In the shadow of Idaho's mountains, the future of technology is being built from the ground up. Micron was born here nearly a half a century ago. Today, it's building the technology powering the next industrial revolution. Steel in the ground. Ingenuity at work. Billions of dollars and tens of thousands of jobs. The race for AI may be global, but its next frontier is taking shape on American soil. Right here in Boise, Idaho. A legacy of American manufacturing is shaping the future of innovation. Mad Money's Invest in America from Micron begins now.
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Hey, I'm Cramer. Welcome to a special edition of Mad Money coming to you from Micron's headquarters in Boise, Idaho. Welcome to Cramer America. Other people, my friends, I'm just trying to make you a little bit of money. My job is not just to entertain, but to educate, to teach you. So, call me at 1-800-743-CBC. Tweet me at Jim Cramer. You take your eye off the market for one lousy day and come out here where they actually make things like a Boise, Idaho construction site for Micron's new semiconductor factory. You realize there's an incredibly jarring gulf between stock prices and reality.
Of course, the market doesn't seem to rally just because it's a beautiful day out here, does it? I'm watching 8,000 workers crawling all over 10 million square feet of steel and concrete infrastructure. But instead, what I really have to do is settle for a rough and nasty day on Wall Street, 2,150 miles away from here, where the Dow tumbled 704 points as it beat the climb 87% and the Nasdaq lost a full percent.
Oh, I wish we had a better session, though. Because there's no manufacturing process on the planet that's more complex than building semiconductors, and Micron builds them right here. This is a company that's always been committed to the United States and we have come out here to see and praise that commitment. This company spending $250 billion — yeah, will it be $250 billion here, New York and Virginia — to make the most advanced memory chips, many for the gigantic data center build-out right now and soon for robots, self-driving cars. They all need memory to work and Micron's a heavy hitter in the memory space, the third largest after Samsung and SK Hynix. If you measure a company's success by its gross margin, the percentage of revenue they keep after the cost of goods sold, what you're looking at will be just two fabs within one of the most lucrative companies in the world. Unfortunately though, you can't take your eye off the broader market. Even if you think, as I do, that Micron stock is radically undervalued. Yeah, that's even after today's $37 rally. In the end, we always have to look at stocks through the market's prism. Okay? Not ours, but the market's. And right now, the market's not going to give Micron its due because of factors beyond this company's control.
What is clouding the market's prism? What is making everything so darn fair? Let me spell it out. I'm going to start with the United States of Walmart, the largest retail chain in the world, where more than 200 million customers shop every single week. Walmart's a fantastic company. You know, I think they have tremendous prices. Lately, it's been able to attract people from all ends of the economic spectrum, and it has a very strong e-commerce business that was on display this last quarter. That said, when Walmart reported this morning, it missed Wall Street's expectations.
To me, these results were more complicated than usual. A gigantic tariff rebate, difficult to understand federally reimbursed pharmacy numbers. When I calculated the hit from federal drug price negotiations and backed that out, I actually thought, 'Hey, sue me. It was a good quarter. Not great, but good.' It would have been much better, though, if gasoline prices hadn't gotten up to $4.
That caused the stock to get crushed. It's not just because consumers have less money to spend when fuel's expensive. You see, Walmart has this nasty habit of keeping prices low or taking them even lower when times get tough. They've done it like this since the days of Sam Walton. It's great for customers and long-term, it's been fantastic for stockholders. Problem is, it means the stockholders right now have to take a short-term hit. The people who own the stock until today, when they furiously dumped it when they saw the results, they saw two things. The two things they didn't like. One, business didn't get worse as the quarter went on because of ever higher gasoline prices. And two, Walmart chose to do something gutsy, make a little less money short-term or to take a lot of market share. That is good business.
Which sends me back to that dark prism I mentioned before where good business isn't necessarily going to be rewarded with good stock prices. When you match Walmart's subdued end-of-quarter results with the continual increase in the price of gasoline, well, doesn't it become clear to us that the stock was maybe a little too high coming in, hence the 9% meltdown today. It didn't reflect the fact that this company's willing to take a very small earnings hit to gain market share during a slowdown. It's what they taught us would make you money long-term. Or to put it another way, we all understand as long as the war with Iran drags on, we're going to pay more for a lot of things except stocks. Stocks where we demand lower prices before we put more money to work. We learned that last night when the president talked about taking on Iran economically. So he wants to get some sort of national, I don't know, a financial siege going, given that Iran is one of the most heavily sanctioned countries on earth already. I'm not sure what else we can do or even if it matters. Now we're getting retail earnings this week and we have some good ones, Target and Home Depot, as well as some not so good ones, Walmart and maybe Lowe's. They don't cancel each other out though. Walmart's so much bigger than every other retailer that it casts a pall over the entire industry, over the entire shopping business. At the same time, this would have been a better day if interest rates had gone down. Our Treasury Secretary's resorting to buying back an unusual amount of Treasuries to hold rates down. I don't know about that. When America has $40 trillion in debt, a $4 billion buyback of long-term Treasuries has this Treasury Secretary looking a little like a little Dutch boy with his fingers plugging the dike. Give him that. Give that man another, say, billion fingers and maybe he'll be able to take care of all this. So, we are stuck with assuming that because Walmart didn't deliver, the American consumer really is slowing down. As much as I'd like to say that's what's behind me, raw American manufacturing might is what matters, that this is why we should own stocks. I have to remember that two-thirds of our country is service-based. Walmart is the thermometer for the service-based economy. And today, it showed us a somewhat sickly patient, one that won't get better until peace breaks out in the Middle East. Historically, that's not something we necessarily want to make a bet on. Now, because rates came down, maybe rates will come down. Maybe they will come down. I don't want to say the Treasury Secretary doesn't. Maybe he's a magician. Okay? Maybe he's more of a magician successfully pulling up the 30-year Treasury than he is a Dutch boy plugging holes. Maybe the consumer gets used to $4 gasoline, unless it's going to $5. But we're just going to have to be satisfied with the Micron marvel, which goes on for acres and acres in some places, as far as the eye can see. Tonight, we're learning why this very special company is doing amazing things for our country and succeeding in an industry where so many American companies have failed, and making boatloads of money while doing it. The bottom line, let's not despair too much. Micron stock did finish up 4%. That's terrific American exceptionalism at work. The problem is there's another 499 stocks in the S&P 500 and the market made a lot of them look downright awful today. All right, get oil down. Get interest rates down. The market will be a heck of a lot better. This picture spoiled by a different backdrop. One that is 2,000 miles away.
Let's talk to Sam in Pennsylvania. Sam.
Jim, listen. After JPMorgan downgraded Nike, I have to say as a consumer of their products, I think I could help the street out with some tips here. This has been an ongoing issue for a couple of quarters now, if not a couple of years. Stock is down 70% from where it was and I think what they need to do is focus on their core consumer and increase the quality of the product. They got to offer us a value proposition. It's enough with the sustainable materials. It's get back to the core ideology of Nike being the best at what they do, you know.
Who's that, Sam? What company?
Nike. All right, Sam. Look, I wish it were just quality. I wish it were just market share. I wish it were just the cost. I wish it were something. There are just too many things going wrong right now with Nike and the whole industry is slowing down. Sometimes you can't even blame them for what they're doing. It's just nothing's working. Micron is succeeding in an industry where so many others have failed. That's partly why it was one of the only positive AI-related stocks in today's red tape. On Mad Money tonight, on the heels of their $250 billion manufacturing announcement, I'm sitting down with our host for the day, Micron CEO. Don't miss our wide-ranging conversation. Then a different Boise-based company, Albertsons, hasn't been doing that well at all. So, what's been going on with that grocery stock? I'm digging deeper and I'm taking you behind the scenes of this fantastic facility and showing you the area that inspired me the most and reminded me just how meaningful Micron's American investment is. So, stick with Cramer.
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We're here in Boise, Idaho, where Micron, the memory chip maker, is spending tens of billions of dollars to build not one but two semiconductor fabs, the ones you see behind me, in order to tackle the dire memory chip shortage. I think this company is a national treasure. Micron's been printing money lately with its stock up 731% over the past 12 months because data centers have an insatiable appetite for memory. Management says the shortage should get even worse next year. Even after this run though, the stock trades at just over six times next year's earnings estimates because Wall Street's terrified that Micron and its competitors will add too much capacity and then become flat-footed once demand starts to come down. I think that isn't going to turn out like that. I think it is going to be a little bit different. The data center is that much of a game-changer and no data center can go without gobs and gobs, almost limitless amounts of memory. But don't take it from me. Earlier today, I sat down with our host Sanjay Mehrotra, the chairman, president, CEO of Micron Technology to find out more. Take a look.
Sanjay, a lot of people could see behind me and say, 'Listen, there's a lot of concrete, a lot of steel, a lot of people with hard hats.' I look at it and I think national treasure.
Jim, I have always considered Micron a national treasure. Nearly 50 years of leading with innovation in memory. The only memory company that is here today in the US driving global leadership and now memory has become a critical infrastructure for AI. Without memory there is no AI. You want to advance AI, you need more memory. All invented here, you know, 62,000 patents created, you know, with the leading work done here and now we are building leading-edge memory manufacturing here. Very excited, Jim, and thank you for coming here to see the action here as well as bringing your whole crew here.
I like to see American greatness and innovation. I like it when I think our country is winning because of Micron. Tell me, what would happen if I went to Clay, New York, I went to Manassas, the other places you're doing these things. It's not just Boise. This is a big effort.
Absolutely correct. Micron is investing $250 billion.
Big billion, not million. And totally, totally committed to making these investments here in America to bring up leading-edge memory manufacturing as well as what we call long-life-cycle memory products for automotive, industrial, medical, defense, aerospace markets. So what we are building here in Boise, Idaho are two large fabs, Jim. Each of these fabs will be the size of 10 football fields. That means the size of two Eagles stadiums. Each fab will be the size...
Two winning fabs. That's right. Absolutely. Two winning fabs. It starts here. We are building in Syracuse, New York. In Clay, New York as well, where earlier a month or so ago, we poured concrete, moving as fast as we can over there as well. And in Manassas, Virginia, we have brought modernizing the technology there to meet the requirements of those end markets. So from data center to edge, for data center, consumer, automotive, industrial, we are bringing up memory supply as fast.
Okay. So are there people, are there people right now, is it, is there Amazon who's saying, listen, when are those chips going to be done and when are they going to be done, when are we going to see something from here?
All of our customers want more memory. They want more memory faster. I'm engaged, directly engaged, and our teams are engaged directly with our customers. They appreciate that Micron is betting on American workers. Micron is investing in American... Our US supply that we are working hard to bring up is very important to all our customers. So yes, I mean this Boise, Idaho fab which has right now about 8,000 construction workers are here. This fab will have first wafers out middle of 2027. Jim, these fabs take a long time to build. You cannot flip a switch and have a fab constructed.
But how can you afford to risk building something this big given the way the industry has historically been like this and this and this?
Jim, AI has changed the demand profile for memory. It's not boom-bust. AI memory has secular demand with AI across data center, across consumer markets and of course industrial automation and in future robotics, which by end of the decade each of these robots, and there will be over time hundreds of millions of these robots, they all require tons of memory. So memory demand is tremendous, supply is constrained. We see 2027 even tighter with respect to 2026. What we are building here, first wafers out in '27, production ramping in 2028 time frame. Clay, New York production ramping, you know, by 2029-2030 time frame. The second Boise fab will start ramping up production late 2028.
You're telling me that you have line of sight for demand beyond '27?
Absolutely. I mean, we see, we have done five-year strategic customer agreements, right? These strategic customer agreements have given commitment of demand from our customers over these five-year period.
Did you ever dream even these three years ago that you'd have strategic customer agreements where they lock in and they take or pay?
They can't call you and say, 'I'm having a hard time here. Give me a break.' And can I tell you they are take-or-pay customers have made cash deposits or, you know, other similar financial commitments amounting to $22 billion and our customers wanted more of supply than what we could commit to them in the SCAs. So even for data center today, customers want 50% more memory than what we are able to commit to them.
Look, I was reading on X that Elon Musk said he would buy everything that you made. What would happen if he called you and said, listen, Sanjay, I want to buy everything that you make and I don't want anybody else to have it.
I'll tell you all our customers across our end markets will buy everything that you make.
So they should take these agreements before someone like that comes in and sweeps.
I mean, these agreements are critically important. They give us, of course, the visibility to supply and confidence in that supply, enabling us to invest $250 billion commitments here in America. These agreements give our customers assurance of the supply that we are able to commit to them as well.
But what happens if some board member says, you know what, Sanjay, this whole thing you got with America, I think it's great, but let's do this in the Philippines and just crush it, make a lot more money. What do you say to that board member?
Look, we are an American company. We are where we are with American innovation. Memory has become a key enabler of AI. Memory is the intelligence behind artificial intelligence. Right? So it is critically important. We are very proud as an American company that we are investing in America. Of course, we have large-scale manufacturing overseas as well and we continue to invest and continue to advance our overseas fabs as well. All of this is needed, Jim, to meet the customer demand and still I cannot see when supply will catch up with demand despite all our efforts to bring up supply as fast as we can.
Okay. Now I look around here at a contrast with the view, a common view in our country unfortunately, that it's too expensive to make things. There's no workforce to make things in this country and no ethic. That can't be true here.
Look, Micron has been around here in America for 50-plus, nearly 50 years. We have been building memory here in America. 8,000 construction workers with tremendous work ethic are here every day building the fabs. We have 7,000-plus engineers and workers that are driving innovation and driving leading-edge R&D roadmap.
I'm assuming you're training some of these workers, careers they're building right here, right here.
Absolutely right. I mean, you know, we have just built a training center, workforce training center where not only we are training workers, our suppliers are training workers to support us here as well as we have College of Western Idaho that is bringing students here to train them. Micron is investing in apprenticeships. We are partnering with veteran institutions. A lot of our workforce is made up of veterans as well. We are partnering with universities to advance semiconductor curriculum. So innovation is thriving here in America and this is where, you know, Micron now invests in Micron Research Labs because there is no better innovation hub than here in America.
I listen to you and I think, well, isn't this what the government used to do for us?
Look, I mean, partnership with government and industry is critically important.
It's better that the corporations do it. You know, they're going to do it great.
