My mission is simple: to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now.
Hey, I'm Cramer. Welcome to Mad Money. Welcome to CR America. My friends, I'm just trying to make a little bit of money. My job is not just to entertain you, but to teach. So call me at 1-800-743-CNBC. Tweet me at Jim Cramer. A real bull market has leaders, and those leaders have terrific characteristics. They make a lot of money. There's a limited number of them, and there aren't too many shares around because these companies constantly buy those shares back. Something they can do. Why? Because they're spewing cash and have beautiful balance sheets.
As recently as a few months ago, that described pretty much all the mega-cap tech stocks. But now we're searching for new leadership because tech can no longer be trusted. That's how you get a day like today, where the Nasdaq spent most of the session deep in the red before a late-afternoon rebound. The Dow finished up 86 points. The S&P declined 26%. But even after the rebound, the Nasdaq sunk 97%.
Just think about it. Tech stocks have been the key leaders of this market ever since the mini bank crisis in the spring of 2023. Ever since, we tend to forget, but that's when the Magnificent Seven emerged. That's when we began to see the semiconductors roar. It's when the enterprise software soared. Everything tech, save the commodity chipmakers, just took off. They had perfect leadership qualities: good growth, fantastic balance sheet, steady buyback, scarcity value. The rest of the market seems sluggish and suspect, with uncertain, inconsistent, episodic growth. Sell.
But now we're in a very different moment, aren't we? There's no longer a scarcity of tech. We have some of the biggest IPOs of all time coming: first SpaceX, then Anthropic, OpenAI heading up the rear. The only consistent techs are the ones that were the worst back then, the commodity semis. As usual, they bounced back hard today because there is a huge shortage. But hot money loves a shortage. Back in the heydays of the Magnificent Seven, everybody loved that these tech titans were immensely profitable.
But the new big three that we revere, SpaceX, Anthropic, and OpenAI, they're losing bazillions of dollars. SpaceX will have to do multiple rounds of fundraising if the company's going to keep paying for its grand ambitions in space. That's fine, but it's not what we liked about tech back in 2023. The other two, who knows? They don't have time for profits. The hallmark of the Magnificent Seven: bulletproof balance sheets. That's what allowed them to have these robust buybacks. They were tight. They tended not to cascade. These were huge companies, but there wasn't ever a lot of stock for sale. Secondaries? Are you kidding me? Now, with the exception of Apple and Nvidia, we have stretched balance sheets galore. Alphabet, if you're buying back stock, issued stock. They might not be the only one of the seven that needs to raise money. I look, I can make a case that Amazon, Meta, Microsoft, all might want to sell some equity if I were running the show. I don't know. I don't want to show up at a hyperscaler gunfight with a penknife.
Is there still scarcity value in big tech? Not after SpaceX, then Anthropic and OpenAI, one after another after another. We don't really know when the latter two will come public, but I think those deals could happen sooner than we think. They need the money. Bloomberg says there's a $3.6 trillion AI pipeline. That's just no good. No good at all. No scarcity value here whatsoever. I've said over and over and over again that higher interest rates can certainly hurt a bull market, but nothing kills a bull market like oversupply of stock. We're about to have supply coming out of our ears.
It's so bad that today I found myself wondering if the SpaceX deal is even going to work as well as I thought. Maybe they open as high as Nvidia's $5 trillion valuation because of market orders, and then it goes to Hades in a handbag. Just a gusher of stocks sold by losers who use market orders and are furiously dumping it because they didn't know what they were doing to begin with. The only saving grace: many of the people who are buying it, who intend to buy SpaceX, well, they're used to losing money because they're in Bitcoin and levered ETFs. Yes, it's the hot money that wants in on the SpaceX deal. The worst kind. Meanwhile, all the crypto charts, I got to tell you, they are maybe among the worst I have ever seen in my career.
Whole areas are overwhelmed today, especially the enterprise software space. Once again, all that had to happen was for one of their number to disappoint. It was SailPoint. Again, a cybersecurity company nobody ever heard of, but we know that they have debt. We know they went to Thoma Bravo. We know that things are bad in that area. And then, you know what? They didn't raise their guidance. That's what really happened. The kiss of death that was extrapolated to the rest of the group. SailPoint plunged over 11%. ServiceNow down 6%. Adobe down 3%. And they're not in the same business. Salesforce all the way back down. Let's see: too much supply, tattered balance sheets, gunner shareholders, no scarcity value. Exact opposite of when the Mag Seven were anointed.
And what led us to say, well, that's pretty simple. With a name like this, it's got to be up 10%. That's right, J.M. Smucker. Okay, this is a little bit of a metaphor here. It's a pastiche of pet food, coffee, Uncrustables, peanut butter, fruit sprays, toasted Twinkies. By the way, the Twinkies did well. This company and others have been left for dead, right? Victims of rampant inflation, health concerns, GLP-1. But when you think about it, the food stocks do have scarcity value and decent balance sheets, although not a lot of growth. Okay? And that makes them a little less attractive. Obviously, the other leadership groups are a little more palatable to me: financials and healthcare. The former have limited growth, but their stocks are cheap, having been beaten down by credit worries and lower rates. Credit can still be an issue, but rates will be going stable or higher, and that's good for the banks.
Healthcare. Eureka, I found it. This is the leadership group that we've been looking for. Take Johnson & Johnson. It has been shedding slower-growing divisions like Kenvue, its consumer products business, as well as its commodity orthopedic operations, focusing on fast-growing drugs. I like that. It's got a ton of them. It's got a AAA balance sheet, better than the U.S. government. I like the drug stocks here. I like the UnitedHealth here. I like all the companies that I think would just be, even just not fly-by biotech, but a lot of biotech. We also saw buying in housing-related stocks because we got a strong existing home sales number, best of the year. I discount this group, but it's nice to see it has a pulse, even if it goes like this in the end. Good housing markets impact more than just housing, though. They do. They help retail. Did you see that? I mean, like Williams-Sonoma, terrific. Two thumbs up. Today's buyers are clearly anticipating multiple good housing numbers. Good luck. I wish I could be that bullish.
This weekend, I penned a piece for members of the Investing Club. We'll talk about more of that later, saying that I've grown increasingly negative about the market. I've said over and over and over again that we'd have to cut back buying rather dramatically, and we did some serious selling because I'm so worried about this flood of stock supply. The only cure for too much supply is lower prices. So low that companies don't want to sell stock anymore, and everything else seems attractive to you and me. We are not there yet. We're only on day two of the period of oversupply. But there's not much that can be done until these deals get through the python.
One last auditing. Many of these tech companies are coming public because they need money to build out their data center networks. It's telling that the one company with a buyback that's cheap that will actually benefit from all these IPOs is Nvidia, and it is being slaughtered like everything else. That's the one to buy. That's the one that snaps back first out of this mess. And then the next one is Apple. Still has a balance sheet that's fantastic. Still has the buyback. It still has products we all love. Oh, Wall Street, stop complaining. You can't wait to get your hands on the new theory. Shut up. The bottom line: let's get off margin. Let's stop the gunning and the speculating. Let's raise some cash in the strength. You won't regret it. Shelly in West Virginia. Shelly.
Hey Jim. As I mentioned last time I was on the show, we absolutely love you in West Virginia.
Thank you. The whole state. The whole state. That's fantastic. I like that gorge there. I like, I've been to the gorge. What's going on?
So Netflix is not moving much at all. And my question is, what have been some of Netflix's biggest headwinds? And additionally, is it a buy, sell, or hold?
Okay, I want to buy Netflix. The biggest headwind is that they went and got involved with trying to buy Warner Brothers studio, and everyone thinks, oh, they don't know what they're doing. I think they took the optionality that they had. They debated it. They made a decision, then they decided not to do it because they're going to do fine. I think we're going to look back and think, wow, I bought it down 13%. Not bad. And thank you. And West Virginia's clearly for lovers. Let's go to Vish in California, please. V.
Hi, this is Vish from California. First time caller.
Jim, Jim, what did you think about Broadcom's earnings?
Okay. Okay. Broadcom's earnings were not good, and my trust lost a huge amount of money, and I feel really badly about it. It can make a comeback. I hope there's some insider buying. They did miss the numbers. But if you want to ask what Broadcom was like for me, Broadcom was like a weekend of hell. I got home and I just said, I screwed up. I screwed up on Broadcom. It was just like 1982 when I got something wrong in the market. Nothing's changed. I don't like that. Look, the only cure for too much supply is lower prices. And unfortunately, I don't think we're there yet.
On Mad Money Tonight, Meta is launching a new initiative to address the shortage of skilled workers in the U.S. And I'm learning more about the plan from the company's top brass. Then, I'm sitting down with the CEO of Cloudflare, Matthew Prince, to get an update on how the cybersecurity outfit is navigating the AI era following its high-profile round of layoffs in early May. And then, shares of energy are up more than 18%. This utility so far this year. Can it keep powering higher? I'm going to get the latest from the company CEO on a true growth stock that happens to be a utility. Stay with Cramer.
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Whenever you hear about the problems caused by the great data center buildout, it's always that they push up the price of electricity or consume scarce resources like water. But honestly, the real problem is they're causing a shortage in skilled labor. We're simply not going to be able to complete all these projects without hundreds of thousands more fiber technicians, welders, plumbers, electricians. I bring this up because Meta Platforms just announced a new initiative, teaming up with legendary TV host Mike Rowe to launch America's Workforce Academy, the largest private-sector commitment to the skilled trades in American history. It's basically a paid job training program, starting with $115 million in funding from Meta that will help people get the certificate they need to do these jobs. This is new. It is different, and at a really cynical time in this country, I'm calling it refreshingly constructive. Earlier today, I got the chance to learn more about America's Workforce Academy from Dina Powell McCormick, Meta's president and vice chairman, and Mike Rowe, CEO of the Mike Rowe Works Foundation. Take a look.
Dina and Mike, welcome to Mad Money.
Thank you for having us, Jim. Great to be here.
It's terrific to have you guys. Dina, I'd like to start with you. I want you to define the problem that America's Workforce Academy is addressing. What's the actual difficulty here that you're, that I think you can conquer?
Sure. Well, we've been working on this for a while at Meta, and what we really have seen is that it's so important to focus on giving Americans a pathway to be part of this economic transformation that you talk about every single day. Jim, the problem is that there are hundreds of thousands of open jobs that are needed to build America's infrastructure, from plumbers to electricians to welders to fiber technicians. And there are also hundreds of thousands of Americans who would love to be in those jobs, but they are often working paycheck to paycheck. Uber drivers, grocery clerks, waitresses. I waitressed my way through college. I know what that's like to be focused on just making sure you get the paycheck that week. And that means you can't afford to take time off work. You can't afford the training to get into these fields, and you can't afford to do it if you don't have a job at the end of it. And so America's Workforce Academy is really meant to address those barriers. When you graduate from this five-week, very intensive program, you become job-site ready. You can actually go on a construction and infrastructure site. And of course, after that, you've got to specialize in electricity, in fiber laying, in pipe laying, in weldership. But what we saw is that if you can just get them on the job site and give them that credential with a guaranteed job, you really solve an enormous problem, and you have people that right now are not part of what is going to make America lead in AI.
Boy, do we ever need it. Mike, why aren't more people going into skilled trades? What are the barriers? And what I'm trying to figure out here also is something that you've done better than, really better than anyone in the country: dignity. You have said over and over again that these jobs are about dignity, and we want people to have that in this country.
Dignified jobs, in my estimation, are jobs that ultimately bless somebody other than the worker. Right? Anything that has a positive impact on the country at large or your own zip code is a dignified job. That was the whole thesis of Dirty Jobs, and that's certainly the thesis that's behind this most recent initiative. I think personally, Jim, you know, Mike Rowe Works is closer to the top of the funnel. We deal with stigmas, stereotypes, myths, and misperceptions that, in my estimation, have conspired to keep a whole generation of kids from giving the trades an honest look. So, I've spent most of the last 20 years trying to debunk some of those misperceptions and make a more persuasive case for the jobs that actually exist. What Meta is doing is dealing with that cohort of people who are ready to be persuaded but have run into some kind of financial impediment. There is zero cost to what he's proposing. They pay for transportation, they pay for food, they pay for your training. When you leave, you have your credential and a guaranteed job within the Meta ecosystem, but if you want to leave Meta, you go and you take your accreditation with you. So, they've literally eliminated all of those roadblocks that have existed up until today. So, what this means for the workforce is anybody's guess. I can't wait to see how the needle moves. But what it also means for a lot of the guests that you're about to have on your program is that the bar has been set. The gauntlet has been thrown down. And I think the biggest, most consequential companies in the Fortune 500 are going to be looked at, and people are going to wonder, what are you guys doing to close the skills gap, right?
And the answer better be persuasive.
Can I add to that by just saying something about the point on dignity? I think that's something that we have seen on our job sites, that people want to feel that America is proud of what they're doing. And if you remember during World War II, Americans came together to physically build the arsenal that defeated tyranny in the world. Well, today those frontline American heroes on these job sites are building the infrastructure that's going to help America win in this critical race for our country's national and economic security. And so I think that dignity piece is important. It also is very real. We're not going to win, and American AI is not going to lead, if we don't actually build these sites with these women and men who are getting into these fields. And I think the thing that's really inspiring to us is that you do not have to have, not just a college diploma, you don't have to have a high school diploma. You can actually get through this certification, become job-site ready. And I think it's really important in this time when there's a lot of questions about what's happening in AI that these are individuals that are not being left behind. They are saying, and I think we're hoping that they believe, that the future is for everyone.
You know, when I listen to you, I'm sure there are people who say that I'm being a soft boy here, that I'm not being tough enough on you. But Mike, you know, there are some issues that are not Republican, that are not Democrat. There are some issues that are American. I can try to poke holes in this. But there are times when it doesn't pay to be cynical. Wouldn't you agree?
I would say that an imbalanced workforce is not a workforce at all. Blue and white collar are two sides of the same coin. And part of the reason we have such a massive skills gap is that we've spent the last 40 years telling a whole generation of kids that the best path for the most people comes with a four-year degree. If you don't think that's going to have a massive unintended consequence, especially when you take shop class out of high school at the same time. You know, we were talking earlier. I can draw a pretty straight line to a number of existential dramas right now that are plaguing us, including $1.79 trillion in outstanding student debt, 7.5 million open jobs right now, and nearly 7 million able-bodied men who are not engaged in the workforce. They're not working, and they're not looking for work. That's never happened in our country. Not in peacetime, anyway. So, there's a lot of stuff going on that's going to require a solution. And it's not going to be a cookie-cutter, broad-based thing. It's going to involve companies like Meta. It's going to involve the feds. More on that later. And it's going to involve school districts. You're talking about redefining the definition of a good job and reimagining the way you train the labor for which we're in such desperate need. It's not hyperbolic to invoke the Manhattan Project, and no, I don't remember it, but I read all about it. It was a big deal. And this...
And we're looking at what's next. It's a $10 trillion infrastructure buildout. The stakes are pretty high.
Well, look, I hope this is not the last we hear of this. Dina knows how passionate I am about small business, as she is, and what this can mean. I hope everybody's bought in. I hope the unions are in. I hope the big utilities are in. We need everybody in because it can't be small. It has to be big in order to work. I want to thank Meta Platforms president and vice chairman, Dina Powell McCormick, and Mike Rowe Works Foundation CEO, Mike Rowe. Guys, it means a lot. Okay, we, this is time to talk about this, not just about the quarter.
Thank you, Jim. Thank you for having us.
Absolutely. Mad Money back.
Coming up, Cloudflare's CEO is joining Cramer to make the case why his company stock should be a buy despite the rumored SaaS apocalypse. Next.
Well, it's been a whirlwind few weeks for Cloudflare, the internet infrastructure play with a major cybersecurity business. When the company reported in early May, the numbers were excellent. It was a textbook beat-and-raise quarter, but they also announced some big layoffs amounting to roughly 20% of the workforce. It was done sadly, but they had to do it. And I'm going to tell you why in a second. The stock sold off hard, down over 27% in a three-day losing streak here of the quarter. Then it snapped right back. I would argue it should never have been down. By last week, Cloudflare was setting fresh all-time highs, but with the tech-led selloff that started last Friday, it's now getting hit again, down almost 15% from its highs. This stuff is very hard to keep track of. Today, Cloudflare held a very successful investor day event here at the New York Stock Exchange. And while it wasn't enough to save the stock on a very tough day for tech, I want you to hear the story straight from the source. So, let's check in with Matthew Prince, the co-founder and CEO of Cloudflare, who just rang the closing bell today. Mr. Prince, welcome back, and congratulations on ringing the closing bell.
Thank you so much, Jim. It's great to be here.
Okay, so give me the long-term investment case, because we can do this short-term stuff and it could be wrong tomorrow and right by Thursday. Long-term case.
I think that the long-term case is Cloudflare is building the infrastructure to power the future. We've built a platform that allows us to continue to scale, and what we're seeing is the internet is growing again. For the first time in years, new websites are being created, new applications, but even more importantly, there's actually more traffic going to the websites, and that's all being driven by AI. And Cloudflare is the platform that can keep up with that demand.
Well, I saw you said agent traffic is growing so fast that the bots have now passed human traffic online for the first time in U.S. history. I mean, you got to tell us what that trend means and what it means for Cloudflare in particular.
It's happening so much faster than we anticipated. I predicted last year there'd be the end of 2027 when bot traffic would exceed human traffic. I updated that three months ago to say it's been the first half of 2027, and just the other day it actually crossed it in the first half of 2026. What we're seeing is that agents just drive more traffic online. The way to think about it is, if I'm shopping for a digital camera online, I might visit five websites and then pick one. If I have an agent that's doing it, it might visit 5,000 different websites in order to make a much more informed decision. Someone has to power the infrastructure to power those bots. And that company is Cloudflare.
Wow. Well, that's just a huge amount of business. Now, that also tells me that if one person's in control of all those things, we have to change the way we do our workforce. We have to change what we do at our company. I think you took a very forward approach to this, and it was not a sign of weakness when you lay people off. But you also talked about people as builders, sellers, or measurers. Can you lay out the investment case for why we should all be expecting that these force multipliers may mean we don't need as many people at the company?
Well, I think we might need just as many people. I think it might just be different people. So I go back to Peter Drucker, who wrote some of the seminal books on business, and Peter really described that there were three types of people at companies. There were the people that built products, there are the people that sell the products, and then there's all the other stuff, which he described as measurers, the people that do audits or revenue recognition or all of those different things. It turns out that we need a ton of people building it. If I have an engineer that's now 10 times as productive, I'm going to hire as many engineers as I can. We need people to sell those products, because people still are needed in order to sell it, and our salespeople are more productive than ever.
Because of the tools that we provide them. But measuring all of that work turns out that's what AI is extremely good at. And what we've seen at Cloudflare is that we can replace a lot of those functions that aren't generating revenue, aren't generating products with actual tools that do this. And I think this is going to be the future of business: more builders, more sellers, fewer measures.
Well, I think that you are a pioneer in the sense that you did something that others will have to do somehow because you did it among the first. It was regarded as weakness even as there was nothing in the documents, in the financials, that indicated anything other than strength. What happened? People like realized, well, holy cow, the business is as good as ever, if not stronger, and the stock came right back.
I think that people digested that Cloudflare is doing incredibly well, and they were actually being very sensible. When I talk to peers, almost everyone in tech across the Fortune 500 knows that they're going to have to do this, knows that they're going to have to change what's going on. But a lot of them are frankly not making the decision right now because they want to wait for everyone else to do it. I think that's cowardly because I think the kindest thing that you can do to an employee that you're going to lay off is make the decision as early as possible because those team members were finding jobs.
But the kindest thing is to give them — I was going to say severance and finding jobs. Now, how many of those people have that?
Incredible. Someone who is a middle manager at Cloudflare can be a senior manager at a startup. And it's much easier to find a job today than it will be in six.
That's what I remember because you once told me how it's probably the hardest — one of the hardest places on earth to get a job. So I figure that anyone who is pre-qualified to get other jobs, so that they would get jobs.
They're going to be, and people are clamoring to hire those people. We're helping them make sure — we gave one of the most generous severance packages. We want to make sure that those people succeed. They're great people. They just are not the people that we needed for the next stage of Cloudflare's growth. And what we're doing is not eliminating workforce. We're going to have more people going forward, but those people are going to be different. They're going to be people building products. They're going to be people selling those products. And that's going to mean that we're going to be able to actually just drive more and more growth across Cloudflare.
That's what we wanted for shareholders. Now, I want to talk about Project Glass Wing, Mythos, and what it showed you. And I know you've been in on it to try to figure out the way that things should be done. I think that this outfit does scare us quite a bit.
Yep. Anthropic makes me feel like, well, wait a second, at any given moment something's going to change badly in my life — too extreme. You know, I think we've been partnered with almost all of the big AI companies — OpenAI, Anthropic, all customers of ours. Almost 80% of the AI companies are customers of ours, and we had access to Mythos very early on, tested it, and it's a pretty amazing thing. It's able to find new vulnerabilities in software unlike anything else. And I predict for the next two years, cybersecurity companies are going to be busier than ever. But the good news is that it's helping us build better software. I'll give you an example. At Cloudflare, we took models and we trained them on all the incidents we've ever had — the big public ones, but also the little quiet ones that happened behind the scenes. And we showed a graph to our team where the incidents were kind of bouncing along what they normally were, and then they fell off a cliff. What happened was we actually built systems that measured how good our code was, that looked for vulnerabilities, that found that. And the instant that we turned those on, our reliability went up massively. And so I think for the next two years, every cybersecurity company's phone is going to be ringing off the hook. But two years from now, I think actually if you're doing something like application security, it's actually going to get a lot harder for that to be a real business because we're going to just write better software. And that's where a platform like Cloudflare, that can build that better software, that can make sure it's deployed, that can make sure it's available everywhere in the world and can scale — I think that's a real future for our business.
Well, listening — the hyperscalers, you taught me, until you got involved and started doing it, they were just scraping everything. I now find some of the hyperscalers don't use as high a quality source as I'd like. Is that because basically a lot of the better sources use you and they have no choice but to default to a not-as-good one, or pay up?
Or pay up. And I think that that's what's going to happen is that the internet is going to have a different business model going forward. I would predict that in five years we're going to have 100 times more agent traffic which is going on. So we need some way to compensate content creators like you for the content that you're creating. And what we hear when we talk to the AI companies is if we can build a system where they pay, you know, maybe a small amount to access a piece of content but at a huge scale, that that's something that they're all willing to do. And so there's a new business model of the internet that's going to emerge over the next five years. And Cloudflare is going to be at the center of creating it.
I think as someone who's been in this business for many, many years, if you don't succeed, there'll only be two papers.
Not even two. I mean, I'm not even sure that that exists because you need some business model, and the future business model of the internet is not going to be driven by ads like we think, because bots don't click on ads and bots are how we're going to get all of this traffic. So we have to come up with something different. In the same way that Google invented the business model that's powered the last 27 years of the internet, Cloudflare is going to invent the business model that powers the next 27.
Well, that means that there'll be a business, and I think that's good for America. We want what the founding fathers said, which is a strong press. That's Matthew Prince, co-founder and CEO of Cloudflare, with a stock that has been — don't look at the ups and downs, look at the longer-term direction because it's pretty fabulous. Mad Money's back after the break.
Coming up, Cramer's checking in with Entergy's CEO to see how the company is handling the demand of data centers. Next.
Thanks to the great data center buildout, business is booming for some of the electric utilities. Entergy, a regulated electric utility based in New Orleans with a stock that's up more than 18% year-to-date, 32% over the past 12 months. Proud that we've been recommending it ever since my daughter went to Tulane. The company held its investor day today where management laid out some bullish long-term financial targets thanks in part to Meta's big data center project in northeast Louisiana, but also some other big projects. Entergy even came up with a plan for data centers to pay more for electricity in order to offer a fair deal to ratepayers thanks to their electric service agreements with the heavy hitters. They should be able to deliver $7 billion worth of savings to their customers over the next two decades. So let's take a closer look with Drew Marsh, the chair and CEO of Entergy, to learn more. Mr. Marsh, welcome back to Mad Money.
