Mad Money w/ Jim Cramer 10/27/26

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1:20Welcome to Kramerica. Other people want friends? Look, I'm just trying to make you a little money here. My job is not just to entertain, but also do some teaching. Call me, 1-800-743-CMEC. Tweet me, Jim Cramer. The smoke has cleared so many times now that my eyes are burning and what's left of my hair is being singed. That's how I feel about the notion that the great data center trade is once again on, as I heard literally all day. And it's time to get back into the pool. Buy, buy, buy, buy, buy, buy. Because Broadcom was able to arrange a$63 billion financing deal to be able to sell computing infrastructure to Anthropic.

2:00It was a tough fight. Broadcom CEO Hawk Tan got directly involved, knocking the heads of the bankers together, only got the deal done. Plus, Meta actually got$25 billion from its equity offering. The offering was five times oversubscribed, we're told. And the deal was upsized from the original$22.5 billion. And the rest of the equity raise, a$60 billion at-the-money program, will commence once the company's new Class C shares begin to trade, likely early next year. So investors and traders bought the usual AI techies again. And that caused the dollar rise a mod of 16 points. But the S &P jumped 0.60%.

2:38And then Aztec soared 1.18%. The buyers overwhelmed the sellers because the all-clear klaxon went off. Didn't you hear it? Now, I am pleased that people feel so comfortable that tech is now all good to go because there is money flowing back in. My travel trust owns a lot of these companies. We need to see them rally. But tell me something. What the heck does that have to do with the coast being clear? First, what coast seemed to clear? It chiefly was the debacle that that is core weave whose shares have been plummeting while the company's bond yields were blowing out. With some publicly traded bonds reaching a 15 percent yield.

3:12Now, that's unsustainable for this new cloud company. Now, Elon Musk took it to X to talk about how there are more than 200 neoclots that will fold, though he's headed more colorful than either. Now, there was no way I could get to that number, but I sure was worried about Nibius and Iran as well as CoreWeave. CoreWeave's stock was getting killed, but the others failed to go down the rabbit hole, making me concerned that there might be more to these companies than we thought. But in rapid succession, three things happened. First, Anthropic unveiled the S1 filing for its upcoming IPO, showing a private company with great growth, a ton of cash, with more coming from the offering.

3:47It's a total breath of fresh air because it will both be making a lot of money and it will have money to spend. Making a lot of money will be an adjusted thing, but, you know, it'll look good. And that way, they were able to, let's say, bury the Achilles heel of the space core weave and its challenged competitors and compadres. Second, Meta announced its fundraising plan. I don't think they'll like that. Nearly two-thirds of the fundraising plan,$60 billion, will come from an at-the-market program next year, something that I am telling you will drag the stock lower because the people who handle these at-the-market programs at the brokerage houses are usually brain-dead and don't do them well.

4:25They tend to add a lot of supply at the wrong time and help accentuate the stock sell-offs. Still, the meta-announcement helped us move forward because it was already so widely expected. Why these masters of the universe don't know that an ATM is testament of their lack of knowledge of trading. Maybe they're too proud to ask someone like me. Maybe. I do. I tell them for free, frankly. Third, the bond market decided not to act up, and oil fell nearly$2. The 10-year traded under 5 % last week and has been tame ever since. So what's the problem? Why hasn't the smoke cleared? Why do I think it'll be back?

4:58What am I so negative about? I'm not negative. But I'm just saying these three catalysts for the purported comeback are more ephemeral than you think. CoreWeb did have a big day today. One that made people sit up and take notice that the premier data center builder is still alive. Under what worldview do you think, though, that the shorts aren't going to allow Cord Weave to lift tomorrow? Do you think they will? It will take an act of Jensen to change things, with NVIDIA buying the bonds of Cord Weave, not the stock, and preparing to reap those gains over time. I know it's not in Jensen's playbook to buy debt, but it would silence the critics.

5:30I have learned that after every positive story about anything in the data center these days, there will be a plethora of negative stories about something wrong, including most definitely Corweave. I could write that stock in my brain. You know, I could write the story right now and just read it to you. I've done hatchet jobs all my life. Well, lately, I've been a good guy. I won't do it anymore. Anthropic. People don't seem to grasp that it's got the money in the Broadcom-arranged financing deal to purchase equipment from Broadcom. That's right. If the money had come from NVIDIA to buy stuff from NVIDIA, Oh, we would have heard all day how the NVIDIA had wrangled a bunch of banks and private equity to give it back to itself in circular buying.

6:10Right now, what Anthropic and Broadcom are doing still seems to be OK to everybody. They seem immune to criticism, even as we are cheering Anthropic for getting the money. Finally, the most damning negative bonds. Oh, we had a tame day today. That's not regularly the story. Tomorrow, for example, we learn the results of this month's Fed meeting. What happens if we hear that the Fed doesn't want to see any more speculability at data centers? What if it says that the rates need to go higher in order to cool the economy? Why are bonds so important? Because with the exception of NVIDIA, these data center companies don't have a lot of money.

6:39So they have to borrow money. Tons of money. Trillions. The rates were getting so high that the return was getting uncertain. That hasn't changed at all. Look, I am an unabashed believer in the AI build-out, which I still consider to be the latest industrial revolution. I think the world is changing rapidly and for the better. I believe that there will be companies that make actual money being involved in the data center and won't just be all NVIDIA. But what did we really cheer today? The fact that there was still enough money left to give to one of these companies? The fact that Hawk Tam, one of the most foremost CEOs of our time, was able to wrangle some banks to find money to loan to the best AI company there is?

7:13What happens when the next deal comes with companies that aren't as good as Broadcom or Anthropic? Yes, I want the analogy of the clouds clearing without smoke in my eyes. But what I am waiting for is someone to say, I can't believe how much money I am making from these NVIDIA chips. I have a boatload of money from profits using NVIDIA chips, and now I want to buy more of their chips. And let that person not be Elon Musk, who has been doing quite well with his NVIDIA chips. But he is one of one, and at the end of the day, still mostly lending compute to others. Look, there will come a time when we won't need to worry about oil or rates or profits.

7:47Oil will be much slower if we'll send rates lower and hopefully profits higher. But the bottom line is nothing has changed except bonds are tame going into a Fed meeting, which will then be followed by an election and then the potential for a fresh bombing run over the skies of Tehran. I don't happen to think that's all of a reason to call all clear. I think it's a reason to look at other sectors in the economy just in case the all clear is just one more bogus bucket of glee. I'm going to go to Bob in New York, please, Bob. Hey, Jim, first and foremost, a heartfelt booyah, my man. You gave such an incredible tribute to a wonderful person.

8:24And you really are truly blessed to have Cliff in your life, my friend. Thank you. If you met him, you would have said, holy cow, this guy is truly different and lovable. Yeah, I can imagine. And lovable. Hey, listen, I'm a chief information officer, Jim. Okay. Go ahead. I'm sorry. No, go ahead. Let's talk stocks. Yeah, I'm going to have a chief information officer. So naturally, I'm extremely bullish on technology, particularly AIs. My portfolio looks a lot like an AI technology stack, to be honest with you, which has performed very well for me. I watched Micron on the sidelines for a couple of months now, finally jumping in about a month ago.

9:01But with the massive price swings in Micron we've been seeing lately, here's my question. Is Micron a long-term, set-it-and-forget-it AI investment, or is the volatility so significant that I'm better off trading with some option strategies like straddles? So what's your play on that, Jim? OK, so Micron, unfortunately, is trading with SK Hynix and whatever SK Hynix in Korea does, Micron does. Now, that is the type of trade I don't like. I think Micron should trade separately from that. But who am I? You are dealing with SK Hynix when you deal with Micron. It's unfortunate. I'm hoping the linkage ends one day, but it hasn't yet.

9:38And thank you for the kind words about Cliff Mason. I don't think this is the time to call all clear. It's just time to look at the other sectors outside the data center and bide your time. It's okay. Go to the movies. On Man Money tonight, Dover stock has been stuck in the mud this year despite putting out solid numbers of guidance. So it gives. I'm sitting down with the CEO to find out more. Then anything to do with oil and interest rates is getting crushed right now, and the aerospace stocks are at the center of it. I'm honing in on two names that I think deserve better, but one of them is so ugly that I did have my eyes hurt by it.

10:11And lately, there's been too much nefarious action going on in the cybersecurity space. I'm going to get a handle of it all with a bankable seal from Okta. So 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. Get ready for Thanksgiving with great deals and crowd-pleasing flavors from Whole Foods Market. Stock your pantry with 365 brand holiday must-haves like turkey gravy, organic green beans, crispy onions, organic stuffing, instant mashed potatoes, and more.

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11:31Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. And then another meeting. Hit your booking point, book with Southwest, and enter airplane mode.

12:06Last week, we got a top and bottom line beat from Dover, the industrial manufacturer that's made a major push into data centers, aerospace and clean energy. Dover raised the lower end of its full year forecast and reported, get this, a 35 % jump in backlog with about half scheduled to ship in 2027. Yet shares are up just 5.6 % this year. I thought that was weird. Well behind the S &P 500. So could Dover finally be ready to break out? Let's find out from Rich Tobin, Dover's chairman, president and CEO. Mr. Tobin, welcome back to Mad Money. Jim, good to see you. Rich, I got to tell you, with demand for so many of your divisions really, really strong, with some terrific margin exposure, with the fact that you did$330 million of share of purchases, I'm saying maybe this is a great setup for 2027 because I thought the stock would be up 25 percent when I saw this stuff.

13:02Yeah, look, I mean, at the end of the day, we're really pleased on where we are year to date. We're right on plan. I think the highlight of the quarter, as you mentioned in the opening remarks, is the backlog. We would expect, generally speaking, to deplete backlog in Q3, finishing up the year. But backlog has gone up 16 percent. So we're carrying more orders into 27 than we generally would. That helps us with our planning processes. That helps us with our efficiencies. So the setup going into next year looks quite good. Now, I did not want to get caught up in what a lot of people want to get caught up in.

13:39But power generation infrastructure, data centers, semicom, biopharma, CO2 refrigeration systems, space are now 25 percent. And that's up from 18 just in 2024. Should I be focused on these? There are some businesses that you have that are very strong. They throw off a lot of cash. And I don't want to lose sight of they're the reason why you've got such a great dividend record. And I don't want to be chic. Guess what I'm saying? Because there's a lot of non-chic parts of Dover that are doing pretty darn good. Yeah, I mean, I think you've got your finger on it. I mean, we try to highlight where we've been deploying capital, and those are our growth platforms.

14:17And as you mentioned, they've outgrown the wider portfolio. But the legacy businesses themselves have actually done quite well this year. So we're doing really good in our retail fueling business. We're doing really well in our retail refrigeration business, which is driving the growth. But, you know, as we've spoken about before, we operate somewhere between 35 to 40 different companies. So we like to keep investors focused on some of the growth areas where we can. But, you know, you're old enough to remember Woody Hayes at Ohio State. That's us. We're three yards in a cloud of dust and 10 percent CAGR on EPS year after year after year.

14:56Well, Woody Hayes won for a tremendous amount of time, and I used to enjoy his games and knew what would happen. I like predictability. Now, how about predictability in something like refrigeration, the supermarket business? Because, you know, that was a business that I—this is a good example of being chic, not chic. I wanted you to get rid of that business because I said it's never going to come back. But you know what? It's cyclical, and it seems to come back big. Yeah, look, if we had listened to a lot of people back eight, nine years ago, we could have sold that at the bottom. We decided to do the opposite.

15:34We've actually invested quite heavily in it. We've created a brand new product line. We're the market leader in CO2 systems in North America that three years ago had zero revenue. It will be more than 300 this year, 300 million. We're finishing the transition on a lot of footprint work. We got caught out a little bit this year where we're trying to consolidate some factories right in the middle of the demand going up quite high. So we've had some transitional costs this year. But the setup going into next year for incremental margin based on the backlog that we have is going to be sizable. All right.

16:12Now, you've got a lot of capital. You could keep buying back stock. I know some of the analysts who follow you just seem to want that because that's I guess maybe they just want to make their model look better for a couple of cents. I want you to put the money to work with some of these private equity firms that must be struggling to get rid of things and the public market won't let them have it. Are they still sticking by old prices that are not reliable and they can't be counted on? I think this year you've seen more than the previous two. But what has come out has been the highest quality assets.

16:46So the multiples paid for those assets have actually been quite high. So we probably kicked the tires on$2 billion to$3 billion worth of M &A through this year. We pulled the trigger on a few smaller deals. We'll see how it goes forward. I mean, everybody waiting around for asset prices to rally in an interest rate environment that we're likely going into, I think that probably 27 is a good setup. All right. Now, I always I'm going to use the word the way G pronounces it turbans. They're fashionable. You make some incredibly important parts in the turbine. Have you ever felt, you know what, maybe this is what everybody's moving into.

17:27And if everyone's moving into something, maybe I should be a seller, not a buyer.

17:34Look, we're stewards of capital and we run a portfolio company. So, you know, both on the in and in the out, we have to have our we have to preserve our optionality. Look, we're in a great position. We supply critical components to the Vernovas, the Siemens, the Caterpillars of the world. These are great customers and we're happy to just stay where we are and not try to monetize on a rallying demand of turbines. OK. And then when you talk about the carryover benefits from close M &A transactions, you've got some incredible business coming. Are the analysts counting on that? Because I thought that was really when I get it.

18:19I'm trying to I'm trying to be very bullish for 2027 because I think your stock is very, very mispriced. And I see things I see acquisitions and I think that maybe they're just not counting on them accelerating. I think that because of the portfolio as complex as it is, the analysts generally wait until we give out guidance for 27. We've given them enough color now in terms of the backlog. So I think in terms of getting a handle on what they think about the revenue growth should be for 27, it's more visible than it's ever been. And we've given a lot of color on the last call about carryover benefits, either from productivity, restructuring and some of the carryover.

19:02So to me, the visibility you get on Dover's performance in 27, sitting here today at the beginning of Q4 of 26, is better than it's been in my nine years of the company. OK, there. That is a great way to end it, because I think these analysts want to they're unhappy until you give them a number. And I keep thinking, why don't they come up with their own darn number? I know I could. I've been around long enough to know a number when I see it. But anyway, I'm so thrilled for where you guys are. This is the best that I've seen you in just a very long time. I'll take your nine years. But your company set up, you're set up regardless of the Fed raises rates by a half or cuts it.

19:44I like that very much. That's Woody Hayes, too. Rich Tobin's chairman, president and CEO of Dover. Rich, I love it when you're on the show. Thank you so much. Thanks. OK, we have money back yet to the break. Coming up with the aerospace stocks coming back down to Earth is now the time to buy. Kramer has got the calm next.

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21:16Lately, one truly discouraging theme that we've seen is the total breakdown for most aerospace stocks. Main culprit for the downturn mostly comes down to higher oil prices and to higher interest rates. When fuel prices are higher, airlines are less profitable and cancel routes that don't make sense financially. So they're incrementally less interested by new planes. New planes also cost millions of dollars and typically require financing. So when interest rates are higher, then financing is more expensive, hurting demand. To be clear, I think this type of calculus is mostly theoretical. The wait time for new aircraft extends out for years.

21:53Still, that's what investors were thinking about as they sold the aerospace stocks over the past few months. They're never even thinking about the aftermarket. So now we're starting to get earnings reports from these companies which we were hoping. Okay, change that. I was hoping that it would be a chance to turn around these stocks. And unfortunately, that hasn't happened. Actually, one has been outright hated. Last week we heard from aircraft engine makers at E.A.R. Space and even with strong numbers, the stock traded lower in response to the quarter. Today, Boeing delivered a mixed quarter with an outright bottom line miss, and its shares fell more than 10 percent, though that move is not necessarily because of the third quarter numbers.

22:32Still, I think it's worth going over these quarters to figure out if this downturn is a buying opportunity, because when you think that oil is going to come down, you have to pull the trigger now. All right, let's start with GE Aerospace. The third quarter results that GE announced last Thursday, they were nearly flawless. When I was talking to Larry Culp, I was amazed. He told me orders grew 49 percent year over year. That's incredible. Revenue was up 18 percent and beat expectations. GE Aerospace operating profit was up 30 percent margin surge. GE reported an adjusted earnings per share result of$2.25, up 36 percent and 24 cents above the$2.01 estimate.

23:08All right, one little blemish. It was free cash flow. It fell 14 percent, came in a bit light versus expectations. Now, both of GE's two segments performed well in the period. The larger commercial engines and services, or CES, segment had 21 percent revenue growth and beat sales and operating profit expectations. But it was the order growth of the CES segment that stood out. Total commercial orders grew 58 percent, with service orders up 23 percent, an astounding 23 percent increase for equipment orders. Come on, man, that's great. For the smaller defense and propulsion technology segment, revenue grew 7 percent, operating profit was up 8 percent.

23:44As with the commercial segment, the defense business had even better order growth. Total division orders grew 18 percent. Services up 16 percent. Equipment orders up 20 percent. GE also updated its full year guidance with revenue growth guidance going from high teens to an explicit range of 19 percent to 20 percent. And earnings for sure outlook going up by 30 cents at the midpoint. GE also raised its free cash flow outlook by 200 million, which is important given that the free cash flow number missed. So then why did GE shares fall in response to such a strong quarter? We can put forward some theories.

24:20The free cash flow and the light operating profit guidance factored in. And while the increase in the four-year sales outlook was nice, the new higher forecast was merely in line with what the analysts already expected. GE shares have also been, look, it's been on a tear, and the shares have gotten expensive. Entering its report, they were trading for over 40 times the midpoint of the company's four-year earnings per share forecast. And even after the post-quarter pullback, they traded 37 times the midpoint. When you have that lofty multiple like this, it's got to be a clean, beaten race. And we didn't get that, especially in a potentially higher interest rate environment.

24:53Frankly, though, I don't want to spend too much time trying to figure out why GE went down, because we don't think this was the right reaction to begin with. You know what I care about? Those order growth numbers. That's the future. Remember, the big concern for the aerospace sector, The reason these stocks have been falling for the past couple of months is the idea that higher oil prices and interest rates will result in fewer plane orders and thus fewer jet engine orders for GE. But those incredible order numbers from GE, especially the commercial side and for new equipment, show it's just not true.

25:23It's clearly not the case. GE's backlog swelled to$170 billion in the quarter. It represents over three years of revenues. And that's why we're sanguine here. All right. Now, what about the ugly, horrible, no good Boeing number? All right. They had a disappointing print this morning. Revenue of 4 percent year over year, top line, top line, be it misses in earnings lines. While the overall revenue is solid, Boeing's core commercial airplane segment also missed sales estimates, mainly due to some setbacks as Boeing ramps 737 jet production. I thought everybody knew that. That was wrong. Boeing management tried to emphasize some key accomplishments in the quarter, including FAA certifications for the important 737 models, as well as a selection by the U.S.

26:07Navy for its next-generation fighter aircraft, which was huge. The latter is indeed a significant win, but the problem is that it was already known. The key item for Boeing today came on the company's earnings call, where management introduced a multi-year free cash flow outlook that disappointed investors, including yours truly, because my charitable trust owns it. Long story short, the free cash flow ramp will be slower in large part because the company has some upfront spending related to that recent Navy jet contract. I thought that made sense. CEO Kelly Ortberg called a transformational win that will shape the company for decades to come.

26:41You got to pay to get that contract right. But people were disappointed. I am hopeful that this reset can be what we call a clearing event. Some investors will give up as they saw today. Oh, my God, they gave up. But everyone who remains, I think, will be using a new, more realistic set of free cash flow targets going forward. We honor for the investing club and we have told people again and again, do not buy until after this quarter. Now, we misjudge how much it would be hated, despised, infuriating people. We think they finally cleared the decks of despair and a new Boeing is at last ready to begin, although I never thought it would get this low.

27:17If you're looking long term, you should also be encouraged by the orders and backlog numbers here as well. The commercial segment at 300 net orders in the quarter and its backlog now sits in over 6 ,300 airplanes and$612 billion backlog. How can that be bad? Boeing's defense segment backlog grew to a record$101 billion. That doesn't even yet include the new Navy fighter jet contract. And frankly, here's one. They're not as stupid as they used to be, not as haphazard as they used to be. They're no longer clowns. But here's the bottom line. If you're willing to look long term here, I still think this sector will be a sector long term winner.

27:54The idea that higher fuel prices and higher interest rates will kill demand looks flat out wrong to me. GE looks fine to buy now. Boeing was a legitimate disappointment, but it is so darn low and they threw the kitchen sink at it. And if you sold it today, you're going to be right for four points, maybe even five points. But I think you're going to be wrong for 200. Phil in North Carolina, Phil. Yes, Jim, how are you today? Today's a today's today's. All right. I'm all right. Phil, how about you? All right. Well, you know me. I'm always fair to midland. All right. Fair to midland is where I mean.

28:33I'm aiming for fair to midland right now, and I hope I hit it in a couple of months. What's going on? Yeah. Every once in a while, I got to pay your respects. You use that term and I know I was the one who told you about that term. You had never heard it before. So I like when you use it. But anyway, first things first, my sincere condolences to you about you for your nephew. And I can say that because I had the same thing. I can relate. OK, same age, a nephew, a godson who died unexpectedly. And I feel you. I can feel your pain. Thank you. It's not a good time. I mean, it's just not a good time.

29:18So, you know, and I'm grateful that you brought it up. And my sister and I talked to, I don't know, like 10 times today. It's just not a good time. And he was with me for 21 years. And I sent him an email today by mistake. Oh. I just did. He's at the top. He populated the top. But anyway, like, let's, you know, I don't want to drag us down here. I don't want to drag us down. How can I help you? How can I help you? So I want to do something that I know you're not crazy about, but I know you like this stock because you've mentioned it a lot lately. I want to buy a limit order on this stock of about 141.

29:57OK, last week it got down to 142 and change. Today it closed around 148. I know what stock. What do you do? I'm talking SpaceX because I wanted to buy it for the Chapel Trust. I wanted to buy it for the Chapel Trust. I think you're dead right. I am unfortunately frozen. We got a big annual meeting coming up. I'm hoping between now and then I get a chance to buy SpaceX. Jeff Marks turned to me. He knows it. He knows that we're both itching to buy SpaceX. But we got all these rules and I got to follow the rules because I'm a rules follower. And I thank you very much for bringing up Cliff Mason because Cliff Mason is very missing.

30:40All right. There are still gains to be had in the aerospace stocks. I think you want to get in ahead of the balance. I think the people who sold Boeing, they think they're so damn smart. Let's see who's smarter. Much more mad money ahead, including my exclusive with one of the companies at the forefront of cybersecurity. Okta speaks English, knows truth. Then there are some good use cases for the AI bots. I'm going to give you an example of how I implement them for this very show. Show you how I use them. It's a little different from what you thought. Of course, all your calls rapid fire in tonight's edition of The Lighting Round.

31:11So stay with Kramer.

31:22The challenge of protecting against cyber attacks is getting increasingly difficult this year because Frontier AI models have proven to be quite good at identifying and, more importantly, exploiting vulnerabilities in software. We just saw this last week when the creators of a popular programming language for websites called PHP announced that security researchers had used AI to identify a floor in their code, leading to a scramble to patch-impacted systems. We just got to say, I've been trying to really emphasize this story, people, because I know you're concerned, and I am too, which is why I want to talk to Okta, the leading cybersecurity company that's focused on security identity.

31:58Okta's been a good stock for a long time, but it's surged over 160 % this year. Investors have realized that their technology will be crucial to managing AI agents, which are proliferating across both the enterprise and consumer markets. Let's check in with Todd McKinnon. He's the co-founder and CEO of Okta. Mr. McKinnon, welcome back to Mad Money. Thanks for having me, Jim. It's great to be here. All right. So, Todd, people have scared us enough. They've told us basically that we're going to, we're all vulnerable, that old software has many things that are wrong with it, and that we're going to be attacked by it.

32:30And we've already been attacked millions of times in the last few days, and we didn't even know it. Could I have some common sense, perhaps non non heated rhetoric about what the heck is happening with PHP? And frankly, what is happening with the world that suddenly all the people are supposed to protect us are throwing their hands up and saying they can't do it anymore? Well, that's definitely not the right answer. If you look at what's happening, there's two things that are different. The first thing is that about six months ago, the big AI models, Anthropic and OpenAI, released their cyber models that helped software companies and open source projects identify vulnerabilities in that software.

33:10And six months later, all of those vulnerabilities are being released. And so you have patches, you have vulnerability, you have this big rush of people trying to react to it. That's one thing. The second thing that's very different this time or very different now is that the actual tools to actually do these vulnerabilities or exploit these vulnerabilities in terms of like probing networks and looking at websites and using these vulnerabilities to chain together attacks are quite a bit more powerful now. And these are the same AI models from companies like Anthropic and OpenAI and open source equivalent.

33:43So you have more vulnerabilities and you have better tools to use them. That is different. And we should be aware of that. Now, what is not different, Jim, what is the same as it's been for a long time, people are still getting hacked in very basic ways. So any company that puts basic defenses in place like phishing resistant multi-factor and patches their system can be protected even in this new world of heightened concern and substantively new concerns. The basics still get you a long way. All right. So how about an idea? I know we don't ever seem to catch anybody who does this stuff. And it's frankly ridiculous that we don't have guys behind bars who are constantly extorting people.

34:24But how about if we did raise the possibility that you that your insurance goes up big or the government goes after you if you don't change? Because it's got to stop and it can't be just free enterprise. It's not working. I think there has to be there definitely you're onto something that there definitely has to be a cost for threat actors to do it, to do this. And I think you see case with law enforcement agencies making some progress there. But you are right. This is a business in a lot of cases. And the benefit is there and the cost is not there. And if we could make the cost higher, well, at the same time, what we're all doing is trying to make the preventative measures better.

35:03That, I think, could be a winning formula. Well, you've also been adamant that there are identifiers. I mean, if we have identifiers of agents who shouldn't be in our system, can't we slow it down a little so that maybe we can figure out what to do? I often feel like they have these run amok agents. And yet if we use your system, we would know who's running amok. Well, this is an interesting challenge because what's happening now is there are these consumer agents. So Muse from Meta and, you know, there's other offerings from other companies. But now these are coming to websites and trying to buy goods and services and interact with companies as if they're real people.

35:46So the industry does need better standards to differentiate these good agents from agents that may be doing something malicious. Or, you know, we used to call them bots. Bots would be threatening and bots could take down a website and bots could steal information. Now we have to differentiate between the good agents that want to do commerce and do good things for consumers versus the bad bots, the ones we want to block. So the problem does get harder. But the good news is that if the companies figure it out, they can open new types of business and get more revenue because they're having more customers.

36:16You know, when customers' agents are buying, they're still buying, and it's good for the companies that are providing those services. You let us into a world where six months ago we had this, and now they're discovering that the vulnerability is there. How about we say this, that these things have been around for four or five years and a lot of the companies knew it. They knew that they had these problems, but they just figured no one else would figure them out. What do we say to those companies? That seems just plain wrong. I think that there's another thing going on, too, Jim, which is companies that are running all the software, many of it decades old.

36:49It's in their own data center. The people that built the software or installed the software for a company are long gone. and they know that they have thousands and thousands of vulnerabilities that they haven't patched yet. And they haven't patched it for many reasons. Maybe the software hasn't been updated in a way that's compatible with the patch. And so what we have in this environment is, you know, you get all these new vulnerabilities coming out because they're being discovered by these tools. And now we're going to the companies where we're saying, patch everything. And I think that's, in many cases, unrealistic, which is why you have to have layered defenses, which is why identity is so important.

37:24Back to what I was saying earlier is like more people will be breached today by a phishing website than will be breached by any of these vulnerabilities. So if you put layers in place, it can be zero trust architectures. It can be a strong phishing resistant based identity. You can have a much better chance of being defended than if you don't put those multiple layers in place. But once again, I mean, we have these systems where the companies, including ours, if you click on one, you know, if you are spotting one, if you spot a fishing line that's bad and you stop it, you know, you get a reward.

37:59But how about how about something which just says, OK, look, if you click on one of these things, I'm sorry. Here the first time you're you're worn, second time you're fired. I don't agree. That's not the right approach. We have the technology to prevent phishing attacks. We have the technology. We just need to upgrade to it. We need to get the modern identity solutions out there. We need to have organizations deploy the technology we have. I mean, 10 years ago, we didn't have biometric readers on all of our phones. We have those now, so that puts the foundation in place to actually do phishing resistance.

38:33So I think it's a losing game to try to just threaten people if they fall for the phishing emails because they're very powerful. But we have the position in place to actually prevent the underlying cause, and that's what we need to do. Well, my only reason for doing it is because I've been scared to death. And I just feel like no one is getting – no individual is being held accountable. Nobody on the good side, on the bad side. And it's just not right because if there's no accountability in the system and you – let's say you've been using Microsoft for years and you know that Microsoft has problems.

39:06I know that you have, again, a slide in your deck which talks about you versus Microsoft. Let's say Microsoft has problems, and they knew. Is that fine? Is that fine? It's not fine. I mean, because as the industry, we're not going to get the full advantage out of technology if we don't solve these problems. I mean, the cyber industry as a whole, we need to step up and do better. We need to work better together. We need to be more proactive about it. We need to make it simpler. We need to make it simpler for companies that deploy these technologies. One of the biggest things the cyber industry can do better is we make it too complex.

39:39We all tell the customer that we're going to solve every problem. We don't work enough together. That's why when we talk about agentic security, we have this thing called the Blueprint Alliance, which is basically calling the industry to work together to help solve agentic security instead of confusing everyone by saying every company has all the answers. Microsoft is the worst offender here. They go to a company and they say, we can solve every problem you have. We can solve every business software problem. We can solve every security problem. We can solve every AI engineering problem. And it's just not true.

40:08They need to work with an ecosystem. And this ecosystem is very important. If we're going to actually address some of these threats and move the world forward with great technology. Right. And of course, I'm inviting Microsoft on right now because I don't want to hear just one side because they're a big company and they've done a lot of good things. I've known them. I helped bring them public. But at the same time, I hear what you're saying. And I'm angry now because I think that we have the ability to control this thing. And instead, all we have is fear. And fear does not produce good, rational decision making.

40:37And people should know that what you're saying produces good, rational decision making. I think I think the cyber I think the cyber industry should have get paid on if there are a few breaches. We shouldn't get paid on fear. We should get paid on decreasing the number of breaches. That's what the industry should really strive for. Well, there's something rational and it's the first time I've heard it. Only thing I'm going to adopt it myself, if you don't mind. That's Todd McKinnon, CEO of Okta, who has had many answers over multiple years about these things. Thank you, Todd. Thanks, Jim. Everybody's back after the break.

41:10Coming 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.

41:27It is time. It's time for the lightning round. I'm going to play this round. Rapcoe is over. You're saying the stocks are above it. Buy, sell, sell. So, I didn't just eat her. I don't know the whole stock. I said, I'm a step-by-step. So, why are you playing this town? And then the lightning round is over. Are you ready? Steve, dad, come on. All right. We'll keep it in. Let's start with Charlie in New Jersey. Charlie. Booyah, Mr. Kramer. Booyah, Charlie. What's going on? Earnings are growing on the AI data center boom, but could a buyout be the real upside or is the whole data center trade running out of juice?

41:59Jamesy, are we buying or selling the birds that can't fly? Penguin Solutions. All right, look, I got to tell you, Penguin Solutions sells at a low multiple and I don't mind a low multiple tech stock because they are not going to get hurt as much as the others. And I just had to do that. I saw my executive person do that and made me laugh. I haven't laughed in like 10 days, so it was good work. It was nice to laugh. Let's go to Jim in Alabama. Jim, Jim, how are you? All right, man. What's going on? Thanks for having me. I'm so sorry to hear about the loss of your great pal. Oh, buddy. Thank you.

42:36Thank you for mentioning him. I love him. I love him. I'm still saying I love him. Go ahead. I'm sorry. I've been a cancer patient for eight years, and I'm doing well. But I learned a couple of years ago about a company in California called Revolution Medicines. They're developing a pancreatic cancer medicine. And I was very interested. I bought a couple of hundred shares two years ago. I've had a nice ride. I want to know what your comments are. I think you got to let it run. I think this FDA is getting some real horror sense. And that means letting that stock run. OK. And that, ladies and gentlemen, conclusion of the lightning round.

43:28The lightning round is sponsored by Charles Schwab.

43:40Many times people wonder how we on the show use the artificial intelligence capabilities to the best we can for the show itself. First of all, I have to tell you that we don't use them in any way that could lead to a mistake. They're so prone to do so. For example, they're not using primary sources. And sometimes I don't even think the bots should be allowed to be considered a serious research tool. My late nephew, Cliff Mason, head writer for 21 years, banned them. He said, you deserve better. But that doesn't mean you can't prompt those platforms to come up with usable story ideas for the show, ideas that you wouldn't normally do because they just take too long to develop.

44:21So let me give you a concrete example of how AI could help you start to form an idea. Last night, we had Mark Kasper, CEO of Thermo Fisher Scientific on their money. Mark's an incredibly reliable guy, and he noted after I asked him that the FDA had gotten a little more reasonable recently. Now, I knew of a company that had a drug trial that was shut down by the previous FDA for what I thought was a very capricious reason. Just the other day, however, they got the goal to continue. It was surprising. My insight was anecdotal. Casper's was empirical, always better. So I took that information. I went to chat GPT-6 Astra.

44:55I asked it, her, whoever to tell me which companies have the most drugs in front of the FDA for an up or down decision. It came up with AstraZeneca and Novartis, two European pharma giants. It knows how to count. My team and I then queried what the drugs did. And we asked Claude what Wall Street thought the sales potential were for these drugs. We then retrieved company-published filings and then went to do a deep dive of each drug to see if the analysts liked them and thought they would be green-lighted. By the time I was finished, the research clearly favored the AstraZeneca pipeline over Novartis, which was second, and then the authors were all distant third.

45:32And that's the point where I would normally begin to do my deep dive about what these drugs could do. I purposely did not use any of the bots for information on this because they would involve subjective decisions about how the medicines would do and who is pushing for them. I also decided to look up every estimate for the drugs because I was afraid it would offer me a Reddit sourced opinion, as it so often does, which I'm sure could be possibly wrong. Now, the process I just described to figure out who could benefit most from the trials in front of the FDA would normally take me two to three days to research properly.

46:07Compiling the data for all the drug companies could take an entire day to start. Day two would be a comparison day. Day three would be the deep dive on the drugs of the winning companies, as well as the evaluation of whether they could move the needle versus the rest of the company's portfolio. I don't want to render my verdict because I am on day three and I don't have time. But I know this. The whole exercise could not be done before three days pre-Chat GPT. Now, do you know it took us just three hours to do everything that I just talked about? three hours, three hours instead of three days.

46:39Do I stick with ChatGPT7 because of that? Yes, when it comes to help organizing the problem, but no, when it comes to solving it. You deserve quick answers, but you also deserve correct ones. I like to say that there's always a bull market somewhere, and I promise to try to find it just for you right here on Mad Money. I'm Jim Kramer. See you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium.

47:12You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money Disclaimer, please visit CNBC.com forward slash Mad Money Disclaimer. Your sausage McMuffin with egg didn't change. Your receive? Yes. The sausage McMuffin with egg Extra Value Meal. Bring a hash brown and a small cafe for$5.

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