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Look, I get it. The bull case in the data center has always seemed too good to be true. So many companies spending hundreds of billions of dollars sounds like something right out of the dot-com period. It's very easy to assume that there's no way these expenditures are going to make any sense, and the only real winner is going to be Nvidia because they make the chips. Come on.
That's the rap in a nutshell. You know that. And when Iran isn't dominating the headlines, it's what we tend to fall back on. Today was a day when the Iranians broke off talks, claiming the US government is dragging its feet in the talks to end the war. Yet somehow the averages still clawed their way back. Yes, the Dow losing 46 points to be gaining 26%. Nasdaq climbing 42%. Why?
Let me explain this very carefully, because this session, perhaps more than any of late, showcased the possibilities of the data center as a truly broad, legitimate investment theme. And it did so in a way that made people feel that the so-called fourth industrial revolution might be less boom-bust than we thought. See, the railroad boom changed the world. But the railroads, well, they busted. They practically bankrupted the darn country.
While we kept using trains, the initial investors in those trains did get obliterated. What triggered the newfound optimism and this insanely positive tech session that made me feel like it's not going to be boom-bust? It was a hugely important keynote speech by Nvidia's Jensen Huang at the Computex festival in Taiwan. He had so many insights, but let me distill the winners and the losers so you don't have to waste your time.
Although I have to tell you, I enjoyed the speech so much, and I did feel it was time well spent. The discussion started with the power of the Vera Rubin, which is Nvidia's latest supercomputing architecture for the data center, shipping in scale. Then he pivoted to talk about how their new product, this revolutionary new product where they'll have millions ready in the fall, it's the RTX Spark Superchip.
That's an ARM-based product for this PC that works best with the AI agents that Jensen sees proliferating all over the place. This is a CPU combined with a GPU in a single package. The CPU category is currently based on AMD and Intel. It's x86-based tech, and Jensen said those are just designed for personal computers, but they're not good enough for AI agents. His are. That, of course, sent club name ARM Holdings higher, while Intel and AMD got hit.
Then he talked about how he's lowering the price of compute drastically so his partners will make more money. The initial winners will be the data center builders, with Oracle, Nebius, and CoreWeave getting a nice shout-out, and then users, which will be like the sovereign funds from Indonesia, India, and then as well as Microsoft, OpenAI, Anthropic, and SpaceX. I saw that Amazon and Alphabet were pointedly absent among the winners. That's right.
Although Jensen did mention that Alphabet uses some of their most advanced products. Alphabet, by the way, announced after the close it's going to raise an astounding $80 billion in equity, with Berkshire Hathaway agreeing to buy $10 billion of that in a private placement deal. Amazon stock's down along with that. By the way, Jensen's not mentioning much about Amazon and Alphabet is important because they have their own lines of chips which Jensen continues to challenge, but neither feels the need to defend itself.
That's a debate I've thrust myself into, saying that you need to be in all three companies because the opportunity is so great. That's right. I'm not saying either-or. I like them all. The rest of this Computex talk had to do with all the amazing things that people will be able to do with this technology. And now the personal computers using his ARM-based superchips will become far more powerful and creative than those based on the old architecture.
And that's why Nvidia stock rallied 6% today, and Microsoft, who they're working with on this, gained 2%. It was incredibly heartening at a time when we're getting very suspicious of the data center as a concept, let alone a profit center. Until this keynote, I was getting the feeling that the bubble contingent had lately had the upper hand. They talked endlessly about the waste of the data center buildout, the lack of power, the despoilation, the ruination of the area, the destruction of jobs.
I think the endless talk from Jensen at Computex that compute is money, that compute will give you a big return, and we all know that it's going to be a big run for many companies, is truly a tide-turner. It just felt right. Can they deal with the community problems? At the end of the day, these are companies with incredibly deep pockets. It's not hard for them to buy off the communities that will be affected.
We'll learn more, maybe much more, about the economics of it all as Anthropic just filed to go public today. They're not seen as a marquee client for Nvidia. They have a $14 billion investment from Amazon, and Amazon's chips are crucial to Anthropic. But when Jensen put up a list of key clients, there they were, along with OpenAI and SpaceX. As important as those three are, Jensen spent more time talking about sovereign AI, mentioning countries like Indonesia and India as important clients.
I got the sense that as big as Alphabet and Amazon might be as clients, their endless attempts to present themselves as friends when they're also competitors is starting to wear thin with everybody. But there are plenty of other customers. So I am not as concerned, because you know that Nvidia has a big position on trust. How about the actual business for other companies? This is where the fourth industrial revolution comes in.
CoreWeave, Nebius, and Iran got mentioned as the companies that do the building, and they're worth a great deal of money according to Jensen. HPE, by the way, was a great number after the close. Dell, obviously, he says those are terrific. The companies that bring the power and the companies that create the power didn't get much of a nod. That's okay. Every day something new happens, like the Caterpillar deal I told you about, where the money managers are stringing up turbines and hauling them into the data center area and then pumping it right into the machines. It's a big business.
And Cat just told you today that it can plug turbines into nearly any nearby natural gas reservoir to generate plenty of electricity. More revelations: Jensen said he didn't want to destroy software, allowing almost every software stock to soar higher. It was an unprecedented software jailbreak. Just last week, this group was left for dead. Now many are up 30% on nothing but what may be a short squeeze. Salesforce, ServiceNow, incredible.
Perhaps the most shocking news came out of Taipei with the new alignments in the PC world. Before today, it was widely perceived that Intel and Nvidia might be doing an any-and-all strategy. I mean, maybe with Intel, maybe AMD, all partners together in PC. Uh-uh. Jensen doesn't think that it's going to work that well with the AI agents that these machines are meant for. He'll be making his own CPUs, ones that work well with Microsoft. That's ARM-based.
Shows that Jensen heard the catcalls, knows that they have to run better, and ARM is going to help him do it. I gotta be honest, I've been getting a little leery of all the Nvidia announcements that never seemed to move the needle. I was heartsick at that botched rebalancing from some unknown index on Friday afternoon that sent the stock down six points in just a few minutes at the close. The largest company on Earth goes down six points in a few minutes.
These index deals have to take place when there are still buybacks working. Buybacks stop at 3:50 p.m. That rule needs to change. And I've got to tell you, I think there were some real shenanigans that should be investigated. What happened last Friday was just wrong. But the bottom line, this time, Nvidia truly delivered just when you least expect it. There's a reason I told you to keep an eye on this Computex conference.
Nvidia is going to break out now, I think, as its dominance reasserts itself and the investors realize that somehow it's now the least expensive stock in the entire group. Let's take calls. Let's go to Michael in New Jersey. Michael.
Hello, Mr. Cramer. Booyah.
Hey, now tell me your thoughts on Bank of America under Mr. Brian Moynihan's leadership.
11 times earnings. 11 times earnings, which means, I don't know, frankly, there's something that's not that great happening there. But then again, Wells, which you own for the child press, is on 11 times earnings. These now are the cheapest stocks in the market. So someone must think they're just value traps. I got to call the backboard to find out what the heck is going on. All right.
Now, this is why I told you to watch the Computex conference. It's yet more proof that Nvidia will keep delivering and it will matter. It finally started mattering today, and I think it's just beginning. Although, we got that big Google deal we got to deal with. FedEx Freight officially began trading today, highly anticipated spin-off. I'm sitting down with the new company's CEO to find out what's going to happen with that one.
Then there's a lot of questions surrounding SpaceX's IPO, including how the heck it's going to actually work. I'm digging into unique lock-up details so you can do your homework before investing. And the AI boom has led to spin action in some sorts of unexpected places, including Nokia. I'm taking a close look at why this cell phone play has suddenly become an AI darling. So stay with Cramer.
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Today, the long-awaited breakup of FedEx finally arrived as FedEx Freight, their former less-than-truckload business, began regular weight trading on the New York Stock Exchange. That's under the ticker, write this down, FDXF. I've said repeatedly that I like this move for FedEx, one of the newest positions in my charitable trust. But what do we do with the spin-off, the largest less-than-truckload, that's called LTL, carrier in North America?
Now, we've spent years mired in a prolonged freight recession, but in recent months, the whole group's been making a nice move higher. So, for FedEx shareholders who now find themselves holding some FedEx Freight, what do you do with it? Let's take our question straight to the source. That's John Smith, the president and CEO of FedEx Freight, so we can get a better read on the situation. Mr. Smith, you're back on the new gig, and welcome to Mad Money.
Well, thanks for having me on the show, Jim.
Well, I'm so glad you're here, John. First, maybe you can tell us what it means to be unlocked. You know, we think the world of FedEx. I know everyone does, but it's also good if you're going to run an independent company to be free of FedEx. So what do you see happening?
Well, absolutely. And being part of a $90 billion company, and you're about $9 billion of that, you know, there's certain things that get prioritized before the $9 billion. And the things that we are going to be able to control now, especially from a capital and investment perspective, be able to put dollars into the LTL company that are LTL-specific, and that's going to get us back on and help us leapfrog the competitors out there in the LTL market. So, we're super excited about being independent.
Now, there are some good companies. There's Old Dominion has really good margins, and you've got a couple of companies that are scrappy that we know about. What should we be looking at to be able to measure your performance against, say, a JB Hunt, XPO, that we've all looked at?
Yeah, that's a great point. In this industry, the LTL industry is a strong industry, and that's one of the reasons that, you know, from a value perspective, why we did spin this company off to be independent, so that we can unlock that value. We, you know, we always watch our competitors, we respect our competitors, but we feel like that we have advantages, especially from a network perspective, when we're the largest by far and the fastest as well as the most reliable. So when you think about what we're spinning out with that iconic FedEx name, we are really excited becoming independent.
And I don't know, I think as someone who's used truckers to have priority versus economy, economy when I'm not doing that well, frankly, priority when I am doing well, it's a great opportunity and a great, I think that's something the other guys don't have.
Absolutely. And it's a differentiator because it gives the customer a choice. And we have several customers that use both. Some that use all priority, some use economy. But a great example, we've got customers that ship from B2B, warehouse to warehouse, and use economy because they can plan further ahead. But we've also, that same customer will ship priority because when they go to their customer from the warehouse, they want that speed that we give them and that reliability. So we've got customers that use both, some that use only priority, some that use economy. So it does give them a great choice.
Okay. So what do you think we should be looking at as shareholders? Margin improvement, debt paydown, customer growth, new vertical success. What are those, are some of that I've been trying to focus on to be able to keep track of your progress?
I think all the above. And when you think about back in 2009 when we integrated all the back office and the sales team into the enterprise, we basically just been running this company as an operation. And so now we have, we're getting back control. We've hired an LTL salesforce. We have improving our customer-facing technology. All those things that we're doing that we know the website used to take five clicks to get to the freight website within the enterprise, and now it's one, and it's a lot more useful than it was in the past.
So all those things that are going to level the playing field and also allow us to leapfrog, we've been working on those very hard for the year. Now, we've got several things left to pull leverage out of this company to do, and that's why, you know, over the next three years, we laid out a plan to be at a certain point in 2029 with a 15% margin. However, that's not the ceiling, and you know, we've got a lot of work to do to get off the TSAs, the transitional service agreements, and some of the technology that we need to build to really truly update our systems.
Now, there were some other things I read that would tell me that it wouldn't work unless you made changes. The dashboard they have where you would have customers and they would be seeing FedEx stuff and FedEx Freight, they don't need to see FedEx anymore. Obviously, you got to change their technology.
Yeah. Not only that, but when you, we built a ton of new technology, but when your parcel business is $80 billion of the $90, most of that technology spend is going to be in, rightfully so, right? And so what we tried to do with the LTL company is try to work that technology in there, and we just basically made it more complicated. And that's what we're doing right now. We're, you know, we're untangling that. Plus, we're leapfrogging because we're building two net-new platform-type technology that's going to give us the ability to utilize AI and machine learning.
Right. Now, I know in all of your publications, of course, you always start with safety first, which is the way it has to be. And I was curious to know whether you thought that self-driving trucks are safe, because maybe some people say that's the future. Can't find as many drivers who like other people just say, listen, drivers get tired, but the machines don't. I'm trying to figure out whether you think they're safe.
Well, when you think about the two types of drivers in the LTL business, you have a pickup and delivery driver that will never be replaced by an autonomous vehicle. The other, the line haul, right now we've been testing that technology at FEC, remain co. We've been running retail business from Dallas to Houston and back, Dallas to El Paso for the last couple of years, and I'm telling you, Jim, that technology is there.
We can leave that yard in Dallas, and it navigates to the interstate, runs down to Houston, navigates to that facility, and 99.9% of the time, drivers never touch one thing. Now, that truck does have a safety driver in there. So, what we're doing, we're looking at that. But what we like about the autonomous vehicle technology is the other safety technology that they had to develop in order to be autonomous, and we've got those all on our trucks now. So, it's made our company drivers more safe.
That's great. Now, also, you mentioned something I think people should recognize that I think is a huge advantage for you. There is, you said that people, the first kind of driver, someone who, you know, can drop off, pick up, they are wearing the uniform, which I think we like to see. I think that we are kind of like, who's that guy? I don't want the who's-that-guy at my house. You know what I mean? So it's a big advantage for you.
Yeah. And all our drivers have uniforms, and you know it's a FedEx driver. And I tell you, when you think about our workforce, we've got the best in the industry. Our drivers have shown that when we compete in the national truck driving championships, just last year in 2025, we had more than 50% of the total winners just from Freight, and of course, we have the 2025 national grand champion at Freight.
I read that competition. I got to know more. They should be showing that. I should be following that more. Now, profitable growth is your north star, said twice in the conference call. How do we measure what profitable growth is?
Well, I think, you know, when we talk about where we're sitting today and where we're going to go to 2029 from an operating ratio, we want to be able to grow revenue and take market share, but we also want to improve our operating ratio every year. And so, that margin is really important for us. And one of the ways that we feel really good about that is the verticals that we talked about that we have not been able to sell in due to the fact that we did not have a dedicated LTL salesforce to do that.
Plus, the way we're incenting our sales team is a little different than what we've done in the past. We're going to incent them on growth as well as increasing profit by the area that they're in control of. So, you know, you got to do both. You can't just grow. You got to grow profitably.
So, obviously, I'm worried. I want the company to perform no matter what the environment is, but you do have to deal with the fact things have gotten slightly better, as you said in your own handouts, but things aren't necessarily strong yet. How do you feel about the economy and FedEx Freight?
Well, with our strategy, we feel like that we can grow in a down economy.
And that's why we feel good about our short, medium, and long-term strategy. We have been watching the truckload market. Capacity has been going out of there because a lot of the regulatory crackdowns, you know, downs that where we're looking after the illegal CDLs, illegal CDL schools, the cabotage out of Mexico, the non-domicile drivers, all of that has been taking capacity. And normally that will transition to help the LTL business when the truckload capacity is tight. That's when we get the bigger shipments into the LTL industry.
