Mad Money w/ Jim Cramer 10/13/26

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1:18Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people who are my friends, I'm just trying to make a little bit of money. My job is not just to entertain, but to teach you. So call me at 1-800-743-CNBC. Tweet me at Jim Cramer. No matter what I say, no matter what the street says, stocks keep getting more and more divorced from the companies they're supposed to represent pieces of. Today, we had all sorts of semiconductor stocks in disarray. What they do at the moment is meaningless. But they're the ones that are dragging down the averages, Dow sinking 180 points, this would be dipping 0.02 percent, Nasdaq declined 0.15 percent.

2:00Right now, this market has a ball and chain attached to it. The chain is interest rates, which are trading in tandem with oil. That's the ball. And that means they're going higher when we don't want rates to go higher. We have moments like today where oil takes a breather, and that allows the chain to go slack, and the ball doesn't hurt us all that badly. But when oil pops higher, interest rates come with it. Given that the president doesn't seem to have a game plan to settle things with Iran, we never know when the chain will turn into the wrecking ball and crush the stock market. Even though the oil stocks went higher today, boy, they're setting records.

2:33Today marked a temporary reprieve in the action when we saw some crazy stuff going on in the banks, which regard as disappointment, even though they're making a ton of money. The market doesn't even try to distinguish between the best and worst anymore. Plus, they have so many line items that it's tough to compare them. Instead, the whole group opened strong and then ended up getting slammed or at least giving up their gains. I'd argue that Wells Fargo should have been a winner, not a loser, especially as the CEO, Charlie Scharf, set the bank up to make money, much more money if rates go higher.

3:03And he gave you a good view of for next year. See, we have to believe that the Fed won't be able to get inflation under control and we are going to see rates go higher next year. Wells has good growth, excellent expenses. Nobody seemed to care. And, well, look, the most confusing part of the market right now, though, isn't the banks, although they are trading so awfully. It's the once red-hot semiconductor space.

3:32The group is so visceral that you figure that they're going to cause pain even before trading starts. The house of pain. And that's exactly what happens. These stocks are so behind the eight ball, and they get crushed from the moment that the COSPI, the Korean index, gets annihilated, which is in the middle of the night. which is both the time when I get up and when I go to sleep. So I see the damage happening. It's being exported right here. For the past six days, the semis have experienced one of the most harrowing skeins on record, and that's rolling right into the averages. The SMH, the Van X semiconductor index, has now fallen 7.22 % in these last six days.

4:07That's the longest losing streak since May of last year. The group has always been streaky, with 10 longest losing streaks in the last 25 years going from minus 33 percent back in 2021 to minus 8 percent in May of 2006. In short, when the semis roll over, it tends to last for much longer than you might hope. So don't presume we're about to have a serious bounce after the worst streak of the year. That said, the last three losing streaks did produce some spectacular gains, at least when they were through. The estimates is up 17 percent since the last streak ended this July, up 73 % since the previous one ended last December, and up 148 % since that one before that, which ended in May of 2025.

4:50So there is reason to be hopeful. The problem here is that the SMH ETF has wrapped up every important semiconductor in the industry. So they all trade together, led by SK Hynix, the memory giant that trades both here and in Korea. What can you do? SK Hynix is so big that it's become the key to the semiconductor solar system, Not NVIDIA. SK Hynix. The fact that it's been down, down, and then down tells you all you need to know about the sell-off being exported from Korea to here. Our chip makers are joined at the hip with SK Hynix, not NVIDIA. So we come in each day with a huge handicap because we know the initial direction of this important group.

5:28And it's mighty hard to reverse that direction because it's controlled by SK Hynix. The problem is, when you have this kind of joint-at-the-hip relationship, we tend to forget why the heck we ever would own these stocks to begin with. But let's think about that. Let's think about what they really do. Today I went to this incredible Apple showroom where I saw interactive devices tied to my phone, bound by Siri, that uses knowledge about me that I give it, but I give it to no one else. It's a personal assistant that knows my predilections and it also knows my messages. And it has what Apple calls broad world knowledge.

6:04In practice, it makes me want to rip out the intrusive Alexa who's in my kitchen who thinks that Wagner is Wagner, and she's trying to sell me another kind of soap because I just bought a soap and welcomed this new version of Siri into my home that doesn't want me to buy anything. I like that. There's a beautiful HomePad mini that can recognize up to six users in a household by their voice, exciting showroom, getting in sync with the doorbell camera to show who's there, downward-facing camera showing you what they've bought for you. I love this stuff. I want everything. I think about Apple, and I know that the stocks are buy ahead of the iPhone Duo, the foldable two-screen version.

6:40But what I don't think about is how much memory and CPU power goes into these kinds of devices. Let's talk memory for a second. After a lengthy period of massive outperformance, this group has been the most beaten up and most discouraging. It's driving people crazy, with Micron at the heart of the disappointment. We read yesterday the Chinese might have a better memory trip, and that could crush the entire group, or that Microsoft's getting in the chip, whatever. But let's use this Chinese example. That they're getting in, it's going to hurt Micron. This is nonsense. See, no U.S.-based company of any repute will accept Chinese memory without worrying about confidentiality.

7:18This is just stupid. Who writes these stories? Why do they go to college and get stupid? I mean, honestly, why isn't there an editor saying, let's kill this? I mean, is it that important to be wrong? Do you really have to fill her up like it's a gas station? More important, do people not know how many long-term contracts Micron has with its customers? How about 26, which cover revenue until 2030? Take or pay. You know what that means? It means you have to pay. Micron's currently negotiating for 2031. If the Chinese competition were so serious, why would anyone take these long-term leases? Are they idiots?

7:54Still, Micron stock is chained to SK Hines because they both make memory shares, but SK Hines' business is much larger than Micron's. But I'd say these long-term contracts put them in a much better position. If micro had no agreements, then indeed I would be worried. Regardless, the point is to remind you where these chips go and the desperate need for them, a market contrast to what the stocks are saying. The biggest disparity comes from AMD and Intel. These two companies make the CPUs that are basic building blocks for practically every machine under the sun, including Apple's. Of course, now Apple doesn't necessarily use their chips, OK?

8:26Although I think ultimately they may use some Intel's. But we know you can't make devices without these chips. Use Intel's foundry, I should say. And Apple's going to make an awful lot of these devices. These are going to be big sellers. It may not matter to the stocks, though. Maybe we have another down day for the semi-index. There have been 10 big losing streaks since 2000. It's reasonable to expect a sharp pullback after how far these stocks traveled ultimately. I just think that when you see the devices, when you know the exploding use cases, you can understand why Micron or Intel or AMD has been moving up.

8:56It wasn't all situational awareness, that wayward hedge fund, that took so many semis up to unsustainable levels with borrowed money. A lot of it's just raw demand, and that's going to include micron, even if it's joint at the hip to SK Hynix. So here's the bottom line. Before you decide to bail from the semis because you can't take the pain, go to see the showroom. Go see where these chips are really used. Go understand what really happens in this world. They appear in places you'd least expect them. Don't watch the semiconductor index. Watch the devices. Watch the business. It may turn out that you may like it and not just the action.

9:32The House of Pain. Betsy in California, Betsy. Well, hey, Jim, longtime member of the club. Excellent. And the thing that I'm pretty good at is retail stocks. And while TJX has been unfortunate in being negative 8.3 for the year, the stock I want to talk to you about is up 23.5%. You and I spoke about it in the beginning of the year because I followed Jim Conroy. When Jim left Booth Barn, it was in the toilet, okay? The minute he left, okay, now, right now, there's 115 new stores for Ross, and they expect that the holiday margin is going to be an amazing 6 % to 7%. Bessie, you're right. I think that's...

10:25No, you're right, Bessie. Look, I've been sticking with the TGX forever. When I saw Conroy, whom I loved at Booporn, come over to Ross, I said, I don't really like Ross stores. I like going to the TGX. I like HomeGoods. But what I like turned out to be not as good as what Jim has done. I'm betting the TGX turns this around. But I got to tell you, if they don't turn it around, I would be very disappointed because what would happen is I realize that Conroy comes in and he won. All right, do me a favor. Stop just looking at the semiconductor index and actually watch the devices. Watch the business.

10:58It's a lot better and you'll learn more. See how the semis are put to use. I'm going to say the power plays peaked over the summer, but is there any more room to run? I'm going to go off the charts on the energy stocks to find out. Then Johnson & Johnson did exactly what I expected him to do after the quarter, get crushed. But I'm not bailing out of this stock after his post-surgents decline. I actually would pretend to be a buyer. And when you called me about a data center stock that just hit the public markets, I did my homework, and now I'm ready to give you my take on Accel-ovation holdings.

11:28I don't know. Is that really a good name? Stay with Kramer. Don'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.

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13:31Well, it's just ever a great time to be alive if you're in the power generation business. Thanks to the enormous data center build-out, the demand for electricity is growing at the fastest pace in decades. It kind of reminds me of the 50s when I was a kid. They built a beautiful nuclear power plant right near me. We could visit it all the time. Of course, all the power plants peaked over the summer. None of them have ever been able to regain their old highs. But I think the energy renaissance is here to stay, even if it might be on hold until after the midterm elections, because data centers are too politically toxic for state or local leaders to embrace.

14:03Even though I think that, well, they're pretty good for your town if you negotiate well. That's why tonight I want to go off the charts with the help of Bob Lagge. He's the founder of ExplosiveOptions.net. He's the author of Know Your Own Options. He wants us to take a look at some pretty much heavy hitters when it comes to this business. Bloom Energy, GE Renova, and Vistra. Lank points out the AI infrastructure buildup has led to a situation where power demand is growing at an exponential rate. The overall demand is expected to increase about 4.1 % compound annual growth rate for the next four years.

14:34That's insane. Electricity demand has basically flat for the past few decades. And look, we're just scratching the surface at this point. Lank says data center power capacity is set to go to 15.9 % annual clip. That's a stunning market that's totally come out of left field if you didn't see the AI data center buildup. coming. Now, last year, data centers needed 31 gigawatts of electricity. Next year, that should be more like 66 gigawatts. Worldwide electric consumption is set to rise 165 percent from 2023 to 2030. This is a level of growth that's almost unprecedented, certainly not anything we've seen in recent history.

15:08So we've got to take a look at Bloom Energy, GE Vinova, and Vistra. That's three different ways to play data centers' voracious demand for energy. Now, we're going to start with the daily chart of a company that I feel like we should have nailed, but I didn't. It's called Bloom Energy. It's a lying favorite. This is a company that makes fuel cells, which convert everything from fossil fuels to hydrogen into electricity without actually burning anything. They're fairly clean. They don't consume much water. They're very quiet. Basically, they're the perfect source of backup power for the beta center.

15:38Two years ago, this stock was at$10. Now it's at$263. You can't beat the stock market for making money. That's after pulling back from its$351 high in June. Boom was laid low when situational awareness that highly leveraged hedge fund had been big on AI, imploder of the summer, pulling back to$157 at its highs. Yeah, pretty much destroyed the darn stock. That's a chart of what happens when you have too much leverage. Okay, since then, though, Lang notes that the stock's back in classic uptrend mode with a series of higher highs and higher lows.

16:16Bloom's also been working its way higher on really fairly strong volume. Remember, that's usually a sign to give the move as legitimate. It has staying power. And you can see, I mean, this is, you know, it's not overwhelming volume, but it's good enough to realize it's telling the truth. After we rebounded the crazy last month, the relative strength index, or RSI, up top, important momentum indicator, briefly went into overbought levels, meaning the stock had come up too far too fast. Since then, the RSI has pulled back to the middle of the range. That's not bad. Then there's the MACD. That's one that I actually love.

16:49That's a moving average convergence divergence. The MACD down here near the bottom, making some strong readings. See, it's flipping there, even though it's currently not giving you a buy signal. As Lang sees it, Bloom Energy has been making a bullish flag pattern. Okay, now this is one that I always like. This is where the stock runs up practically in a straight line, then basically trade sideways to digest its gain. It's the flag. Eventually, it breaks out of the flag and the general direction is usually higher. If Bloom can break out past$300, that's almost, that's about$400,$40 up from here.

17:25Then Lange says it would be pretty smooth sailing to$400. I don't know. That would be quite a move. Because the momentum chasers who vanished in June and July would just come right back. He's also noticed strong option buying in the$350 and$400 calls for next January. Now, let me go over one last indicator that I've not used. It's called the TTM Squeeze. And this is down at the bottom here. This is an indicator created by John Carter of simpler trading that helps spot low volatility periods of consolidation. Now, in order to help traders predict big moves, Long story short, red dots on the zero line mean that we're in a period of consolidation.

18:06OK, green dots means we're looking at a period of expanded volatility, which can lead to explosive rallies when conditions are right. At the moment, the TTM squeezes red, which tells Lange that bloom could be like a coiled spring. I'm not sure of this indicator, but I felt that Bob going to give Bob the floor on that. He thinks it's going to work. I'm not quite sure. Anyway, next thing you gain in the chart of GE Vrnova. That's the power business spun off by the old General Electric. It's also a CBC investing club holding. If you're building new power plants, you need their turbines. They call them turbines, not turbines.

18:43The wait list for these things is years long. At the moment, Lange says this is not a particularly bullish chart. But then last month, GE Vrnova tested its floor of support at the 200-day moving average. And ever since then, the stock's been rebounding like crazy. you can see that the RSI, Relative Strength Index, is showing signs of life. I think it's a little bit better than signs of life, but that's all right. The stock's been rallying on strong volume. Volume here a little bit up versus what it's been. That tells you the buyers want in. The MACD line has been flashing a bullish crossover where the black line goes over the red line.

19:19Always looking for that right there, bullish crossover. And that's since mid-September, and that's one of the most reliably positive signals you can get. The TTM squeeze indicator recently broke out of consolidation mode and to expand a positive volatility. He says that's very bullish. Lang also says he's seeing very strong option buying in the January 1000 calls, as well as the January 1200 and January 1250s. Those people better they better pray. And the NG Renova is pushing up against Sicilian resistance formed from downturn since the stock's June high. It looks like it could break out real soon.

19:53This is now a$1 ,004 stock. Langley, if it can go to$1 ,080, then it could be headed to$1 ,300. Like I said, my trust owns it, and I would indeed blow it out if I got that. Finally, take a look at the chart of Vistra. That's one of America's largest independent power producers. Happens to own four different nuclear power plants. Lang points out that Vistra was getting slammed until Google announced a big partnership with Constellation Energy. Gap up. With lots of nuclear exposure. In response to stock gap from 145 to 151, that was just last Wednesday morning, then finished the session at 160. I thought it was going to give up that gain.

20:29It did not. Lang likes that Vistra held the gap, and its stock has now risen above its 208 moving average. With that move, the MACD line, and remember when we look at MACD, we're always looking for the crossover. There it is. The MACD line made an incredibly bullish crossover. And the same goes for this TTM squeeze that he likes so much. Basically, since last week, Vistra's rallied hard on high volume, creating a new uptrend practically overnight. Right. And here we got to you can see this. And there's very high volume. That's what I'm looking for. That's a that's a volume explosion right there.

20:58OK, according to Lang, the stock is a heavy ceiling resistance at 170. But if Vistra can clear this level, he sees the stock going to 220, maybe 240. Again, very strong call volume for the January 200s. All good signs. Here's the bottom line. The data center power generation plays have come down hard from their summer highs. But the charts distributed by Bob Lange suggest that Bloom Energy, G. Renova, yes, club name, and Vistra could all be ready to run. Ned Money's back after the break. Coming up, worried about the move in Johnson & Johnson post-earnings? Fear not, Kramer's got the bull case.

21:32Next.

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23:07All right, what the heck just happened to the stock of Johnson & Johnson? Exactly what I predict would happen last Friday. The company reported decent numbers, and then the stock sold off. Because J &J tends to be a terrible trader during earnings season. Here's a great American company with a stock that had an incredible run from the middle of last year. Until early last month, climbing from$150 to$280. Poor pulling back from its highs. As of last night, it come down to$262. And after today's$15 or 5.7 % beat down, it's fallen to$248. But you know what? I don't believe J &J deserved to get hit like this.

23:48I don't know if it's not for the Travel Trust. Follow closely. So I can say with confidence that the quarter was fine. I will make that point at our monthly club meeting, which you should join so you can see it. That's Thursday. As I explained to club members last week, this company just tends to get hammered after the company reports. While the quarter wasn't perfect, there was still a lot to like here. J &J reported a modest revenue beat with 6 % growth on a cost and currency basis. They earned$2.59 per share, a 5 cent beat, even as their earnings shrank 7.5 % versus last year because of an accounting change related to an acquisition that closed in the quarter.

24:22Now, some parts of the business are performing better than the others. The United States, 9.1 % sales growth, much better than expected, international little soft. The most important disparity was between the company's two segments. The innovative medicine segment, which is the larger pharma business, exceeded expectations substantially. But J &J's medtech division came in a bit light. By the way, the company acknowledged me when I spoke to them. It was disappointing. Within pharma, their immunology business is putting up surprisingly strong numbers led by Trimphia. You probably see the ads for that.

24:53For plaque psoriasis, psoriatic arthritis, and Crohn's disease. That drug's a replacement for Solera. That was a huge show. It lost patent protection in 2024. On the conference call, CEO Joaquin Duato said, quote, This momentum reinforces our conviction in Trimphia as a foundational medicine in inflammatory bowel and psoriatic diseases, and our belief that it can grow into a$10 billion franchise. They've also got another new drug for plaque psoriasis, Icotide. I think, oh boy, this is going to be big. Just got approved in March. 20 ,000 people are now taking the thing, up from 10 ,000 the last time the company reported.

25:27I think this one could actually be overly bigger than trim fire because it's an oral medication as opposed to a shot. People like a pill. The largest piece of J &J's drug business remains oncology, which put up 16.4 percent growth. That missed sales expectations also slightly. But it's tough to be upset about a cancer portfolio with a growth rate in the mid-teens for a drug company. The third largest subdivision here is neuroscience, which was up 17.3 percent. thanks to some newer drugs like a nasal spray for depression, that is really selling well, and potentially revolutionary schizophrenia treatment that put up 66 % sales worth.

26:02Put it all together and the pharma side of the business had more positives than negatives. All right, now how about this med tech thing? All right, look, I said J &J's medical device business was a little disappointing, largely thanks to weaker than expected results from the cardiovascular franchise. Surgery was flat year over year and also missed expectations slightly. But orthopedics and vision care both outperformed versus expectations. Now, there's some extenuating circumstances for J &J's MedTech division. They temporarily lost some business in the Middle East because of the war. Management said it believes that those sales were just merely delayed.

26:34At the same time, they're facing severe pricing pressure in China thanks to some new government policies. We saw that happen at Merck, too. In the end, though, I don't think we need to make excuses for MedTech because pharmacy represents 65 percent of the business here. And that's what really matters. And look, J &J still raised their full year of sales and earnings forecast. They didn't cut it. Management took up the low end of the sales outlook, raising the midpoint by$100 million. And they raised their earnings per share guidance by six cents at the midpoint. Remember, J &J had cut its full year earnings forecast in late July.

27:04That was more of a formality. It was an accounting move related to an acquisition of Firefly Bio. Still, it was nice to see the earnings forecast start to go higher again. What else? All right, we got an update on J &J's plans for the disposal of its orthopedics business, Depew Synthesis. A year ago, they said they were looking into a sale or spin-off of Depew. Today, we learned that it'll be a spin-off, likely coming in the middle of next year. It sounds like J &J just wasn't getting the kind of takeover offer they wanted, so they decided the best way to unlock the value would be a spin-off. I get that.

27:36If they sell it quickly to a private equity company and a private equity company immediately flips it, they would look pretty stupid. In appearance on CBC this morning, Chief Joe Walker explained, quote, we're not cash strapped. We don't have to pursue a deal that is maybe not optimal. If you think about some of the potential buyers of this business, MedTech valuations are depressed right now. We can sit this out for a little bit, separate the business sometime next year. And I think owners of that company in a few years will benefit from the long term, end quote. Look, that makes sense to me.

28:07Again, though, it was considered disappointing because people thought they had a buyer all lined up. So it was expectations that were dashed. So how do we explain today's nearly 6 % pullback in a stock after more or less, maybe less solid quarter? Look, J &J had a huge run over the past 15 months. I thought it would sell off even if the numbers were phenomenal. That's what I told you on Friday. So there's nothing surprising about the fact that the stock got slammed on a good but imperfect quarter. Still, none of the negatives are going to change my mind. They're not. My overall thesis for J &J stands.

28:41I think this company is one of the best drug portfolios in the industry. I was thrilled by the things I heard about their immunology franchise, especially that trend fire and agitide. The cancer business still looks great to me, even if Wall Street's expectations got too high this quarter. The MedTech unit has plenty of bright spots, and to get even brighter once the Pew spinoff is completed, they do have to work on AbiaMed. That's a business they bought that I don't think is doing well enough at all. and you're getting all this in a stock that sells for just over 22 times the midpoint of the new earnings forecast for this year or just 20 times the earnings estimate for next year.

29:15J &J also yields a decent 2.2 percent. That looks attractive in a world where even a five-year treasury is above 5 percent. But 2.2 is nothing. And alongside Microsoft, J &J is one of only two companies with a triple-A credit rating from the S &P, meaning it's considered even more credit worthy than the U.S. government. I would say much more credit worth it. After today's tumble, J &J is now down almost 12 % from its early September all-time high. The bottom line, I think this is a good chance to get into one of the best-performing pharma names out there, especially since the company has an investor day on December 8th that could potentially be a positive catalyst.

29:50That's why I'm sticking with the J &J for the Chapel Trust. If you missed all the previous gains here, it might be a good time to do some buying. I'm going to reiterate that at the club meeting on Thursday at noon. Let's go to Zach in Pennsylvania. Zach. Booyah, Ski Daddy. This is Zach in Redding, Pennsylvania. Fantastic, Zach. What's going on? Well, yeah, go birds. That's all right. What's going on? Yeah, rough week. Hey, look, they make it tough. Look, I'm a perfectionist. If I screw up, here's what I do. I come out and say, man, did I screw up. I don't just say, oh, I blew that one. Okay, let's go.

30:23So I had a question about Palo Alto. It's run up for me. I almost called it earlier in the year. I'm tired for it to move, and it finally moved. Now it's about 10 % of my portfolio. What do you think I should do with it? Trim some or let it ride? Cyber security rules. It's the only thing that's keeping us from the craziness of these companies that tell us all over the time. All they do is tell us, listen, we're going to destroy the world. But they never slow it down. We need Palo Alto to protect us from these greedy people who just say, listen, we're going to destroy the world. But, you know, hey, man, we got to do an IPO.

30:57That is what it's like. OK, no one wants to say except for me. I don't play for dinner. I think this pullback in J &J is actually a great chance to get in on one of the best-performing pharma stocks on the market right now. Hey, much more mad money, including my look at the new Republic Data Center name that you brought to my attention. And not all crises really deserve that moniker. And the Enterprise Software Rebound has made that clear. I'm taking a look at another sector that's facing a similar dilemma. And, of course, all your calls rapid-fire tonight is just some lighting around. So stay with Kramer.

31:36Last week, Max in Ohio called to ask me about a stock I never heard of. It's called Accelivation Holdings. So I said I'd do some homework. Get back to them. Now, this is a newly public company that makes and installs the electrical connections, cooling infrastructure, and support structures for servers inside the data center. Boy, there are way too many data center stocks, and that's one of the big reasons why the group is just awful. Sell, sell, sell, sell, sell, sell. Acceleration came public on September 30th at$18, well below the proposed price range, then opened at$17.55. As we had a sickening data center-related stocks because of those politicians who come out and say, listen, we can't do them anymore in a midterm election.

32:19Since then, it's pulled back to just over$15. That is a really disappointing debut for a company selling you the AI infrastructure boom. But I can't call it a surprise, given the fact that everyone's worried about political blowback these days. In the end, this is a time of persistently high oil prices and steadily rising its traits. It is no longer a great moment to come public. There's a reason OpenAI pushed its IPO to next year. Anthropic doesn't want to make its debut until November the earliest. The smart ring company Aura was supposed to become public on the same day as Salevation, but ended up pulling its IPO internally, entirely.

32:56I have to tell you, they shouldn't have done that. That was a big mistake. They should have brought it when it could, because I don't know when a good time is going to come from. Plus, as much as I believe in the great AI data center build out, there are some real issues with Accel evasion. When it came public, it sold 30 million shares. OK, but only a third of those companies came, those shares came for the company. The rest were from existing shareholders affiliated with their private equity backer, Olympus Partners. In the end, the company only raised$100 million after underwriting fees. I call that bad form.

33:31Don't get me wrong. I like the business. Accelivation's work takes place in the room where the servers sit. AI computers and racks need electrical connections, cooling to keep them from overheating, and structures to hold the cables and pipes in place. The industry calls this part of the data center the white space. Customers can hire Accelivation to design a system around their buildings' dimensions and requirements. manufacture the components, and put everything together on site. On the electrical side, Accelivation makes power plants to distribute electricity into the server racks and prefabricated cables that make the final connections.

34:04On the cooling side, it splices barriers separating hot exhaust from cooler air coming in, but with manifolds that make liquid cooling around. It also makes the steel structures supporting all the equipment. Every data center needs this stuff, and Accelivation offers them a one-stop shop. And the demand is impressive here. The company's revenue increased from$181 million in 2024 to$448 million in 2025. That's up 147 percent. In the first six months of 2026, sales were up 170 percent for a year earlier. Even if you exclude the impact of acquisitions, we're still talking about 143 percent apples to apples growth.

34:41Acceleration backlog reached$1.1 billion at the end of June compared with$419 million at the end of December. a 165 % increase in six months. Most of that comes from products launched since mid-2025. Who's buying? Acceleration serves hyperscalers, cloud companies, co-location operators, and the contractors work in their facilities. They list Amazon, Google, Microsoft, Meta, Oracle, Digital Relief Service now on their website. Those things get your attention, don't they? But the IPO prospectus doesn't identify the largest customers by naming two customers alone in Canada for over 60 % of sales last year.

35:13I certainly don't love that level of concentration. Most importantly, acceleration is indeed making money. $19 million in net income in the first half of this year. That said, the gross margin got hammered during that same period thanks to high costs like labor and travel efficiencies. That tells me some of the work has been much harder to execute profitably than those guys expected. The way this industry works, when a job takes more time or more money, Accelivation usually takes a hit. At the moment, they have negative free cash flow thanks to a bunch of as-yet unbilled work, which is not ideal.

35:52That brings me to the balance sheet. In June, Accelivation borrowed an additional$346 million, chiefly to fund a $299.4 million distribution to existing shareholders. Then it went public and earmarked the IPO proceeds for debt repayment, but of course they only raised$171 million from the IPO. Worse, though, the sequence of events it bothers me. Feels like these guys borrowed a bunch of money to pay off the private equity sponsor, then used the IPO to pay back the debt, except they couldn't raise enough money to do that. Common problem, private equity back deals. Not something I like either. After accounting for the IPO and disclosed September property transactions, the filings imply that Acceleration has about a half a billion dollars in debt.

36:35Olympus Partners retains roughly 85 percent of the voting power, so the sponsor still calls the shots. On the encouraging side, CEO Michael Rivera personally bought$3.6 million

36:48worth of shares at the$18 offering price. I like that commitment, but he's just as captive to the private equity backers as any other shareholder. Let's talk valuation for a moment. Accelivation's market cap is now roughly$3.5 billion. The company did earn just over$100 million over the past 12 months, won 727 7 million in sales. Of course, given that the company grew at 176 % clip in the first half, it's going to look much cheaper if you use the estimates for the out years. And honestly, 34 times trailing earnings or less than 5 times trailing sales. It's not expensive to begin with. That said, you really got to wonder, how much of a moat do these guys have?

37:26We go over these companies all the time, a bunch of big industrial verdant, Eaton, that won't be over for the trust, Schneider Electric. They're all chasing various parts of the same business. Meanwhile, cooling methods and electrical architectures keep changing, so they need to spend just to keep up. In the end, even though Accelivation's got an incredible growth rate, I'd rather stick with more established players like Vertiv or Eaton, which we're going to cover well on Thursday's conference call for the club, because I have more confidence in their ability to hit the numbers. Hey, then there's Cheating for Nova, supplying power generation and grid equipment, Sterling Infrastructure helped build these facilities.

38:01We've had those companies on, train supply cooling. We've had them on, too. And then Oregon, the power plant builder I covered last night. They serve different parts of the system, but all stand to benefit from the same data center build out. In the end, there are a ton of different ways to play this story. I'd rather go with the ones that have earned my confidence. Accelvation still has those troubled contracts winding down. And I really dislike the fact that the private equity sponsor retains so much control over the business. Plus, if you're going to buy a data center supplier, I think you should wait three weeks until after the election.

38:31That's when I expect some of the political heat to die down. Here's the bottom line. Acceleration, it's an exciting story, but after it came public with a whimper, I am not too eager to jump on this one. If you're worried about delays, cost overruns with data center construction, that will really hit this company where it hurts. For now, I say, why don't we do this? Let's put Acceleration on our watch list, see if management can deliver before we pull the trigger. We have money back here for the break. Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast-fire lightning round next.

39:17It is time. It's time for the lightning round.

39:27And then the lightning round is over. Are you ready? Ski, day time of the lightning round. We're going to start with John in South Carolina. John. Hey, Jim. This defensive compounder has pulled back roughly 11 % year to date. The CEO personally bought over$7 million in May recently. They have an inflation-leaked contract. What are your thoughts on Least Connection? You know what? I'm still going to send you to Waste Management. It's just WM. I just think it's a better company even if it was insider buying WCN. I want to go to David in Washington. David. Hello, Professor Kramer. David. Long-time listener.

40:06All right. Good to have you on the show. Good. I bought this stock earlier this year before a proposed merger was announced. I doubled down on the stock, and then the merger was terminated. The current P.E. is around 50, and lately you've been recommending against higher P.E. stocks. What should I do with Element Solutions? Element Solutions, you hold on to Melon Solutions. The Salsa Steel, it really diluted Salsa's nuclear, and people thought Element Solutions was being given away, and I think they were right. Let's go to Vikram in California. Vikram. Hi, Jim. How are you? First time caller and short time listener.

40:50All right. Thank you so much for having me. My question to you is regarding SailPoint, ticker S-A-I-L. Yeah, you know, this thing was supposed to be the Achilles heel of enterprise software, and yet it is hung in. Look, I don't like the company, but I got to tell you, all the things that said it was going to go bankrupt were some really big trouble. Those were just talk. I was going to say lies, but I'm a real diplomat tonight. Let's go to Brenda in California, Brenda. Hi, Jim. Thank you for taking my call. My pleasure. I'd like to get your thoughts on IREN Limited. Okay, I understand IREN has got this deal we don't know for sure with Anthropic.

41:30I say if you want to be in that business of the neocloud, the only one that I trust and want to be in is CoreWeave. No offense to IREN, but CoreWeave is the real deal, Michael Intrader. Let's go to Rob in Kentucky. Rob.

42:01I don't want to own that. It just doesn't compute. I know that he is a good investor, but this has not turned out to be a good investment. I don't know what else to say about it. Let's go to Bobby in Florida, please. Bobby. Hey, booyah. Booyah. Professor Kramer. All right, man. What's up? I'm down here in Florida, sunny Florida, originally from New York. All right. My question is Penguin Solutions by Zello. I kind of like Penguin Solutions. because I know it's kind of a meme stock, but I got to tell you, it's got real business. I'm going to say you're okay. I'm going to say you can buy it. Let's go to Harry in Florida, please.

42:44Harry. Hello there, Jim. Thank you for having me on the lightning round. Absolutely. I'm throwing you on the lightning round. What's going on? MozTech, MTZ. It's been cut in half. This thing has been crushed. Okay. Now, it had the worst pattern. It was like, you know, just like Mount Everest. You're all the way down at the bottom. You're like in base camp four now or whatever. Three, two, one. I don't know. Hey, you know where you are? You're in like some sort of crevasse. I'm going to say you buy Mazdaq. I don't care. I think it should be bought. That's a new position for me. And if Jose wants to come on, I say terrific.

43:22And that, ladies and gentlemen, conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, with software stocks bouncing back, Kramer's highlighting another sector that could stand to benefit. Next.

43:52Today was a good day for enterprise software, one of many. It's hard to miss the incredible run from Salesforce. It's going for 146 in June to 238 today. Beaver Systems, the company, digitized drug trials. We had one last week. It's popped from 150 to 301 as its business has gotten stronger and stronger. Workday has zoomed from 111 to 186 as its business grew stronger. And we got the rumors of a potential takeover. Remember, all three of these companies were supposed to be disrupted, if not destroyed, by Claude or ChatGPT or some vibe-coding competitor. It never happened. When the enterprise software stock sold off hard earlier this year, that turned out to be a fantastic buying opportunity.

44:28And let's not forget the other side of the story. When Wall Street started worrying about AI displacement in the software space, those fears extended to the private credit firms that backed these kinds of companies when they were taken over. As individuals became progressively more panicked about the kind of software that could be made obsolete by AI, they did everything they could to arrest their losses in these infernal bundles of low-quality loans, even as the sponsors tried to console and cajole them to stay. They didn't let everyone sell when they opened the bundles for exits, and it caused panic everywhere, including the stock market.

45:01The private credit firms didn't take it lying down. Back in March, near the height of the panic, private equity giant Blackstone had more than 25 senior executives commit$150 million of personal capital voluntarily to help meet the demand for withdrawals. Now, lots of people felt that, you know, I heard the same thing you did probably. These Blackstone investors were naive or chumps, or maybe they were just ordered to invest. But given that these private credit placements were heavily skewed to enterprise software and enterprise software had become endangered, it did seem like a real sucker's play at the time.

45:31In retrospect, though, the private credit collapse we were warned of never came true. The blockchain investors didn't get blasted. Sure, there were very few companies that were like Medallia, a customer experience software play that succumbed to a complete lender takeover in August. There are always some bad ones for half a second. There were enough to say it like Wiser Solutions, Anthology. Too small for companies had to file for bank machines to generate real worry in the private credit space. What matters to me, though, is that if you go back to the times when we first heard people couldn't get out of these funds because they were inherently illiquid, there was a sense of pending doom for the entire market, not for those people.

46:07We read about it every day. It made us feel like Blackstone, Blue Owl, Aries, Apple, I mean, Apollo, KKR, that they had to be in real trouble. whatever counts as real trouble these days. Those stocks got crushed today, by the way, but not because of enterprise software investments. The problems haven't gone away, but you don't hear about them anymore because the publicly traded enterprise software stocks have been rebounding like crazy, so maybe the private ones should be doing so too. The panic is over because with the exception of Adobe, the enterprise software companies are all doing incredibly well.

46:40Their stocks were broken, but their businesses were fine. It makes me wonder if the valuation of these private credit funds might be higher than we think. I'm not going to recommend any of these funds to you. I never thought they had much upside, and they're all about reaching for yield to begin with. That is not my thing. But in a world full of crises, sometimes it pays to recognize that these crises don't always end in disaster. While you could argue that the private credit crisis is still ongoing, I think the more likely scenario is that the Blackstone partners who bought in may have bought in at the low.

47:07And unless rates shoot up dramatically from here, it sure looks like they've stumbled on some pretty distant paper. And the private credit crisis, I'm going to downgrade it to a private credit concern. Why? Because while there's still plenty of people who still went out of these things, there are plenty of others who went in for the long haul now that the SaaS apocalypse has been taken off the table. It's not the type of business that's hurting these PE firms. It's the bomb market, and I bet they'll survive it. I like to say there's always a market somewhere, and I promise you I'll find it just for you, right here on Mad Money.

47:35I'm Jim Cramer. See 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.

48:06To view the full Mad Money disclaimer, please visit CNBC.com forward slash Mad Money disclaimer.

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