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Do you know that the fate of today's market was decided at 12:30 a.m. Eastern time? Yeah, middle of the night. That's when Taiwan Semiconductor, the biggest chip manufacturer in the world, reported one of the strongest quarters I have ever seen.
That's when we learned in a definitively bullish conference call that the artificial intelligence doubters may have no idea what they are talking about when they keep talking about a bubble, because demand for these AI chips is off the charts. That's when we found out that the only company with real insight into the long-term demand for advanced semiconductors just can't make enough of them fast enough. Taiwan Semi has spent more than $50 billion just to keep up with its current orders. Its stock was up about 20 bucks before most of you woke up.
The rest of tech all part of the lure of the day, where the Dow gained 293 points, S&P advanced 26%, NASDAQ rose 25%. I have to tell you though, they were much higher before an afternoon pullback related, yes, of course, to where interest rates are going to be and whether they're going to be chopped, which I keep telling you is a sideshow if you want to make big money.
Tech wasn't all that flu today. After staking up the joint for a couple of sessions, the banks rebounded because of beautiful, pristine blowouts from BlackRock, from Goldman Sachs, my alma mater, and Morgan Stanley. We're going to go into those in a moment. But make no mistake about it, that conference call from the other side of the world, the one thrown by Taiwan Semi, the company that physically turns the blueprints into semiconductors, changed this entire market.
More specifically, it changed the way this market views the most important, largest company in the world, the elephant in the room. That is Nvidia, which had been down for 2026 until last night when so many other less modern chip makers have seen their stocks soar. And that's what made the session so encouraging for those of us who like technology stocks.
See, until just after midnight when Taiwan Semi reported, the new narrative had become you need to steer clear of the AI stocks, especially Nvidia, which had become known as what we use the term overowned, meaning that too many institutions already owned it, so there were no new buyers of any size. Everybody had already. The only stocks that have been working this year are the so-called commodity chip makers because of a severe shortage of semis that store data. These are so-called memory chips.
No one thought that these low-tech chips would ever be needed in such high quantities. But data centers can't get enough of those things either. And there aren't enough machines available to make more of them. That's why SanDisk is up 72% since the beginning of the year. Western Digital up 29%. Micron up 18%. C up 16%. Everything they make is in short supply. Customers are desperate.
Meanwhile, Nvidia stock is flat. So these outsized gains taunted the Prometheus of our time, eagles feasting on the liver of the chain Nvidia giant. I just like that imagery. Until today, that's because Nvidia is Taiwan Semi's biggest client. So if business is as fabulous as they say, and there's no reason to believe otherwise, then business must be pretty darn good for Nvidia. Certainly better than expected.
The stock closed up 4 to 187.18, been 189. AMD caught a bid too, as we say, and Taiwan Semi's good fortune is terrific news for the semiconductor capital equipment makers, the companies that supply Taiwan Semi and the other foundries. I mean, they think ASML, that's that big European company of 500 billion, KLA, Applied Materials. Ooh, that's hot. And Lam Research, LRCX. These all rallied like crazy today. We used to have a ton of these semiconductor capital equipment plays, but they all merged, and when demand is this tight, they can make fortunes.
Just as important, Taiwan Semi made mincemeat of the skeptics who've been doubting AI's staying power. They said something we have only heard from Jensen Huang, CEO of Nvidia. The demand is insatiable. More important, the profits could be humongous for the customers. The companies we call hyperscalers aren't wasting their money when they spend billions on data centers. According to Taiwan Semi, they're finding money everywhere. They're making it. They're making it on the data centers. Despite what we keep hearing, Taiwan Semi says the more they spend, the more they make. Remember, Jensen told us that, but no one's believing him. The gating factor here isn't even supply. It's the darn electricity shortage.
The hyperscalers want clean energy. They went nuclear and shun natural gas, even at three bucks a throw. They put up data centers all over the place, sending the price of power higher. They don't seem to understand that they'll have to go hat in hand to GE Vernova to beg them to build, to give them more gas turbines, because building a new gas plant is much, much faster and cheaper than building a nuclear power plant.
When I listened to the Taiwan Semi call, I realized that one of these hyperscalers is going to break. Maybe buy some natural gas companies in Texas and Pennsylvania. Start building huge numbers of natural gas power plants right next to the natural gas wellhead. That's what I'd do if I were in charge.
I told you earlier this week that we needed to see the banks reverse, right? Remember, because that's the best leadership group in the world. And then suddenly it's been really bad ever since JPMorgan reported. Well, guess what? We saw it happen today. Goldman Sachs, Morgan Stanley, BlackRock broke the downturn precipitated by allegedly weak quarters from Morgan, Citigroup, Bank of America, and Wells Fargo. It takes a lot to get these stocks out of their tailspin.
And we got a lot with Goldman Sachs putting up phenomenal numbers across the board. Morgan Stanley continuing to be a juggernaut of corporate finance and asset gathering, and BlackRock taking in just trillions to the point where they now manage an astounding $14 trillion.
That was the last time I lamented that the market seemed to be led by big pharma and the oils. Those are terrible generals. A healthcare rally signals a weak economy, and an oil rally signals inflation. Worst possible combo: stagflation. My hope is that the JPMorgan healthcare conference was causing pharma to temporarily levitate, and the president's rhetoric toward Iran was going to get hotter. It got cooler. So both catalysts fizzled.
I said I wanted to see these major minor chords recede and the major chords come back. I wanted the money flowing back into tech and some consumer stocks, retailers, coupled with a ramp-up in both data centers and non-data center industrials. And today we saw exactly that. The major chords returned. Plus we had a monster move in the small caps as Russell 2000 broke out with space, alternative power, Bitcoin, and of course quantum computing and nuclear power adjacencies all back in the wind.
Now there's some excellent news here. Let me give you some examples because I hate just saying the oh Russell this and S&P that. I like the resuscitation of the restaurant stocks. Starbucks and Texas Roadhouse, two charitable trust names. Look, they were on the brink. Starbucks was on the brink not that long ago. Now they're breaking down to the upside.
What else? Housing stocks are moving up not long ago after getting hit with mass downgrades. There's a thaw going on as supply has arrived to quell demand. Home prices are at last coming down, many of them to 2019 prices. Toll Brothers, Lennar, Horton led the group higher. The same, by the way, was how about this? Home Depot rallied again, only to be outdone by Lowe's, which hit its 52-week high. Congratulations to Lowe's CEO Marvin Ellison for that achievement in this god-awful environment.
But the turn in Nvidia, which had become an eyesore of this market, is what gives me hope that the bubble talk may have finally run its course, at least for the moment. One listen to the words of Taiwan Semi, one gander at the transcript tells you that it's worth buying Meta, as social media was called out for strength as well as Apple, which was down today because expensive phones were noted too as having great strength.
Apple's stock has done nothing. That worries me. It worries me that the buyers haven't figured out to buy it yet. These stocks have done nothing lately. Same goes for Broadcom, which is linked to S1 172. That stock rallied three bucks. Maybe today was the day it started.
What's really happening? Well, here's the bottom line to me. You're getting another chance to buy these high-quality stocks before they take off in the face of the doubters who didn't get up early enough to hear the Taiwan Semi call. As for the rest of us, we knew it would be a good day at 12:30 a.m. last night. Would you mind if we got some sleep tonight?
>> Shel in West Virginia. Shelly.
>> Hey Jim, I love your show as always.
>> Well, thank you Shel. What's going on?
>> My question is on Arm Holdings. I've had this position for a while and it's taken a beating. Do I just go ahead and add more, hold it, or sell it? Do I buy?
>> You know, I got to tell you something's going on. I mean, we got to get Rene Haas on. I mean, the stock has just been in freefall and that's not right. Maybe it's because the price-earnings multiple got too high. I would hold it. I can't tell you to add any until we find out definitively that it isn't SoftBank selling its stake or something, because man, this thing's been nasty. All right, let's go to Mark in Illinois because Mark.
Jim, good to see you. Got a squat this morning.
>> Oh, yeah. It was nice to be back.
>> But you know what? We do have great chemistry. I dropped chemistry because it was going to ruin my transcript, but I've got it with the show. How can I help?
>> Listen, I was calling about Starbucks and a competitor that I've seen pop up in my neighborhood and I looked into it. Uh, and the place is like off the chart. As a matter of fact, they got more places popping up than the cheese curds at a Bears game. It's uh, it's called, it's called Seven Brews and the traffic in.
>> Seven Brews for Seven Brothers.
Well, let me, let me, let me, let me retort. Let me retort with the fact that I think that Brian Niccol is going to pull off this turnaround. At one point, Starbucks today was all the way up to 94. It finished at $93.28. It's been a slow step-by-step, inch-by-inch move from the 70s, but it's coming back up. I hope that the Seven Brothers, the Seven Brews, the Seven Brides, whatever, is doing well. But I got to tell you, my choice is Starbucks.
12:30 a.m. was when everything changed for today's market. Thanks to TSMC, can we get some sleep tonight, please? Oh, man. Time. We've got really unbelievable earnings for the big banks. And now, is it time for the regional players? Interesting. Today I'm sitting down with Memphis-based bank First Horizon to hear all about the company's latest results.
Then yesterday a viewer pointed me in the direction of a centuries-old company whose stock has been quietly soaring lately. I'm digging deeper into the tale of Babcock and Wilcox and give you my take on the story. And as identity protection comes front and center for companies in the age of AI, I'm checking in on the cybersecurity stock Rubrik with a stock that's been much worse than how the company's doing. Let's see how they're protecting it. I want you to stay with Cramer.
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We did earnings from those big national banks earlier this week. Wall Street was not impressed. Okay, the whole sector got hammered. Now though, we're starting to get numbers from the regional banks and they're doing better. Take First Horizon, Tennessee-based bank that reported this morning. Even though the stock had rallied more than 50% from its lows last April, it still tacked on another 1.6% gain today. Why? Because the numbers were that good.
So, can this stock keep rolling as the new year unfolds? Let's check in with Bryan Jordan, chairman, president, CEO of First Horizon, old friend of the show. Get a better sense. Mr. Jordan, welcome back to Mad Money.
>> Thank you. Thank you for having me.
>> All right. So, Bryan didn't skip a beat. This was the kind of quarter I like. Expenses under control, revenues growing, area really sound. Uh, and you used a phrase I'm going to use from now on. People are generally biased for growth. What does it mean to be biased for growth?
>> Well, it's not a term of technical. It's a term of art. And we survey our customers on a number of different ways and I spend a lot of time with customers and everybody I generally run into is looking for opportunities to invest, to buy, build or expand. And I think if we can get the uncertainty to a lower level, that I think people will, you'll really see this economy take off. I think there's a great opportunity for us and I'm hopeful that the benefit of the one big beautiful bill this spring will actually accelerate the growth in the economy.
>> Well, people may confuse exactly your footprint. Uh, we're talking about the whole Southeast, which I guess is just seeing everything from data centers being built to a lot of new, a lot of people coming in. I was thinking of you when they did the, when they talk about the billionaires tax in California and I think that we know what I'm going to run to Texas. I'm going to run to Florida. I'm going to run to First Horizon. Are you seeing people who are basically, uh, people coming from other areas of the country into your area because they know that you can expand and the government's got your back?
Yes, absolutely. If you look at the U-Haul destination list, Nashville is always near the top of that list. Tennessee is a tax-free state, income tax-free state, right-to-work, great laws, and a great business environment, and you've got great climate, great resources in terms of human capital, transportation, and it has been a real magnet for the state, and we've seen a number of headquarters located here over the last several years.
Now, uh, we were looking at some of the things that make it so that things are much better than expected for yours, and this growth in loans to mortgage companies now is, I always thought that the mortgage market was not so hot and then I read how you're doing and maybe it's a regional thing.
Yeah, it's a combination of things for us. That is a national business and there has been a lot of shift in the market over the course of the last 18 months and we've picked up a good bit of market share and we've picked up greater line utilization because of that, people exiting the business. What really started to happen late in the fourth quarter and surprised us a bit is refinance activity picked up.
As you know, people with the last couple of years wanted to get the 2% and the 3% rates, and they haven't been available. So, people have had ARMs. And as the 30-year mortgage has approached that 6% area, we started to see people refinancing and buying mortgages at that lower 6% area and getting out of ARMs. So, it's not a big wave at this point, but activity did start to pick up in the fourth quarter. We saw it in our warehouse business and we saw it in our mortgage origination business.
>> Now, I want to ask you something because I know you're not a biased individual. I keep reading that the data centers are being built all over the country. People don't want them anymore because they jack up the electric prices. Uh, you've got areas where there's tremendous data center expansion. Are you seeing that or is that just some sort of thing that people are using to slag these guys?
>> Yeah, we're seeing data centers built two miles from where I'm sitting right now. xAI has built a huge facility and it's probably at 20 to 30% of the capacity that they will ultimately build. We're seeing across the footprint and it does put some pressure on water and electricity, but at the end of the day, the community seems to be very, very open to having those investments and the tangential or follow-on investments that vendors and providers will bring once the data centers like xAI's are finished.
All right, let me follow up on that. I was going to go another way, but I got to stop because this is really important. You just said, I'm going to repeat this. You basically just said that the net, there are net positive, not a net negative, which makes me think given how wide your footprint is that perhaps we're getting a little too negative about the idea of having new data centers.
>> Yeah, I think they're very much a positive. It's clearly going to require some investment in infrastructure, but that's going to be required anyway. So, it really does bring economic growth to the communities and here in Memphis, the growth dynamic that has been created around xAI is tremendous and we're very, very excited about how that's playing out.
>> All right. I'm going to thank you for that because you're the first person to say, and I thought it was the case. Honestly, I thought it was the case because I talked to the guys who put them in and they were saying that. Now, let's go back to what you were talking about in terms of people feeling better. Now, nationally, we have a new administration. Obviously, it's, it is really not, I'm not going to say it doesn't like regulation. I'm going to say it's anti-regulation. Is that an attitudinal thing that gets your area or is it just frankly less enforcement of regulation that might be onerous to business?
Well, I think there's clearly a much better environment for lower bureaucracy or red tape when it comes to making decisions or investments or acquisitions. It's very clear in the banking industry and you've seen that drive consolidation over the last six months in our industry, but it's generally true across all sectors of the economy and efforts to change environmental permitting and things of that nature, which seem to be taking root and growing, is going to be very, very effective in driving growth over the next several years.
>> But can your new companies find workers? We keep hearing their kids not have enough families that are having kids. We're running out of people, so to speak. We stopped immigration. Can these companies find people to hire?
We may have a longer-term problem and we'll have to figure out, I think, how we balance out the needs for workers and balance it out in a smart immigration system. But in the short run with the use of technology, with the use of automation and the great workforce and the immigration we have in our footprint, there's not been a tremendous amount of contention for human resources in terms of staffing open positions.
>> Well, I knew you'd be a breath of fresh air. You've been with us consistently. I know when things are bad, you say, "Hey, look, things aren't that great." Uh, other people are always reluctant to do that. So, you have every right to be able to say when things are great. I want to thank Bryan Jordan, who's the CEO of First Horizon. Thanks for coming on, Bryan. It's great to talk to you.
>> Thank you for having me.
>> Absolutely. Mad Money's back here for the break.
>> Coming up. Last night, you caught Cramer's attention with this energy technology stock. Now, he's returning his homework with some extra credit. Next.
Last night, I got this call from Jim in Rhode Island who served in the Navy. Thank you. Who wanted to know about Babcock and Wilcox? I thought it's a great speculative play on the construction of power plants, but the stock's had an insane run. It's up over 30% just since the start of the year. So, I recommended waiting for a pullback before you do any buying.
But after the show ended, you know, I couldn't stop thinking about this Babcock and Wilcox. I remember from the old days. This small industrial company was founded only a couple of years after the Civil War. Yeah, the actual Civil War. They made boilers for Thomas Edison and the New York City subway. They were involved in the Manhattan Project, too, which is how the company got involved in the early development of the nuclear energy industry and ended up making components for nuclear-powered submarines.
That was Babcock and Wilcox's main business unit until it was acquired by rival construction company McDermott in the 70s. About 25 years ago, this company was forced into bankruptcy thanks to a wave of asbestos lawsuits that troubled many of these companies that were in construction. In 2006, it came out of bankruptcy and merged with another McDermott subsidiary, BWX Technologies, before being spun off as the new BWX in 2010.
Now, 10 years ago, Babcock and Wilcox split again. This time, you with me? It spun off its commercial power business as Babcock and Wilcox Enterprises. And that is the company I got a call about last night. While their defense and nuclear business changed its name to BWX Technologies. And I gotta tell you, I think both of these companies have a lot going for them these days. I just wish the darn stocks weren't so high.
Look, it wasn't always the case. Babcock and Wilcox peaked at $110 in 2016. That's adjusted for a 10-for-1 reverse split, by the way. And its stock then sunk to well below $1 at its lows early last year. Back then, a lot of people were worried that this business might be headed for bankruptcy. Last April, it sank to 22 cents, 22 cents, where it was at risk of getting delisted.
Since then though, Babcock and Wilcox has caught fire. Get this, it's rallied 3600%, 360% from its lows to $8 and change. Now, you know what? That created a lot of penny stock millionaires. Why the renaissance? First, the company sold some assets to raise some cash, bought back some debt, avoided delisting, and stayed in business. Then in the fall, they announced a deal that would give the company exposure to the AI data center space.
I don't want to get too lost in the details. This story is tough enough already, huh? But one of the things that this new iteration of Babcock and Wilcox does is help convert old dirty coal-fired power plants into new relatively cleaner natural gas plants. And most of the tech companies building data centers want relatively clean energy if they can't have nuclear. Since then, there's not enough of that to go around. Natural gas is often the best thing they can do.
So that deal instantly made Babcock and Wilcox a sexy new data center play and the stock, it soared. Of course, most of the data center adjacent plays peaked last October and then saw the stocks get hammered over the next couple months. Remember, that was the end of the year of magical investing. This one though avoided that. It just kept charging higher.
Some of that's because when BWX reported in November, they posted a huge increase in their backlog from all this data center business and they announced this $1.5 billion deal with Applied Digital, which is one of the many cryptocurrency miners that's pivoting to become a neo-cloud company. This is the first time BWX is installing a power plant for a new data center rather than just doing coal-to-gas conversion for older ones. So, it was pretty good reason to buy the stock.
In the end though, the stock's had a pretty extreme run. While Babcock and Wilcox is racking up a lot of new business, which is impressive for a company with a $923 million market cap, I got, I, it's highly speculative. It certainly doesn't help that this company's currently losing a lot of money, still has a lot of debt. Plus, there are big projects and we don't even know if Babcock can deliver. So, it's worth your attention. Uh, but I wouldn't buy it even for speculation until the stock cools off. And remember October last year, they cooled off.
Now, what about this BWX Technologies, the nuclear and defense company that used to be under the same corporate umbrella as Babcock and Wilcox? Intriguing. This is another stock that caught fire in recent years because of the newfound interest in nuclear energy that you all know all know about. Now, BWX gets about 80% of its sales from the government, mostly from the Navy. They do design, engineering, and manufacturing for nuclear components, reactors, and nuclear fuel for nuclear-powered aircraft carriers and submarines.
Where Jim worked while he was in the submarine, when he, it was previous before he, when he called, but this was what I thought was his true interest. I thought this would be the division that he would like. Uh, this company also has a commercial business that's connected to civilian nuclear power plants. BWX has really cleaned up over the past few years. In 2024, the Navy rolled out a 30-year shipbuilding plan that included a lot of investment in nuclear-powered subs and aircraft carriers. That's decades of growth for these guys.
Meanwhile, the commercial nuclear industry has come back from really from the dead thanks to all these power-hungry data centers. In its latest quarter, BWX's government business put up 10% revenue growth and its commercial business was up 122%. Because these projects are so long-term, a lot of visibility into the company's growth many, many years into the future, and the long-term earnings are looking pretty, pretty good.
Of course, a lot of that's baked into the stock though, which was again, listen to this. It rallied from $76 at the end of 2023 to $213 today, including a 23% gain since the beginning of 2026. Another parabolic move. At these levels, BWX trades at nearly 50 times this year's earnings estimates. That's too rich for me. Good story, but you need to wait for a major pullback or rapid acceleration of BWX's earnings growth to justify the sky-high valuation.
Finally, look, while we're on the subject, you know what? Let's do this. Let's highlight some of the top defense contractors in the shipbuilding space because that's good for BWX, right? All right. Two stand out here. First is HII. That's the old Huntington Ingalls Industries. That's the nation's largest military shipbuilder. They're the sole designer and builder of nuclear-powered aircraft carriers and one of only two companies that makes nuclear-powered submarines. Not bad, huh?
They've also got a rapidly growing business making drones for the Navy. But look, HII up 80% last year. Even at these levels, it sells for just under 24 times this year's earnings estimates, though, and that's pretty reasonable given that the company's earnings should grow at a 16% clip. HII, I like it. Then there's the other company that builds nuclear subs, General Dynamics. This is a big diversified defense contractor. So, it's less of a pure play on shipbuilding. They even got a commercial aerospace business, Gulfstream.
Still, the stock rallied 28% last year, and I think you could have more upside in a world where the president is talking about a 50% increase in defense spending. Stock trades at 21 times this year's earnings estimates. It's not that pricey given that General Dynamics should be able to put up 12% earnings growth this year. Both of these are cheaper.
Here's the bottom line. When Jim in Rhode Island called about Babcock and Wilcox last night, it sent me into a rabbit hole, maybe a warren of nuclear-powered sub shipbuilding. Babcock and Wilcox is pure speculation. I think it's too expensive for the moment. BWX, much less speculative, also very expensive. HII, if you want nuclear-powered ships. Uh, and I got to tell you, General Dynamics right now, I think maybe I should put it in the charitable trust. I got a big meeting next week. Uh, it's a club meeting and I, you know what? There's so many stocks that I'm intrigued in right now, but I would have to sell something to buy General Dynamics and I can't think of what to sell. Stay tuned next week for more information.
Why don't we go to Greg in my home state, New Jersey. Greg,
>> hey Jim, good evening. Enjoy the show. Love to get your, love to get your opinion on Texas Pacific Land. Purchased some stocks over a year ago. Just split three-for-one and they also just let Bolt Data and Energy in the door with them. The former I guess was Google CEO, Eric Schmidt.
>> Love to get your opinion on that stock, pal.
>> Well, you know, look, we recommended the stock a couple years ago. We had a good run. Uh, we're not inclined to like the oil stocks this year. We just think that the president wants oil down and this president seems to get a lot of what he does want. I'm not going to get in the way of him and his $50 price target for oil. Let's go to David in Florida. David.
>> Booyah. Jim, how are you?
>> Booyah. I am good. David, how are you doing?
>> Good. Good. I'm calling about an energy company that has had very strong earnings the past multiple quarters and it was just upgraded yesterday from Jefferies. I've heard you talking about them a lot. Do you still like GE Vernova?
