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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramerica. My friends, I'm just trying to save a little bit of money here. My job is not just to entertain on days like today, but also to teach you. So, call me at 1-800-743-CNBC with Mitchum Cramer. Maybe we didn't deserve to rally from the lows in late July. Now that's how I'm really beginning to feel about negative days like this one. Dow lost 419 points. S&P dropped 0.1%. The Nasdaq fell 1.03%. Sour, nasty.
I say that reluctantly because on any given day there are plenty of things to like, some individual stock stories that are terrific. Novartis' new drug for MS. Sierra bounces back from negative news from the California legislature. Hal Met rallies after he realized Elon Musk can't hurt their base aircraft business. The health insurers are robust. The dollar stores stayed strong. New Apple CEO John Turners got a terrific welcome with the stock running up 2.6%.
But there is a simple fact about what happened today. We had that kind of episode that we're really getting used to these last six months. Tensions with Iran heat up overnight. The president lets loose missiles and tough postings to retaliate. The price of oil then rallies more than 5%, causing interest rates to shoot up this time to levels we haven't seen in ages. Sell, sell, and the stock market retreats regardless of how the vast majority of companies are doing, and they are doing very well.
Oh sure, there can be exceptions. Tonight Dell reported a quarter that's so strong it shouldn't change people's minds at least about Dell, maybe about tech. One of the best quarters I've ever seen, but it can't ignite the entire market and might not even ignite the AI trade because of the litany of woe that I just mentioned. Is the litany correct? Okay, there's a very compelling question because you have to ask yourself, can this happen over and over again? Can the president keep firing missiles towards Iran to try to stop the Iranians from mining or bombing the state of Ramuse, which will always raise the price of oil, which then always raises the price of money, also known as interest rates, and then causes a sell-off in the stock market? The short answer is yes. Might be able to happen for days, I don't know, maybe weeks, months. It's a nasty chain.
One the Treasury Secretary hoped to stem by buying back long-term bonds. The bond market doesn't take that seriously, though. In part because higher oil prices are incredibly inflationary, but also because this new Fed chief, Kevin Walsh, he seems eager to stamp out inflation, even if that means raising short-term rates. Yeah. Funny thing, when he spoke on Friday, this Fed chief sounded a little bit more like the much revered Paul Volcker, the Fed chief who took rates up to 20% in the early 80s. Volcker was willing to cause a ruinous recession as long as he could get inflation under control.
That man meant business. He was a rigorous practitioner of the game. I sense that Walsh wouldn't hesitate to do the same thing if necessary. Remember, at the time, Volcker was the most hated man in America, but by the time he passed away, he was considered a hero. What matters though, as long as we've got this on-again, off-again war with Iran, it can derail a rally at any moment. Now, I could argue that we deserve exactly what we got today. Oil's going almost all the way back to where it was at the beginning of the war. That makes sense, as the world's strategic petroleum reserves are now all running low after months of conflict.
Refineries have been running full out for months, way past when they're supposed to be closed for downtime. Much of what we buy at stores is trucked in with very expensive diesel. Diesel, gasoline. Wow. Truckers, they have pass-throughs. Supermarket then passes the cost to you. Grocery stores have gotten real expensive. Hence why the dollar stores are thriving. Higher oil is like a tax on the entire system. It increases the price of your commute. It impacts vacations. It jacks up ticket prices. It infiltrates construction costs. It's insidious and omnipresent. And it's getting worse and it matters.
So, when you see a day that starts okay and then falls into the fire and brimstone trade, the cascade of red ink washes over pretty much the whole market, what can you do to protect yourself until this rinse-and-repeat cycle with Iran is over? All right, let me tell you what I'm doing for the investing club. Anyone who's a member knows this because it's pretty darn draconian. First, we've raised our cash position for the travel trust to more than 15%, which over the 25 years of its existence is extremely high. We want it that high because without a true end of the war, you don't know when the Iranians will provoke the president by firing missiles at oil tankers or our allies in the region or maybe our bases there. We don't know when the Iranians are going to mine harbors. The Iranians want higher oil prices. They've gotten very good at that.
At the same time, we don't know when our president will post something provocative, which is equal to about a 1% move in oil or a few basis points of interest points and a quarter of a percent decline in the market. When the president responds to bill entirely, you get about a 2% increase in oil, many more basis points for Treasury yields and a half a percent decline in the majors, particularly the NASDAQ. We had a more than 5% move in oil today and rates rose all over the world. And our markets were clobbered. Oh, I wish it weren't this cut and dried, but we simply aren't in an environment that's conducive to big capital gains, especially during September, which is historically the weakest month of the year.
Second, we want to slim down our data center exposure and replace it with more healthcare. The data centers become a major battleground and we will, you know, it's going to stay that way until the election is over. Rightly or wrongly, these things are very unpopular. If the anti-data center cohort wins in November, we'll be glad we lightened up. We can always buy them back in November, but for now, we don't want to give back our gains. That would be sinful. We're also anxious to see if there's a positive reaction to Dell that lasts throughout the day. What a good quarter they had. But if we get another presidential smackdown, it might not last.
We sold one of our absolute favorite AI infrastructure stocks today because I suspect we'll be able to buy it back lower and I will not let a gain turn into a loss. We still have some semis and we own and not trade Nvidia and Apple. But we're not fools. We can read a screen. These stocks are all heavy, meaning there are sellers every step of the way. The semis especially versus say healthcare which seems to levitate regardless of what happens. AI trade is very rough because of the macro backdrop. Not the micro, meaning anything company specific. Micro is still strong but now it doesn't matter.
Third, we understand that we have to be more nimble. When we sense that everyone feels like us and there are many more negative people out there than there are right now, we'll be happy to put some of that trust cash to work. But the bottom line, when you have a volatile situation with oil and a president who's volatile himself, along with volatile interest rates, you need to be a little more concerned about the volatility. As this market gravitates from exuberant to negativity and the dip buyers, especially those involved with artificial intelligence, now go unrewarded.
Let's go to Gary in Illinois, please. Barry.
Hey, Jimbo. Calling you from Bloomington, Illinois. But I grew up in Philly. You a Go Birds instead of a booya. You okay?
I like your Go Birds. Yeah. Actually, we play the Commanders at first. That's going to be like a pre... Yeah. It's like a preseason game. What's going on?
Yeah. Yeah. Hey, just real quick, me and my dad grew up watching you all the way back in your Cuddlo and Cramer days. Say thank you. And my question's on Caterpillar. Don't really know how to value it with all the AI stuff bumping around and want some information.
Well, Gary, it's funny you say that because isn't it, if you repeat what you just said, isn't that the problem? Since you don't know what to value it, what do money managers do? They sell. And that's what's going on. They're looking and say, 'Oh, it's 28 times earnings. I'm used to catch trading at 16 times earnings. I don't know if that's right. Why don't we sell it? We can buy it back.' And that is what you're running into. I want to go to Jim in my home state of Pennsylvania. Jim.
YouTube. Hello. How... Hello, Jim. How you doing? I'm doing fine, Jim. How are you doing? I'm great. Thank you for taking my call and thanks for you and your team and all you do.
The team is so good. I love the team. Let's go to work.
Jim, I want to ask you about Marvell Technology. Is it a buy now?
Okay, this is another one that proves my point. Marvell reported an amazing quarter and what they then said was, look, listen, maybe our big win won't be till 2029 or it's going to be pushed back. They have an October meeting at the beginning of October, their analyst meeting, that's going to tell us what's going to happen. I don't feel comfortable until I see what they say before I say just pull the trigger. All right.
In a situation with this much volatility on all sides, you have to keep expectations low. Those who buy the dip are no longer being as rewarded as they used to. It's just that's okay, man. Tonight, Palo Alto in the movie after earnings. I'm sitting down with the CEO to find out what the quarter says about the state of cybersecurity. Then Dell just delivered the latest results. Holy cow, can the AI server boom keep power in that stock higher? I got the exclusive. Plus, CrowdStrike, Nvidia, Intel, OpenAI. What do they all have in common? Their top executives all took the stage at CrowdStrike's Falcon Conference today. I'm going straight to the conference floor to get the latest from CrowdStrike CEO George Kurtz. Mad Money is back after the break.
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The cybersecurity stocks have been climbing steadily higher for months now. Ever since Wall Street figured out that this industry wouldn't be made obsolete by artificial intelligence. Take Palo Alto Networks, a longtime holding of my travel trust. Here's a stock that's more than doubled from its April lows to its highs a few weeks ago. That's why it's been pulling back. It's going into earnings. When Palo Alto reported after the close, they delivered a much better than expected result on almost every key line. Plus, their guidance for the current quarter and the full year were both very strong. Now, is it enough to get the stock running? Let's dig deeper with Nikesh Arora, the chairman and CEO of Palo Alto Networks. Fresh from his conference school. Mr. Arora, welcome back to Mad Money.
Nice to see you again, Jim.
Yeah, I miss you, Nikesh. You had some quarter. I mean, I was just looking at some of the facts. This stat, roughly 220 net new platformizations the fourth quarter, double the 110 from the last quarter, not year-over-year, but the last quarter. What's going on?
It's Q4. It's party time. Jim, look, you know, nine months ago, I said we were guilty and convicted of near death because AI was going to eat our lunch, breakfast, and dinner. It seems like that's not the case. Seems like we're going to have to have the feast with them. And, you know, the Mythos moment has just become a net new beginning for the cybersecurity industry because the world has realized that we have to pay attention to cyber because AI is going to be weaponized by bad actors and they will need the large players in the cybersecurity space to help protect them. So, I think that's what we're seeing. We're seeing the early signs of customers wanting to adopt platforms. We're seeing the early signs of customers wanting to get a head start on what is coming with AI getting better and better at cyber attacks.
Well, you're talking about the need for accelerating the urgency to modernize $1 trillion of legacy security. That just means hackable security. A trillion dollars worth.
Well, think about it. If the average life is seven years and you're spending $230 billion a year, you got a trillion dollars of security infrastructure that's out there. Nothing that was deployed seven or ten years ago is prepared or ready to handle AI at machine speed. So you have to make sure that you have to rethink your cyber architecture. You have to make sure that you are ready for what's coming down the pike from a bad actor perspective. And that's where the $1 trillion and the need for modernization comes from. Not to miss the fact that on top of that, you're going to see $5 trillion of capex spend in the next five years with people building AI data centers and having tons and tons of agents running around. You also have to build a net new security stack for that.
Nikesh, how worried are you? I mean, there are too many companies that are not protected. And if there are that many companies that are not protected, we've got all these agents running around. How can we stop them? What is Palo Alto doing to stop them?
Well, the good news is, Jim, that, you know, we have been very consistent in our approach of making sure that we build an AI-first product. You and I have talked about this over the last few years. We built a brand new product called XIM. We bought a company called Chronosphere which focuses on AI-driven observability. We are focusing the AI security operations and IT operations space. We've always had this ethos that AI was going to be big and that's the one thing I brought with me from Google when I worked there ten years ago, that AI was going to be big. Not wasn't quite sure when and how big, but that's where the ethos of Palo Alto is, that we have to build something that is able to work at machine speed and resolve security incidents at machine speed. We've been able to get ourselves to one minute of resolution. We think we can get our customers there.
The good news is not all customers are unprepared. Many of our customers have taken that bet, have worked with us to go deploy XIM as a capability. Many of the customers are having immense conversations. And I'll tell you, finally, Jim, I've been trying for eight years to tell customers they're not ready. And Dario did it in one event just by launching Mythos. He made every CEO aware that AI has capabilities which we have not all ever thought about. And that's been an amazing tailwind where CEOs want to reach out and talk about how do they modernize their infrastructure? How do they get ready for what's coming from a vulnerability discovery perspective? That's been great.
Are governments ready, Nikesh?
Well, governments have a phenomenal property because a lot of them are not cloud-first because they've been very particular about air-gapped systems, about sovereign systems. To be fair, they actually have done a much better job. You know, and not a well-known fact, but governments spend seven to eight percent of their budgets on cyber. Enterprises spend four to five percent of their budgets on it, on cyber. So I have to tell you that many of the governments are well-prepared and they have very, very qualified people historically, like our NSA or people of equivalent ilk around the world. They have a lot of capability from a knowledge, security, and offense perspective and they've seen the worst attacks or worst attempts in the world. So I think they are aware, they are prepared, and whether or not they're making sure they're going to be prepared.
Well, what kinds of companies are calling to find out about your AI Critical Defense program that you announced, Jim?
We've had about 2,000 companies that we've had a conversation with. So, what we've been able to do is, thanks to our friends in the frontier LLM space, we actually are the first certified commercial partner for Mythos. So, we can actually bring Mythos with our people and test our customers to see how vulnerable they are. Not just on Mythos, we can also do that with OpenAI's 5.6 cyber. So we actually come with multiple models, test our customers, work on a plan to fix what we find with them, and also work on a plan how to modernize their infrastructure going forward. So that's 2,000 conversations. Not everything's going to happen next quarter, but all I say is this changes the long-term growth rate and duration of cybersecurity, not just for Palo Alto but as an industry, because suddenly people are paying attention that you cannot deploy AI successfully if you don't get cybersecurity right.
Now, at one point there was actually a question about platformization from some cat-calling analysts. I think in retrospect it was probably the single best thing that Palo Alto has done.
Well, three years ago, we took a few punches because we said we're going to go towards this notion of platformization. And it's kind of historical if you think it's happened with our friend Mark at CRM. It's happened with Workday. It's happened with ERP. It has to happen with cybersecurity. That is the right answer. When multiple systems are fragmented, they cannot talk to each other at machine speed. You have to have systems talk to each other. You have to have them be together. You have to have them be integrated. And I think AI is just going to make it more sort of important for us to get it right.
How many companies are ready with a kill switch to stop the agents?
I think the agent security space is going to be a net new amazing space. Jim, I think there's a lot of innovation that's happening on the AI front. Every three few months we see net new innovation. We had the OpenClaw moment, the Mythos moment. We're having an open-weight moment in AI. I think that's going to keep evolving, but customers are not fully ready to deploy the kill switch. And we all read about things like OpenAI models escaping and hacking Hugging Face. That puts a bit of a fear in the minds of our customers saying, I don't want rogue agents in my infrastructure. I want to make sure that these agents can be identified, can govern, and can be stopped midstream if required. So even if you don't have a kill switch, you definitely need the ability to intercept agents and stop their activity. And that's some stuff that we're working on with our customers.
And what will Console Soul do to help your suite?
You know, one of the things, Jim, in addition to building security for our customers around AI, we also have to become an AI-native business. We have to have our products be AI-first, and Console is a phenomenal team that has been working as an AI-first capability around security and IT operations. So, all the work we're doing with large amounts of data for our customers needs to become AI-native. This team is going to help us get there. This team is going to work especially on the IT space, but also help us identify our entire security operations space. Very excited about this team.
Okay. So the Mythos moment, since then, what has your life been like?
My life has been great. You know, it's much better when customers call you than you have to go chasing them. So, you know, once in a while it's good to be sitting at the other side of the phone call as opposed to constantly begging for attention from a cybersecurity perspective. But I think it has fundamentally changed the awareness levels of boards, the awareness levels of CEOs, the awareness level also it's coupled with the whole desire for, you know, CEOs are paranoid, they don't want to get sort of loose in this AI race. And remember the 1999 get the internet race and a lot of companies were left behind because the internet created a whole new categories of companies. I think this time we're all resolute not to become the has-beens and that's causing CEOs to get more assertive, understand AI, deploy AI. And the moment to think about that, the first thing they want to know about is, well, how do I know this is going to be secure? Because there's so much uncertainty around it. So it's been great.
All right, my trust is a happy shareholder because we got a happy Nikesh because this is a monster quarter. I want to thank the cash roar chairman, CEO of Palo Alto Networks, who's been in this the whole way, understood that this could happen. Thank you so much, Nikesh.
Thank you, Jim. Thanks again.
Excellent. May's back after the break.
Coming up on the heels of a quarter for the ages, Cramer's talking to Dell's CFO to see if the company can still power higher. Next.
Dude, you're getting a Dell. Specifically, a blowout quarter from Dell Technologies. After the close, this iconic maker of tech hardware reported one of the best quarters I've ever seen. Thanks to the incredible strength of their AI server business, Dell's revenue growth 58% year-over-year. A $2 billion beat. Company earned $74 per share. That's more than $2 above what Wall Street was looking for and more than triple what they made the year before. And the guidance was even better. They took their full-year earnings per share forecast from just under 18 bucks all the way up to 25.50. Stunning definition of blowout. Let's check in with David Kenny. He's the CFO of Dell Technologies. Get a better sense of the quarter and what comes next. Mr. Kennedy, welcome to Mad Money.
Okay. A wise man, Michael Dell, once said, there's an old Texas saying I might have just made up. If you keep growing earnings per share 200% plus, year-over-year, something good will happen. And what good is happening there?
Yeah, an outstanding quarter for sure. Record revenue of 58% growth. Our EPS is $74 in Q2, up over 200%. And obviously a shareholder return record also of $4.3 billion. Look, what we're seeing is this acceleration and appetite for infrastructure. It's more broad-based. It's across the portfolio. And our job is to serve as many customers as we can as we envision and see it come working through. Look at AI server. $61 billion of demand in Q2. If we're keeping count, that's $132 billion in a 12-month trailing assessment. And we're now shipping $1.5 billion of AI every single week. It's this acceleration, it gives us the confidence to take up our guide to $192 billion for the year, up $25 billion. And like you said, that EPS number, 25.50, which is almost equal to the last three years combined.
It's incredible. Incredible. Now, David, traditional server demand, which I probably didn't really think would be that great, was incredibly strong. That's on-premises demand. How's that possible?
Yeah. Look, I think it's undeniable now that the appetite for infrastructure has gone beyond the GPU. I think the inferencing workload, the agentic activity. You look at the traditional modernization of the data center, the introduction of this cyber and security activities as well. All of that's driving CPU demand and in turn is driving networking demand and storage demand. If you look at our $25 billion increase in guide today, $11 billion is beyond the GPU. It's traditional server. We grew 122% in Q2 and we're guiding for the full second half of the year triple-digit growth. And then storage, which was my personal highlight for the...
Well, David, what about the pushback from the higher DRAM prices that everyone felt? Is there any price sensitivity for your equipment?
Look, I think it's important to kind of call out that demand was greater than supply on the server side. So, as much as we celebrate the 122% growth, demand is higher. We continue to look for supply. That's tightened this environment, obviously, as you know. But it just proves out the broadness and the durability of the growth that we're seeing, whether that's by geography, by customer vertical, by customer segment. All boats are rising. We're seeing it across the board, and it's giving us a lot of optimism as we move forward.
Now, are you taking share as well as having terrific organic growth?
Oh yeah, for sure. If you look at our traditional server space, almost 10 points of share in the first half of the year. So we're really differentiating in terms of execution. That's something that's very important to us. That's leveraged on the expertise of our supply chain. We obviously layer on that in terms of relationship with our product teams and our sales teams. So that triangle of execution, that discipline, whether it's operationally or pricing-wise, is a big anchor in terms of the performance.
So David, look, I was prepared to hear a great AI story, but obviously this is much bigger than just artificial intelligence you're talking about.
Oh, for sure. Look, there's no doubt the demand is there, and it's across the entire portfolio. If you look at, take storage as an example, we're now six quarters in a row of demand growth, faster than the market. It's our Dell IP storage. So we're delighted with the portfolio performing at such a high level. The traditional server market. Again, this inferencing and AI workloads, it's almost a brand new TAM that's out there. It's going to continue to evolve and be durable for us as we move forward. More and more customers are looking for us to solve those problems, and we're there to help them along that journey.
You must have monumental supply chain issues. How are you able to handle this?
