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So I'm crossing Broadway right near the exchange and John from Los Angeles stops me this morning. He wants a selfie. Hey, I'm always thrilled to do a selfie. I wouldn't have a show if I didn't. So of course I'm gracious. After the selfie, John wanted to ask me a question, even as a beer truck was backing up right into him. After I saved his life by telling him to move back, he asked me, "Isn't this market too frothy, Mr. Cramer?" I said, "No," even as we had a fairly good day with the Dow rising 10 points, S&P gained 38%, NASDAQ jumped 0.90%." But he said, "Uh-uh, Jim, it seems like 1999 to me." I said, "I lived through 1999 with hundreds of companies coming public that had no earnings and a ton of companies building out an internet that simply wouldn't play ball."
Many of those companies went under, taking trillions of dollars with them, souring a whole generation of buyers who got blown out, never to return.
I told him I didn't have time to explain, and that dastardly beer truck was backing up into him again — tight spot. So I told him to watch the beer truck and watch tonight for a more complete answer. So why isn't this 1999 then? First, when you compare markets, what you have to do is you have to make them apples to apples. Okay? As I say in "How to Make Money in Any Market," that means you're going to compare the price-to-earnings multiple of the indices or individual stocks to each other. A high P/E multiple means a stock's expensive, unless it also has an incredibly fast growth rate to justify the valuation, in which case that could be acceptable. You also need to measure prevailing interest rates, because that's a good proxy for comparing the price-earnings ratio and the value of stocks versus a risk-free alternative.
Let me knock out the latter first, because there's pertinent information from today, from this morning, thanks to a stunningly positive consumer price index reading we got at 8:30. At the end of 1999, which I regarded as the fulcrum of the overvaluation, the yield — what you got if you owned a bond — the yield on the 10-year Treasury stood at 6.4%. I'm going to repeat that because you don't hear that anymore: 6.4%. It's now just under 4.6%. Which means, among other things, we simply don't have the inflation we had back then, something that would inflate the value of the entire S&P 500. We hear so many bears fret about 4.6, 4.5, but 6.4 before is a very much vicious, vicious competitor to stocks. So that cuts to making stocks a lot more compelling now than they were then on the basis of that risk-free alternative.
As I mentioned, the CPI came in very light today, much cooler than expected, and rates dropped nicely. We know that there's a dip in gasoline, but that won't last because of the president's Iran strategy. With the war back on, oil's coming back up, but we got welcome declines in apparel, used vehicles, auto insurance, and medical care — all of which have been high and sticky until now. Why do we care about this? Because as long as inflation stays very fairly tame, it's unlikely that the Federal Reserve will feel the need to or feel compelled to raise interest rates. At the end of the dot-com era, the Fed was not our friend. Then-Chairman Alan Greenspan hiked rates six times between June of 1999 and May of 2000. You don't get a dot-com crash scenario without a series of tremendous rate hikes, and we simply aren't there yet. New Fed Chair Kevin Warsh spoke today, and he didn't sound like he's going to tighten if the CPI stays at these levels. I regard that as very bullish for stocks.
In terms of valuation, what I know John was most concerned about going into 2000, the year of the dreaded decline, the S&P 500 was trading at 25 times forward earnings. Right now, the S&P trades at 20 times forward earnings. Remember, apples to apples. That's a big difference. And while 20 isn't exactly cheap, it's certainly not expensive like 2000. And to date myself, it's nowhere near the 29 times earnings we were seeing right before the crash of '87. That was the worst single-day moment in the history of the stock market. But the real tale of the tape comes from the difference in everyday stocks. So let's go over a couple. Many of the major stocks back then had really high, sky-high price-earnings multiples. Cisco, one of the largest stocks in the market by market capitalization back in '99, was selling at 95 times earnings, even as those earnings were on the verge of collapsing.
Now it's at 27 times earnings, and they are on the verge of accelerating.
I can go over chapter and verse how overvalued and frothy stocks were back in '99. I know because I brought a company public back then at $19 a share, but the stock opened in the low 60s. I screamed holy hell to the underwriters that they failed to control the deal, and that's why it opened so high, and it made it ridiculously overvalued from day one. But the public was so crazy for dot-com stocks that it was a common pattern. We had 330 stocks that came public and failed, many in a similar fashion to the street. Thank heavens we survived. They had no earnings, in some cases no sales. Is that the case now? Not at all. Not one bit.
Instead, let's talk about what happened today. I want to talk about some plain vanilla stocks that are shockingly cheap, that represent this market well. And I spoke to the CEOs of these — they don't even get what their stocks are doing, selling so well. Let's start plain vanilla: Bank of America, which everyone knows, today reporting revenue growth of 15%, asset management fees up 19%, investment banking up 50%, global banking net income up 20%, global markets net income up 72%, much better credit quality and efficiency. And what happened? The stock went up 1.88% to an all-time high. Yet Bank of America's stock sells for 12 times next year's earnings. 12. Well, that's exhibit A against those like John who think froth predominates.
How about Goldman Sachs? We're going to spend a lot of time on that later, but it had 78% net income growth, 92% earnings per share growth, 55% growth in investment banking, 32% growth in fixed income, commodities, and currency trading. These are all pretty unheard of when it comes to the stats of the business — best in the history of the firm. Yet even after its 9% gain today, the stock sells for around 18 times earnings. More on that one. The best blowout I have seen in many years, and certainly the biggest non-tech blowout that I have ever seen. When we come back from the break, I didn't know it was possible.
Or how about JPMorgan? Biggest bank in the world. Get this: it had the highest net income of all the banks, the highest revenue growth, the largest deposit base, highest return on equity, the largest capital return, the highest investment revenues of all the major banks that reported today. The stock, which at one point in the gloom of this market was down $6, down $6, closed up $8.36, or 2.5%, all-time high. The down $6 was before the market traded. People are such dopes. But what does it trade at? 15 times earnings. 15, below the market multiple. Best bank in the world. How the heck? Anyway, so these are ridiculously cheap. They're insane. And you think that's frothy?
Oh, so you're worried about tech then? You think it's way too high? Have you considered the $26.5 billion that SK Hynix, the Korean semiconductor company, raised last Friday in our markets? What if I told you that stock, even after it skyrocketed $41 today, still trades at about four times next year's earnings, according to analysts at Barclays who initiated coverage today? Yes, it's that cheap. It's downright nutty cheap. It's like ridiculous cheap. I mean, you could like, I don't know, Gemini in cheap and it should come up, or maybe like, I don't know, Claude cherry-picking. You think I'm doing that? Hardly.
Micron, another red-hot commodity chipmaker, trades 13.5 times earnings. SanDisk stock's up 643% this year already, but only sells at 27 times earnings, even though it has stupendous earnings growth. Finally, in tech world, let's consider Nvidia, the world's largest stock. It looks to be trading at slightly more than a market multiple by some measure. 23 times next year's earnings is the one that's prevailing. Dell, taking a lot of business from a flagging IBM — more on that one later — trades at 25 times earnings. And I think those estimates are way too low. Those stocks are going to turn out to be much cheaper than we think.
Now there are plenty of stocks that do have higher multiples or no multiples, like SpaceX, which can call the perception of the market. I know that something like SpaceX can feel very 1999, but those guys have huge revenues, and I think a lot of hope. Bottom line — well, I shouldn't use the word hope. A lot of, uh, let's say they're going to make a lot of money one day. How about that? Bottom line: what typifies this market is the inexpensive nature of so many big-cap stocks in so many sectors. There is some froth, but the froth does not represent what we trade, what we own. It just stands out like a sore thumb and nothing more. Or if you're into the canary metaphor, may I just say this one's a canary, but it's at the wharf, not in the coal mine. Nick in New Jersey. Nick.
Hi, Jim. I'm into Boston Scientific at 102. What should I do now?
Nick, you've got to wait two quarters. That's my rule. That was one of the worst misses. Even though I like the healthcare sector, I don't particularly like the equipment sector. A lot of those stocks are doing badly. Intuitive — hey, I got to tell you, Intuitive Surgical — that would have been a good piece to do today. I'm looking at my executive producer, Regina Gilan. Should have gone into it. And to it — how if you intuit it, it's bad. If you think maybe it's good, there might be some froth, but it doesn't represent what we own. I'm telling you to, let's say, don't let it dominate, and don't let a beer truck hit you. Oh, man.
Tonight, IBM just had its worst day ever. So, what sent the big blue deep into the red? I'm breaking down the surprise earnings disappointment. Then, one bank has been outperforming the others in earnings season. I'm going to tell you where I come down on what I just mentioned — that beautiful Goldman Sachs quarter. Hey, and get this: Zoom. It just had its best growth in years. So, is now the time to get a piece of this 15-times-earnings company? Again, no froth. I'm checking in with the CEO. So, stay with Cramer.
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This morning was supposed to be about bank earnings. Five major banks reported, but then IBM pre-announced some hideous numbers, and the stock got torn to pieces, down over 25% in a single session.
All right, look, I've been an optimist in IBM for two and a half years now, but the stock's back down to a level it first reached nearly two years ago. So we have to ask what the heck happened. First, let me set the scene. Not long ago, IBM's software business was posting its best growth in ages, in large part because much of their software seemed very useful to AI developers. At the same time, their consulting business was on fire as they helped other companies harness AI without spending fortunes. A little over a year ago, they also launched a new mainframe model that was selling very well. Today that got derailed.
This morning IBM pre-announced weaker-than-expected numbers pretty much across the board. CEO Arvind Krishna explained that because IBM was lapping the launch date of its latest generation mainframes in the second quarter, its infrastructure business was up against very tough comparisons. But what played out was even worse than expected, driven by a shortfall in both mainframes and related software. Here's how he put it. I'm going to quote: "In the last few weeks of June, we saw clients shift their quarterly capex spend towards servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases." End quote. Basically, there's all this tech hardware that's in short supply that we talk about all the time. Prices have soared. So companies are spending a lot less outside of the data center in order to cover the costs. They can't cut their cybersecurity budgets. That's too dangerous. So anything outside of these core areas could be in big trouble, and anything includes IBM.
Now, Krishna took ownership of the miss, which was certainly nice to see. He's not one of those CEOs who's in denial about reality. He knows IBM dropped the ball, and he admitted it. He then went on to note some of the limited highlights from the quarter, including double-digit growth from my favorite business that they have, Red Hat; strong performance from its acquired businesses, HashiCorp and Confluent; good numbers from the distributed infrastructure division; continued growth in signings for the consulting business; and some cost cuts. Krishna also noted that the company launched a new cybersecurity initiative called Lightwell, and he had some positive things to say about IBM's quantum computing business as well, that I have spoken to you about many times.
But when we saw these numbers and read Krishna's explanation, what instantly struck us is that this is the first tangible evidence of a trend that we've been hearing about for the past few weeks. Right now, the people in charge of corporate IT budgets are being forced to prioritize into three buckets of spending. You want to take these down if you can, because you're going to start hearing more and more of it this earnings season. They spend on cybersecurity, tech hardware, and AI tokens. Anything outside of these buckets is a much lower priority, which is how you get a quarter like this from IBM. Let's take them one by one.
Starting with cybersecurity. Back in April, Anthropic released its Mythos cybersecurity model, which then fully launched in June. And this thing scared the heck out of most companies — thousands of companies, frankly — and it's for good reason. Mythos, or Fable 5 as the publicly accessible version of the model is called, has the ability to identify security vulnerabilities in a way that no human or model has ever been able to before. It's proof that hackers using AI can indeed tear through most of these corporate networks, hence the need for more cybersecurity spending. Why CrowdStrike was up so much. Uh, I'll tell you, that's one of — that's the antidote, I think, but we're talking to IBM here.
Second bucket: hardware. This is a bucket that's become much more expensive over the past year because of the explosion in memory and data storage pricing, that's caused huge gains in stocks of Micron, Seagate, SanDisk, Western Digital, SK Hynix. Saw that tonight because their products are in very short supply, to the point where they can charge insane prices for this stuff. And you need all this to build a computer or a phone or a tablet, let alone an entire data center. IBM explicitly said that customers were prioritizing this stuff over their mainframes. Everyone knows these shortages could last until 2028, which means pricing could go ever higher. So big spenders are eager to lock in as much supply as possible right now. So pretty much all tech hardware has gotten substantially more expensive. And this might just be the beginning. Bad news for IBM because it means there's less money left over in IT budgets for IBM.
Finally, a third, a little harder to understand, third bucket is AI tokens, which means more use of the leading AI platforms, which have mostly moved to a consumption-based pricing model, with tokens being the basic unit of measure. Companies don't want to get left behind in AI, right? In the AI year, they've got to be present. So they've been willing to let their employees use tokens liberally, whether that means using AI platforms for some productive process like rewriting your software code, or just experimenting with AI to try to find new ways to use it. See, a lot of that we've started to see griping about the ballooning cost of AI this year. So maybe there could be a crackdown on token usage at some point, but for now that type of spending is being allowed, if not always encouraged.
What happens when those three main buckets of IT spending get prioritized as they have been? Other types of spending need to be deprioritized. Unfortunately for IBM, they have too many products and services that fall into the other types of spending, even if they also have a decent overall AI narrative, as I've been talking about for a long time. So even though IBM stock plunged 25% today, which certainly seems excessive compared to the size of disappointment, I can't tell you to buy this stock on weakness because I think the weakness could very well be persistent.
Sure, the stock's now pretty cheap. Okay, it sells at around 17 times this year's estimates, but those estimates will have to come down overnight. Yes, IBM's dividend yield is back above the 3% level. It's nice, but that's not a good enough reason to buy the stock. I like that Krishna took ownership of the miss quarter. He's a good guy, good executive, and I think that IBM still has some AI tailwinds that were totally disregarded in today's beatdown. But frankly, I'm too worried about these trends to say that IBM is now safe to buy after this decline. We're at the point in the year where IT managers are putting together the budgets for 2027. And you have to assume that these three priorities that I just identified will continue to dominate, which means anything outside of them will still have a real problem. I hope that IBM truly is just seeing its deals get delayed and not cancelled. But I can't tell you to buy a stock because I hope something is true. Hope should not be part of an equation here.
So let me give you the bottom line. Corporate IT budgets are getting squeezed by sky-high prices for all the hardware that's in short supply, which means less money to spend on stuff from IBM. That's the new reality, and I have no idea when it will change, which is why I can't recommend IBM, not even after today's severe decline. Mad Money is back after the break.
Coming up on a day dominated by big bank reports, one emerged head and shoulders above the rest. Cramer's explaining which next.
Earnings season kicked off in earnest with a parade of bank quarters, and I thought they were all terrific. Typically on the first real day of earnings season we get results from a few banks, usually three or maybe up to four. Today, for the first time that I can recall, we got results from five major banks on a single morning. The four national commercial banks with large investment banking businesses, and that's JPMorgan, Bank of America, Wells Fargo, and Citigroup. And we also heard from Goldman Sachs, the preeminent investment banking pure play. The only one bank left to report is Morgan Stanley. We hear from them tomorrow morning. Honestly, it feels like the banks are trying to give me a heart attack here.
As I mentioned at the top of the show, these results were generally pretty good. But one bank quarter was clearly the best of the bunch, and that's my former employer, Goldman Sachs, which I happen to own for the charitable trust. Expectations were very high for Goldman coming in, meaning both the literal consensus estimates from the analysts who cover the company, and the general expectations reflected in the fact that the stock was indeed up 48% over the last 12 months going into the quarter. Uh, you'd have to believe it's going to be unbelievable to move the needle here. Generally speaking, we all knew that Goldman's results would be strong because there's been a bonanza of IPOs, debt offerings, and M&A transactions. Those are the investment banks' bread and butter. But even though Wall Street had great expectations, the company still managed to surprise to the upside in a major way. Throw in a fantastic story told by management on the conference call, and you can see why the stock shot up $94, or 9%, today to another all-time high.
Just how great was this quarter? Let's start with the headline numbers, which were truly extraordinary. Goldman generated $20.3 billion of revenue in the quarter, up 39% year-over-year, and more than $4 billion ahead of expectations. That's an insane beat. The company's efficiency ratio, which is their expenses divided by revenues, giving you a percentage where lower is better — okay, lower — came in at 57.4. That's down from 63.4 the year before. That is a staggering improvement, almost impossible to execute. Needless to say, that decline in cost produced astonishing earnings. Goldman earned $20.98 per share, more than six bucks higher than Wall Street was looking for. Nearly double what they earned the year before.
When I was speaking to Dave this morning, I was glum. He said, "What's the matter, Jim?" I said, "I'm glum. I don't work at Goldman Sachs anymore." I mean, holy cow, with these numbers. And whether you use return on tangible equity or return on equity as your preferred measure of profitability, Goldman came in well ahead of expectations and saw a huge jump from the second quarter of last year. I mean, these guys, they're practically — they're probably pretty buddy. The driver of Goldman's standout results was the stalwart investment banking and the sales and trading businesses, which Goldman collectively calls Global Banking and Markets. That division had revenue of $15.52 billion, up 53% year-over-year, and well ahead of the $11.72 billion that the analysts were looking for.
Now, all the subsegments within that division had substantial growth. Investment banking fees were up 55% year-over-year, to $3.4 billion, thanks to all the M&A, IPO, secondary offering, debt offerings that we've seen. Fixed income, currency, and commodities trading grew 32% year-over-year. That beat expectations handily. But the biggest upside surprise came from Goldman's equities trading operation, which grew an incredible 72% year-over-year to $7.42 billion. I never thought it could have that kind of firepower. That unit was only expected to have just over $5 billion in revenues.
Meanwhile, Goldman's smaller asset and wealth management business also had a very good quarter. Revenues up 20% year-over-year, to $4.6 billion, when the analysts were only looking for $4.3 billion. The asset and wealth management unit had 20% growth in management fees, reflecting higher assets under supervision, but a 222% year-over-year surge in that segment's investments revenue certainly didn't hurt either. This kind of performance is incredibly important because it is not episodic. It doesn't need big deals. It's sticking with big gross margins regardless of M&A, regardless of whether they're more SpaceX deals.
Well, on the conference call, CEO David Solomon explained that his firm's benefiting as its corporate clients seek more scale to, quote, "invest and compete more effectively." That desire for scale has driven a significant increase in dealmaking, as we know, with large-cap corporate M&A up 90% through the first half of 2026. Boy, they've been getting their fair share, huh? On top of that, Goldman's benefiting from the rise of artificial intelligence. As Solomon said, quote, "The AI investment cycle is expanding capital needs beyond core technology into infrastructure, energy, and data centers, generating a ripple effect across industries. This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets." End quote.
It's worth noting, by the way, that Goldman was not only the lead left underwriter for the SpaceX IPO, meaning they're in charge, it also led Alphabet's huge secondary offering, which was the largest equity offering of all time for about a week until SpaceX came public. Anyway, these are two very lucrative pieces of business, again with terrific gross margins. Now, Goldman, even when times are good, there's always a question of how long can the good times last. That's why the stock's price-earnings multiple, currently around 19, never gets all that high. It doesn't get above the market multiple.
But one analyst brought it up today on the conference call, asking them to compare the current moment to, quote, "the dot-com era or even during the 2021 period," end quote. The implication was, well, maybe we are at peak period, because 2021 happened to be the top of when we had a lot of IPOs. But Solomon's answer was interesting, and I thought pretty encouraging if you were bold. He said basically that Goldman is so much larger now, so much more diverse — and I'm paraphrasing here — but so capable of making money in very different ways that he feels as though the current moment is much more durable — that's the key word — than in significant investment cycles of the past. I think that helped contribute to today's terrific rally. We felt a little more confident.
So here's the bottom line. The five big bank reports that we got this morning were all pretty darn strong, but the report from Goldman Sachs was indeed a cut above the rest. This investment bank is seeing incredible strength across the entire business right now. And while it's fair to ask how long the strength can continue, Goldman believes the business is more durable than it's ever been. And personally, I think we're still in relatively early innings of this fundraising and dealmaking cycle, which is why it is a top-five position in the charitable trust. An important point we'll be discussing when we convene our club meeting this Thursday at noon. Join up now. I'm promising you won't want to miss it. Let's go to Venus in Michigan. Venus.
Mr. Cramer. Woohoo. We're Cramer fans here, me and my daughter Katia. She's 10. Say hi, Katia.
We just left the beach. We're doing awesome. It's 100° here in Michigan today.
I feel like it's 100 degrees right now. I'm under a lot of pressure from this kid who's got some horse sense. Let's see what you got. Glad to see what you got, mine. Uh, tell them what stock we're asking about.
Um, SoFi. So, this is what I want to know about SoFi, Mr. Cramer.
Okay. Well, she should be a client of SoFi. You got to get young people involved there. No, come on. That's what Anthony's trying to do — get the younger people to save. And I agree with him. The stock's been stuck a little bit around the 18-and-a-half level. I think that's a great level to get involved. I think that this is much more than a bank. I think it is more of a service company that happens to be in banking. And I like everything that Anthony's doing there. He is the CEO.
All right. The bank earnings have all been strong so far, but Goldman stood out even among a strong cohort. And yes, I think Citi was not that bad. Come on. I think the strength in Goldman can continue. Now, there's much more Mad Money, including my sit-down with Zoom Communications. Then there's a lot of negativity out there starting to bring even me down. I'm telling you how to fight the negative headlines and keep your head in the game. And it is really difficult. Of course, all your calls, rapid fire. Tonight is the lightning round. So stay with Cramer.
Oh, I got a real treat for you tonight. We're going to be speaking with Eric Yuan. He's the founder and CEO of Zoom Communications. Now, you may have first heard of Zoom during the pandemic. Zoom was omnipresent, but then we got over COVID, and while Microsoft Teams and Google Meet became much bigger competitors, it led to a tough, let's say, tough decline in the stock. But over the past 12 months, Zoom stock has rallied almost 22%. But you know that even up here it sells for just 15 times earnings. In the latest quarter, the company had its best growth in years. Management raised their full-year forecast across the board, even adding a billion dollars to their buyback authorization. Zoom is pushing further into phone, contact center, workplace tools, AI products that can turn conversations into notes, follow-ups, completed work. It's like a brand-new company to me. Plus, they made a $51 million investment in Anthropic back in 2023. Well, it's currently valued at $1.3 billion. Could be worth a lot more as we get to a, who knows, an IPO event. So tonight I want to check back with Eric about the journey he's had with Zoom. Eric, welcome back to Mad Money.
Thank you, Jim. Thank you for having me. It's so awesome to be back.
Oh, well, I'm so thrilled you're here and to have you in person. Before we go over all the things that are extending Zoom well beyond core collaboration to a broader modernization engine you've got going, I thought it might be good for you just to talk about how Zoom came about, the journey, how you got to this point, because people don't know the story.
Yes. So I left Cisco back in 2011. I started Zoom, and today we just celebrated Zoom's 15-year anniversary. Over the last 15 years, we were focusing on the product and truly built a great product to delight our customers, and we're onto a Zoom 2.0 journey. Now we are talking about some tremendous, really some great AI use cases. I'm talking about transcribing calls, summarizing notes, generating, potentially executing next actions.
You're starting to get some pretty great enterprise work and a nice acceleration. What are the things that are really making people excited, including the enterprise, about what you're doing now?
So first of all, Zoom's value goes far beyond the meeting. We power the preparation before the meeting, the collaboration during the meeting, and action that follows. Essentially, we embed AI into every stage of the work: conversation, collaboration, action, and completion. And we really want to become a system of action that can connect work from a conversation to completion. That's why enterprise customers really like our mission.
So I mean, for instance, you mentioned Raymond James, the firm I really like, and that they've become a client, really a very large client. Would they be looking up some contact center interactions and finding out maybe some commonalities, or are they just using it to be able to figure out how to make it so everybody's better at sales? What are the use cases there?
So they are a customer for a long time. When we shared our AI vision with them, they really get it, you know, from conversation to completion. That's why they deployed our customer AI company and with our AI technology to improve their day-to-day workflow.
And how about Figma? What a great client. We think that they might be taking over in that particular segment of AI. What are you doing with them?
So, you know, Figma, right, is a design company. They focus on the vertical market. We leverage AI also focus on the vertical use case as well. Like we have a product for the sales department, product for HR department, product for the contact center, also the product to leverage AI focus on the vertical market as well.
Okay. Now, I love the Zoom customer experience insights, the inquiries, the query contacts, and it would seem to me that these are the kinds of things that you could always take a Zoom client that found, and you've got that great method. You let everybody kind of try it and sample it, and then how do you get them to know about these products? Because it seems like when you tell them about them, they take it.
That's a great question. That's one of the problems we are facing. As I mentioned, right, Zoom's value, you know, goes far beyond meeting. Quite often customers, they do not know that I have so many vertical products and, you know, built for those lines of the business or vertical use case. You know, our marketing strategy is make sure, first of all, make sure the product works, and then gradually let customers understand we have, you know, an entire platform.
Now, you do have some very tough competitors, big, big companies. How are you distinguishing yourself from them, and how can you have good growth knowing that they are, well, let's say, they're very well-known companies that already have a lot of business with different companies that you might be calling on?
Yeah. Our strategy always looks at everything from the customer perspective. For sure we have a few very big competitors, but our threat always is to build the best product to delight customers and essentially build trust. Because when customers, when they are using Zoom, they feel very happy, because our culture is to deliver happiness to our customers.
And how are you able to grow AI Companion paid users 184% year-over-year, and my notes reach 1.5 million licensed users in just four months? What are you doing?
So first of all, product just works. The second is ease of use, and also, you know, especially like AI Companion is part of our package. It's for free at no cost. You know, customers love that it works very well, ease of use, and also for free. That's the reason why, you know, in terms of year-over-year growth, and 184% growth.
Now the company, the growth here is rather astounding versus where it was a couple of years ago. Do you think that you bought back so many shares? When will you get that recognition that I see, which is that this is a very new, faster-growing Zoom, or will you just keep buying in the shares if they keep it at this level?
Yeah, we have a strong balance sheet, so, you know, we always had a strong balance sheet from the very beginning.
I know you always cared about that.
Yeah, because we look at it from a shareholder perspective, right? We just did a billion-dollar buyback. Make sure, you know, and focus on, you know, anti-dilution, right? Make sure your shareholders, they feel happy, you know, make sure we have long-term shareholders. So.
Well, it does seem when you speak with people, Zoom became like the old Xerox or like Kleenex or these — it's just one of these names where they say, let's just do a Zoom call. And then when you find out it's not a Zoom call, it's the other guys, you panic, because no one knows how to use those guys. We all learned how to use Zoom. Have you ever noticed that the strangest — when people say, 'Oh, I do want to do a X call that's not yours,' people want to do a Zoom call.
