'Mad Money w/ Jim Cramer 11/5/26

0:00Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished. No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab.

0:33Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts. My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a home market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer.

1:15Welcome to Mad Money. Welcome to Kramer. My friends, I'm just trying to save you some money. My job is not just to entertain. On the day's like today, I've got to put it in context, and I need to do some education. So call me at 1-800-743-CNBC or tweet me, Jim Kramer. We left here 24 hours ago, feeling fabulous. The market was up huge yesterday. If you remembered, we were headed toward nirvana as investors figured that the war would wind down. The tariffs, they'd be scrapped. So inflation would peak, and there would be liberty and justice for all. Today, though, we address the other side of this week's midterm results, It's the idea that the data center theme is falling apart, and that could take the whole shebang down.

1:58To listen to the commentators, as I did, yesterday didn't occur. And we are now in a vicious bear market under incredible proportions. And that's why the Dow fell 1 ,333 points. It has to be tumbled 4.36%. And the NASDAQ, the center of the blast zone, plummeted 5.52%. Not minimizing. That was terrible. We more than totally reversed yesterday's gains. Which day was right, though. yesterday's incredible rally or today's vicious sell-off? Frankly, kind of both, because we've had two stock markets happening at once for a very long time. We just don't talk about it. There were the stocks that occasionally had big moves, but for the most part were pretty humdrum, kind of puttering along, not making much money, if at all.

2:37They were unattractive to most traders. And then we had the tech momentum stocks that knew no bounds. The traders were moss. Those stocks were flames. For months, though, since June, we have seen money transfer from the red hot section, which increasingly became concentrated lucrative data center trade, to the humdrum section in search of growth. It had been a drip, drip, drip tech sell-off since the peak from momentum this summer, as many traders pronounce that a lot of tech is too risky to own, while others seem to lust in the thrill and unbooked profits of it all. Now, though, suddenly, after the election results, we've got a real glam on our hands, don't we?

3:14See me out of nowhere. The electorates seem to almost speak as one. They hate the data centers and don't want them built in their neighborhood. Sell, sell, sell. The House of Payne. Or their counties. Or even their states. The victory of a slew of data center restrictions on a whole host of states shocked those investors still in any of the stocks connected to the data center. And many people have them, as well as any bonds connected to the smaller builders of data centers trying to put up these gigantic expensive buildings. they're difficult to do. If you didn't know any better for today's action, you would think that not another data center will be built in this country.

3:49Now, I don't think that's going to happen. Even as I know, it'll be harder to build them going forward. Or you could say it's no longer a drip out of tech. It is now a tour. That's the notion that caused a huge amount of fear today. Lots of people being drawing parallels saying the dot-com collapse. And look, having traded through 2000 and having created at dot-com, it didn't collapse. Let me say it, this moment is not like then, when hundreds of worthless companies were bid up insanely. Here's why. With the exception of a small handful of semi-credger stocks and the neoclouds, those are companies that build the data centers, often using their knowledge of building Bitcoin factories, things have never really gotten out of control with the vast majority of the rest of the market.

4:30In fact, many of the stocks in this market haven't been doing much at all. Now, when the smoke clears, I think it's their chance to shine. Now, we did have over-exuberance in the spring when we saw frenzy buying of the memory stocks and other data center suppliers, not to mention these neoclouts I keep talking about, this Corwe, this IREN, this Nibius, among a small handful of others. We later found out that much of that rally was fueled by leverage, both from ill-conceived two - and three-times ETFs, from novice hedge fund managers at a hot hand, and from Korean buying. Well, also, there was some firm called situational awareness.

5:01We also had the endless chatter about private companies, OpenAI and Anthropic, whose valuations seem to triple every few months or so on the way to IPOs that have not yet occurred. And we had a gigantic deal from Elon Musk and SpaceX, which brought out a ton of speculation. These are all part of the data center theme, and it is falling apart right before our eyes. I'm not denying that. But there is some good news. With the exception of these neocloud companies, most of the businesses involved with the data center are good, solid companies with lots of revenue and really plenty of earnings. The bad news is that their stocks were presuming an endless wave of data center building that may no longer be the case.

5:39Without that, these stocks might still be too high. I think there still will be a lot of data center building, especially in the next two years. But after that, I think there is real doubt about a lot of the speculative projects that these neocloud outfits are trying to build. Their projects will most likely be delayed by new regulations in the wake of the election. I do worry about these companies and more specifically the billions of dollars in debt that they have accrued and all the different finance companies that have offered it to them. Not all these companies are going to make it. Maybe they're NGMI.

6:12Not going to make it, as the kids say. I think the market's simply trying to price on these big changes. It's getting messy out there. With rumors of more large hedge funds blowing up, isn't that what they do all the time? Like we saw this summer in dramatic headlines about the trillions of dollars being lost. Hey, it's going to happen. Remember, though, trillions of dollars have been made over the past few years. You just have to ka-ching them. It's all happening. The basic premise of the data center is not something that's a gigantic joke, though. These companies make a product called Compute, and it's worth a ton of money in a world where artificial intelligence is a real part of business.

6:47I could even argue it's worth more if fewer new data centers will be built in a couple years' time. That, to me, is the big difference between now and 2000. Back then, we had huge companies that were making products that no one needed. We had gigantic telco products that no one wanted. We had companies that were claiming they were making products that they weren't. We had companies that were buying products that really weren't. We had dark fiber, static, bogus websites, hundreds of companies with no reason for being. We had those things. These days, compute, the product that's being made right now is very valuable.

7:17Although I will concede that compute is hard to understand. But just because you don't understand it doesn't mean it's a joke or worthless or a con game. In the new world we are in, we can't get enough of the stuff, and people are paying fortunes for it. We're going to talk to a company later on. Real good, solid company stocks going up. They bought a ton of it. At the end of the food chain are two private companies that I just mentioned, Anthropic and OpenAI. And it's not clear how profitable they are because they're private. Anthropic is supposed to come public this month, but now it seems fair to wonder if that's even possible.

7:44That would be bad. Even if it does make it to the market, will the company really be worth the$2 trillion rumor that it was or$1.5 trillion or$1 trillion? I mean, what happens if it's less? Until we know that, it's tough to say what everything else in this space is worth. And that's weighing on everything. Lurking behind the scenes, as I mentioned, is a huge amount of debt being raised to finance the brick and mortar part of the data center. That's what I am chiefly worried about. That's the real problem. And that's what could really hurt the stock market, the debt side. Some of the biggest debt is indeed trouble.

8:15I have to redouble my efforts to focus on this worry factor above all others to help you make the right decisions. Right now, no one of significance is defaulting on their debt, and I don't mean to scare you. The only issue with the debt is that it's connected to these neocloud companies, CoreWeave, NAB, Siren, and a couple others that I mentioned. But that's not enough to sink us. So to sum up, we have some very valuable companies that were bid up above where they should have gone because business was so red hot great. We were gradually working off those excesses, but with this week's election, that gradual process has now turned violent.

8:49That's uncomfortable, but it's not existential. The more worst in part, again, is the debt that's out there with the build-out. Will it be money good? I sure would feel better if Anthropoc opened our public so we could see that when you spend money on compute, you can make a real return. Right now, it seems like only a handful of semiconductor companies are doing that. NVIDIA, AMD, memory companies, as well as a few other one offs like Dell. Those stocks had been holding up better than most, but they haven't lately. NVIDIA collapsed into the red today, dropped nine points, now negative for the year.

9:20I know the percentage losses seem gigantic, but the money coming out of the hot sectors is indeed going into other sectors. Interest rates are actually going down. It's not going into bonds. What should you be doing? All right, tomorrow I have a big CNBC Investing Club annual meeting, and I'm going to lay out a course of action. Suffice it to say that we all know the market's gotten real nasty. But we also know that interest rates are well off their highs and going lower. We have a sense that the world might end soon because of the election. We have a sense that inflation may be getting more tame.

9:50So be sure you have some cash. Unlike when I say that you should just wait and see, uh-uh, it's not like that. If you don't have some cash, I want you to raise some tomorrow. Take some losses in those data center-related companies if you don't have enough cash. And accept that we are accelerating what was going on for months, something that lots of funds with borrowed money weren't expecting to happen and are now blowing up. I wish I could say that today's flush was the bottom, but I look at the charts, And it still seems like there's no support for so many tech stocks, especially the semis, because they ran up so much on the way up.

10:21But however, it might feel it's actually an orderly decline because unlike 2000, which was a route, these are mostly lucrative companies with stocks that just went too high. The bottom line, I, for one, am actually glad that they're ripping off the darn bandaid from this market rather than slowly trying to take it off a little bit each day. I wish we didn't have yesterday's big increase and I wish we didn't have today's big losses. But they are two sides of the same coin, people. If you have cash, you will not panic. You won't be complacent either. You'll be tear-headed. And that will help you lose less money until things get better.

10:56Because they always do. Let's go to Rich in Texas, please. Rich. Hey, Jim. I watched you lament the other day how your investment club lost 25 % on a stock. I believe it was Intel. And I'm how upset you were. Yet I didn't hear a word about how another stock you recommended four times last year has it fell 45 % in just 12 days after recommending that stock last month at$160. Now that it's plummeted to$90 and wiped out our savings, what are your new thoughts about Reddit? Okay, well, let's talk about those things. First of all, I talked about Intel pretty much every night because I was worried about how it did.

11:33Did I talk about Reddit? Yes, I did. I said that Google had changed its algorithm and it hurt Reddit, but I think it's a valuable company. Am I perfect? Hardly. Have I tried my best in the last 45 years? I sure as hell hope so. Are you disappointed in me? Well, if you are, all I can tell you is I did my best. Let's go to Joe in New Jersey, please. Joe. Hello, Mr. Kramer, and thank you for taking my call. I am thrilled that you called, Joe. Good to have you. Oh, I just want to say, when I called on my diversified segment of your show, You said I had too much tech and I sold some and I held up and had some gains between yesterday and today.

12:13Thank you. Well, that's great, Joe. I mean, some people think I don't have a brain in my body. Other people think I have a big brain. You know what? I think it's a bit of a mix of both. How can I get it? My question is on Palo Alto Networks. They took a hit today. Now, they're supposed to be maybe acquiring Clutch Security, the Israeli cybersecurity company. I just want to know if I should add to my position. Well, look, I don't think we need to add to any tech right now. Both Palo Alto and CrowdStrike got very hurt today. And I'm mindful of the fact that these are what are known as high-priced earnings, multiple stocks.

12:50And so, therefore, we're going to have to give them some birth because right now the market's in a bearish mode. Some people would say we're in a bear market that started literally. I don't know, a few weeks ago. I look at Palo Alto and say it's made us a lot of money and sometimes we have to give back some money in order to be able to make big money. That's been my philosophy since 1981. You know what? I'm going to stick by it. It works. Even for our first caller, if you give me the chance to be able to help with it. On that money today, the averages got hammered today with the data center stocks taking a beating.

13:19But by opportunity, could these names have further to fall? Well, we have to talk about what is going to happen and play out tomorrow. Then as tech stocks slide, I'm going to check in with the state of the buy now, pay later space with the firm. Fresh off earnings. Plus, with travel stocks in the red, I'm going to catch up with Airbnb to see what the road ahead may look like for the sector. So stay with Kramer.

13:48Don'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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15:42We don't know what to pay for any of the stocks connected to the data center anymore. And that's why this moment is just so darn fraud. I mean, that is the real issue, because if the election results aren't met with a slew of new regulations, you probably should start buying these stocks pretty soon. But if tight regulations and bans are now going to surface throughout the country, you have to avoid them. Unless, of course, the regulations don't cover any of the near-term developments planned and approved. Phew. Tomorrow, I'm hosting our CNBC Investing Club annual meeting. Always a lot of fun, although this year's meeting might be a tad tougher.

16:14And I am totally conscious that no one really knows how to value stocks in a world where things might be good next year, but not the following year or maybe the year after that. If you think, for example, that NVIDIA is going to have a good year in 2027 and just meet the current estimates that have been set out for the company, then you'd have a stock with a growth rate of 70 percent that's selling for less than 12 times next year's earnings. I mean, that's an incredible, ridiculous bargain. And now it's down for the year. But it is not a bargain if the following year can't grow any further because the U.S.

16:42won't permit new data centers as fast as they do now. How fast will they permit them? Will it be like the oil and gas pipelines, which companies struggle to get approvals for from the fossil fuel-hating Biden administration? Will they be like the nuclear power plants in the early mid-70s when the country turned on that fuel? Or will the whole thing just be delayed a little bit and the build-out still occur, just at a more leisurely pace than the frenzy way it's happening now? See, we don't know. The data center stocks have gone up so much over the last few years that it's difficult to tell how much they can fall.

17:12If NVIDIA had a clear line of sight to its own destiny, and that line of sight is positive, it should be buying back billions of dollars of shares right here as part of its$235 billion buyback that it's already committed to. Remember, companies have been throwing money at NVIDIA, and while it's been a big spender itself, buying stakes in many companies, it has not to date gone all in when it comes to its own stock. Why not buy it? Of course, maybe they're gun shy, too. Perhaps the read is that there won't be nearly as much demand in the next few years as there is right now, which means the stock has some downside.

17:42Or maybe they bought a ton today and they don't have to disclose. See, that's not how I would do it, though. When I ran buybacks, I waited for days like today to stand there at each level and buy until the sellers were sated. Sure, that may be too hard today, but I think NVIDIA at under 12 times next year's earnings is going to prove to be a bargain. You know, that takes the pain first. It's tougher to get to the more commodity-oriented companies, though. For example, Micron has many strategic customer agreements that are known as take-or-pay contracts, meaning companies will have to pay them even if they don't take delivery of the chips.

18:14Now, though, you might have to ask, will they be around to pay them? I know that sounds dire, but what if companies like I've been talking about, these neoclouds, smaller neocloud builders with no other businesses to pull back on, sign take-or-pay contracts? Could they possibly default on them? Anything's possible. Still, Micron has some ability to forecast based on those strategic customer agreements. It is free to do a gigantic buyback if it's wishes starting December 9th. That's a date imposed by the company's deal with the federal government as part of its CHIP Act funding. Perhaps the toughest to analyze is the stock of AMD.

18:42They just reported Tuesday night and it was spectacular. Buy, buy, buy. One of the best quarters I have ever seen. When I interviewed CEO Lisa Su yesterday, she reiterated that she sees a trillion dollar total addressable market for the data centers and its accoutrements coming up. If that's the case, then you can and should be buying her stock right now. Do you want to? The stock was at$108 in March. $188. Hmm. By that token,$404 went out. Seems awfully high to me. Maybe that's the real problem. Here's the bottom line. These dramatic moves you're seeing reflect the market trying to figure out in real time how much to pay for stocks, where the next year still looks great.

19:23But it's absolutely true that the future for tech is now darker than it was before this week's election. to be sure it's a messy process that we're watching. You need to be careful when the swings are this violent. But if you keep your head, have some cash, like I said before, you know what we're going to do? We're going to get through this together. May have money's back after the break. Coming up, is Buy Now, Pay Later platform a firm of Buy Now? Kramer's checking in with the top brass next.

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21:27After the bell affirmed, the buy-now-pay-later company that we prefer on this show delivered a strong fiscal first quarter. Revenue jumped 35 percent to$1.26 billion, beating expectations, while earnings came in at$0.47 a share again versus the$0.38 estimate. The firm also raised its full-year outlook for purchase volume and for profit margins. Now, shares came under pressure in today's miserable sell-off ahead of the report. They're down a little more in after hours. I do not think you should look upon what's happening right now in the market as a referendum on this excellent company. Do these results give investors a reason to take another look?

22:01Let's check in with Max Lebschen. He's a firm founder and CEO. Mr. Levchin, welcome back to Mad Money. Thank you. Great to be here. All right, Max, 12 straight consecutive quarters of 30 percent plus gross merchandise volume and also becoming more profitable. Does anyone have anywhere near that record from the time that they started? Anyone? I guess I had tracked the entire stock market, but I do think we're fairly unique in this one. Also, eight straight quarters of being gap profitable. I just want to mention that gap profitable. It means not made up problem. He's gap profitable. Affirm card, active cardholders doubled over the past year.

22:37Now, cardholders, they you make they tend to make a lot more purchases than non cardholders, correct? Exactly right. They're the most engaged customers. We have just under twenty nine million active consumers. But the six million that have a card make a huge commitment to a firm and use it a lot more often. Let me ask you. I signed up this before the interview. I got the card in 90 seconds. I just checked the box at the top. Why doesn't everyone check the box? Because this sure was a heck of a lot easier than anything else. And it sent me right to Amazon. What's the problem here? Well, we're known for our pro consumer stands.

23:15We don't charge late fees. We don't compound interest. We do a lot of things different from the rest of the industry. We don't push our products into your hands. If you wanted one, we'll be there 90 seconds flat. If you wanted, we're there for you. We're not going to push you into anything you don't like. And so we are very happy to take on the six million and growing very quickly, doubling year over year. We'll be here when they're ready for you. You have Sam's Club, a place I like very much. I know that Walmart's not a senior. Doesn't mean you don't do business with them. But Sam's Club's got to be one of the marquee camps that still left, right?

23:44Yeah, we were extremely, extremely excited to to have Sam's as part of our merchant ecosystem. them. Super exciting. Just went live a little while ago. Great company. Great experience. Can't be happier about that. At the same time, I don't mean to minimize the fact that there are, I don't know, what percentage of the world does not have an Affirm card right now? You know, there's a lot more to go. So we have underwritten about 40, 50 million U.S. consumers, vast majority of whom, by the way, transacted with us and paid us back on time every time. Very proud of that stat as well. But there's, you know, a couple hundred million more left in the U.S.

24:22We're live in the U.K. and Australia and Canada. We're going to to Europe now. So so we have a lot of growth left to do. So there's plenty of cards to distribute. All right. Now, you mentioned about the vast majority pay on page nine of your deck. You say credit quality, 30 plus day delinquencies, of course, excluding Peloton and pay and ex-loans, increased nine basis points year over year and increased 35 basis points quarter over quarter to 2.9. Is 35 basis point increase something we should be concerned about if we're going to buy the stock of a firm? No, that is a seasonal change. So if you compare the right comparison is year over year and you can see nine bips tells you everything you want to know.

25:00The quarter on quarter you expect to rise. And then as the tax season rolls along, you expect the fall happens every year. You can and we provide data going back many, many years. You can see it's an annual change. Right. I'm glad you brought it to that. There are charts that would have indicated that, but I have to be sure because I'm looking. Like Max, you know this, the stock's down. I want everyone to have any objectives, anything that they think might be wrong, to be brought up in the interview because you're here and you're the most forthright guy in your business. On a loan product basis, GMV mix shifted slightly to interest-bearing loans, which increased 34%.

25:29So a firm card GMV, which grew 170 % in the quarter, continues to skew heavily toward interest-bearing loans. Are we okay with that? We are. If you look at the zeros, so we do lots of lending with interest. We also do lots of lending without interest, both in billions. The growth of the 0 % loans, I think from memory, 33%, interest bearing 34%. The entire business is growing about 34 % rapidly. That's not a concern. I'm very excited. The reason, by the way, it changes because merchants are saving up. Merchants are paying for that interest subsidy. So when you get a zero percent loan from us, that means the merchant is basically paying your interest.

26:09Right. A lot of those deals are going to come right into the holiday shopping season. They're saving their dry powder to entice you to shop during Black Friday, every Monday. You just brought up the thing that I wanted to know most. I mean, there's a lot of people. I think the election seemed to be a referendum. Too much inflation, perhaps not enough. Too much money being spent on health care versus your the dollars that you take home. And yet I don't hear anything to make me think from what I see here that it couldn't be a great holiday season. You know, I'm going to knock on wood here, but I don't see anything either.

26:39If you look at the demand that we're seeing, if you look at the last few weeks of the quarter we're reporting, if just the demand is building, I expect a healthy holiday season for our retail partners. We'll be there to serve them, of course. That's a huge, that is our Super Bowl, Black Friday. So I don't have a reason to believe there's going to be weakness in the economy. And by the way, the economy is fully employed. That is the alpha and omega of what we care about as a lender. And that's what the retailers care about. as those who shop. They feel good about their ability to earn. They buy things for their loved ones in the Christmas sense.

27:11You mentioned something in the zeitgeist that is a kind of a skein of thought, which is that while people are very excited about agentics and shopping, we actually like shopping. Do you think that agentics could be capped? And if it's capped, is that good or bad for a firm? I am personally very excited about agentics shopping for a slightly different reason. One of the core values of my company is no fine print. I started the business 15 years ago now because I think traditional financial service providers hide their business model in the tiny print in the back of the statement saying, by the way, when you least expect it, we charge you fees and compound interest.

27:50And so I said, no fine print. We're going to tell you exactly what the costs are going to be. You'll know up front. It'll never change. Agents are really, really smart. They're going to read all the fine print. They're going to pick a firm even more because we don't charge any of those fees. So on that front, I think Agenda can come soon enough. But you're totally right. Shopping is a form of entertainment. I love looking at things that I may or may not take home eventually. And so it's still evolving. We will figure out how to use AI for research, how to get the best deal, how to get the best financial deal.

28:19A firm will be there, of course. But we're not going to outsource the selection of our wedding dresses or bicycles to ride to an AI. Like that is a personal decision. It has to do with taste and it's a form of entertainment. All right, let's leave it there. Max, again, an excellent quarter. I wish other people had that kind of growth and that kind of transparency because it would make everybody's job, would put me out of business, but it'd make everybody else's job very easy. That's Max Levshan, founder and CEO of Affirm AFRM. Thank you, Max. Great to have you on the show. Thank you. Me and Batty's back with a break.

28:50Coming up, the top brass of Airbnb is checking in with Kramer after the company's latest report. Next.

29:08As we try to figure out where to turn after this brutal day for stocks, one group we always like to look at first is the companies that we know are doing well because they just reported. Take Airbnb, the company that lets you book whole home rentals and hotels. Airbnb reported a really unbelievable quarter tonight, really beaten race quarter after the close as revenue continue to accelerate and the business gets increasingly profitable, too. Earlier tonight, we had a chance to check in with Airbnb co-founder and CEO Brian Chesky about these excellent results. So take a look.

29:40Mr. Chesky, welcome back to Bad Money. Oh, thank you. Good to see you again. I miss you, Brian. I got to tell you, we have some bad days in the market. Everybody says, well, look, everything's bad. I'm looking at your business. I am seeing accelerated revenue, top line growth, unbelievable growth rates, needs for nights, seats booked, gross booking volumes, revenue. What is driving the acceleration for Airbnb's top lines? I think it's two things, execution and AI. Let's start with execution. You know, four years ago, we rebuilt the entire foundation of our tech platform. We rebuilt our app. We really built out entirely new leadership team.

30:19And it was almost like renovating a house. It was a lot of thankless work to set ourselves up now. But we really started operating like a startup again. I basically took these really small teams. I trained them about how we innovate in the early days. And they started shipping and shipping and shipping. I went into, I guess you could call it founder mode, this thing that Paul Graham wrote about where you just have this sense of urgency every day. You're in the details. You drive everyone in the same direction. And you're just really driving the business every single day. The other thing is AI.

30:46I think AI is the best thing that ever happened at Airbnb. You know, I think a lot of people are asking, who's a winner of AI? Who's a loser of AI? There's a lot of reasons why AI really helps Airbnb. It is really hard to find homes and find travel. Most people don't want to offload it to an agent. They want to really be able to discover, look at photos. They want to be able to message. And so AI really helps us. We also now ship 70 % more software than a year ago. So we really became much more of an AI native company. We now handle 40 % of our tickets are now handled by AI. So we have a 70 % reduction in our cost of customer service.

31:17So it's really been execution and AI. And I guess the thing I would say, Jim, is we are now back in growth mode. You know, we were growing really fast when we were in public. We had some deceleration. Now we're back. All right, Supra, when you talk about AI, I think people listening are saying, look, AI, everybody talks about it. Everyone's got a rap on it. The fact is, AI does cost you money, right? You have to pay something in order to get it. How do you measure the return on what you pay for AI? Yeah, I mean, we basically pay for tokens and we look at the incremental revenue growth from the software incrementality.

31:52So, for example, we'll look at what we spend on cloud code and codex every year. Those are the main two models we're using to ship. And then we look at how much revenue we're generating from the features we're delivering. Now, for example, we ship 75 % more software. The AI that we developed, the code that we shipped probably generated, you know, hundreds and hundreds of millions of dollars of incremental revenue this year. So it's been so far very, very ROI positive. And our headcount has been pretty flat this year. So we're able to ship 70 % more features without more people. All right, so let me play devil's advocate.

32:24I never knew that things were bad. I've been using it the whole way. I've always felt things were good. As a customer, I don't see necessarily that something is so much better because I thought it was good to begin with. A customer like me, maybe not as tech savvy as you, what would I be seeing that I should be noticing that is so much better than what I've seen all along? Well, thank you for saying that. I think it's always been a pretty solid service, but we're always trying to make it a lot better. So prices on Airbnb are much lower relative to hotels. Three years ago, we got rid of cleaning fees.

32:58We got rid of house chores that people were complaining about, really streamlined the service. We now have AI certs. You can type in entire sentences, filter. You can essentially, we have AI-generated highlights to make it much easier to read the reviews, to read the listings. So really, there's been hundreds and hundreds of small improvements. Not really one thing, but there's just a lot of little things. It's easier to find a home. The homes are more affordable. See, there's some of the things we're doing. I definitely see that. I have to tell you that it's been a pretty seamless process the whole way, but I like this.

33:29The thing I've got to tell you that I like the most, we're big points users. We're Amex points users. But I've always felt that was separate. Now it's for hotels. But you announced at the end of October this, what I think is kind of a dream partnership on over one million listings to American Express travel. I look at the other way, bring American Express travel to over one million listings. How is the points program working? Because that's how every my look, my daughters don't go anywhere unless it's on points. That's just the way that's that society. I don't have that. But that, again, is something that you recognize is more important than many other things when it comes to travel.

34:01Well, this is the biggest partnership we've ever done in our 19-year history. And we now have a million listings available. You can earn points on Amex. And Amex people obviously spend a lot more on Airbnb. We're seeing a huge increase in people booking luxury and higher-end properties on Airbnb. We're getting like thousands and thousands of bookings on it. So these are extremely high-value, high ADR, average dealer rate bookings. And I think it's going to bring a whole new audience to Airbnb. You know, we really started with younger audiences, more affordable travelers. Then we moved up market to family travel.

34:34This is really the final frontier moving up to the luxe segment. It's very, very high end. And actually, this is a weird thing that's kind of counterintuitive. Airbnb is both, you know, kind of cheaper than hotels, but we also have homes that are much higher end than hotels. So we kind of have the full economic range. There's almost no marketplace on the Internet where you can do budget and you can do ultra luxury. But Airbnb does the gamut. All right. So where are people going? Tell me where, what are the hot places? I mean, we're in 100 ,000 cities. They're kind of going everywhere. There's a lot of people traveling domestically.

35:04You know, Brazil, for example, a lot of people are going to traveling within Brazil. United States, people are going to national parks. They're going to urban areas, but they're also going off the beaten path. You know, France is our number two country in the world. So a lot of people are traveling to France. People in France are traveling domestically. We're starting to see a lot more travel to Mexico. Mexico City is booming. So there's a lot of different places that are going really well. All right. Just tell me, I can't believe France, because they're rioting in the streets in Paris, but obviously there's people who like to go to Paris.

35:37Outside of Paris, especially. Yes, exactly. Now, dynamic pricing. It's a tool for hosts. It's optional dynamic pricing, sometimes controversial. What do you think? You know, hosts basically say, like, hey, Airbnb, you have all this data. We're trying to price our property. So what we basically say is we have billions of data points to help you price your property. And so we think we're able to help them price their property better than they do because we can compare what hotels are dynamically pricing. If you're not getting enough visitors, we can say if you list a little bit lower, you'll make more money.

36:10And what's not intuitive is should I charge$20 less or increase my prices? It's really hard. Well, if I charge$20 less, I may sell an extra night and actually make more money. So it's really hard for an individual to know how to price. We're able to do that for them. And what we're able to do with dynamic pricing is generally the average prices on it may come down and hosts make more money. It's essentially just a supply and demand balance. OK, now some people think it's a tough economy. Other people have got full employment, so it's hard to say it's really tough. But people seem to be traveling as much, if not more than ever.

36:40Is it still post-COVID or is it just outfits like Airbnb that makes it so there's price discovery and you feel pretty good about it? Well, actually, right now, I would say people are probably not traveling that much more. You know, booking in Expedia, they've reported growth of between 1 % and 3 % and 3 % and 5 % year over year, whereas our growth we reported as a nice is 16%. Our revenue is 19%. So I think that they're still traveling, but right now the travel economy is kind of stagnant or, like, stable. But Airbnb is definitely taking share. And part of the reason, Jim, is also family travel, lux travel, but also Gen Z.

37:18Our fastest growing segment are Gen Z young travelers. Young travelers want to travel. Why do they want to travel? They want to get out of the house. They are tired of social media. They want to meet people. They want to travel with their friends. And so, but they don't have a lot of money. So, obviously, Airbnb is a great source for them. And it's Gen Z people who understand all the things that I don't that you had to add, right? No, they're the ones who say, why does he do this? Exactly. I mean, the AI features, yeah, a lot of the AI features we shipped are disproportionately used by younger travelers like Gen Z.

37:46But we try to keep that so simple that I like to say, design for our parents and my parents in their 70s. And I want to make sure they can use it as well as young people. Well, it's still Airbnb is still the only way, after all the years I've known you, it's still the only way I even know how to do this. Congratulations for the ultimate franchise, Brian Chesky. Great to see you. Good to see you again, Jim. All right. Brian Chesky is the co-founder and CEO of Airbnb. be. Remember, not all stocks are just companies that get beat up by AI. Some are actually helped by it. Everybody's back in for the break.

38:22Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast-fire lightning round next.

39:00Period. Yes. Completely tough day. Everybody feels it. And we're in this together, even if it's tough. We're in together, yeah. I was going to ask you, how's Harry and David? When are you going to come to Ashland, Oregon soon? Oh, man. You know, Medford, Ashland. I wish my daughter still lived there. It was just the greatest time of my life. Alright, what's happening? Hey, quick question for you. The stock that I want to purchase, I have held for about, you know, five, six years now. I want to add to it. It's quite a bit down. Recently announced, setting today at$25 billion-dollar buyback. What do you think about land research?

39:33Great way to start the lightning round. So here's a stock that is down $36. So you'd think it's a buy, right? It sells at 19 times earnings. It is down from$108, down$438, all the way down to $185. But it was at$135 last year at this time. And that means to me that there's still some more downside. I hate to be that simplistic, but as much as I like that stock, if I had to buy 100 shares, I would only buy 25 of it tomorrow, and then I'd wait. Let's go to Paul in New Jersey. Paul. Good evening, Jim. Good evening, Paul. Really looking forward to tomorrow's meeting. I'm so glad. Thank you. It's a tough day, but we'll get it together.

40:13What's up? I have a position in Xylem. I took some profits out of TIE, but now it's back nearby basis. Should I buy more if it continues to drop? You know what? I think Dupont's better water purification. I really do. I think that Xylem is not as good as DuPont. DuPont just had a great quarter. Let's wait for that one to come down. Let's go to Rick in Mississippi. Rick. Booyah, Jim. Booyah. Jim, with the new Congress going to convene in just a couple months, I think it's a safe bet that we're going to see some environmental or green initiative. Is First Solar the way to play it? No. Actually, Next Power is the way to play it.

40:53And the stock was down very badly today, and that's a good opportunity. 21 times earnings. Dan Shugar is right. I have him won a couple of times. I really like the way he thinks. Let's go to Danny again in my home state, New Jersey. Danny. Hey, Jim. Danny Camp from New Jersey. Thank you. It's a privilege to be on the show. Thank you. Thank you. This is one I'm calling about is in the very unpopular sector, AI and data center. This company designs and manufactures data centers. The price point that it's at right now is beautiful to me. And the company name is Vertiv Holdings. Okay, well we had Vertiv on last week, Mr.

41:38Albertazzi. The problem is that the stock's still up for the year. I don't want to buy a stock that's up for the year that's in the data center. I want it to come down a lot, even though I know it's doing great, because things have gotten very uncertain. And that, Ladies and gentlemen, let's go push it up the lightning round. The lightning round is sponsored by Charles Schwab. Coming up, Kramer's connecting with the CEO of CUNITY to find out where the electronics maker is headed. Next.

42:30Yesterday, before the bell, CUNY Electronics, that's a successful DuPont spinoff that we own for the Chapel Trust, delivered a strong beat and raise. Now, this company is a crucial link in the semiconductor supply chain, making specialty materials used to manufacture chips and advanced electronics. In other words, they don't make the semiconductors themselves. But the group has come under pressure following the midterm blue wave. CUNITY initially fell more than 5 % yesterday morning, then recovered to finish essentially flat. Then today, shares fell more than 7 % as the AI sell-off continues. Let's check in with John Kemp.

43:00He's the CEO of CUNITY Electronics to learn more about the court. Mr. Kemp, welcome back to Matt Money. Hey, Jim. Good afternoon. Good afternoon. Now, Jim, I got to tell you, it's tough to come on on a day like today because people want to know, well, really, you can't be that much exposed to the data center, even though five days ago we hope you were maximally disposed, you know, been involved in the data center. And I want to get away from this exposure, data center, non-exposure. You make a crucial form of materials that everybody has to use and will be used for many, many years. So can you explain where you are in the food chain and kind of divorce it about whether there's a data center that's going to be built or not?

43:40Yeah, Jim. Fundamentally, CUNITY is the largest pure play material solution provider to the semiconductor value chain. Look, and semiconductor chips go everywhere in the modern economy. We use it to run everything. And almost literally every chip and system powering progress in the world today is made using CUNITY materials. Our materials connect and protect, pattern and polish the semiconductors and advanced devices across a broad array of end markets. You know, whether that's data centers, satellites, smartphones, vehicles, factories, wherever chips are going, that's where CUNITY will be. Now, for instance, I was on the Apple conference call.

44:23There are very few companies that are ever called out on an Apple conference call, but they mention yours because of your exposure to cell phones. Now, that's a growing business when it comes to your book of business, correct? It is. And we're thrilled to be a partner as part of Apple's Advanced American Manufacturing Program. It's a wonderful example of how materials innovation is moving from backstage to center stage. Because what we do, Jim, is we sat in a room with our scientists and engineers side by side with the scientists and engineers at Apple. And they identified what they wanted from a breakthrough technology.

44:59And we worked collaboratively for months, if not years, to try and make that a reality. And then we could scale it up at our U.S. facilities here to be able to support them. And what I love about that example is it's the perfect way that we work, not just with Apple, but across the OEMs, across the entire industry, where we're co-innovating with the seat at the design table side by side. And then we work with them to customize it and scale it to make tomorrow's technologies possible. All right. Now, on your excellent deck and in your conference call, you talked about heat. Now, you're the first company I've heard that is not involved with thermal management that actually addresses the concept of heat.

45:38And you have proprietary technology that I think everyone's going to have to adopt, correct? That's right. We've all felt the example of what heat feels like. Everybody knows exactly where their battery is because it's the spot, the hot spot that gets hot in their hands on their phone. And you can imagine that everywhere compute is rising, that's where the hotspot is going to be. And what our portfolio, leading portfolio of thermal solutions is all about, is about identifying where those localized hotspots are and then moving it out. Right. And we do that at the chip level, at the package level, at the board level and at the device level.

46:14And we sit side by side with our OEMs and their manufacturing partners. And we figure out how do we optimize the performance across that entire system so that there's never a dropped call, an interruption in signal, an interruption in power and nothing shuts down. All right. The last question I have to ask is, without mentioning a name, I only know one competitor of yours. I mean, are there a lot of companies in your business that are private? I just don't see them. No, there's not a lot of competitors that can do what we do. I mean, there's there's kind of one major U.S. competitor and then there's a couple of overseas competitors, whether that's Japan or in other pockets of Asia.

46:52But it speaks to the uniqueness of where we sit in the value chain is there aren't a lot of people that can replicate the performance, the quality and the reliability that our customers need for their most advanced technology. All right. Well, look, I got to tell you, John, I wish you reported on a different day, because I think people should have known that I think your stock would have been up 20 bucks in the old market. And maybe this is a new market and we're not going to make as much money owning Letter Q. But I find it hard to believe, given that these numbers are just getting better and better since the spinoff.

47:22Thank you so much for coming on Mad Money. That's John Kemp. He's the CEO of Letter Q. And, John, great to have you on the show. Thanks, Jim. Really appreciate it. Absolutely. I'd like to say there's always a bull market summer. I promise you I'll find it just for you right here on Mad Money. I'm Jim Kramer. See you tomorrow.

47:42All 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. 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.

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