Technology
Mad Money w/ Jim Cramer 10/6/25
In this episode of Mad Money, Jim Cramer discusses the groundbreaking partnership between OpenAI and AMD, highlighting the implications for the tech industry and stock market. He emphasizes the signif...
Mad Money w/ Jim Cramer 10/6/25
Technology •
0:00 / 0:00
Interactive Transcript
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What made you confident that you could do something that hadn't been done before?
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I have no fear of failure.
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Trailblazing women changing the game.
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One of my favorite pieces of advice.
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Think about what your boss's boss needs.
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Leadership can look in many, many different forms.
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It really does come down to just trusting yourself.
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Life is short and you just gotta think big to accomplish big things.
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Julia Bourston hosts CMBC Changemakers and Powerplayers.
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New episodes every Tuesday, wherever you get your podcasts.
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Hey, I'm Kramer.
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Welcome to Mayor of Money.
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Welcome to Kramer.
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I'll do it with my friends.
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Hey, I'm just trying to make you a money here.
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My job is to entertain, but I'm going to be doing some explaining.
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So call me at 100 733 CMBC.
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Sweet meet you, Kramer.
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Look, you either believe or you don't believe.
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It is as simple as that.
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We either accept that OpenAI is going to pay for the billions of dollars of chips
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that are just ordered from AI and AMD or you refuse to believe it.
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And you assume AMD will get stiff because OpenAI doesn't have the money or won't need the chips.
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I prefer to accept the answer I got.
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I was walking on the street this very morning from Lisa Sue, the brilliant CEO of AMD.
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She's not worried and neither is Greg Brockman, the co-founder and president of OpenAI.
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He will be doing the pain.
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Even though there are countless AI skeptics, the market clearly believes that OpenAI
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can afford to spend tens of billions of dollars on AMD's highest end chips,
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in addition to Nvidia's chips, which is why AMD stock shot up 24% today.
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And getting almost the whole market, the dip, 60s, B points, Sb of S, 0.36% in the Nasdaq,
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jump 0.71%. That's what the action is.
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I know that I am a believer.
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Ever since Jensen Wong, the CEO of InVidia, told me about the possibilities of accelerating
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computing and artificial intelligence. I don't know, 2018. I thought that there could be some sort
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of revolution going here. Jensen told me I was thinking too small. He said it was actually going
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to usher in the fourth industrial revolution. Now initially I thought that seemed a little
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bit hyperbolic. We've had three industrial revolutions. First there was this D-mengin and the rise
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machine production. Second electricity and mass production. Third the last five decades of
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digital technology, automated production, electronics, telecom, the PC, and the internet.
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And now is the fourth industrial revolution, the era of artificial intelligence and machines
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that reason. That is the next generation. Machines that we'd rather deal with than humans.
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Machines that will either be our assistance or our enemies if you believe Hollywood.
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I see no reason to disagree with Jensen Wong. His predictions have been right the whole time.
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He predicted AI would be seismic and his company would be at the heart of it.
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Today though, today we found out we have a second heart with open AI, the most aggressive
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of the generative AI plays. Stamping up the plate and announcing a gigantic deal with AMD
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to supply cutting edge chips to the kind that rival and what Nvidia is making.
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rival. I wish I had a chocolate. I knew that AMD was working on chips that could compute with
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the videos and knew that for a while. Open AI's Greg Brockman told us this morning that he basically
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needed all the computing power he could get his hands on. And AMD's product was excellent.
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Open AI will be taking a stake in AMD's slug of warrants which kick in his AMD stock goes higher.
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This deal could be worth tens of billions of dollars to AMD and Lee Sue.
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Now the stock market lapt it up with AMD rallying $39 from really 24% in one session.
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But more important, all the parts of the data center went higher. The usual suspects had
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Dell, ARM, Marvel, Micron and the more prosaic companies that designed and build the centers.
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They all had still one more rally on them. Any good news about this particular part of the
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economy sends everything connected to it roaring. But what matters to me is that there's
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an ever ending parade of billionaires, hedge fund managers and their generalist mouthpieces
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who simply will not relent. They refuse to accept that all this is happening and it is happening.
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They think these sky high levels of spending have to lead to a crash, not unlike the dot-com
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implosion in the year 2000. Oh, they got the same old litany. The spending will get more
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reckless and more and more reckless companies involved. More and more, the train based on
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alchemy. The transactions be phony. Lazy Susan deals where you give me 10 million investment.
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I give you 10 million orders or 10 billion and 10 billion. Just a table on a swivel it sends you
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the money and then you send it right back. Yes, that's a lazy Susan sale. These critics are so
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confident that they can make you feel like a fool for trying to make money this way. They act
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as if the gains in the AI stock somehow don't count. Like you have no right to them because someday,
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someday they're going to go away. You know, I've been wrestling with these days,
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shares and pessimists for all my working life, all the way from Dow $1,000 to Dow $46,700 and it's
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incredible what magicians they are. They can still make you somehow feel foolish for buying stocks
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and me for recommending them. You can bet they don't believe in the fourth industrial revolution.
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They think it's all snake oil. I talk about this endlessly and how to make money in any market.
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Just endlessly that these people have kept these and the people who have made you
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so you can't make a lot of money. The billionaires, they come on, they have the money and it's almost
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as if they don't want you to make the money. No, it's like they don't want. They don't want you to make
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the money. Well, let me tell you just how wrong they are. Last month, just in one, one,
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a very similar deal with opening. This time, a 10 giga watt deal, the AMD was six,
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with the latest and greatest and very merchandise. Unlike AMD with this grand of warrants,
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opening, I am video actually is going to be investing 100 billion in opening. I am
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staged over the life of the deal. If you haven't studied Gensers moves, you might not know that he's
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an excellent investor. He does all the work himself. I'm telling you, I have people been in the room.
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He intimated that rather than this being a circulated lazy, circular lazy Susan deal is
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as the billionaires described and the hedge fund shorts described, it's a big investment up
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and coming company. He pointed out that there can be no circular deal if there's no quid broke.
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No matter. I hear it from people immediately. Once I haven't talked to him years,
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who are outraged that I believe that Gensers, when he said the deal was exclusive.
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This guy has created four trillion dollars of market capitalization less than five years. Why the heck
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wouldn't I believe in? Of course, I heard from none of those critics today when we found out that
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it really wasn't exclusive to the point where opening, I see the view AMD's chips is equal in
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videos. I mean, I found it a little insulting. They needed computing power to meet the demand
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because the demand is overwhelming them. I asked how they were going to pay for it and they
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told me basically not to worry about it, but they have a no-nonsense CFO in Sarah Fryer,
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a story fixture at young companies in former managing director of Goldman Sachs,
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whom I trust through and through. And, AMD's Lisa Sue is one of the toughest execs in the business,
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both have impeccable credentials. But look, what can I tell you? I trust them. I mean, what about
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29, though? Well, there was nothing but cysars and crooks and liars and mountbacks right at the
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top of the big companies. As the founder of the street.com, I know where I speak. The executives
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running, opening, I and AMD are not like these people. These current iterations are honorable.
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The people back then had nothing to do with the people right now. I take offense when people
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question what Gensers doing. I really do. But what's the hurry here? Aren't the hyper-scalers worried
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that the equipment they're buying isn't worth it? They might go broke spending all this money
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that by the time they get the equipment, it's going to be obsolete. No, no, no, no, that's not
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what they're worried at all. In part because the hyper-scalers are over in deep pockets,
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they don't care about the cost. In the end, they're afraid of being the next Microsoft BING left
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left in the dust, left behind. See, each one of its own verticals that need AI and that has
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social ads, Tesla's robotics with times driving, Google has search, Microsoft has the enterprise,
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Amazon has retail, they're all deathly afraid of someone else coming in to take their business.
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After today's announcement by OpenAI, I think they're right to be afraid. They're right to keep
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spending. They have to. And that's what OpenAI's partnership with AMD is all about. They want to
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challenge every one of these verticals. They need every bit of computing. They need both Nvidia and AMD.
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Oh, and what do I think about the stock of Nvidia here after this OpenAI deal with AMD?
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Oh, nothing's changed. It's just like the second industrial revolution. I always knew there would be
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another railroad. Here's the bottom line. The hyper-scalers are all vulnerable with OpenAI gets this
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computing power and given the number of chips that's buying, I think this company can go after
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everybody's business. No wonder the hyper-scalers are spending so aggressively too. If they stop,
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they're worried about OpenAI. Well, let me just say, they'll open the eye, we'll eat their lunch.
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And I've got to tell you, those guys are tough enough that I believe them.
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Let's go to John and Indiana. John.
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Hi, John. And Jim, how are you doing today?
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I am doing well, John. How are you?
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Good. Thank you. First time caller, long time, Mr.
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Excellent. I have owned this stock for two plus years. Do I take my 65% profit or let it ride?
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Bank of America.
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Let Bank of America ride. It's very inexpensive. I didn't go much higher. I don't think it's going
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to be stuck at this level. And I like the way the financials trade very much. You'll do well with
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Bank of America. Stephanie in Colorado. Stephanie.
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Hello, Jim. Thank you for taking my call.
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Of course, Stephanie. What's up?
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I am calling you about a great little company called Celestico from Canada.
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Did you see that stock today? Did you see how beautiful that stock acted?
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Holy cow. I mean, the J-Bill was acting not nearly as good. I think J-Bill's
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going to come in, but Celestica, they better come on. I mean, that thing is just like,
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that's a freight train. It's going to Wesley in California, please Wesley.
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Jim bought the book. Sorry, I couldn't make it to 55557, but I bought it on the fan shop.
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No, you have to worry because they ran out of books. They ran out of books real early.
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So you didn't have to worry. You see, I didn't have any back pack, you know.
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That's okay. There's plenty of where I came from. Sorry.
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In 1995, I came down. Play for dinner.
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Easy, easy, Jim. Here's an easy one, Jim. Go, Missacks, buy, sell or hold.
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Buy. The stock is selling at a ridiculous little multiple still.
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It's hovering around this level. People are getting nervous at this level.
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It's going to blow through this level and you're going to wish that you got in right now.
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I look, this deal between OpenAi and AMD is a shot across the belt to all the other
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hyper scalers. Don't just see that.
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And I think they are right to be spending as much as they are to defend.
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And the billionaires who want to keep you in your chains, throw this at them or at least make
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them read it. All right, man, money tonight. With the release of Grand Theft Lotus SIX on the
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rise and I'm giving you my take on the Take 2 Interactive story. And I'm reviewing my cheat
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codes for this name. Then what's behind the latest move and shares of the electricity coming
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into the energy? I'm thinking, of course, look at that. Louisiana Powerhouse.
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And you called in and you just tell me what this is, it's an inspiring medical.
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I was out all about it. Why did the work I'm ready to give my prognosis?
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So you better stay tuned to Cramer.
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Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question.
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Tweet Cramer. hashtag mad mentions. Send Jim an email to madmoneyatcnbc.com or give us a call
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at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
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What made you confident that you could do something that hadn't been done before?
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I have no fear of failure. Trailblazing women, changing the game.
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One of my favorite pieces of advice. Think about what your boss's boss needs.
spk_0
Leadership can look in many, many different forms. It really does come down to just trusting
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yourself. Like, it's short and you just gotta think big to accomplish big things.
spk_0
Julia Boursten hosts CMBC Changemakers and Powerplayers. New episodes every Tuesday,
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wherever you get your podcasts.
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Even with a government shutdown, this has been a phenomenal market.
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With so many stocks approved for the year. But which ones can keep running?
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I mean, that's what you're going to know. Maybe even away from the data center.
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All right, let me give you a big one. Take two interactive.
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Five out of five! Yes, the video game powerhouse. You probably know from the
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iconic franchise. Grand Theft Auto, Red Dempshem, and NBA 2K.
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In the past couple of months, this stock has really caught fires. Now,
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it's probably 40% for the year.
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And part because with EA going private, there's a new new,
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new sense of scarcity in the video game space.
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But mainly it's because the next installment of Grand Theft Auto, GTA 6,
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comes out next May. This is one of the biggest franchises of all time.
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Maybe not just gaming, but any form of media.
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Some of the argue it is the number one franchise of all time.
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Until that comes out, though, take two shareholders, find themselves in a weird limbo.
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How much does the results even matter with an almost guaranteed blockbuster on the horizon?
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Well, they matter if the numbers are good.
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Take two important slated quarterback in August.
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So, for me, a strong top and bottom line beat.
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Net bookies reach 1.4 billion surpassing management's own forecast,
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as well as 1.31 billion number that Wall Street have predicted.
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As a result, despite the only 1.4 into their 2026 fiscal year
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management, they're confident enough to raise its full year forecast for both net bookings
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and earnings before interest tax depreciation and recession.
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That said, take two's guidance for the current quarter came in and taxed software.
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But the quarter was still strong enough to get the stock running.
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Plus, it's not like this is some tiny company that's doing nothing until the Grand Theft Auto
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Company franchise puts out its new addition.
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This is one franchise among many.
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On the Costco Management Highlighted, the continues to assess their NBA 2K franchise,
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the latest iteration of which already sold 11.5 million units.
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These sports video games are so terrific.
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You know why?
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Because they get to release a single new one every single year.
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There's a new one.
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And people buy even more impressive daily active users on 30% year over year,
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signaling healthy engagement.
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This serves in player activity also fueled a 48% jumping quote,
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recurrent customer spending.
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Because increasingly the video game companies find all sorts of things to sell you
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after you've already purchased the game, usually in the form of add-on content.
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Now many of the take-to's titles are still rooted in PlayStation X-Box and PC.
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But they have now rapidly growing mobile business too after the acquisition of Zingat three years ago.
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Under the company's peak mobile library, the label that's their label,
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match factory posted record net bookings, growing 33% of your year.
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To the blast also delivered another strong quarter, growing revenue is 22%.
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Very impressive given that it was up against some real tough compares.
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None of these though are grand theft auto.
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And certainly doesn't hurt to have a highly successful mobile business.
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And such is these casual mobile titles driving momentum.
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The mobile adaptations of take-to's core console games continue to perform with WWE supercard
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boasting more than 37 million downloads a day.
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So everybody's focused on GTA 6 for good reason.
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The last GTA theft came out 12 years ago and it's now sold more than
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215 million copies worldwide.
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They've actually seen a pickup in grand theft auto 5 and grand theft auto online.
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Which so new players accounts surge 50% year of year not bad for a game that wants a 2013.
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At the same time take-to's recent releases have been earning some rate of reviews.
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Following the success of NBA 2K25 and the newly released NBA 2K26 appears to be off to a very
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strong start. We don't have any official numbers yet but some analysts have been sitting through
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the available data and what they found is pretty encouraging. According to analysts in
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Cali, since an early September release NBA 2K26 ranked number 6 on the PlayStation's most
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playlist and number 11 Xbox's story is first full week of release. That's a step up from the
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previous iteration which peaked at number 13 on PlayStation number 18 on Xbox. Plus they also
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pointed out that Twitch viewership for the two NBA 2K franchise is up 34% versus the previous
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quarter. For those of you who are my age, Twitch is where your kids watch other people play video
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games. Not sure I see the appeal but then again I'm not the target audience.
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Take-to also mention that their 2K banner is working on a quote,
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college basketball experience end quote. Now we don't have any dislike without a towel.
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But it's been 15 years since the last NCAA basketball video game. Could there be a lot of potential
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here? Hopefully the players can get paid. What else? A few weeks ago, take-to launch Borderlands 4.
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Another big franchise that was apparently well received. Given that this franchise has sold
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over 90 million units, I gotta believe it makes good money. But honestly, far more important
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than the latest or underneath report is the simple fact that just last week, the old electronic
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arts announced it will be taken private at $210 per share by a consortium of private equity firms
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including the Sony Arabian Investment Fund, Silver Lake, and Affinity Partners. The leverage
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buyout came just two years after Microsoft acquired Activision Blizzard and the other huge American
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voice game player publisher. This was an industry with three major players but now with Activision
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going and EA going private, take-to is now the only major publicly traded American video game
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company that's a pure play. Now I think this is huge. Not only were some very sophisticated
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investors willing to pay a premium for EA, but take-to has real scarcity value now. If you
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want a traditional video game publisher, you either need to mess around with the Japanese market
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or bet on take-to. Sure, Microsoft and Sony have huge gaming divisions but most of their sales come
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from other businesses. That's why I'm feeling really positive on take-to right now. Even now,
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eight months before the next Grand Theft Auto comes out. If you bought the stock eight months before
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the last Grand Theft Auto in 2013, that was being January 2013, and then you hold it for the next
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two years, 130 creeper cent gain. Here's the bottom one. Grand Theft Auto 6 is almost guaranteed to be
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a major hit. And in the meantime, take-to is already firing an all cylinder. And once EA goes private,
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it will be the only pure play of market video game publisher that's publicly traded. Just keep
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in mind, if you're taking the plunge into take-to here, you have to be able to stomach any delays to
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GTA 6. In fact, you should expect delays. Video games are all like movies, which come out on
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a regular schedule. But I'm so confident and take-to that I actually hope that the next big game gets
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delayed. And the stock comes down hard, which would give you an even better buying opportunity.
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If you have money's back, get to the break.
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Coming up, the lights are on, and the servers are humming. Cramer on why data centers may be
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lighting up energy's future. Next. What made you confident that you could do something that hadn't
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been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite
spk_0
pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different
spk_0
forms. It really does come down to just trusting yourself, like the short, and you just got to
spk_0
think big to accomplish big things. Julia Bourston hosts CMBC Changemakers and Powerplayers. New
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episodes every Tuesday, wherever you get your podcasts.
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We need to talk about this incredible running. Ancure G, the normal and spatial electric
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tuning. We just see this stock move up from 87 to 97 in month. I mean, come on.
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Including some big moves just over the last two sessions. So energy hit a new all-time high
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today, which has become semi-regular currency stays. We've been stocked now up more than 28 percent
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year date money. This is a utility stock. What's driving this latest leg hire? Okay. Last Thursday
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night, energy announced that its Arkansas subsidiary will be powering Google's new four billion dollar
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data center in West Memphis. This is just the latest example of regulating utility catching far.
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Thanks to some new AI data center announcements. Yep, these sleeping utilities have done something
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incredible. They become growth stocks. When you hear me talk about regulating utilities,
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that means the profit margins are basically fixed by state regulars. Regular utilities are allowed
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to raise the rates gradually over time, but some odds with the process of submit requests and obtain
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approvals. So really, if these companies want to grow, it's not going to go up in pricing.
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It can only come from additional demand. Ports in these energy hungry data centers have
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costed unbelievable spiking to manful electricity. After aggregate U.S. electricity consumption
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was effectively flat for 15 years, from 2005 to 2020, the U.S. Energy Information Administration
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estimates that electricity consumption should grow at about 2 percent from 2020 to 2026.
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Many estimates now of electricity low growth more than that headed in the end of the decade.
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I think it could be as high as 5 percent. Now this is hardly a new story. The independent power
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regulators, I mean the producers, the non-regulated utilities that produce electricity and then sell
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it to the highest bidder. Oh man, you're familiar with the museum. They're stocks of reward.
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Here I'm thinking about constellation energy, viscera energy, energy and talent energy.
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Ever since strategy between launch to the end of 2022, most of these are up between 315 percent
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and 825 percent. But it's taken longer for Wall Street to realize that this team is so big
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that it's turned the sleepy regulated utilities into winners too. Take the energy, which I've
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been recommending for a while. This company held a bullish annual speedy way back in mid 2024,
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where management detailed how data centers as well as liquefied natural gas terminals,
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some other industrial end markets were driving elevated demand for power in their coverage area.
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We asked about the energy GCO, Drew Mars, a little less than a year ago, and he was almost
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giddy at the scale of the opportunity here. At the time of the interview, Mars teased the
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large forthcoming customer. And just a couple weeks after that conversation, we found out that the
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customer was met up platforms, which is about a $10 billion data center in Louisiana.
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That said energy stock flying and it has not looked back since.
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I select it here, even after this magical run. Sure energy now is looking. It's
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had expensive here, trading in 25 times this year's earnings espusome. I used to pay it only
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that much for electricity. But I'm going to pay up for a dependable company with accelerating
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earnings growth. Plus the stocks are actually going to look cheaper forward. It sells for roughly
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22 times extra stupors. And I expect more data center announcements that will send this thing
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higher and then higher again. It's got some new too. It'll take many years for these to pay off.
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But again, this is the first time in decades that the regulatory utilities have anything remotely
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resembling a growth story. There are plenty of other regulatory utilities with similar dynamics.
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Take the minion energy, the rich from Virginia based utility, that I'm basically on the east coast
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down the South Carolina. Not long ago, Dominion was a bit of a trouble company, spreading itself
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too thin with major investments in renewable energy generation, including a very costly offshore
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wind initiative that turned into a quagmire, most among wheeling natural gas assets.
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But the story has been simplified significantly over the past couple of years.
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After a matchment rained in, the renewable investments in simplified its business,
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including with the sale of three gas distribution businesses to emberage for $14 billion last year.
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Ever since that emberage deal closed last year, Dominion has just been a juggernaut.
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The company now has a much cleaner story, one that's centered around providing a dependable
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growing supply of power to many data centers in northern Virginia. According to management,
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there's total data center power capacity under contract has almost doubled in just over a half
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a year. Best of all, the stock sells for 18 times this year's resesments, with a hefty 4.3%
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dividend yield, so cheaper than energy. Even some of the nation's largest regulated
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utilities are finding that this seems a needle mover. Like AEP, a market-level power.
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The Columbus Ohio based utility that maintains the nation's largest electric transmission system,
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and is also one of the country's top electricity producers. AEP's had a tremendous run this year
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with a stock up 25% year to date thanks to low growth in the data centers and that's hiding right
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in your plain face. It's so big. We should all figure it out. When a market-level power last
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reported in late July, the quarter was excellent. The stock jumped 4% in response. Some of that's
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because the numbers were generally strong, but a lot of it came from management's commentary
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all about the demand growth they see in the future, driven by new data center customers,
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including Google, which announced the new $2 billion data center, Caperson, Indiana,
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right in AEP's coverage area. So Google's helped out multiple utilities with its data center
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plans. On the last conference call, AEP's headed now projects a staggering 24 gigawatts of
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new customer low by 2030, which was a 14% increase from what they forecast just three months before.
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That's how fast the story's moving. At the same time, AEP said its customers are actively looking
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to connect an additional 190 gigawatts of low to their system. That's roughly five times the
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current system size of 37 gigawatts. CEO Bill Firman called the low growth quote, unprecedented.
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But he said that AEP is soon to address this challenge because it has such an advanced
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transmission network. We mostly don't have a great election created in this country,
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people, but that's nothing AEP needs to worry about. Stock cells for just 120,
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this 20 times is your service. Solid 3.2% dividend yield. I am a big fan, I've been for 20 years.
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So where's the bottom line? In the grand scheme of things,
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introduced new deal with Google to power a data center project in Arkansas is not that big a deal.
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But it's just the example of the latest one of many examples because the AI data center
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build out requires an immense amount of electricity and that's turning regulating utilities into
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growth stories practically overnight. I like energy, dominion of energy and emergency power.
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All three with so many data center projects, I wouldn't be surprised if the whole industry is a winner.
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Let's go to Randy in Washington, Randy.
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Oh yeah, Jim.
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Oh, yeah, Randy.
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First time, long time won't be the last time.
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Oh, I know.
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So my question's on Acklow. Open to position early September 72,
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three weeks later, it's at 140. So I sold half my position because as we know, hogs get slaughtered,
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pulled back to 110. It's on the move again. My question, should I buy now or hold for a better price?
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You've got a really good position and you don't mess with it. I was joking with Jeff Marks,
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they said, why don't we just go buy some alcohol? I can't take it anymore. That's how I talk all the time.
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And he said, well, I will be doing. I said, because it's just something to go on.
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When you hear someone say that, even if it's me, I'll tell you what you do. You don't touch it.
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Let's just stay the course. John, in Missouri, John.
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Hey, man. Thank you for digging the cold. Long time listening. I've done real well,
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taking your advice, but oh, thank you, boss. Thank you.
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I got one hand kind of concerned about its EE,
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exhalicated energy. Yeah, you know, I looked at that. I don't think you have, I mean,
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first of all, energy is in one place to be, but second, that LNG terminal service, I thought
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it was going to be great because we don't have real deep water there. But I just feel like I've
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just read in the rusty Brazil stuff. I just can't be excited about it. I'm sorry, I just can't be.
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All right, look, I like energy, dominion, and American luxury power. Those are like three
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huge ones. They're really easy. I mean, I think they're going to go up solely over time.
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But with so many data center projects, I wouldn't be surprised that the entire industry wasn't aware.
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Watch for my man money, including my deep dive on a little known medical play that you called
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about. Now, with the government shutdown, where can we turn to get good data about the state
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of the consumer economy? I'm citing all my sources for you and all your calls, rapid-priorization,
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and lightning round to stay with Kramer.
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Okay, so let's find out. Get this call from Andrew and Dorke-Lyne. Why didn't I about
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inspire medical systems, which is a company that's come up with a minimally invasive procedure
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that's an incredibly effective treatment for obstructive sleep apnea,
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where your airways close up while you're asleep. I tell my guy to look into this one because
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anything related to sleep apnea has been eviscerated by the rise to the GOP-1 weight loss drugs
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for me, like only a noble norris. At doing some research, I've got to tell you a few things in
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this business are more important in timing. Inspire spent years working on incredible technology
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to replace the current standard of care for sleep apnea, a disease that impacts 30 main Americans,
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and its linked to high blood pressure, strokes, heart attacks, and many other serious problems.
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For a long time, the standard of care here is a kind of face mask hooked up to tubes and a
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machine. It makes you look like you're on your deathbed, or if you get one of the sleeker ones,
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it can double as a nice costume if you want to go as bang from the dark night rises for a Halloween.
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We've had rest men on the show many times, and over the years they've made a fortune
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for these machines. But obviously nobody wants to soak themselves up to a whole
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ropper out of us to get a good night's sleep. And that's where Inspire came in with just
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brilliant idea. They implant a little neuro stimulation device near your collarbone that helps
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keep your airways open, and the efficacy numbers for the latest model are incredible. According to
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the company, 91% of patients say it's better than the breathing machines. 79% report reduction
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sleep apnea events. Most of the 90% of bed partners report limited to no snoring.
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God, I get one of those. All right, anyway, Inspire for Skydeptia approval for the original
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system 2014 by last year was already an eight or a million dollar business. Last summer,
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they received approval for their fifth generation model, which was even better than what they had
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already. Finally, Inspire looked like it could take a ton of market share from the CPAP machines
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and rule the sleep apnea business. Unfortunately, they were about a year too late,
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because the GOP-1 weight loss drugs have proven to be incredibly effective treatments for
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sleep apnea. The number one cause of this condition is obesity. Now that there's an anti-obescent
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shot, every stock connected to it as sleep apnea has suffered. Inspire peaked at $330
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mid-July of 2023, and as of today, it's trading at 76 bucks in change, a staggering 70%
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of 70% decline. Mostly because Wall Street's worried that the GOP-1s will solve sleep apnea,
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before too many people can benefit from Inspire's technology. Because CPAP machines are so
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cumbersome and because Inspire's solution involves a surgical procedure. The first thing doctors
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tell anyone with sleep apnea is that they should go to lose weight, willpower, and losing weight
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has become a lot easier over the past couple of years thanks to GOP-1s, which are better than willpower.
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We first started to see GOP-1 concerns enter this market right around this time two years ago,
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with everything from package food companies to other healthcare names like Inspire, taking a hit
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once investors began to suddenly price in what the rise of GOP-1s might have meant.
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Who knows? But while other sleep apnea plays like RESTMED, managed to bounce back from their late 2023 low,
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they'll better respect their earnings. Inspire kept sliding lower and lower. Why? Because
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RESTMED has been able to report a series of good quarters. Inspire simply hasn't. Now,
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some of that slated execution issues like our limited product recall last summer because of
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a manufacturing defect. The stock did get a lift when Inspire's latest device was approved by
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the FDA last August. But in the months afterwards, it gradually gave up those gains. The reasons for
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that are pretty messy. For starters, the new device hasn't been selling as well as they expected.
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At the same time, back in February, management disclosed they were cooperating with a kickback
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investigation by the department of justice. By the way, we haven't gotten any update on that
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issue since the disclosure. That news broke alongside Inspire's fourth quarter, 2024
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earnings report, overshadowing what was actually a pretty solid result for the company within much
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better than expected outlook for 2025 and in early May, Inspire delivered another better than
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expected quarter. But the last time Inspire reported in early August, the whole story fell
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apart. While Inspire actually managed a small revenue beat and a size more earnings beat,
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nobody cared about that because management cut their full year revenue forecast by 4.5% and
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slash their earnings forecast by nearly 80%. That was devastating. After previously guiding for
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2020 since the 2013 sense of earnings per share, they now say it's going to be more like 40 to 50
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cents. That's bad. The problem. Apparently, the launch of Inspire's next generation to sleep
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out in an implant simply isn't going that well. A lot of the surgical centers that installed these
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things simply don't have the training to handle this new one. At the same time, there was a change
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to Medicare and Medicaid billing policy that made it impossible for the surgical centers to
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bill products until July 1. Management believes that they can turn this thing around now that most
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of the problems are in the rear of the mirror, but the guidance was disastrous. On Inspire's
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last conference call, CEO Tim Herbert gave a lengthy explanation of what is going wrong with
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the Inspire 5 launch, specifically calling out five different things that have hurt, including
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the ones I just mentioned. But the fifth and final factor is very simple. Listen to this.
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Quote, some patients may be delaying Inspire Therapeutic TriG-GOP-1s and quote,
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management wasn't able to quantify the impact and they continue insist that GOP-1s
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will be a work of positive because tons of people are actually two of obese to get Inspire's
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implant. They argue that the GOP-1s will increase their total addressable market by helping those
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people lose weight. I'm not buying this one bit. It feels like a crazy argument to me to make
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when you're cutting your earnings forecast by almost 80%. One part of the GOP-1s have proven to be
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incredibly effective treatment for sleep apnea, even before they make you lose lots of weight.
spk_0
Lily Zepbound has already been approved for this treatment for obstructive sleep apnea and the
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others are all in clinical trials. In the end, I can't give Inspire med my blessings because it really
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does seem like the company is being hurt by the GOP-1s. Something even management is finally acknowledging,
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but look, it's not just the GOP-1s issue got a bad track record. They've had one execution issue
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after another after another. Their latest product launch was in nightmare. If you want to play
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sleep apnea, respire has been still pretty up good numbers, which is why that stocks up 23%
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for the year. Here's the bottom line. In a world without the GOP-1s, Inspire might be a very
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exciting story, but that's not the world we live in. And from the worst of things, the GOP-1s
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may be eating them alive. Maybe this company can finally sort out its short-term execution issues
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and try it, but I'm not going to hold my breath. They have my news back here in footprint.
spk_0
It is time to light welcome back. The same name is talking to everybody. I just heard
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no questions. I mean, I pretty definitely. And then the light browser. Are you ready, Steve?
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Dad, time to light round crimson buds start with Tom and New Jersey Tom. How you doing, Jim?
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Doing well up at you, Tom. I'm from New Jersey. All right. I was going to stop your opinion of
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remotely global. Well, that's to remit for immigrants to be able to rip money. And I think
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that's a very challenge group right now. And I don't think you want to be there. I rather just
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be the traditional bag. Let's go to Edward and Texas. Edward. Jim, my favorite person.
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Thank you, buddy. What's up? It's like, you know, I've been doing homework as you want us to do.
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And I'm looking at upbound group. That model, that's at least no model has not been a proven
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model. I do not like it. I am sorry. Let's go to Gregory and California Gregory.
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Well, 2025 is turning into a magical year in more ways than one. Jim, congratulations on
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20 years of mad money. Congratulations on your new book. I hope you've been a great host.
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And I hope to get to see maybe your hair tomorrow. Are you here tomorrow?
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I'm going to see what that post. That's right. That's right. All right. Let me help.
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So I can't believe I'm asking you about this company. I mean, it really sounds like I found like
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a one of the companies you want us about in your weekend piece for the club. The balance sheet
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looked like frankly, a word I can't say on television until very recently. But last earnings,
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they announced a ten and a half billion dollars sales greatly improving the balance sheet.
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Have I been drinking too much fuss for a while or will choke Kramer bless a small spec position
spk_0
in con scope? You know, I got to tell you, I think the real Gregory, I know that I feel awful that we
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missed the big run. But you know, there may be another run in that one. I think that you're not
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drinking the first four. I think you're fine on that one. I know that sounds strange, but I really
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think you're fine. And thank you for the really great comments. Let's go to Frank in Texas now.
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Frank. Hi, Jim. Today, I'd like your opinion on USAR Rare Earth. Okay. Now we did a piece last week
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on Rare Earth companies and we said that they're all speculative, but we recognize that the president
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and a given moment could take a stake. I am going to say that this fits that pattern and we are not
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going to fight you to take it now. It's not like I'm just saying you can buy any one of these.
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I am saying that there's a White House talk trumped stake. That's what we're concerned about.
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You can play that. Remember, that's what you're doing. You're not playing the Ernie says,
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you know, they aren't it? Let's go to Carl and Oklahoma Carl.
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Jim, we welcome the servers appreciate all you do for us. Oh, great. Thank you.
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And for our appreciation, we give you and the Eagles, Jaylen Hertz. I hope that's working out
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for you. Oh, he's terrific. It's just he's a little bit more offensive coordination there. So
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to speak. What's happening? The stock I'm talking about was wrecked and made by the same guy that
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is recommended in video back in 2015. It's global. But it's not doing as good. What?
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Coach, you'll be. What the heck is that doing down there? I don't know why that stocks down like that.
spk_0
That's terrible. We got to do some work on that. I got to find a bin, Ben Sturder,
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Reacher Strow. We'll find what's in the middle of the co-op. Okay. And that lays on the conclusion of
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the lightning round. The lightning round is sponsored by Charles Schwab.
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Coming up, Wall Street's worried, but Kramer says the consumers still got cash. His take on the
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real state of spending. Next.
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All right.
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Every morning I start my day looking at what the research says. I know that might sound
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alien to you. I mean, who reads all the research reports for creating an opinion?
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The answer is simple. I do. Jaylen, we got a lot of research about how the consumers in
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the entire world are going to be able to do that. I know that's a bit of a shake shack.
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Bob Johns may be too expensive for some people. I've been a big fan of shakesack stock. I was
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proud to learn to customers who are being hurt by the price of beef and a softer economy.
spk_0
Burger has got a little pricing, but I didn't think it was make a break. This morning Matthew
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Boss, I was going to be the best retail analyst out there from JP Morgan, downgraded Applecrombian
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Fitch and Bath and Body Works. You wouldn't do that if you thought the consumers were paused.
spk_0
Lots of these analysts choose to blame the government's shutdown. And the idea that the president
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might use it to make a statement by firing a lot of people going after the deep state.
spk_0
It's one thing that 900,000 people not being paid as part of the furlough. That's the high
spk_0
assessment. It's another thing to have a president that seems to help out on canning a lot of
spk_0
federal employees. You probably don't want to do a lot of spending if you think that's what's coming.
spk_0
Instead, you save. Especially because there seems to be no resolution to foot whatsoever.
spk_0
That's it. I'm sticking to my thesis that these shutdowns really do less in damage to the economy
spk_0
or the stock market. Still in the absence of actual employment data not available because of
spk_0
the furloughs, we really don't know our employment numbers. But the reason what the reason why I
spk_0
think the research is is treading toward that way is exactly because they have a feeling that
spk_0
the number is going to be quite bad. Oh, and there's the working layoff machine that is
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artificial intelligence. We almost someone including ourselves who could be let go to make room
spk_0
for something like an agent force, the sales force AI platform. Let me tell you what I think.
spk_0
Right now, we're still seeing a robust economy as measured by the land of Fed within economy.
spk_0
Their saying it's got a 3.8% GDP growth. According to the latest live forecast for the
spk_0
third quarter, we haven't seen any real shortfalls from any retailers save Lulu Lemon,
spk_0
which we know is very expensive. We've gotten terrific numbers from the cruise lines. And yes,
spk_0
I know that a cruise is a bargain relative to a lot of other vacations, but cruise reservations
spk_0
have historically dried up in other downturns. You don't take vacation if you're worried that you're
spk_0
about to get laid off. Meanwhile, we've had solid figures on bank loans and credit cards.
spk_0
In a real downturn, you expect the big surge of the league with these in bad loans, but that's not
spk_0
happening. And then there's the most important indicator, the incredible merger between
spk_0
Comaric and Fifth Third announced today. We're fifth third, a very strong bank is taking on
spk_0
the Comaric of Colossus. Now, Comaric doesn't have a lot of bad loans anymore versus the old days,
spk_0
but the stock's done nothing for years, which is not a good sign. Banks merge and take on other
spk_0
troubles only when they're so confident that they won't be acquiring a lot of bad loans.
spk_0
It's too risky otherwise. What a sign of strength. It is true that we've seen an increase in
spk_0
traffic at discounters. And here I'm speaking about a Costco or Walmart or TGAX, as well as the
spk_0
$1.5 dollar stores. But I think the idea of value has become a constant of late.
spk_0
People are sick and tired of high prices if you're years of inflation. That doesn't necessarily
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mean though that consumers in bad shape. The stocks that have been doing poorly in retail have been
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doing poorly for ages. We can't attribute the consumers' frugal behavior to any economic
spk_0
weaknesses because we've seen that same economic weakness for a while now. In short, the weak
spk_0
consumer narrative should be retired. Outside of Washington, I think the country's doing just fine.
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Washington is a powerful enough influence that we may see and feel weakness that's not really there.
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And that's what I think the research is falling for. I'd like to say this always,
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we'll mark it summer. Promise to find it just for you right here at Mad Money. I'm Jim Kramer,
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and I'll see you tomorrow.
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All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not
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reflect the opinions of CNBC, NBC Universal, or their parent company, or affiliates, and may have
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been previously disseminated by Kramer on television, radio, internet, or another medium. You should not
spk_0
treat any opinion expressed by Jim Kramer as a specific inducement to make a particular investment
spk_0
or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are
spk_0
based upon information he considers reliable, but neither CNBC, nor its affiliates,
spk_0
and or subsidiaries, warrant its completeness or accuracy, and it should not be relied upon as such.
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To view the full Mad Money Disclaimer, please visit CNBC.com forward slash Mad Money Disclaimer.
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Visit CNBC Changemakers and Powerplayers. New episodes every Tuesday, wherever you get your podcasts.
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