Mad Money w/ Jim Cramer 10/1/26

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1:18Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. How do you make friends? I'm just trying to make a little money. My job is not just entertain you, but to educate, do some teaching. Call me 1-800-743-CBC. Tweet me at Jim Cramer. When a quarter runs to its conclusion, you have to look at what went right and what went wrong. We talk a lot about bonds here. We talk a lot about oil. We know interest rates are flying and the Fed's tightening again. Always a tough situation for stocks. And a third aircraft carrier with 10 ,000 troops is reportedly on the way to the Gulf. Disconcerting. But on the first day of a brand new quarter, October 1, you need a compass.

1:56You know what provides you the best compass? What can navigate you the best? Last quarter. Luckily, today was a sedate session with the Dow advancing 21 points. This will be climbing 0.19%. And that's like edging up 0.04%. Though I thought it was going to bust out until we heard about that aircraft carrier going to the Gulf, which stalled a nascent and much-needed bond market rally. we all use our S &P 500 as our benchmark in this business. Now, the index finished up 2.03 % for the third quarter. Not bad, not great. But if you owned Moderna, you got rich as it finished up 175%, except it was a one-off gain because Moderna, after years of toiling in the oncological wilderness, came up with a big one, a melanoma vaccine, along with its partner, Merck.

2:45The medical community is trying to figure out exactly how big this could be. Doctors are hoping this vaccine will virtually eliminate a recurrence of melanoma. And that's why the stock soared. It's come back a bit because of talk that there might not be a follow through to other cancers. I get that. But the fact that Moderna formerly viewed as a one trick COVID pony now is something that could be huge in cancer. I think it verifies the excitement and the move. Next up is one I had to look up called Everpure up 66 percent. Turns out EverPure is pure storage, a data storage company, except for this quarter, it's become a hyperscaler play.

3:22Meta chose EverPure to handle some of its storage. Others may choose it, too. The stock's had a miraculous run. I wouldn't be surprised if it's got more upside. Some stocks are bounce-back stocks. Remember that Saspocalypse thing, that theory where all enterprise software would be destroyed by AI? Viva, a company that makes software for life sciences, have been put through the AI displacement meat grinder. When the displacement didn't happen, those betting against it blew up and the whole group came roaring back. And that's how Viva finished up 61%. At just over 30 times earnings and almost 135 points from the bottom in April, I've just got to say, uh-uh, I'm not going to be in this one.

4:01I'd rather be in the bounce back that is Salesforce, a competitor that has a lot further to go. Finally, there's Palantir, also up 60%. I believe in these guys. They're among the fastest growers with great gross margins and smart, tough leadership. I've been using a$250 price target. I've been too aggressive so far. The stock got as high as 207, and then it got wild. It is now back to 190, where I would still buy Palantir. OK, now, how about the worst performers, the ones that really did not help? How about that? First is Fair Isaac, the keeper of the FICO score. It's down 50%. Looked like a split of it.

4:38Bill Pulte, the head of the Federal Housing Finance Agency, jack of all trades kind of, believes FICO to be too powerful and too expensive. He's been trying to get more competition to make it cheaper to get a loan. I'm in favor of that, but the banks I surveyed, they actually like FICO. They think it works. It's worked for years. They trust it. Fair Isaac's been a winner for so long, but now has a powerful opponent in the government who wants it to go away. Next, AppLovin wants a favor of the momentum crowd for its ability to connect advertisers with the right audiences, had the feel of in-app advertising all to itself until Android came in and wrecked the story, leading the stock to fall 44%.

5:17Now, it's still a$94 billion company. That's just way too much market cap for me. Hey, then there's a great one, Corning. It fell almost 40%. Now, this one's misleading because it spiked from $88 at the beginning of the year to$255 at the end of the previous quarter. So Corning's trip down to 154 last quarter was pure profiting. We had a big moment in this one for the Chapel Trust because we visited Corning Factory where they make the glass for Apple. Howard'sburg, Kentucky. From that trip, I became certain that fiber is the future of the data center, not copper. So I'd happily buy this one back if it ever dips again, which it doesn't seem to want to.

5:52What about the NASDAQ 100, which finished up 2.47 %? The gains here don't offer much insight, sadly. Bitcoin finally rallied and that took strategy. Remember, you used to be micro strategy. A lever Bitcoin repository up 76 percent. Now, look, if you like Bitcoin, I got an idea. Buy Bitcoin. I already covered Palantir. Workday rallied 56 percent. Cloud software cohort came roaring back and we got some takeover chatter. We know that cybersecurity is incredibly important. We own CrowdStrike for the Chapel Trust. I'm feeling real good about it because it rallied 39 percent. Losers. All right. There's that app loving again, down 44 percent.

6:26But here's another one. One that I buy. KLA Corp, the semiconductor capital equipment maker. We have a widespread chip shortage that can't be solved without KLA. Hence what we sold today with Micron. Crazy it stocks down 35 percent. Then there's Rocket Lab off 31 percent. Some delays, some dilution, lower margins can even bring down rocket stocks. You want rockets? SpaceX. In the end, I think the best lessons from the third quarter came from the 30 stocks in Dow Jones Industrial Average, which finished down 2.7 percent. The winner was Salesforce, up 46.5 percent. This is another Saspocalypse survivor.

7:00Still one more stock that was leaned on by that situational awareness outfit, giving Salesforce a chance to buy back a lot of stock, a lot of stock much lower. And it reported a great quarter, along with a big partnership with Anthropic. We're sticking with it for the travel trust. Microsoft's rally is just beginning. The stock jumped 37.5 percent in the quarter as the market fell in love with enterprise software again. I think Microsoft has a lot more room to run because it's only up about 6 percent for the year with Copilot, their AI product on fire, and some genuine acceleration to their Azure web services business, as well as a hint of profitability from its data center build-out.

7:35I really like this one. Chevron, the Iranian war raised prices. Venezuela beckon. I still think it's the number one stock because I feel like the fossil fuel gang. And there's Amgen, catch-up trade, plus 16%. You know what? I like J &J, which just got absolutely blasted today. I buy that one. Dow's Losers, worst for last. Caterpillar stock, that one's like Corning. It had a monster run. Then it got hit with 24 percent profit taking in the third quarter, just like Corning. Given that its engines have had become a very good source of data center power, this might be a buying opportunity, even though the stocks run huge.

8:08IBM missed its quarter and fell 22 percent. You know my rules. You miss a quarter, you got to wait a quarter. I like IBM, but rules are rules. Then there's two that are such name brand companies. I just can't bring myself the thrum away. Home Depot down 19 percent, a bad pick for my travel trust. and McDonald's off 15%. Now, Home Depot is hostage to interest rates, which have one of the most vicious increases in a quarter that I can ever recall. No relief to the despot until rates go down. McDonald's, they can't seem to get out of their own way, but history says that when it gets this cheap on a price-earnings basis, well, why don't you stay tuned?

8:40Here's the bottom line. Ultimately, I think we'll remember the third quarter as the moment when software bounced back and some amazing data center plays succumbed to profit-taking. But my big fear right now is the impact of higher interest rates on the stock market. We'll see how that plays out when earnings season comes around in a couple of weeks. Right now, it's not looking like a positive. Why don't we go to Mike in Michigan. Mike, my bike. Hello, Mr. Kramer. Thank you so much for taking my call. I greatly appreciate it. I've been listening to you for 20 plus years. Oh, thank you, Mike. That's good, man.

9:12You stick with us. You're cadre. What's up? All right. I appreciate it. You actually motivate me to get my bachelor's degree in finance because I read your books and it intrigued me. Within finance, I was wondering if we should pull the trigger on Morgan Stanley with the buyback authorization. The answer is yes. I mean, I think, well, Ted Pick's company's been brought down along with the rest of them, and his is doing better. I think you want to buy the stock of Ted Pick. You want to buy the stock of Morgan Stanley. I want to go to Tim in Maryland. Tim. Booyah, Jim. Booyah. I'm talking about N-E-E.

9:52N-E-E, Next Carat Energy. Is it electric or what? It's electric, but no, I don't want to own that stock. As a matter of fact, I've been right to avoid that stock, and so I'm going to double down and say I really want to avoid it. Let's go to Robert Robert in Ohio. Robert. Hello, Jim. Hello, Robert. What's up? I'm sorry? The stock I was wondering about is Medtronic, PLC, MDT. Okay, now, I am so glad you brought this stock up. I'm going to tell you what, this is why my job's hard. Medtronic had a great quarter. Jeff Martha's doing a fantastic job. I thought they put everything together. They're even getting rid of the commodity stuff.

10:31And what happens? Stock goes up and then goes back down. That's why this market is so daunting. I like Medtronic, but I got to tell you, at 14 times earnings, I don't know what supports it. I buy a little and then wait a little more until it goes down. Darn, it should be higher, but I can't make it go higher. In the third quarter, software finally bounced back. I'm curious to see what happens this quarter when we see what companies are saying about higher rates. Well, Mayer Money Tonight, can McDonald's finally deliver the turnaround it desperately needs? I'm going to take a closer look at the stock.

11:03Then as the AI trade shifts, we've seen a quiet rally in one key area of the market. Don't miss my deep dive on the stocks that keep the internet going. And when Fermi came public, I said this nuclear power plant was kind of more of like a business plan than a business. One year later, I'm checking to see how the business plan's turning out. So stay with Kramer.

11:32Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com. Get ready for Thanksgiving with great deals and crowd-pleasing flavors from Whole Foods Market. Stock your pantry with 365 brand holiday must-haves like turkey gravy, organic green beans, crispy onions, organic stuffing, instant mashed potatoes, and more. Plus, find deals on frozen turkey, appetizers, and produce to check everything off your list early. Save on chef-inspired holiday favorites now at Whole Foods Market.

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13:28What the heck is wrong with the stock of McDonald's? Now, look, I've been rolling this one over for weeks, even when I was in Italy. But I wanted to give them a chance to explain themselves at their investor day last week before I chimed in. Unfortunately, that much ballyhooed September 23rd investor meeting sent the stock down another 4.8%. At this point, Mickey D's is off 24 % for the year, a highly unusual decline for this gold standard of the fast food industry. What happened? Pretty simple. Management came in with a big plan to transform the business, and the street shot it down. So as McDonald's a lost cause, are we just simply getting a buying opportunity here?

14:08Long term, this is a great franchise, and I find this stock tempting here. But I want to go over the negatives first, because there are a lot of them. And let me say from the outset, this is a real hard one to decide on, even as I am a Big Mac fries and Diet Coke guy from way back when. Let's start with the turnaround plan that didn't get much love last week. The idea is to give investors, I'm sorry, give customers better food and a better experience while making the location simpler and more productive so they can improve throughput. From my perspective, that's exactly what McDonald's needs to do because, you know, investors balked at the cost.

14:43See, for a typical drive-thru location, the full package takes$800 ,000 of incremental investment above its normal remodeling requirements. To help cover the cost for franchises, McDonald's planning$8.5 billion of capital support and rent relief through 2036, including about$5 billion by 2030. That's not going to be cheap for the shareholders, but it's a good thing. Is it fast, though? Management indicated that roughly 70 percent of U.S. restaurants could come through that cycle over the next four years. The updated design becomes standard for the new restaurants in the first quarter of 2028. Look, for such a sprawling operation, I think it's pretty good.

15:18The problem is McDonald's is all about the franchises, which means they need to wrangle thousands of individual owners before they can make big changes. And the franchises won't get on board if they don't think the potential returns justify the near-term disruption. At this point, it might be an uphill battle. Not sure if they got everybody's buy-in. The sell-side research certainly didn't make it feel like anything revolutionary was going on, something that could shake the slumber, and that hurt too. But if you want to know what's really weighing on this stock, you know what? It's like so many others.

15:49I think it's the darn bond market. With 10-year treasuries yielding 5.24 % risk-free, McDonald's non-risk-free 3.3 % dividend yield becomes much less of a draw. You've also got a stretched consumer with rampant inflation, especially higher beef costs. Customers want cheaper meals that are better for you, while franchises need to protect their profits. Headquarters can come up with a national value campaign, but getting thousands of independent operators to execute it? Well, that's a different story. So why don't you throw in the towel in the golden arches? For starters, there's the low P.E. multiple, what I call the secret sauce in how to make money in any market.

16:26The secret sauce is going in a direction. It's traded just 18 times next year's earnings estimates. Historically, McDonald's tends to trade in the mid-20s, meaning we're now getting a substantial discount from its historical value. In fact, McDonald's hasn't been this cheap since 2014 when the business was falling apart. But then they brought in a new CEO who turned things around really quickly. And the stock was hitting record highs again by the end of 2015. We saw a similar dynamic during the pandemic. Different problems, different periods. But the same reason to keep an open mind here. McDonald's has come through difficult stretches before it's in their DNA.

16:59I don't doubt its ability to do it again. In either case, did anyone see anything good happening on the horizon when it bottomed? You needed faith in the company to take the leap. And that faith was in short supply, even though the stock was super cheap. That's why even though the stock's gone out of style, I want to remind you that this company still has a lot going for it. Yeah, I'm taking a pretty contrarian view here. Let's start with a scale. OK, more than 46000 restaurants, roughly 70 million customers a day, nearly 220 million active loyalty customers. International accounts for more than half the business.

17:32This is not some pitiful helpless giant. then there's value, an important area where management admits that they've been slow to adapt. U.S. same-store sales rose just 0.8 % in the second quarter with higher checks, offsetting declining traffic. At the Investors Day, management said they still expect slightly negative U.S. same-store sales for the quarter. I don't know. But now they've gotten religion on giving customers better deals. Now, some of the fixes are straightforward. McDonald's pulled back digital offers and removed its buy one, add one for a dollar deal. Ouch. Only 60 % to 65 % of the U.S.

18:04systems followed the recommended pricing structure for their under$3 menu. Management attributed roughly two-thirds of its traffic shortfall versus internal expectations to those value missteps. Now, they advertised affordability while taking away deals that we thought were affordable, the ones the customers liked. Now, management is bringing back digital offerings, putting more marketing behind proven meal bundles, and simplifying execution. They're also testing new value offers, but they really need to get the franchisees on board to make this work. You see this theme? McDonald's is also using AI to help them determine when and where to lower prices.

18:38They should have been all along, right? I mean, their AI operating system helps handle voice ordering. Ultimately, it can free up at least 50 labor hours a week at each location. Automated inventory is expected to save about five hours weekly and reduce food waste by 15%. These changes flow through right to the franchisee's bottom line. They should like it. McDonald's can spread its technology across tens of thousands of restaurants. J.P. Morgan pointed to its data and AI Foundation as an advantage competitors would struggle to replicate. There's also room to improve the financial model. McDonald's plans to move from roughly 95 percent franchise restaurants to 98 percent by the end of 2028 while reducing corporate overhead.

19:17That's good news for margins. Now let's talk about the much much panned turnaround plan from last week, because this is what's sticking to my crawler. See, management is adamant that this plan is bigger than investors appreciate. I think I side with management. Morgan Stanley argues that it's broader than a remodel strategy. The physical restaurant is one expression of changes to food, hospitality, loyalty, technology and operations. I like that argument. Open kitchens, refreshed play areas, better beverage and delivery layouts are a part of that. So are the tools that make the restaurants easier to run.

19:47Management is targeting roughly one hundred thousand dollars in gross annual cash flow benefits for the average U.S. location. After corporate support, the targeted payback period for the$800 ,000 investment is about four years for franchises and five to six years for McDonald's itself. If they can hit those numbers, it's a great plan. The challenge is execution. Management already admitted that overlapping promotions and rollouts overwhelm restaurants in the latest quarter. The next round of changes needs to make the operation simpler. And again, they need to get the franchises under control.

20:18Bottom line of this very complex story, McDonald's remains a show-me-stock. Investor Day did indeed disappoint. The macro is difficult, and a cheap valuation alone won't bring customers back. But at this level, I am tempted to be a buyer, not a seller. This is a great business that's fallen on hard times. They just need to demonstrate that they can get their house in order. At the end of the day, it's still McDonald's, not Wendy's, thank heavens. Sure, the stock's gotten hit, but if it's bounced off at this price earnings level before, I think now the odds favor that a bottom could be at hand.

20:56My mind! Mid-Money's back there for the book. Coming up, with AI sparking massive traffic on the internet, Kramer's analyzing which stocks stand to go green next.

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22:46Lately, we've seen a quiet rally in the internet infrastructure stocks that are known as content delivery networks. Cloudflare, Akamai Technologies, and Fastly. Cloudflare stocks up 121 % from its February low. Akamai is up 51 % from its lowest last of ever. And Fastly has been kind of a roller coaster, but one that's finished very strong, now up 159 % for the year. These guys operate in a pretty straightforward industry. They build hubs of servers all over the world and then help manage digital traffic so that everything operates faster and more reliably. But this is not a new business. I used to recommend Akamai all the time in 2005 when the show started, and it was a great performer until the financial crisis hit.

23:31Lately, they've become more about cybersecurity and collecting data, which is one reason I keep recommending Cloudflare. In general, the thesis for the content delivery networks is that these companies thrive when the Internet traffic's on the rise, and the rise of AI agents has boosted that traffic dramatically. I think that's the key reason for these stocks. That's why they're on fire. But each of the stories is very different. Let's start with Cloudflare. Net, which is by far the largest of the content delivery networks, with a stock that's now up over 2 ,000, 200 percent, since it came public in 2019.

24:05We've had CEO Matthew Prince on the show many, many times, and he's been very prescient about what the arrival of AI means for the rest of the Internet. Last time we spoke to him was in June. He said that traffic from AI agents had already surpassed traffic from humans. And what a great call that was. That's the point of agents. If you're comparison shopping for something, you might only check a few websites but an AI agent will visit thousands of sites in order to find you the best deal. So there's a heck of a lot more web traffic now, and somebody like Cloudflare needs to help us handle it. That's one reason why the stock keeps putting up these fantastic numbers with steadily accelerating revenue growth, or ARG, over the past year or so.

24:42Next is Akamai. Now, late last year, they announced a new initiative, Akamai Inference Cloud, which is basically a network of many smaller data centers spread across the globe that help these AI models process data. Imagine figures that we're moving from a period of training AI models to a world where we actually use these models at scale. And that requires a lot more infrastructure. Now, in early August, we had Akamai CEO Dr. Tom Layton on the show for the first time in over five years. I'm going to let him explain what his company is trying to do. we're unique in being able to support the ai infrastructure needs from core to edge so that whatever task you have whatever agent you're working with or model if you need to train it okay maybe we do that in the core but the real usage the day-to-day uses is inference where that model is being queried it's telling a robot to do something and that you want to do close to the robot or close to the user so it's fast and scales and is efficient.

25:45Ever since that interview, I've been thinking a lot about this Akamai plant. First, it makes total sense if you need distributed data centers, especially as we get into things like this physical AI, because this requires a lot of bandwidth, and you want the infrastructure as close to the user as possible. That reduces latency, speed. Plus, lately we've seen massive central AI data centers become politically toxic. And it strikes me that Akamai's idea of building smaller data centers, that could be an easier sale, don't you think? Now, this is an investment year for Akamai. They have to spend a lot of, a bit, they got to acquire and build the infrastructure for their inference cloud, which will translate into a meaningful earnings hit.

26:23But Magnet says there's a ton of customer interest here, and they expect business to turn up in the fourth quarter for really booming in 2027. Hey, by the way, last Thursday, Akamai announced this big win with Anthropic for$11.6 billion contractual commitment over seven years. Clearly, Anthropic needs this additional capacity, and they're willing to pay for it. This works out, by the way, to$1.66 billion per year. Pretty impressive, given that it's more than a third of what Akamai is expecting to bring in this year. Initially, the stock spiked in response, as it should. But now it's given back all of those gains and then some.

26:56Well, that feels like a buying opportunity to me. Finally, let's talk a little bit about Fastly. This is not a company that I've spent much time on recently. I remember Fastly as a fleeting pandemic era darling. The stock caught fire at one point, in large part because it was the content delivery network for TikTok, which was exploding in popularity at the time. But then Fastly lost most of the TikTok business and the stock imploded. For years, it felt like a broken momentum stock that was losing money. They didn't start turning a profit until last year. Lately, though, stocks had an incredible run, up 159 % for the year thanks to some spectacular earnings numbers.

27:29If that wasn't enough to catch Wall Street's attention, Fastly put itself on the radar again last week. First last Tuesday, the company held an Investor Day, where management explained how Fastly's transitioning from a simple content delivery network, CDN, turnaround story, to a much more exciting edge cloud play, fueled by booming web traffic from all these AI agents. Second, this came right as everybody was realizing the power of Meta's Muse platform, something that really let a fire on the stock. In the end, the rise of agentic AI has made all three of these content delivery networks into big winners.

28:02So, have you missed it, or can the stocks keep running? Tricky question. I love Cloudflare, but it's selling for 279 times this year's earnings. Then again, the stock's always been expensive, and if you let that scare you away, you've missed some huge gains. Still, if you want to buy Cloudflare here, I recommend waiting for a meaningful market-wide pullback. Between Iran and the Federal Reserve, I bet someone's going to give it an opportunity. Fast has got a more reasonable valuation, trading at over 50 times this year's earnings. But that's still pretty rich. And the stock has a tendency to be insanely volatile.

28:29I'll be honest. This is the one I have the least confidence in. So, again, I urge you to wait for a lower entry point. But Akamai, I think you can buy that stock right here right now because it's cheap, selling for less than 16 times this year's earnings estimates. And you're basically getting the latest Anthropic partnership, which I thought was gigantic, for free. Sure, they're having it down the year because of all that spending that I mentioned. But that's about to take a turn for the better real soon. Here's the bottom line. One side effect of the AI revolution is that it's already creating an insane amount of web traffic, and somebody needs to help us keep the Internet running smoothly.

29:02That's where Cloudflare, Fastly, and Akamai come in. Although, for the moment, Akamai is the only one that's cheap enough for me to pound the table on. I want to take some calls, and I want to start with Linda in Pennsylvania. Linda! Hello, Jim. And God bless you and Lisa. I feel like you're part of my family. And when you're on vacation, all the extra studies you give me, I love it. And I hope Norman the Bull is good. Jim, the reason why I'm calling is about an IPO I've been trading since its inception. And I've made money. But since April, it's down 26%. I know there's debt. And you had the fee on yesterday, Michael and Trader.

29:43So I'm wondering, should I turn it into some cash and maybe hold to something better or hang in? Well, I'll tell you, Linda, first of all, thank you for those kind words. And thank you for what you said about Lisa. You know, she is the one who keeps me from taking, you know, she says you got to take some time off, Jim. You really have to. So that's a great insight. I happen to like Michael Intrader very much. The stock is still almost a double. It is a double from where it came public. I have tremendous faith in him. The stock does lose a lot of money. So then the question is, do you have the stomach for it?

30:11If I were you, I would say, you know what? I want a small position in Corweave, not a big one, because it does have a balance sheet that I don't like. But that's part of the business. I sure do like Intrader, though. He's a straight shooting guy. Rob in Florida. Rob. Booyah, Jim. Booyah, Rob. Jim, what is your opinion of AXON? Thank you. OK, I happen to like Rick Smith. Anyone who's watched the show for a couple decades knows that I think Rick Smith's great. I do think that there's actual competition out at Axon. And they've got a good product. But I have to tell you, When there's competition, that means there's going to be gross margin pressure.

30:49When there's gross margin pressure, you can't have a stock sell from 54 times earnings. So the answer is I'm taking a breather now on Axon. I feel terrific about CoreWeave. I was a little too negative. I think that CoreWeave has got, it's the one that Jensen Wong thinks is the best builder. I'll not go out again, Jensen. Or at least in Twitter, Jensen says he's the best builder. With AI creating all this web traffic, I think these content delivery players are worth taking a look at. I like that hack of mine. What's more made money ahead? After a year since its IPO has firmly, that's F-E-R-M-I, but it's Philly, proved that it deserves to be a public company, I'm taking a look at the stock.

31:26Then Micron reported earnings last night, and today the stock, well, it didn't do much initially. I'm explaining why I stood behind the name during the period when it was real ugly today. And all your calls rapid fire tonight's edition of the Lighting Round. So stay with Kramer.

31:50Exactly one year ago, today, a clown show of a company called Fermi came public with a bang. This business had been founded just a few months earlier, and the plan was to create an AI data center campus in the Texas panhandle, complete with nuclear plants, although they'd start with natural gas plants to get things going. The prospectus painted an incredibly rosy picture. And at least at first, people lapped it up. Fermi's IPO priced at$21, then finished the day at$32 and changed$19 billion valuation. I came out that very night and told you to stay the heck away. When I see a company created out of whole cloth coming public a few months later, so I get a little, I get a tad nervous.

32:35Either way, I want to steer clear of this one. Again, this is more of a business plan than a business. I like hope, you know that. To be fair, Fermi seems like he's got a pretty well thought out plan. And if it all works out over the next decade, then maybe you can justify the stock's current$19 billion market capitalization. In my view, though, no business plan is worth$19 billion. I want more than that. I thought it was a very bad sign that people were willing to pay off for this thing. So one year later, hey, how's that call look? Well, this next day, in a pure insult to me, Fermi's stock opened up and peaked just under$37.

33:12But it finished the session in the red, a big reversal, and it never looked back. By the end of last year, the stock was in the single digits. As of today, it's just over$4, down 89 % from its peak on October 2nd of last year. What went wrong? How about everything? The initial customer announcements haven't materialized the way they were supposed to. In fact, some of the initial customers who made soft commitments pulled it out of the project entirely. Fermi's losses have been wider than expected, too. The companies raised additional funds to a convertible note offering, which will likely be dilutive to shareholders.

33:47And that was all before Texas Governor Greg Abbott announced a pause on new data center approvals. A year ago, I warned you that the CEO, Toby Nogabauer, had a bit of a checkered history. Predictably, things didn't go well with him. Remember, the whole pitch for Fermi was that they were tight with the Trump administration because a former secretary of energy, Rick Perry, is one of the co-founders. But in March, Norge Bauer apparently had a loud and belligerent confrontation with Commerce Secretary Howard Ludnick at NVIDIA's GTC event, no less. By April, Norge Bauer had been fired. And then he went to war with the company.

34:25First through a failed proxy fight, then lawsuits. All aimed at the board of directors. We got a call on Fermi the other night from John in Pennsylvania, and I didn't mince words, saying it never should have come public, and it's lost people's fortunes. Tonight, I'm circling back because, in retrospect, Fermi marked the top for all sorts of long-shot nuclear energy companies. Do you remember Ocklo, O-K-L-O, the miniature nuclear reactor company backed by Sam Altman from OpenAI? That stock was on fire for most of 2025. But it peaked October 15th last year, two weeks after the Fermi IPO. Since then, Oclo has fallen over 80 percent from its high.

34:59New scale power. Oh, yeah. A company that's working on small modular reactors is another stock that seemed to go higher every day, levitating for most of last year. It peaked on October 16, 2025, a day after Oclo. And since then, it's fallen 86 percent. Same story with nanonuclear energy, down nearly 75 percent from its peak last October. This year, we've seen a bunch of nuclear related IPOs, but they haven't caught on. X Energy came public in late April. Rather than building reactors, they wanted to license the reactor designs and then sell nuclear fuel to their customers. I told you it was only worth buying with money that you were prepared to lose.

35:35And I should have been a lot more negative. X Energy is now down 55 percent since I first talked about it, 62 percent from its initial high. In June, a company called Deep Fission, which is that's it should have been F-I-S-H-I-N, but it was F-I-S-S-I-O-N, you know, like the Oppenheimer thing, which is working on underground nuclear reactors. Lasted on the Nasdaq, but only after reducing its deal size by over 50 percent and slashing its offer price. After debuting at 16 bucks, Deep Fission is now plummeted to just over five dollars. That's a 68 percent decline. It's barely large enough for me to mention on air.

36:10Standard nuclear came public in July. And again, the deal had to be significantly downsized to make it to market. This one's actually held up well. Standard nuclear fell over 50 percent right out of the gate. But it's actually rebounded from its lows. Now it's only down 17 percent from where it came public. But standard oil, this is not. There's one other nuclear energy play that's become too small for me to even talk about on air. It came public via a SPAC. You know how much I hate those. A SPAC merger that closed late last month. And over the past two weeks, that stock has plummeted more than 80 percent.

36:44I mean, that is just brutal. Whole Tech Nuclear was supposed to come public last month. They pulled that deal. This one's a real company with more than$500 million in revenues over the past year. But who the heck wants to buy even a legitimate nuclear IPO when data centers have become politically toxic in America? I think the market's had a much needed reality check over the past year or so. When it comes to these long shot nuclear energy plays, I am actually a big believer in nuclear power. But it's a very difficult technology. It can take over a decade to build a nuclear plant. And the upfront cost is insane.

37:16We're kind of rusty about how to build them. So what should you do about this? Look, if you're a believer in nuclear energy, I say stick with the tried and true players in space. And even though they know that you're making a long term bet, that will take multiple years to pay out. Not just a few years, but multiple years. Think GE Vernova. That's a charitable trust team. I see that today. Worked well. Which is the only established builder of nuclear power plants out there at this point with a full order book for both nuclear and gas power equipment. They just want a big nuclear deal from the U.S.

37:46Nuclear Regulatory Commission earlier this week. Or you could go with the nuclear power plant operators like Constellation Energy and Vistra. Just this morning, Constellation announced a 20 year agreement with Amazon to sell power from their nuclear power plant in southern Maryland. Constellation and Vistra have pulled back pretty hard from their highs. down 37%, 36 % respectively. Hey, at these levels, you know what? I think they're pretty cheap. Finally, there's a stock I talked about last night, BWX Technologies, more of a defense contractor, focused on nuclear technology for the Navy, take nuclear subs and aircraft carriers.

38:16But that's a steady base of business that can sustain the company as it branches into other commercial nuclear power situations. Stock's down 43 % from its all-time high in April, dragged down by the market's broad aversion to nukes. Could be a buying opportunity. But here's the bottom line. We're one year removed from the disastrous Fermi IPO. And in retrospect, that was clearly the top for the entire nuclear energy mania. Nuclear is just an extraordinarily difficult technology, which is why you need to be careful before buying anything in this space. And money is back after the break. Coming up, you've got questions.

38:56Kramer's got the answers. Get charged up for a fast fire lightning round. next.

39:10It is time. It's over the light. It's over the light. It's over the light. Bye bye bye.

39:19And then the lighting round is over. Are you ready? Let's start with Justin in Tennessee. Justin. Hello. Yo, yo. What's happening? I don't know. Doing the show. I have a new stock for you. I think this is a stock that I took one position today on one share. It's SFM Sprouts Farmer's Market. That stock has come down so much that it is cheap. I'd love to have them on. You don't get a quality company like that at 11 times earnings. I think Sprouts is a winner. Chicken dinner. Let's go to Jim in South Carolina. Jim. Hello, Jim. Hey, Jim, what's shaking? I'm from South Carolina. Love it there. Good barbecue.

40:03Thank you. What's up? Thank you, sir. It's good. It's good barbecue. Your birds couldn't beat those bears last week, huh? What are you going to do? No. Well, you just take a lot of Xanax and Klonopin and maybe some painkillers. That's one thing. Not that I could fall asleep after I did that cocktail. What's up? Jim, I got a little chunk of cash that I need to put to work here on a stock that I've owned for quite a while. I missed the last dip. The stock I'm looking at is Taiwan Semi. I like Taiwan Semi. Now, look, obviously, I'm an invidious devotee, but Taiwan Semi is such a great company. Now, I will tell you, if you really want to have fun, you get up for that 2 o 'clock, 2 a.m.

40:51conference call. I like to not sleep that night. It only happens four times. Buy that. Mike in Illinois. Mike, my bike. Hey, Jim. Thanks for taking my call. Jim, I currently own Nova. I currently own Nova Nordisk and Eli Lilly. And, of course, Lilly has been a clear-brow performer while Nova started over the last year. Yeah. Looking out three to five years from today's prices, which stock do you believe offers the better upside? I still got to go with Lilly. It's a high-quality stock. Now, this new guy, Mike Dussart, he is trying really well at hard at Novo Nordisk, but he's up against Dave Ricks, who's like one of the most competitive guys.

41:26I mean, I'm told even on the golf course the guy's competitive. So I want to stay with Lily. I am told that. I can't say for certain. I didn't look up his handicap or anything. Let's go to Melinda in Massachusetts. Melinda. Hi, Jim. Just finished reading your book and learned a lot, so thank you. Thank you. It's about why a stock goes up a dollar, which probably 99 % of the people that I taught at Goldman did not know. What's up? So I've owned this stock for years and it's done very little until recently when it went from a low of 96 in April to an all-time high yesterday of 216. What should I do with NetApp?

42:05Hold or sell? Oh, good. I got to tell you, you want to hold that one. I mean, I think you had a great situation. Just a great situation. I wouldn't worry. I like that very much. Let's go with Scott in New York. Scott. Jim, booyah. Booyah. Kenview is the world's largest pure-plank consumer health company by revenue. They used to be with Johnson & Johnson. They were now being acquired by Kimberly-Clark. The thing with Kimberly-Clark is they're down, like their five-year chart is ugly, but they have a low PE and high dividend. Do you think that, and their CEO is leaving to go for a quirk spinoff.

42:43Do you think that Kimberly Clark is a buy at this level now? Okay, so I'm going to tell you. One, I think it's a buy. And two, when I talk about it with Jeff Marks, I feel awful. I feel I started too soon. It's become a bond play. But I am going to buy more because I think the combination we can use is unstoppable. So I am willing to stick my neck out and say I'm not going to regret buying Kimberly Clark in the 90s a few years from now. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The lightning round is sponsored by Charles Schwab. Coming up, Kramer's got a chip on his shoulder over the dip in Micron.

43:20Now he's sounding off. Next.

43:34I've been thinking, too many people let the action in a stock tell them the story, even if it's the wrong story. Last night, Micron, one of the largest semiconductor companies in the world, reported a phenomenal quarter. We honored for the Travel Trust, and it was much, much better than what we were looking for. Jeff Marks learned a terrific note last night for investing club members detailing the results. But what happened? The stock got hammered immediately. That was wrong. Let me break down the basics. Micron did$54.23 billion in revenue when Wall Street expected just a little more than$51 billion.

44:09They earned$33.42 per share, up 1 ,002 % year over year, and others were expecting just$31.61. $31, that's a huge beat. Demand for the high bandwidth memory chips, the ones that belong in the data center, is insane. These chips are in such short supply that customers have been trying to sign strategic customer agreements with Micron that would last the next few years, lest they be shut out of the incredibly important components if the shortage continues. They can't afford to be without high bandwidth memory. It's an amazing statement for a company that used to live or die by the day-to-day vicissitudes of DRAM pricing.

44:46Now they can lock customers up for years because their best chips are so scarce. Cyclical to secular, my favorite kind of redo. So if everything's terrific, why in the world did Micron stock go down last night and then open down today and stay down for an hour? A lot of people saw that action and assumed that there was got to be a problem with a quarter, even if there wasn't. The truth is the sellers didn't know what they were doing. Ostensibly, Micron trades on gross margins. If the gross margins show any degradation, it's usually because there's too much competition and pricing is about to collapse.

45:17But this time, the degradation came from a decision made by CEO Sanjay Marotra to compensate his team a little bit higher than people expected. I thought it was a sound gesture. I saw it with my own eyes. We went out to Boise Micron headquarters in August in the site of a huge new fab to make chips. And some of the workers told me they were going six days a week, long days. And while they were genuinely cheerful about it, they definitely deserved a bonus. Still, the playbook says what you sell, Micron, a gross margin is based. So the playbook followers bolded. Second issue, the buyback. Micron's earnings were huge, and the price earnings multiple is shrinking.

45:52When that happens, a company can either say, darn it, I wish it were higher, or it can take its cash hoard and put it to work buying its cheapest asset. This shares in the company itself. Because Micron took chipsack money from the federal government, it has to wait till December 9 before it can buy back stock hand over fist. It can't front run that. I was one of several people who begged for details of the potential size of the buyback when I interviewed Sanjay this very morning on Squawk on the Street. But I had no luck. I think Micron, like Apple, like NVIDIA, knows that it owns its own stock isn't getting its due because people are so worried about a data center slowdown.

46:27Me, I know that when I was out there in August, Micron had 16 long term contracts to provide DRIVs. now to 26. One month. Every time there's a new contract, the company becomes less cyclical and more secular. Given its newfound consistency, it's nuts that the stock still sells for six times next year's earnings estimates. Weird. So I like a huge buyback here. It could help my shareholders tremendously. But that's not why I stood there at our 1020 Morning Media and Toll Club members. Now, buy it. Buy this dip. I did it because the story as great as it was when we visited in August had gotten even better, maybe much better.

47:04Just a few weeks later, as customers know, they'd better lock up chips as soon as possible or else. The end of Micron's relentless boom and bust cycle has arrived at last. That means the stock can still be bought. But maybe more important, it can't afford to be sold. If you want to short this thing, knowing that Micron will be able to buy back its own stock aggressively come December, I think you're digging your own grave. Why don't I send you an invitation to your funeral. I'd like to say this, always a bookmarked somewhere. I promise I'll find it just for you right here on Mad Money. I'm Jim Cramer.

47:35See you tomorrow. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Cramer on television, radio, internet or another medium. You should not treat any opinion expressed by Cramer as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion. Cramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

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