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This market keeps going up and up on the same old stuff: news about semiconductors, even old news about semiconductors, retread news about semiconductors, even pure conjecture about semiconductors. Anything remotely positive moves that group higher. Anything remotely negative about any other group is considered catastrophic.
You know what? They tend to cancel each other out when you look at the average. That's why the Dow Jones is up just 12 points, but the S&P gained 0.84%, and the NASDAQ, where there's little to be canceled out, surged 1.71%.
It's where the semis hang out. But the same storage and memory stocks keep flying. Micron up 15.5% today. SanDisk up 16.6%. All in one day, regardless of the on-again, off-again nature of the war with Iran or the on-again, off-again possibility of guessing about a rate cut.
Okay, you want me to guess? Let's just guess how much. Ask me how much money I'm going to make for you right now. Maybe, maybe not. Maybe it'll be a Fed cut, maybe not. The Fed is as much a distraction as an abstraction when it comes to the business of making money.
It's exciting. It is. It really is. And I think you should own one or two or even three of the companies linked to the data center semicapex that I talk about all the time, even if they can't be your entire portfolio, and I don't want them to be. We're coming around to the idea that these data center stocks are what's known as foundational and must be owned.
Ideally, I tell you to buy them on down days, and there are down days occasionally. But if you don't have the patience to wait, it's better to pay up than to not own them at all. Still though, we need to take everything into account, right? Which means the show's not made of semiconductors, which means we need a game plan for next week. And I happen to have one right on this wall.
Look at this. The week starts with an energy supplier that's no stranger to tech. It's Constellation Energy. That's the nuclear-heavy power generator that the big tech companies want to use. They want to use it to power the data centers because nuclear is carbon-free. The earnings have been fine. It's the zeitgeist that matters there.
Tuesday, all right, starts with the Consumer Price Index, CPI. And if you're banking on a rate cut this year, you probably hope this inflation gauge comes in weak. We got a strong set of employment numbers today, albeit with weaker wage growth. Nirvana for the Fed, by the way. Now we just need a softer CPI, and it'll be much easier for the incoming Fed chief to convince the rest of the market committee members to do some cutting.
Searching for an unhurried semiconductor play? I got one here. It's called, yes, DuPont Electronics reports Tuesday morning. This spin-off from DuPont makes materials that are integral to all kinds of semiconductors. The stock's had a big run, but I think we're still going to get a strong set of numbers that might justify the move.
What the heck is wrong with the stock of this Venture Global? One of the best ways to invest in America's worldwide edge on natural gas. Even though the stock's still up huge for the year, it's pulled back about 20% over the past month. I guess because people feel peace is bad for them. I'm not so sure about that. $11 seems right to me.
At the same time, we get earnings from not one but two sports apparel plays: On Holding and Under Armour. Now, I'm worried about On — some very quick management turnover there without a lot of explanation. But Under Armour, I think the turnaround is here, and you can still get in before CEO Kevin Plank really fires up the engine. Too many people still wear that distinctive Under Armour insignia all over the place, decorating a hat or a shirt, for me to write this guy off.
Wednesday, Wednesday, we hear from a company called Nebius. And that's a company that Nvidia poured $2 billion into because they want Nebius to help develop knowledge factories. This is a big deal for this relatively unknown AI company, and it's part of a constellation that Nvidia has put together to ensure that clients can take advantage of Nvidia's best chips.
Now, Cisco reports this night, and I got to tell you, its stock is galloping like 1999. Cisco is just moving like this because it's one of only a handful of networking companies that are dominant in the data center. Arista and Ciena are the other two. My gut says you may be a little late to buy Cisco without a pullback because this has been a monster move. But my brain says the stock sells for just 23 times forward earnings, so it isn't all that expensive.
Nothing's ever perfect with Cisco, though, so please be careful. The future is bright for the data center part of the business. Let's find out about the rest. Thursday, we're going to get the latest from Figma. Okay. Now, this is an eclectic design distributor that's made life difficult for Adobe, which at one point had it all to itself.
I don't know if the company can deliver terrific earnings, but I do know that you probably don't want to own Adobe on the day Figma reports. Remember, just a few years back, Adobe tried to buy Figma for about $20 billion. The bid drew too much regulatory scrutiny to go forward. Figma's only worth $10 billion now.
Now, one reason we've seen such incredible runs in the plays on semiconductor stocks is that there simply aren't enough machines out there to help boost production. Don't understand the concept? It's very easy. Go to the Applied Materials conference call on Thursday afternoon, along with their deck, for a refresher. They'll tell you that they simply can't produce enough semiconductor capital equipment to make the semis. Competitors Lam Research and KLA are in the same position.
This confluence of lackluster supply and insatiable demand makes me feel like you can still buy those stocks, too. Not much of note on Friday. All right, we begin that period where things slow down towards the end of the week.
We always search for analogs in this business, and I've never seen anything like what's happening with these semiconductor stocks. And I never thought that I'd say that, given the great run I had trading them at Grand Central Station when a brokerage house placed a machine there. You were allowed to hit up five quotes. It was summer of 1984. I bought five semis, would go endlessly after my bar exam prep and watch them fly. They were one-direction stocks back then. So you looked at Motorola, Texas Instruments, and you thought you were just getting rich because the whole country was going digital.
Now the country is going toward an agentic world where thinking machines can do all sorts of heavy lifting that we can't do. Some doubt this whole movement. They're skeptical because so many data center-related stocks are going parabolic here, and that usually doesn't end well, and I agree with that.
But the bottom line, I look at it another way. When I talk about how amazing what is happening right now and how this time is really different, the cynics — and that's most people — heckle me and warn me that my thinking is dangerous to their wallet. I say this is still a gigantic opportunity, and I am also telling you right now, it is not too late to buy.
We will get dips. There will be plenty of negative stories by greedy press. There was one yesterday that was just totally made up. It could give a great opportunity to buy a stock. I'm not going to go into it because that would make fun of someone. But that's when you have to pounce because these stocks don't have much quit in them, even for a day. Let's go to Steve in South Carolina. Steve.
Hey, Jim. Booyah. It's Friday. How are we doing?
I am doing well. Booyah. What's going on?
Hey, UPS. Stock's down about 20% year to date. The earnings per share first quarter wasn't pretty, and now Amazon's getting into logistics. What do you think going forward with the stock price?
Well, I don't, you know, look, it's got that 6.8% yield, but I don't buy stocks for yield. I buy stocks for growth, and therefore I buy FedEx because that is the winner. Raj Subramaniam doing a remarkable job. I want to go to Vincent in Texas. Vincent.
Oh yeah. Vincent from Houston, Texas, with my wife Tony, my dog Wubba, and my daughter Veronica, who's about to turn one this Sunday on Mother's Day. Happy birthday. I love you, and happy Mother's Day to all moms.
With US-Iran tensions unpredictable, is Valero Energy a buy here, or would you wait for more clarity? Thank you, Jim.
Valero, I like Valero. I mean, Valero's got that... Look, as long as we've got this spread that they've got right now between the price of gasoline and what they buy the oil for, you are just going to print money, and Valero will print money for you. Hey, how about we go to Bob in Florida. Bob.
Hey, uh, Mr. Cramer, thank you for taking my phone call.
Of course, Bob. What's going on?
Oh, not a whole lot. Hey, I had a quick question on Waste Management. I started a small position at the beginning of the year, and then it was looking like it was getting ready to break out, so I bought some more. But the past two months, the stock's been a dog in my portfolio. Do you think I should hold, buy more, or sell this position?
You know, I saw somebody say some negative things about Waste Management today, and it's been going down pretty consistently for the last like four or five days. I think rather than just say it's time to buy, let me do this. Let me do some work on what they said at the May 7th OppCo conference. Let me do some work about who's driving the stock lower, because someone is, and it's a darn good company. Maybe we should get involved. I will do the work. I promise.
All right. It's not too late to buy some of these red-hot data center stocks, including Micron, which is the one that I think is, by the way, the cheapest even after this run. We're earlier in this phase than you think.
May I tell you, Affirm is down for the year, but its latest earnings, they were really good. So it's now time to take a look at this one. They got that buy now, pay later stuff. I'm finding out with the CEO. Then RBI's earnings were boosted by a whopper quarter from Burger King. So what's next for the fast food stock? I'm going to find out. And specialty chemicals company Element Solutions sounds boring, but it is anything but. So you better pay attention. I'm learning more when I sit down with the CEO. Stay with Cramer.
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All right. What do we make of these numbers from Affirm Holdings, the king of buy now, pay later? This stock's been roaring, up about 30% since its early April lows, but it's still down 13% for the year, and it got hit hard today, off 5%. Why? Okay, last night Affirm reported what I thought was a terrific quarter. This is now a very profitable business, and Affirm's network has gotten a lot more powerful. Earlier today, we spoke with Max Levchin, the founder and CEO of Affirm Holdings, to learn more. I think you're getting a great opportunity here. Take a look.
Mr. Levchin, welcome back to Mad Money.
Great to be here. Good to see you.
All right, Max. This was really a terrific quarter. Gross merchandise value up 35%, revenue up 33%, net income gigantic. Should we be thinking... I felt that yes indeed. I know you view yourself as a startup, but these are the kinds of numbers I expect from a really, really good merchant, good lender, and that is really what I think of you now at Affirm.
Thank you. That is the place we're at. You know, I tell everyone who asks, 'Are we still a startup?' We are. We're still inventing new things, breaking new ground, trying to come up with cool, new, unexpected ideas. But we are a real going concern. These aren't small numbers by any stretch.
We've generated an enormous amount of cash flow, which is something we really don't talk about, but it's time to pay attention to that. And Affirm is a real business. It's almost 15 years in. It's time to generate some real numbers, and it's exciting to be here.
But at the same time, you've been low-key. I mean, when you have your meetings, you have a meeting coming up soon and it's about nothing. When I read the 8-K, it's about nothing. How can that be?
Um, we have this... A lot of Affirm is about having fun while doing what we think is really important work, and the Big Nothing is no exception. It's the name of our shopping event. So it's the second one. So, you know, it's too early to say how many times per year we'll do it, but it's the first one this year. And it's pretty amazing.
You know, you and I share views on sort of what the lending industry at large does wrong. And that's, you know, it hides the fine print. It charges, you know, unforgivable fees from my point of view. So Big Nothing is kind of the counterweight to it all. It's an event where pretty much everyone gets a 0% deal where they pay no interest. Nothing. And there's no asterisk. It's not a joke. It's not a trick. You are not going to pay any interest if you participate in a transaction during these Big Nothing days.
And we have thousands of merchants that are super excited to basically pay interest for you because they would love to have your business. They would love to sell you whatever it is that they're selling. So it's coming up next week. I'm super excited. We ran the first one last year. It was a huge success. It drove 20, 30% increases overnight for the participating merchants. And obviously we made it our business to let everyone know, and sure enough, there was a lot of demand for the next one.
Well, that was my subterfuge to be able to make everybody know because I think it's radical. It's a radical thing you're doing.
We are a radical business.
Now, another thing, speaking of radical, another thing you do — I mean, I regard most credit card companies as companies that charge a lot of interest and they spend a lot of money to market. And the marketing doesn't really talk about the interest. I looked at your marketing budget. It's really not that much, is it?
It's essentially nothing. I mean, we occasionally spend money to pay for some of the interest that consumers would have paid ourselves, but even that is the tiniest amount and going down because the merchants have realized that this is a great investment of their marketing budget, and so that is what they do now with these Big Nothing days and similar promos.
But yeah, you're exactly right, actually. I never thought of it, but marketing from the traditional lenders is all about not interest, while we take great pride in being over-disclosive. If there's interest to pay, we put it right in front of you and make sure you understand what you're getting into. And most of the time, we just try to make sure you don't pay a penny more than you absolutely must.
Well, it seems like you're such a good underwriter. The default level, it's almost... Look, you think that the economy is just as strong as it was last year, right? I mean, the numbers are really remarkable.
You know, we kept it very steady, and that is absolutely the outcome of our extraordinary, if I do say so myself, AI machine learning team. We've been investing in building the best underwriting engine in the world, we think, for 15 years. And it really shows.
We employ some unbelievably brilliant people that are as good or better, I would argue, than some of the frontier AI labs have. And they're motivated by the mission. They really want to make sure we only lend money when the person on the other side can and will pay us back, which allows us to reduce costs on everyone — us, but also the consumers and the capital markets providers that we work with. And it shows, and you can see it in numbers every quarter.
I thought that one of the things that I really loved about your conference call was you made it clear that you are not in the slash-and-burn mode. Some people are saying, 'Yes, you know what, we have AI, we can fire as many people.' You are more from the Jensen Huang mode, which is that we old people are even more productive, which theoretically you can just keep adding people, become more and more productive, it's a positive flywheel. And you made a point that you think that you can get more out of each person, and people actually obviously love being more productive.
100%. That's exactly where I am. I don't really understand this strange sort of idea sweeping the industry where people are using AI as kind of a fig leaf. You know, if you must conduct a layoff, it's no fun. You know, every one of us has had to do it at some point or another. There's no need to blame AI for it. Just own that part of it.
Right now, our engineering team is standardizing on this notion that everyone has to be a 10x engineer. These tools are that good, and they're getting better. But the list of things we want to get done is not 10x. It's like a 100x of what we could do last year. We're not going to fire people and do fewer things. We'll just do more things sooner. And it's exciting.
And a lot of the parts that were considered drudgery, quote unquote, are gone because AI is that good. It'll do that part for you. You still have to be creative. You still have to be intelligent. You still have to have taste. You still have to decide what the right product is for the moment for the end customer. All of that is human work. And AI is in no danger of taking that away from you. So if you love what you do, you're more productive. Full stop. Just, you know, produce more things in less time.
Well, you also seem to have fun. I mean, at one point you said, 'Listen, we were trying to figure out what to do. We were not sure.' So you had a hackathon. Now, I mean, you had a... I mean, literally, I've seen hackathons. They are for creative people a great moment. So you guys are just creating... you're creating an atmosphere where if someone has a really good idea, it goes right to you, and it might be done very quickly.
You took the words out of my mouth. So we literally just wrapped up a hackathon, another one. I mean, we do a lot of these. In fact, at the end of this one, I said, 'Maybe we should just switch our entire company to like a permanent hackathon mode. This is so much fun.' And people are so excited to be here.
So we had over a hundred people just in our product team come together. They produced 37 shippable products in the span of two days. And like the only thing I had to deal with was this complete sensory overload where I was trying to decide what goes first because these were all great ideas, beautifully made by very small teams of people who were just excited to be there. Like they're changing the world and doing it 10 times faster than they did last year. So it's amazing. It's an amazing time to be a software engineer. It's an amazing time to be a product manager. It's just so much fun.
I always wanted to ask you: if there weren't such things as credit cards and you had been first, would people take a credit card knowing that, well, you could work with Affirm and try to be really good about your money, or you could end up being stuck the rest of your life paying debt? I mean, I would never have let a credit card be issued if Affirm had been first.
You know, it's the sort of A/B test. You can only run one side of it. Unfortunately, we don't get to find out what the past would have looked like or the future would have looked like. You know, obviously I'm extremely biased, and the entire company, I would hope, is extremely biased. We're very mission-driven. We believe that what we're doing is profoundly important for the health of the American consumer, at this point beyond America.
We're, you know, we're live in a bunch of countries and going to more. I do think there's the right and the wrong way. And, you know, we're not apologetic about how we conduct our business. We think it's about transparency. We think it's about being smart about using your money, stretching it, making sure that you get the most out of it you can, and not paying more than you must, and not finding yourself in debt that you can't explain or can't get out of. And that is what motivates us. And every day I get emails from our consumers and from our employees saying, 'It's amazing that Affirm exists. It's so great that we started this thing.'
Oh, you do have a great panoply of merchants. I know that your defaults are very low, but are the number of transactions holding up? I mean, I keep reading that, you know, in this K-shaped economy, people are just buying less and doing less. But you've got a good view of things. Are the actual traffic and transactions lower?
It is not. If anything, the remarkable thing about this moment in time is that while the vibe is undoubtedly, you know, concerned is probably the right word. There's a lot of things macroeconomically that are, you know, we wake up to news from all sorts of parts of the world that are not necessarily heartwarming. American consumer is unbelievably resilient. We printed another increase in transactions per average user this quarter, going up again.
Every metric I could look at suggested US consumers are resilient. They're shopping. They're paying their bills on time. They are generally speaking just as shopping-obsessed as they were this time last year, three months ago, six months ago, etc.
Different categories. You know, travel is a little bit more expensive, but we think of travel and ticketing as a single category. We saw a huge rise in travel and ticketing this quarter, and I was trying to figure out why, and I realized there's a lot of concerts coming up in the summer. People are financing — you know, tickets are not cheap — and we are there to help people get to their favorite band and, you know, watch them.
We saw a really nice rise in home wares, which for a few quarters was a laggard in our portfolio of categories, and I think kind of it ebbs and flows. People decide, hey, you know what? It's time to refresh my living room. So generally speaking, no, we're not seeing any decline either in financial health or in interest in shopping.
Well, we're going to leave it at that, but that's terrific, and everyone should read their documents and understand this is a different kind of financial company. All right. It's not really a finance company. It's a company to try to help people buy things and not get in trouble for buying them. And I really like that. That's Max Levchin, CEO of Affirm. Thanks for doing it differently, Max.
Thank you. It's always a pleasure to see you.
Thank you. Mad Money's back after the break.
Coming up, Burger King's latest quarter suggests it's not just the customers having it their way. So has the company flipped to the top of the fast food pile? Cramer's digging in with the top brass next.
Oh boy, it's been a tough earnings season for the fast food space. We've heard some incredibly disappointing things from Shake Shack. Even McDonald's seems to be getting dragged down by the poor state of the consumer. But when we heard from Restaurant Brands International earlier this week — that's the parent company of Burger King, Tim Hortons — they reported a pretty solid quarter. More importantly, they told us that Burger King's American business is taking share and taking names. I was astonished. 5.8% same-store sales growth. A lot of guys have double-digit declines. Burger King has spent years working to turn...
itself around, improving restaurant operations, modernizing the store, offering better menu items, and according to management, this is not an outlier. It's the new normal. Do not take it from me. Let's check with Tom Curtis. He's the president of Burger King to get a better read on things, how things are going. Mr. Curtis, welcome to Mad Money.
Hi, Jim. Great to be here and thanks for having me.
All right, so Tom, I love the changes at Burger King. I was aware of them mostly because Pat Doyle's an old friend from Domino's, but I like things even the things where you're elevating the Whopper. I love the Whopper. I didn't know it could be better. You did. Why did you bother to do that? How did you know that it was time for a revamp?
Well, we've been listening to our guests a lot lately. So, I've taken over seven... well, our team's taken over 7,000 calls. I've personally taken 1,800 from the guests and we've got over 70,000 incoming calls. We can aggregate all of that. And what we've learned is that people love the Whopper, but sometimes they think it gets smushed and sometimes they didn't quite like the bun that it was presented on. So, we knew exactly where to go.
Well, I mean, how did you know that people want that kind of bun? I mean, I would be afraid that there were people who love the Whopper so much that they wouldn't want change.
Well, that's why we had to be really nuanced with the changes. We'd been looking at changes to the Whopper for over two years, and some of the early ideas that we had were pretty sweeping, but one thing that we heard loud and clear was that people love the Whopper, it just needed to be a couple of small changes and packaging was frankly the biggest one of them that could make it actually better without changing the profile of the taste.
Now, you've also historically under-indexed with families, but these new King Jr. meals, SpongeBob featured family-oriented promotions. It's working, isn't it?
Well, that's working. And also, what's working is what you mentioned a few minutes earlier, which is upgrading the restaurants and improving the experience. When you bring your family to a restaurant, you're really entrusting that experience to a team and to what kind of facility they're visiting. So, it has to be a better experience. That's important as well. But we're now up 40% on our kids meals from where we were six months ago just because of all these efforts.
Well, also, but roughly 60% of the Burger Kings are now modern. So, you still got another lift coming, don't you?
That's what we're most excited about. We feel like we're in the early innings of this transformation. And if this is the result that we're seeing after the work that we've done, we feel like we have years of runway ahead of us where we're going to continue to grow this brand.
I love the fact that Pat, when he, executive chairman, when he said at the end of the last conference call, he said there are others in the industry where things are really clearly getting worse and they are losing share. Our teams are obsessed with being on the right side and that's about Burger King. That's a high compliment from someone who has a great attention to detail. So, they're noticing it within the organization, too. Correct.
Absolutely. You know, Patrick Doyle sits right next to me in the office, so I get plenty of solicited and unsolicited advice, all of which I appreciate. But just listening to him, getting his counsel and advice every day. And you know, we were both at Domino's for many years and we learned a lot there. We're putting that learning to work here. And it's obviously starting to make a huge difference.
Well, you're right about listening to guests. That was another thing that Pat... I know that was too much about Pat and not you, but Pat has been on the show a number of times, but I called him from a Burger King. I love to go to Burger King, from a Burger King in Germany. Don't need to be more specific. And I didn't like what I saw and he said it was fixed the next day. I mean, because when he hears from a guest, a guest is his boss. That's kind of the attitude I see from your company now.
And just think of what that means when you're getting 71,000 incoming calls. How many opportunities is that to actually change the experience for the guest? And boy, when they actually see that change happen themselves, boy, it ignites an incredible love for the brand because the brand's listening. The brand's acting on their feedback.
Now, of course, I saved this for last, but the pricing, the value without a value word. The pricing is rather extraordinary. You're well under a lot of other organizations.
Yeah. When we contemplated these changes to the Whopper, for example, we knew that would add cost and that was actually $4,000 of additional pressure on the P&L for our franchises. They all locked arms with us and agreed they were not going to change the pricing. It is a value-oriented economy out there and we have to be cognizant of that. So, we have to be there with value and we have to be there with good prices on our core products. All of that is necessary right now in this economy.
Well, Tex Rito said last night, I'm sure you and I both know, great operator, that they saw for the first time actual substitution. People just said, 'I can't afford beef. I'm switching to chicken and pork.' Have you seen anybody move over? Well, this would be your whole chain. It may not be fair to ask you, but have you seen demand destruction?
No. Because once again, if you're able to offer a quality beef product, a great Whopper, and you don't take price, you actually become more attractive in the burger universe. Because as burgers are getting either smaller or more expensive elsewhere, we're holding serve and that's attractive to guests. And that's why you see what you saw in quarter one. And that's why there was even an acceleration throughout the quarter and we're hopeful that that sticks for quarters to come.
Now, do you think there's any hope that beef comes down? You guys would not see it necessarily because you don't have the demand destruction, but everyone keeps telling me until the herd gets bigger, we're just stuck. I've always felt that either maybe because they bring in beef from overseas or because people just get away from beef because it's too expensive, that it can come down. But it has been the stickiest of every single commodity.
Well, it's always most painful when the prices are high for beef. But I will tell you that we've seen this over many, many decades. It's about a 14-year cycle from peak to trough. We know we're at the peak. I think the question now is when does it turn? When does it start to come down? And how fast is that deceleration in prices of beef?
Well, let's hope it happens. A lot of Americans, it's still a staple and we need protein as it is. Well, Tom, I want to thank you. Yeah, it was great to talk to you and I, you know, tell Patrick you said hi and I love all the other stocks in the group. They haven't done that well. So, thanks for making money for shareholders.
All right. Thank you, Jim. Love being here.
Oh, it's great. That's Tom Curtis, Burger King president. Back after the break.
