bump, that $10 bump from 220 to 200 230, that ratified the initial previous 220 figure, which means something with the stock at 167 and changing a lot when it was down there 140 if you got it. What do I mean by ratified? Okay, when Goldman Sachs and a bunch of other firms first wrote on this company, they were full of super pural numbers. It seemed like everyone was just making them up, frankly. SpaceX stock was at 120, that $220 price target seemed almost silly. I mean, who even knows where they got that number? But when I saw the latest price target boost, I said to myself, "Wait a second. Maybe there really is some rigor to the analysis." When you're dealing with real speculative names, you almost never see price target bumps until after the hot money's overrun the price target. By then, it's too late anyway. With SpaceX though, these Goldman analysts looked at all the incredible things happening right now and decide to get ahead of the move. And hey, I get it. They're making so much money renting out compute at SpaceX that the company's planning to borrow $40 billion to buy more chips from Nvidia. As I said at the top of the show, they can scale up the business. Why not? Musk can immediately monetize these chips. SpaceX could end up being Nvidia's largest client at this pace. That's fantastic news for both sides. As I've said before, I don't think that this one's right for the travel. But you know what club members? I think you should stay tuned because it's becoming more and more likely that SpaceX could come to fruition a lot earlier than Tesla ever did. Taking price target up space exploration technologies. Get used to hearing just that. and CBC investing club members maybe get ready for me to buy it for the char trust at next week's monthly meeting. Now there's a tease. I like to say there's always more because I promise to find just for your mid money. I'm Jim Kramer. See you tomorrow. 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