Mad Money w/ Jim Cramer 10/12/26

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1:17Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people like friends, I'm just trying to make a little bit of money. My job is not just to teach, but also to entertain. So call me at 1-800-743-CBC or tweet me at Jim Cramer. Happy birthday, bull market. Today is the fourth anniversary of the incredible rally that began on October 12, 2022. And I think it needs to be celebrated. Because it created a tremendous amount of wealth out of nowhere. Nobody seemed to be noticing. So in a day where the Dow gained 196 points, has to be dipped 0.06%, and now it's that gloss 0.44%, let's make a toast and light the candles, at least preferably, because a bull market in stocks is a virtuous circle of wealth creation.

2:05That's what happens when stocks increase in value by$40 trillion. Today, I want to trace out how implacable this bull has been, even as it hasn't always received the recognition it deserves. Its birth was barely noticed. In fact, it was just the opposite. that nobody believed in this little veal market when it started. If you go back to when this bull was born, you couldn't believe how negative things were. We were gripped by severe pessimism about everything from the Fed's stance on rates to high inflation and fear of the coming earnings season. Not only was there no claxon sounding to tell people it's time to buy, people were selling aggressively right into the vortex.

2:45The next day, by the way, October 13th, We got a hideous consumer price index with a core CPI up 6.6 percent. You know, that was the highest in four decades. That's a catastrophic level of inflation for a developed country. Nothing in any part of the data set I could find was considered positive. The only bottom sign I saw was from the actual action in the stock market. The S &P had gone out at 3 ,577 the night before. The intraday low after that CPI number was 3 ,491. And yet the market closed up 3 ,669. It was a remarkable recovery. In short, extreme pessimism is what caused the bottom. Pessimism.

3:26By that point, pretty much everyone who was going to sell had already sold. The fact that we could rally on that kind of inflation figure meant that there really wasn't much left to worry about. All the bad news was out and there was nobody left to dump stocks. And that, people, is how a bull market really begins. Now, the market couldn't perceive this, but on November 30th of 2022, ChatGPT was launched and adoption was stunning. Although it didn't seem initially more than, say, a parlor game, the enterprise workhorse quickly became evident. Baby ChatGPT definitely wasn't enough to keep the bear away.

4:01In March of 2023, we saw the most serious banking crisis since 2008, when several banks collapsed, led by Silicon Valley Bank, known as a money lender to executives and startups. They were caught flat-footed by the dramatic rise in interest rates orchestrated by then-Fed Chief Jay Powell, who took the federal funds rate from near zero in March of 2020 because of the pandemic, all the way up to 4.5 % to 4.75 % in early of March 2023. The man was on a mission to stamp out inflation. But these damaged banks had invested poorly in Treasury bonds, of all things. So they were hurt when rates went up so quickly.

4:35Higher rates equal lower bond prices. The fall had included the acquisition of credit suites by UBS. First Republic, respected lender, was sold to J.P. Morgan, a deal arranged by the regulators. The S &P declined 9 % on that banking crisis. But it never went down below there, and it didn't actually have a lot of contagion. Instead, the bull found its footing, led by a new group of stocks. That's when the Magnificent Seven was born. Output, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. It seems ironic after what happened with their willy-nilly debt-fueled data center expansions. But back then, these companies became market darlies because of their balance sheets.

5:14See, they were so close to perfection, they didn't need credit. Because in a credit crisis, people who need credit can't get it. And those who don't are fine. I don't think we had any widespread knowledge of the two markets, the Mag7 and the rest, until we saw NVIDIA's earnings on May 24th of 2023. It was the biggest upside surprise in history. And it propelled NVIDIA's valuation to a trillion dollars a week later. A trillion-dollar company that seemingly came out of number. But I say seemingly because in reality, NVIDIA had been public since 1999. That July, more bad news. The Fed raised rates by another 25 basis points.

5:48But it turned out that was it. No more hikes. In January of 2024, the S &P hit an all-time high, taking out the previous record early 2022. Not bad. Then on July 15th, Donald Trump received the Republican nomination. Six days later, Joe Biden dropped out of the race. Believe it or not, these political events played no role whatsoever in the bull market, Even at the time, we probably thought that they were going to be really important. On September 18th, the Fed cut rates by 50 basis points, breathing new life into a flagging bowl. From there, we didn't hit real turbulence until April 2025, when President Trump announced a new highly punitive tariff regime.

6:25The S &P plunged 19 percent from its highs. But the president pivoted soon after, offering a jumbled array of lesser tariffs that the market didn't seem to mind. And we were off to the races again. That tariff reversal pattern. Well, you know what? That actually started something that we've become gotten quite used to. President will try to pivot when the stock market gets hammered, except this time. He doesn't talk about it. We had smooth sailing for a bit. And then the S &P tumbled 9 percent when our government went to war with Iran at the end of February, with the decline escalating at the end of March when oil spiked over$100 a barrel after the Iranians effectively closed this trade of removes.

7:01All during this latter stage of the bull, we saw an ascendance of hardware over software. Not only led by NVIDIA, but truly supported by a host of semiconductor and disk drive makers, along with other data center components. In July, we discovered that much of the upper momentum that we had been seeing, though, was fueled by a wayward hedge fund, situational awareness, which peaked and then plummeted with hardware stocks cascading and software stocks finally bottoming. Since then, enterprise software has been roaring back while hardware struggled to find its footing. That happened all day today.

7:30Regardless of what kind of tech's leading the way, the average just kept riding higher. So I've given you all this negative news, but it hasn't impacted how much money was made. Whether it was a banking crisis, higher rates, the tariffs, the war in Iran, major hedge fund implosion. Nothing's been able to derail this incredibly powerful move. There are tons of takeaways here. Perhaps we should act in fear of rate hikes. We should not fear rate hikes if we are long-term investors. That's the right way to think. Rates don't seem to tell you as much as you might think because they can change when the facts change.

8:11We don't need to focus on the day-to-day machinations of the president either. We should recognize that earnings can drive the market, but so can changes in technology. For me, the real lesson here is that there never seems to be a good time to invest because bad things do happen quite regularly, as I just showed you. Yet investing in stocks has proven to be a superior way to get a return, especially if you match your S &P 500 contributions. with a handful of stocks that are outperforming. The S &P is up 118 % since the bottom. You invested$10 ,000 in the S &P back then, you now have$23 ,061. NVIDIA, though, gave you a 1 ,875 % return.

8:46A$10 ,000 investment would now be worth$197 ,505. Meta, 488%. Well, it's been a laggard, but I've got to tell you that you would have made$58 ,800 if you put$10 ,000 in. Alphabet's more than doubled the S &P. It would have turned your 10 ,000 into 36 ,500. The biggest winners were in the data center with amazing returns from a handful of semiconductor and disk drive companies that started the bull market as small, volatile enterprises and are now behemoths. Although, as I'll point out later in the show, they're starting to lose their shine. No matter what, the most important point is the consistent investing.

9:25Putting money to work regularly in good and bad times in stocks and indices is by far the best strategy toward wealth. We could not have predicted either the big declines or the big rebounds. We could have turned tail so many times in these four years and would have all been for the poorer of the bottom line. Stay in. Keep buying. Don't lose faith. Those are the lessons from this indomitable and intrepid four year old bull market. Let's take calls. Let's go to Zach, Louisiana. Zach. Hey, big booyah, Jim. How are you doing? I'm doing well, Zach. How about you? I'm good. Just trying to make some money, man.

10:03I hear you. So, look, me and my finance buddies have been buying into this LNG producer for a couple of years now. We bought it all the way down to$6, and then it recently hit$17 again. But it's typically been sitting around$13 a share. Do you think Venture Global has room to make a big run to$20 a share? Or will it continue to try to make another big run? I'll tell you what happened. Zach, it gave a bad taste in a lot of people's mouth because it did some things involving contracts that people didn't like. And I think those were then forgotten when the stock went down to 7, 8. But stuck here at 13, I don't see as much upside as I'd like.

10:37I think LNG is better. And that's, I mean, the stock symbol is LNG. I would put my money in that. I would also do ET, by the way, which gives you good return. All right, no matter what, despite all the decline, staying in the market and putting your money to work regularly is always the best strategy. On May of Money tonight, auto stocks have been struggling lately under rising rates and the price of oil. I'm sitting down with the bankable CEO of General Motors to find out how the company's positioning for an unpredictable environment. Then you called in about a power plant builder whose stock's been cut in half.

11:07I'm turning in my homework for you and went arguing. And what will it take for the hardware and software stocks to normalize in this AI-driven market? I'm explaining the changing winds of the tech stocks and how you can stay ahead of it. So stay with Kramer.

11:28Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Cramer. 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. There are three kinds of investors that listen to this show. Those protecting what they've got. Those looking for solid returns. and those swinging big. Most tools pick a lane. VectorVest doesn't. Every stock gets three scores. Value, safety, timing. You decide what matters most. Stop overthinking what to buy and sell. Go to VectorVest.com slash mad. Get 30 days for just 99 cents.

12:16VectorVest provides stock analysis tools, not personalized investment advice. Terms at VectorVest.com. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much.

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13:26What do you do with the stock of a great automaker during a time of high oil prices and rising interest rates? Well, that's the question you have to ask about General Motors. In late July, GM reported an excellent quarter, and the stock shot up to new all-time highs. Like I said, this is a great company. They've been doing very well. Since then, oil prices haven't retreated, while interest rates, well, they just keep rising, making it more expensive to get an auto loan. That's why the stock's given up most of its gains for the year. Still, GM just rolled out some new heavy-duty truck models last month.

13:55They've got a growing digital and services business. And frankly, business seems to be holding up a lot, I think, pretty well. Even though the company's in a quiet period ahead of earnings reports next week, I want to check in with Mary Bartsch, the chair and CEO of General Motors, to get a better sense of the industry and celebrate how far this company has come over the past 13 years under her leadership. Ms. Barr, welcome back to Mad Money. It's great to be here, Jeff. Thank you. I mean it to celebrate. This is a difficult time. You have gotten you had to deal with very complex and tough geopolitical issues, a policy environment that's very pretty alien, I think, from what it was when you got in 14 years ago.

14:31I still don't think, though, that you get enough credit from the street about a vision and your tenacity. And I'm wondering how we can just explain very quickly the arc of GM, what you've done and accomplished in a really tough period. Well, I really appreciate that because we do think the stock is undervalued. When you look at it, we have the strongest vehicle portfolio that we've ever had. We're building on top of that a very strong software business and services business that you talked about. And I think from a traditional OEM, we're in a leadership position there with OnStar that's 30 years old and still growing, as well as what we're doing with Super Cruise.

15:13And then when you look at it, there's adjacencies like GM Defense. So we have a really strong fundamental business, and we have opportunities to continue to grow. Well, let's talk about these highlights of the third quarter. This light-duty pickup trucks, for example, Silverado, we all know Silverado, Sierra LD, these were up 9 % in the quarter. You're doing incredibly well, Chevy Trailblazers, Chevy Trax. These are really very strong numbers for this environment. Well, if you think about it for the trucks, this is a truck that we've already announced a new one's coming out that we'll start rolling out yet this year and then into next year with many different models.

15:47This has been one of the strongest trucks through its whole life cycle. And customers still love the truck, as well, as you mentioned, small SUVs. We continue to grow midsize SUVs. So we have a very strong portfolio across the board that I think is what is giving the strength that General Motors has and how we've been able to, with all the twists and turns you've talked about, whether it's tariff, whether it's oil prices, whether it's interest rates. The strength of the product is what's fueling our business. Well, new twists. People love diesel engines. I know that. I mean, when you talk to anybody who owns a truck, they'll say, look, you know, mine's a diesel.

16:24And yet diesel, the fuel just went up in price rather dramatically. What do you say? Well, again, I think people look at it, especially a diesel truck buyer. They're extremely loyal. I think, you know, we all hope that the geopolitical situation gets resolved sooner rather than later. But I think people look over at the time that they're going to own that truck. It will come down. And generally, a diesel is a very efficient way, and they love the performance. Okay, so let's talk about the state of play of EVs in an environment where gasoline has gone up in price, but the rebate's gone at the same time.

16:57You've been saying over and over again, the endgame is EV. That's what we believe, because we fundamentally believe that vehicles are better. You never have to go to a gas station. You have instant torque. It opens up new design languages. And our EVs have won many awards for beautiful design, best luxury vehicle of the year, et cetera. So we think we've got a great EV portfolio. We think it will continue to grow, but it will be slower. I'm excited because, you know, we're investing in the next generation battery technology. We'll be rolling out LMR in the not-too-distant future, which will take thousands of dollars out of the cost of the vehicle.

17:31So we continue on that path. But we've also got great ICE vehicles or internal combustion vehicles. And we'll have the right hybrids. So we'll have a portfolio where we're going to let the customer choose. Whatever the customer would like, we're going to have a great vehicle. And I think that's how we respond to a situation, especially when things spike like they're doing now. But we believe they'll come down. Well, let's go back to the battery. Sure. You uniquely have said, we want to be in control of this. We don't beat the mercy of others. We don't beat the mercy of any country. We don't beat the U.S.

18:07Talk about your battery philosophy and why it's working. Well, again, we have the ability to do R &D, core R &D on battery technology, as well as processing and then scaling. And not everyone can do an automotive-grade battery. So we're working not only with LG as a partner, SDI from Samsung, but also with startups, understanding what battery technology. I believe we're in the first lap of the 24 Hours of Le Mans when you look at battery development. And it's very promising that what is coming that will only make the EVs more attractive. We're always working on energy density at a lower cost. And NP Materials was quite an original deal that not many people saw coming.

18:51Well, you know, when we went through not only COVID but then the semiconductor shortage, we recognized we needed to rethink our supply chain. We started working with NP Materials over five years ago because we looked at, you know, We have businesses around the world, but we wanted to be closer to where we sold the vehicle and have a more resilient supply chain. So we either ally short or on short. MP was one of the first vehicles recognizing the importance. And we're really proud that they're going to be producing parts, validated parts, hopefully by the end of the year. Excellent. Now, you mentioned digital sales and a lot of people say, oh, come on, that's it can't be additive.

19:29Yours actually is, I'd say, material to your earnings. I believe it's material now and will continue to grow. When you look at the fact that we have well over 10 million OnStar subscribers, we have a billion miles of people using Super Cruise. And Super Cruise is one of those technologies, if you haven't tried it, where people, once they experience it, they say, I either wouldn't buy a car without it or strongly prefer it on my next vehicle. So technologies like that on the vehicle, I think, are what are going to generate the loyalty. And we're seeing that business grow. And I'm super excited about as the truck comes out because we're going to have more models available with Super Cruise.

20:08Now, to go back to OnStar for a second, I think it's important. But people, the re-up is the way I look at the success of this. People keep re-upping. There'll be one thing, look, it comes, I don't know, when it's over, it runs off. No, people love it. People do. People do because not only, you know, you've got the security piece of it. You can choose your program of what you have in the vehicle. and people find it a very important technology to use, and they depend on it. So we're really proud of the attach rates that we see once the initial subscription has ended. All right, but let's deal for a moment with the fact that oil is up a lot.

20:46The overall number of vehicles down 6 % year over year, also down 6 % from the second quarter. But I think that when you look at the actual makeup of what you've got, it's actually much better than what the overall number would look like. Well, it absolutely is, especially when you look at, in many cases, we're selling everything we can build. And that's why, as we launch the new— Oh, you're selling everything. We're pretty much all of the models, whether it's crossovers, full-size trucks, full-size SUVs, we're selling everything we can make. And many of our plants were constrained, constrained not only with the vehicle production but with engine production.

21:20As we get through next year's ramp of the next-generation truck and the new engines that are coming, we get into 28, we're going to really have then the ability to produce more vehicles. And in some of the cases, the vehicles that we're moving to the United States not only are going to give us a better position from a tariff, but they're going to give us added volume. So I'm very excited about what we have coming, and that will uncap us and give us room to grow. And I don't overlook the fact that you're number one in fleet sales. I mean, it does matter tremendously. Some people say, well, listen, they don't make as much money, but it's profit.

21:54No, it is. And fundamentally, since COVID, the fleet business has changed. And we see it depends on who, what fleet customer. And we have some very strong fleet relationships. I'm very proud because that's another business that keeps growing. And we're number one. At the same time, you've tried to offer the average American who is so struggling very good value on some of your cars. Well, last year we sold over 700 ,000 vehicles that had an MSRP, manufacturing suggested retail price, of under$30 ,000. So think about that. The Chevrolet Trax starts under$25 ,000. This is a car that's beautifully styled, has great technology, great safety features.

22:36When it came out, I drove it for a couple months. I loved that vehicle because you're not giving anything up. It's got a good pickup. It's a great vehicle. So being able to deliver that, I think we're really getting those customers that are worried about affordability. Excellent. Mary, stay right here. We're going to have a lot more with you. Don't touch that dial. We have lap two of Kramer's conversation with GM's top brass next. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins.

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23:57Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. weren't agents supposed to take things off your plate building another to handle the others is a bit much don't make more work out of work gemini is the one agent that knows all parts of your business and actually gets stuff done you give it a project close your laptop and when you come back the job's finished no matter your industry or role your agent has the skills to help every team stay in their flow seriously make work less work with gemini on google cloud check response subscription required

24:40For the break, you saw the first part of my interview with Mary Barr, the chair and CEO of General Motors. One segment isn't enough to cover this great number of companies, so let's get back into it. Mary, I have been blown away by your capital allocation. I know that sounds like it's pedestrian, but the fact is, is you have a great buyback. You've bought back 37 percent of the stocks that you got here. It's meant a huge amount to shareholders. How did you know to go that way and not dividend? Well, I think when we looked at it, as I said before, we fundamentally believe the company is undervalued.

25:08And so, you know, the management team works with our board and we look at what is really going to create the most from a shareholder value perspective. And we have, as you say, many shareholders are very happy about it. But that's one of the things I focused on when I took this role. I think in the company in the past, we hadn't been as disciplined as we should be about capital allocation, that it's got to generate a return because this is our owner's money. So that's the focus we always have. We believe the company and the stock share price today is undervalued. So we think it's a great opportunity to continue to create value.

25:37Right. Now, one of the things that I think that you've been doing that is hard to, again, quantify how much it means is supply chain management, whether it be a deal with Micron for memory chips, whether it be MP, but also trying to get around tariffs into supply chain management. Try to keep the cost of your vehicles low, but move stuff back and forth and back and forth. How are you able to deal with an environment where it seems to change all the time to be able to continue to do supply chain management in a disciplined way? I think we have one of the well, the people of General Motors are what make this makes this possible.

26:09I think we have now our superpower is agility. And so from a supply chain, you know, again, they lived through covid where we had, you know, any given day you were going to learn that you weren't going to get a part to when we went through the semiconductor. And I think what we did is we built partnerships with our suppliers. And instead of calling and being difficult with them, we're just like, okay, what's the problem? How can we work? How can we solve it? Here's where we need you to build. Use your capacity for this. And I think we've been building on that relationship. And so the relationships help.

26:39But also it's the team that's looking ahead of what's the next thing coming. I mean, we've all seen the supply chain disrupted again with data centers and some of the demands that they have. Our team continually says, okay, let's get ahead of that. So I have to give them all the credit. Now, talk to me a little bit about the autonomous vehicles. Are they a threat to car manufacturers? If we all ended up having them, then, well, at a certain point, we don't need to buy our own car. But at the same time, it's something that is definitely in the future no matter what. You know, this prediction, ever since the early days of what I call ride share 1.0 with Uber and with Lyft, people, I remember there was an analyst report written that, you know, car sales would drop 40 percent.

27:19They haven't because, I mean, people still value that it's in my driveway. way. I can go wherever I want, whenever I want. So I think that's going to be important. But we think personal autonomy is going to be important. That's where we're focused on from an autonomous. You know, we're not in the taxi business. We're not in the bus business. That's when we made the decision from a capital allocation about not continuing with cruise when we looked at the capital that we were going to need. That was tough. It was a tough decision, but I think it was the right decision. We've been able to preserve a lot of that team.

27:48They're working on personal autonomy. I was just in a vehicle a couple weeks ago, and the progress, I was in March, and I was just in it again. I said, hey, I've got to do this almost every month. They're making so much progress on our goal to have eyes off, hands off in the 28 timeframe. So we think we're going to be well positioned from a personal autonomy perspective. And again, when people want to drive, they can. When they don't, they won't need to as that grows. Now, I remember GM as really part of that's not integral to the arsenal of democracy in World War II. We are short of lots of military equipment.

28:23You decided to do something about it. Well, you know, we've been in, had started GM Defense about five years ago because we felt that we could really bring, leverage our parts bin, leverage what we do. So we started with the infantry squad vehicle, and now there's demand for over 10 ,000 of those vehicles as we move forward. But also leveraging energy storage. That's been also a business that GM Defense has been growing. But then when we see the shortage that we have now, we know how to scale up quickly. Remember, we built ventilators in 30 days. And so now I was very pleased with the partnership that we have with Lockheed Martin to be able to deliver parts in less than 30 days that we're constraining them.

29:04So that's, again, the know-how that we have from a manufacturing perspective that we think we can help with a model that partners with the big defense companies and enables them to get the parts that they need to, you know, it's good for the country and also lowers costs. Right. Talk to me about China. China is both an existential threat. We don't look if you're if your government subsidizing cars, they can beat anybody. But on a level playing field, I don't know if they can versus your lineup. Well, you know, from a level playing field, you know, our business in China, we have the highest rated infotainment system in the industry with the one we rolled out about.

29:42It's about a year ago now. So I'm confident that we can compete on a level playing field. But I do think when there isn't a level playing field, we have to make sure that we have a strong U.S. automotive base. Manufacturing matters. You it's funny you just mentioned Cruz. He said, well, we know because we were out there with you. He had to cut your losses. You cut your losses in Europe a really long time ago. Europe turned out to be almost financially suicidal. How did you know in 2017 that it wasn't going in the right direction? Well, when we looked at the regulatory change that they were driving and we knew we were subscale at 6%, 7%.

30:18And so to do the investment to meet the regulatory climate was going to be very difficult at our scale. So I always say when we sold Opel to PSA, it was a win-win-win, A win for the Opal team, a win for General Motors, and a win for PSA because it gave them scale. So, again, it was something I've never regretted doing. All right. Now, I want to go back to the two new full-size trucks that you've launched, the Silverado and the GMC Sierra. These are incredibly profitable, and they're also incredibly popular. So what's the secret? Well, again, it's knowing that truck buyer. That full-size truck segment is a unique segment from a loyalty perspective.

30:56Payload, towing, the performance of the vehicle. For many of them, they're contractors, and that's their office. And really understanding what that truck buyer needs, what's important to them. They also want really great design, and we do that. We have new powertrains coming out with these trucks that are going to take it to the next level. I can't wait. We actually start the first plant that we're launching this month, and I can't wait for these trucks to get into the marketplace. And we'll be launching through next year because we're also launching and bringing up engine plants as well. All right.

31:26How about Cadillac? Cadillac? You know, one of my favorite articles was actually about 18 months ago now. And it was like Cadillac's back baby. We have been investing in Cadillac. We understand we didn't deliver on the brand promise, you know, 10, 20 years ago. And so I have to give Mark Royce all the credit. He's our president and head of product development of investing and making sure we had beautiful design. Going back to our Cadillac roots, the right technology, innovation, and the Cadillac lineup that we have, whether it's an Escalade internal combustion engine or the Escalade electric. Again, these are vehicles people love and aspire to own.

32:04The Cadillac Lyric and the Cadillac Vistik, which are two-row and three-row luxury SUVs, one German luxury car SUV of the year, not car, SUV of the year. First time, I believe, a U.S. company has won a German award like that. So these are great vehicles. And we're going to be adding some ICE SUVs as well into the catalog lineup. So we'll have a full, broad lineup again. But the design, the craftsmanship, the technology, the innovation, it's back. All right. Now, you just listed those qualities. Do you also have to say, but wait a second, we've got to think about tariffs. The administration is committed.

32:44we cannot make this car or truck at a certain price because of tariffs. When does that figure into the equation of what you're doing? Well, we look at every program from a profitability perspective and, you know, leverage our scale, leverage the engineering innovation and ingenuity. You know, I was recently we have engineering workshops within our engineering building in Warren, Michigan, where, you know, I was walking around seeing all the great ideas our engineers have, how to give the customer more but cost less. So that's our job. We've been working on taking costs out but giving the customer more for years, and we'll continue to do that.

33:20All right, last question. I think you've set GM up for the future. You've done an amazing job. Stick with it for longer, please. Well, I think I have more to give. Obviously, it's a decision for the board, but I'm having a lot of fun, and I think I have more to contribute. But I've got an incredibly strong team I couldn't be more proud of. Well, shareholders couldn't agree more. Thank you so much, Mary Barr, CEO and chair of General Motors. Ben Money's back here for the break. Coming up, you called in looking for advice on the stock of Argon, Inc. And now, Kramer is presenting his full report next.

34:01Last week, Catherine in New Jersey called to ask about a stock that had, frankly, put it in a tough spot. But it's called Argon. That's A-G-X for you home gamers. And it stumped me. I wish I had known it. I said do some homework. Catherine said she was still up 34 percent for the year in this thing, but the stock hadn't been cut in half from its summer highs. So was it time to throw in the towel or stick to her guns? First, let's figure out what's going on with this business. Argon is an engineering, procurement and construction company that mainly builds power plants, although it also has some exposure to communications infrastructure, both of which make it into a yes data center play.

34:37Now, all these new data centers definitely need electricity, which is why power generation has become an incredibly growth market over the past couple of years. The power business makes up 78 percent of Oregon's sales, with another 20 percent coming from industrial construction and equipment fabrication, and then the last 2 percent being communications and data networks. But the vast majority of this business is building power plants, mainly gas-fired power plants. About 80 percent of their backlog comes from natural gas projects. And look, for the foreseeable future, natural gas is how we'll be boosting the electric grid.

35:09Our country's overflowing with this stuff. It's cleaner than coal. And you can build these plants much faster than, say, nuclear reactors. I like Oregon's position here. Data centers are driving demand, along with new factories and 700 foundries. Meanwhile, the pool of contractors who know how to build power plants is pretty small. Honestly, this one reminds me of Sterling Infrastructure. Remember them? That's an engineering construction firm that builds data centers. We did a homework piece on Sterling in August of 2023 when the stock was around$80. In the years since, it climbed above$1 ,000 before falling all the way back into the low 500s.

35:42Sound familiar to this one? Even after that brutal decline slipped more than 500 % from where I first recommended, I think you should stick with that one. How about Argon, though? We also know that their latest results were nothing but phenomenal. A little over a month ago, Argon reported a blowout quarter. Just a massive top and bottom line beat with 62 percent revenue growth, power business up 53 percent. Their industrial business more than doubled. Even their tiny teledata business grew 40 percent. These guys are making serious money from the current construction cycle. That said, some of the strength last quarter was because some revenue came through earlier than expected, which means the current quarter might.

36:20But imagine it's very.

36:33...hurt by a couple of underperforming projects that are unrelated to the data center, but it doesn't matter. Imagine you expect those projects to take about six months to finish, meaning there'll be a drag for a couple more quarters. Bad! That brings us to the number I'd watch most closely, or the backlog of contracted work that hasn't yet become revenue. Oregon finished July with roughly$2.52 billion backlog, down from$2.93 billion in January. Completing construction naturally reduces that balance. Imagine pointed to more than$260 million of additions against approximately$675 million of first-half revenue.

37:05But there were no major new power projects added during the second quarter. Now, that's a real problem. Eventually, Argonne needs major new business to replace the work it's completing. Given the demand we're seeing for electricity, I think that work will come. But the timing matters. High interest rates certainly don't make it easier. On the latest conference call, Magnum said they expect a handful of new awards over the following seven to 15 months. Yet the CEO acknowledged that the new job, next job could arrive anywhere from next quarter to a year later. That uncertainty about the future is one reason the stock's been slammed.

37:37A year later is more recent. Fortunately, Argonne's financial strength behind it, the company ended July with approximately $1.03 billion in cash and investments versus zero debt. Some of that money comes from customers paying ahead of construction, so it isn't all surplus cash available to share, Still, a balance sheet helps Oregon support large contracts. Their business requires relatively little capital spending because Oregon is being paid to construct facilities for other owners. They're not the ones putting up the money. Imagine returning money to shareholders, too. On September 9th, the board raised the quarterly dividend by 40 percent to 70 cents per share, its fourth consecutive annual increase.

38:11The yield is tiny, but I found an encouraging sign of confidence. Oregon's also repurchased$124 million worth of stocks since 2021. are not huge, but not meaningless, even for a$5.5 billion company. So why the heck has this stock been rolling over? And that is the right term, rolling over. Mainly, I think it's because Argin got caught up in this situational awareness hype earlier this year. And like many other AI plays, the stock went parabolic. Then situational awareness imploded, and we started seeing more negative headlines about how data centers have become politically toxic. If it becomes harder to build these warehouses full of servers, well, we're certainly not going to need as many new power plants.

38:47Arguing to report a great quarter, but if their backlog is shrinking and Wall Street is worried about a data center slowdown, it's no wonder the stock has struggled to find its footing. On the conference call, management was asked directly about resistance to data center development, and they said they hadn't seen a change in developer behavior. The urgency remained, but projects still need customers for the electricity permits, access to gas and water, turbines and financing. I think substantial new power infrastructure will get built. This train is just too powerful to stop. But I also understand investors who want to wait until the midterms, right, before they pull the trigger.

39:19Same goes for Argon's potential customers. Finally, there's valuation. With a market cap of roughly$5.5 billion, Argon's small enough that a few major contracts could really move the needle. But the stock's trading at just under 25 times next year's earnings estimates, so if you buy it, you're paying a premium multiple for continued growth. I can justify a premium for Argon's scarce expertise and strong execution, but I prefer to leave some room for uneven quarters and delayed contract wins. historically, building power plants is not a smooth business. What would make more bullish? Mainly, Argonne needs to win new contracts on the power side of the business.

39:52So how about Catherine's question? In the end, I like Argonne's business enough to endorse holding the stock for the long haul. But after the beating it's taken in recent months, I wouldn't blame anyone for ringing the register in order to hold on to what remains of the profits. Here's the bottom line. If you want to own Argonne here, you need to believe in management's ability to deliver. You need to be confident that there really won't be a sustained data center slowdown. For someone starting fresh, I buy some gradually and leave room to add on weakness, which potentially could last through the midterms.

40:20I think Catherine's found an excellent business, but because of short-term blemishes, it won't be a great stock unless it becomes more affordable. May have my news back after the 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.

40:48It is time. It's time for the Lighting Round. It's time for the Lighting Round. It's time for the Lighting Round. And then the Lighting Round is over. Are you ready? It's time for the Lighting Round. It's time for the Lighting Round. It's time for Frank in New York. Frank. Good to hear you, boys, Jim. Jim, I know you're high on Nokia. What specifically? Is it something they're making or something they're doing? No, they're doing AI fiber at the edge, which is really good. And don't forget, they took some money from NVIDIA at$6. And I think that they're actually a core component in the growth of the data center.

41:21It's very real. Let's go to Oscar in New York. Oscar. Hey, Jim. It's Oscar, long-time listener. Excellent. A few weeks ago, you brought up an up-and-coming defense company. I like it. But since then, it's down almost 50%. The company is AADX Applied Aerospace. And I wanted to know what you thought about it here. I like the stock. I don't think that it's warning this decline. I really don't. I would stick with the stock. I would definitely stick with it. Let's go to Raj in California. Raj. Yeah, this is Bagaia Raj from California. I would like to know regarding BlackBerry. Symbol is BB. Yeah, I like BlackBerry very much.

42:10We actually had management on. I thought they had a very good story to tell. I would not abandon that one. I know a lot of people are banning some of these stocks that have just gone up a great deal. But I thought BlackBerry had a lot of good things to say. Let's go to Jeff in Texas, please. Jeff. Hi, Jim. How are you this evening? I am doing well. How about you? I'm good. I'm just wondering your thoughts on Monoly. Should I hold it or just sit tight? I am not crazy about the food stocks. No matter what I do, I can't seem to figure out when, what level. I mean, I was looking at General Mills at 30, that in 31.

42:46I just can't find any level. I want to be able to buy them. And I think that if I say, you know what, I think that this is the level to buy Mondelez, next thing I know, I think I'm going to be hurting you, and I do not want that to happen. So I'm going to say let's not go there. Let's go to Stephen in New Jersey. Stephen. Yes, Jumbo. Good evening. What's up, man? I'm calling it AMRC. Amaretto. Yes, another construction engineering company. There seem to look a lot of these construction engineering companies. They had a great moment. They've come back down. I think they're being oversold. I don't know when they're going to turn.

43:23We talk a lot about them, and they all seem to have that same kind of feeling that they're not going to bottom yet. So I'm not going to recommend that stock. Let's go to Rodrigo in Colorado. Rodrigo. Hey, Mr. Jim. How are you? I am good. How about you? Good, thank you. Talking from Steamboat Springs in beautiful Colorado here. Excellent. My question to you today is about Ambarella, ticker AMBA. No, AI vision. No, AI vision, I'm just not. Again, I mean, I know that I sound like I'm being incredibly negative, but in a rising rate environment, I've got to be able to show that the fundamentals are good and the stock price is good, and I don't feel that way about Ambarella.

44:03And that, ladies and gentlemen, includes it of the Lightning Round. The lightning round is sponsored by Charles Schwab. Coming up, Kramer's looking to make sense of the seesaw between hardware and software stocks. Next.

44:27For years, this market was led by enterprise software. We could count on Microsoft, Salesforce, Surface Now and the like because they were consistent, sustained high growth winners. At the same time, Wall Street shunned stocks like Western Digital, Sandus, Seagate. The market had no patience for tech hardware. Micron never got its due, no matter how well it actually did. Intel didn't even seem to register as anything but an easy short. Dell and HPE were disregarded. Only NVIDIA and AMD got much love, but even AMD rarely got the credit it deserved. Then artificial intelligence took off and everything flipped.

44:59We began to get signs that data centers desperately needed huge amounts of memory and data storage, so the earnings of those companies exploded higher. Dell and HP Enterprises became crucial in the establishment of AI in the enterprise. Intel came back to life because it turns out that AI agents need a ton of CPU capacity, and that's their bread and butter. AMD offered an incredible alternative to both NVIDIA and Intel, so it was incredibly strong. Best of all were Micron, Western Digital, SeatGate, and SanDisk, all data storage businesses they couldn't meet demand. So the enterprise hardware stocks started to seriously outperform the enterprise software stocks.

45:30The move was accentuated by a hedge fund known as Situational Awareness that aggressively bought hardware while aggressively shorting enterprise software. The major situational winners, 25-year-old Leopold Aschenbrenner, borrowed billions upon billions of dollars, taking monumentally high stakes, both long hardware and short software. He'd been prescient and initially made fortunes. But there came a time where enough was enough. His biggest position is Blumenergy, Sandisk, Micron, had run too much and succumbed to profit-taking. The software stocks, meanwhile, may have rolled over, but the underlying business like Salesforce, Forth Service now offered sticky services that had proven their mettle over many years.

46:06So they had great support among their clients. In a classic lesson of how not to run money, his longs had set up slight downticks, and his shorts battled their way higher, so both sides of his trades went awry. It's very dangerous when you're playing with borrowed money, because the margin corrects will force you to close your positions. He allegedly lost 67 % of his funds in July. Situational awareness was effectively defunct. Since the end of June, we've seen a furious rally in software, with the IGV, that's the software index, up 23%, while the SMH, the semiconductor index, is now down 10%.

46:38Today was still one more day where the hardware stocks just got clogged. Getting used to that. Software stocks hung in there. Led by Salesforce, caught a double upgrade today on a much shorter than expected bunkings. I still can't believe an analyst kept recommending a sale of a stock when business was so strong and a buyback was so voluminous. I don't know. I don't know when eventually these two groups, software and hardware, will reach some sort of equilibrium. At the top of the hardware cycle, things got excessive. Now I'm seeing the same thing with the sulfur cycle. Sulfur is once again king, while hardware is reverted to pawn.

47:08I think both are more like knights or bishops, but they're not behaving that way right now. Until then, it's too difficult to call the bottom in the sand disk in the C-gauge, just like it was too hard to call the top in these same stocks over the summer. In the end, perhaps both segments are inexpensive, given the incredible demand. But there's only so much money to go around, so it tends to be zero-sum, and it also tends to be wrong. I'd like to say there's always a bull market somewhere. I promise I'll find it just for you right here on Mad Money. I'm Jim Cramer. See you tomorrow.

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