Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer America. My friends, I'm just trying to make you a little bit of money here. My job is not just to entertain, but to explain, to put all this stuff in context. Call me 1-800-743-CNBC. Tweet me at Jim Cramer. Wall Street can overreact better than anyone. Earlier this week, an outlet called Satrini Research put out a paper titled 'The 2028 Global Intelligence Crisis' that presented our country as a vast wasteland of white-collar unemployables thrown out of pretty much anywhere they previously worked because of what we talk about all the time: AI. This piece of science fiction caused a huge downturn in the market, although we've now spent the last couple of days bouncing right back. Dow gaining 308 points today, S&P advancing 0.81%, and the Nasdaq, which was really hard hit the other day, up 1.26%.
All right, but let's deal with this thing though. Satrini's research thesis was pretty much as simple as it was wrong. Anthropic, the lovable business-to-business AI disruptor, has such a powerful hand. Satrini says that it'll pretty much be able to eliminate all white-collar office jobs, effectively taking out a huge chunk of America's middle class. It doesn't matter whether it's real estate, it could be travel, it could be banking, it could be credit. Lose those jobs and you lose all the businesses that cater to them. You lose the economy. Recession, depression, massive bankruptcies.
So the great recession too. Now the great recession too will include the downfall of a ton of software companies that get their funding from private credit firms. The private equity and debt mongers love the steady flow of cash coming from those cloud software business models that are going to be obliterated. And of course here you're thinking about Salesforce, which reported tonight at the close, delivering by the way a robust top and bottom line beat. But their full-year earnings forecast came in a little light. I thought it was conservatively made, and that was enough to send that stock down in after-hours trading as if it fit the Satrini model of Monday. On the other hand though, they talked about spending $50 billion in buybacks, which is equal to more than a quarter of the share count. They're sick and tired of the selloff and they're not going to take it anymore. I don't blame them. I saw a company called Workday report a really horrible number, opened down 12 and ended up finishing almost three bucks up, and now Salesforce trades at 15 times earnings. Weird dichotomy. And that's why I'm very glad you'll hear from Salesforce CEO Marc Benioff later in the show. I bet he comes out fighting today.
The Satrini worries were viewed as being way overblown. I say you got to take them with a box of Morton salt. But you know what? I like to hear contrary views to my own. By the way, contrary views that include the idea that maybe Nvidia won't be any good. We're going to talk about that in a second, but I wouldn't describe it as being bad. As a bear, Monday's meltdown gave us a glimpse of the future. But two days later, we've been brought back to reality after what's looking like one of the biggest overreaches of all time. Which is right: the enterprise software domino theory, or the idea that the global intelligence crisis is all smoke and mirrors? Wait a second. Will an AI tsunami really wipe out the entire white-collar class? Oh, come on. That's just not right. This is a case where Wall Street took a tiny kernel of truth and extrapolated it into a financial tragedy of ridiculous proportions that caused many people to completely freak out. And you know, sell panic is not a strategy.
Now, it's a case where Nvidia seems to be the only winner, and even that goes away in a depression. I'm going to tell you one thing: it sure isn't going away tonight, not after that blowout quarter. Of course, I am concerned about most enterprise software companies. They are in the crosshairs of the bears because they may not be able to reinvent themselves fast enough, but not because they're threatened with extinction. I don't see this Anthropic great firm wiping them out. I just think they maybe won't be able to make as much money as they used to, which is why they're now getting lower and lower price-earnings multiples. Salesforce, 15 times earnings.
I do believe that some of the private equity and private credit firms that we're so worried about will have to take real hits. Maybe some of these funds can bring in money from individual investors because these companies are campaigning for the uninformed to come in to get those high yields. I don't like that. I agree with my old friend Lloyd Blankfein, former CEO of Goldman Sachs, author of 'Streetwise', which comes out today, a great new book where he questions the goal of these private equity firms that are so desperate to get liquidity. They want to hit up regular people. They want to hit up you for cash in order to make their more sophisticated investors whole. Don't be fooled. But in the end, I think most of the private equity and private credit firms will simply make less money. That's my theme: no apocalypse, just less money. They're going to have to be more realistic. They're going to have to do a little bit worse and accept that. Maybe some of the funds may disappear, but the overall industry, I do not think, is truly about to blow up.
At the same time, I don't believe in the white-collar job apocalypse. Maybe AI can eventually replace most of the positions, and that's very bearish, but it's going to take many, many years for that to happen. Many new jobs will be created in the process. So, tons of stocks that sold off on Monday — retailers, credit cards, banks, travel — they should all come back. And which ones in particular? You know, I like names. I like to mention companies. I like TJX, which had a terrific quarter. HomeGoods was amazing. Marshalls, TJ Maxx, but its stock got hit anyway because it had been straight up. Management's always cautious on the conference call. I like the credit card companies. American Express got killed. That's a great company. Capital One, so good. I like Booking Holdings. I like Marriott for travel. I think the travel bull market lives. They won't be brought down by Anthropic. My favorite, the banks: Wells Fargo, Goldman Sachs. The former because it's doing the best job of integrating AI — just hired a whiz from Amazon Web Services. The latter because it's the closest we have to a pure play of investment banking. And right now investment banking is on fire. These are entrenched companies. They're not going to blow up. Many of these will use AI to cut costs, perhaps better than a Salesforce or ServiceNow or Workday could. Maybe not though. Maybe these software companies can do it cheaper to stay competitive and just make less money in the process. You see my theme? Make less money. Price-earnings multiple goes down, but no apocalypse, no extinction. Okay? There will be some earnings degradation, but I accept that and you have to too. Look, the software companies are survivors. They can merge. They can adapt. They can do whatever is really necessary to get it so they stay in business. They're priced for perfection though, and they do seem to have, let's say, kind of a rugby scrum feel about them, and we don't pay up for scrum. 15 times earnings for Salesforce. Something's wrong there. I'm talking real earnings here when you include the impact of stock-based compensation. No.
So am I worried? Well, look, you have to be worried. But I am not worried about the impact on the broader economy. I think AI helps the broader economy, and for that we have to look no further than the most important company in the universe, which is Nvidia, which just reported a healthy top and bottom line beat, 75% growth in their data center business, also gave better-than-expected guidance for the current quarter, enough to send the stock higher. Although remember, there'll be people who will say it's the end. They always say it's the end. You know me, I say you own Nvidia, don't trade it. Even better, it doesn't seem like they're feeling much of a pinch from the memory shortage because their margin guidance was strong. We know Nvidia's been cleaning up with these hyperscalers, and once again demand is off the charts. So for all the hand-wringing about how AI will be an engine of wealth destruction, it's hard to deny that it's also an incredible vehicle of wealth creation, and that's where I come down.
Of course, regardless of where Nvidia trades tomorrow, what matters is that Nvidia has created the entire AI boom with its ultra-fast chips that can reason and accomplish time-consuming tasks for a fraction of what you pay a human, which means a plentiful amount of new businesses are coming. Nvidia is the bedrock of the fourth industrial revolution that will create more jobs than it destroys. I can't promise you that, but I'm sure optimistic that that's going to occur, and that's certainly at odds with Monday's doomsday paper and doomsday stock market. I know those who just started, you may think maybe I'm just a Pollyanna, an older Pollyanna, but I'm old enough to remember what happened when the PC wiped out most of the big iron in tech except for IBM. The cheap PC was ascendant. Seemed like nothing would take its place. And then this was born: the iPhone. This was a total revolution in itself. It was creating an app store that only employs millions upon millions of people, from the apps themselves to hardware to software to phones to PCs to all of the, let's say, the accoutrements. And I say this to all of you naysayers out there: did the iPhone destroy more jobs than it created? Did the PC? I don't think so. Don't think that this is either. Don't get pessimistic. Don't get sucked in.
Here's the bottom line to all you naysayers. Tonight, Nvidia reported a picture-perfect quarter. It shows me that AI is alive and well and actually making a ton of money for more than just Nvidia. Oh, we're going to have speed bumps. We're going to be fooled periodically. But let me tell you something. My optimism, which is including this moment, it has put me on the right side of 49,000 Dow points since I first walked down this street. And I got to tell you, I'm not changing sides anytime soon. Let's go to David in Louisiana. David.
Greetings, Jim, and salutations from the Big Easy. Got a question for you. Got a question concerning Yum Brands. They recently announced they might spin off their pizza business. What's your opinion on the stock after seeing Domino's decent results in that section?
Okay, I am so glad you asked about this. I was doing a piece about fast food. I will tell you I think Yum Brands, the stock has been a horse lately. It's up 9%. I want you to hold it. I would buy any Yum Brands if it dropped because that plan to shed Pizza Hut, spin it off, whatever, is going to give you amazing numbers because of how well Taco Bell is doing. Taco Bell will shine. We'll know how great it is. Own Yum Brands. Kurt in Tennessee. Kurt.
Mr. Cramer, how you doing?
I am doing well, Kurt. How about you?
I'm good. My question is, I bought a lot of this when it was $68 a share and it ran all the way up to 350 or 360. The stock, and it's had a pullback. I want to know what your opinion is on Visa.
Okay. Right now there are people who are actually — there was a piece that came out on Monday talking about how Visa is going to be in huge trouble. Visa. All right. Here's the way I feel. I like both Visa. I like Mastercard a little bit more. These are terrific growth companies. Periodically they sell off. Periodically they are cyclical companies. What? Not cyclical in their business, but cyclical in whether they're loved by the stock market. Whenever they're not loved, like right now, I got a solution for you.
What can I say to all the naysayers out there? Look at the quarter. Nvidia just reported. The AI trade is alive and it's not wiping out anybody anytime soon. You may have to pay a little less for some companies, but you'll be paying a lot more for others. Home, man, tonight. Shares of Arista Networks, one you're going to pay a lot more for, stalled out so far in 2026. So what's going to get the AI networking player that has been one of the best performers in my lifetime moving again? Let's just check in with the company's top brass. Then Salesforce has been in the eye of the software storm and the stock's trading down. Why don't we do this? I think it's a good idea. Let's listen to CEO Marc Benioff. Maybe he sets the record straight after the company reported a great number. I know people want to sell. They wanted to sell Workday this morning. And how wrong were they? And Snowflake is also on the move after reporting earnings. I'm going to sit down with the CEO to see what's next for the company. I suggest you stay with Cramer.
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Two weeks ago, we got this really fantastic quarter from Arista Networks. The networking equipment company has become one of the big winners of the data center era. They're the default Ethernet backbone for most of the hyperscalers, connecting massive clusters of chips and servers. When Arista reported, these guys delivered a healthy top and bottom line beat with management raising their full-year forecast. Yet even though the stock initially popped in response to these numbers, it's given up all those gains. In other words, you're getting a terrific quarter for free. Only way I can look at it. Don't take it from me though. Let's dig in deeper with Jayshree Ullal. She's the chairperson and CEO of Arista Networks to learn more. Welcome back to Mad Money.
It's great to be back, Jim. I was just looking. It was a year ago we were here again.
And your stock has done terrifically since then. One thing I want to start with is I want people to understand exactly how good you are in your conference call. You talk about how three years ago you had no AI. Now you're going to do north of three billion this year. How are you able to scale up like that?
Oh wow. Yeah. You know, three years ago, to the point you just said, we were literally outside looking in at a technology called InfiniBand where the majority of the AI connections were made through a proprietary network. We went to work really hard. The engineering team developed standards for Ethernet. And today, Arista is at the forefront of building that all-Ethernet, scale-up, scale-out, and scale-across network. But I couldn't have told you it would happen this fast, and I'd really sign up to three billion. It's like a little startup, or maybe a large startup, inside of Arista. Our customers really pushed us there. Our technology is naturally suited for that, and it's a natural progression from where we are with the data center to the now new AI center.
Did the customers push you also toward getting more memory than everyone else had? I know there's a question where you basically say, look, we didn't really have enough memory like everybody else, but the fact is you bought a lot more memory than anybody else. How did you know to do that?
Well, I wish I could tell you I was clairvoyant, but late last year we did see all the memory pressures. And earlier in the year, we had worked with our chip vendors to get a lot of the high-bandwidth memory, often called HBM. And so frankly, I had, you know, not so much bought early, but understood there was a memory pressure that was first affecting the server vendors and naturally made itself to us as well on memory-intensive SKUs on networking. So we did get ahead of the problem, but I have to tell you, Jim, the problem is more acute than just one company or my getting ahead of it. It's going to go on for two years, and memory is the new gold.
Yeah, but it's going to go on for two years. But at the same time, you're guiding up. You're obviously not destroyed by it. You're able to either pass it on or you still have more of a surplus, and you're less worried than others.
I could have done better with more memory.
Well, let's just say I think you're humble, but that's all right. We like humility. Now, let's go to something that bothers me about your stock. So, Meta, good customer, they suddenly partner with Nvidia and your stock goes down because people feel, well, maybe there's something that's bad for you. Then AMD partners with Meta and your stock goes down. People think it must be something bad for you. Do they not realize you have like a software layer that you're not as easy to disrupt, and that no one really wants to disrupt you anyway because you're really good at what you do?
It's kind of — the stock has a mind of its own. But we look at both those announcements that Nvidia made with the GPU and AMD made with their MI series as natural goodness for Arista, because where there's lots of AI accelerators, you got to connect them, and guess what, that's where we come in, right? So I don't think people are putting two and two together. They're just looking at the isolated news. But we're living in a world of multiple AI accelerators, whether it's GPUs, TPUs, homegrown AI accelerators from inference companies like Meta and Microsoft. And we love that because in a world with lots of GPUs and lots of model makers, guess what? We have to connect to that and make them better, more resilient, higher throughput, greater radix, greater scale, and better latency. So all of this is good opportunity for us. Of course, Nvidia is the gold standard in GPUs, and they were the majority of the market, but more and more of them are coming to bear.
Okay. Now, your operating margin, 47%, your next closest competitor, 34.6%. Why is your operating margin so much bigger?
Well, I think we do more with less. Quite honestly, my engineers are just top-of-the-line, exceptionally good. And in this world of new agentic AI, not only do we do more with less and we have excellent engineering, we have to be more efficient. We think we can be, with the use of AI tools, 30% more efficient than even how we are today. So the days of just hiring people or having more employees is replaced with more and more automation and analytics tools combined with intelligent employees. And I think that's where our secret sauce really comes in.
Your secret sauce also allows you to have, I think, a better view of almost everybody in your industry. So I want to know why is it that every single conference call says, you know what, is someone going to pull back? Is someone going to pull back? Why don't people realize you can't afford to pull back? It's too dangerous to pull back. These companies that are your clients, if they pull back, they could be obsolete.
So there are two schools of thought in things like this. If you went through the dot-com industry like you and I probably did, we were born then, and there's enough people pattern-matching to what can go wrong, right? And in the dot-com industry, what people don't understand is the pets.com or the Webvan or the Sycamore who have now disappeared were not real customers. They were kind of in this build-it-and-it-will-happen. But today we have a much more important sector of responsible customers: our cloud titans, our hyperscalers, our neocloud providers, our model providers, our content providers. These are very real and responsible customers who see that Arista can improve the utilization of their AI models by using a better network and therefore get more out of their GPUs. This is the big difference. But you can't help the analysts from saying, what if something can go wrong? That's always in people's minds. But I think lots can go right because of the responsible customer suite we serve.
Your customers, why can't they take on some debt? Why do they have to have — it doesn't mean they no longer have pristine balance sheets if it's producing revenue. Do you think this is going to produce revenue on mass in the next two, three years?
Are you talking about our customers taking on debt?
Yeah. I'm just saying when I hear — I mean, Amazon takes on debt for the first time, everyone says, 'Oh my god, I don't want to be in Amazon anymore.' They're not now going to go back to selling books or something. The fact is that these companies are uniquely able to take on debt and pay you because they actually have generated a huge amount of cash flow.
Like I said, these are the most responsible companies generating, like you said, tremendous billions of dollars of cash flow. Debt is just another vehicle for them to pay because their investments in capex are so monumental. So absolutely they'll pay well, but again, part of their responsibility is to look at various avenues of cash flow. I think they're doing a tremendous job of that.
All right, that's good. I'm glad to hear some sanity. I'm tired of hearing everyone say what a big mistake it is to be able to do what they're doing. They're obviously smarter at this stuff, as are you. Jayshree Ullal, CEO and chairperson of Arista Networks. You are getting this great quarter for free. Thank you, Jayshree.
Thank you, Jim. Great to be here.
Mad Money's back after the break.
Coming up, with Salesforce on the move after its latest revenue guidance, Cramer is getting the latest from the company's CEO next.
I'll tell you one thing, Salesforce just can't seem to catch a break. The cloud software kingpin reported a better-than-expected quarter after the close, with the Agentforce for business up 169% year-over-year annual recurring revenue growth. But their full-year revenue and non-GAAP earnings forecast were a tad light. So the stock's getting slammed in after-hours trading. Wall Street's just not willing to give these enterprise software companies the benefit of the doubt. As I said at the top of the show, even though they've come down huge from their highs and are now actually inexpensive on an earnings per share basis. Plus, Salesforce just announced a $50 billion buyback equal to more than a quarter of the company's market capitalization. Clearly, management believes the stock's gotten way too cheap. Earlier today, we got to check in with Marc Benioff. He's the CEO of Salesforce to get a better read on the quarter and the future. Take a look.
Marc, welcome back to Mad Money.
Oh, thanks, Jim, for having me. I am delighted to be here with you today. Well, hello from San Francisco.
Well, look, I want to get a couple of things just right now. I'm seeing accelerated revenue, 12%. I am seeing a $50 billion buyback. And yet I am seeing a stock that sells at 15 times earnings. Something's ridiculous here. It has to be the PE multiple, if you ask me.
Oh, Jim, the part that's ridiculous is that we are projecting $46.2 billion in revenue. Jim, the first time I was on your show, I think it was a billion in revenue. We're talking $46.2 billion. It's the 46th time since 2008 when I was first — 2009, I think I was first on the show. Amazing.
And Jim, yes, Jim, that of course was one of our first SaaS apocalypses. You know, remember that you said I had to come on the show because it was a SaaS apocalypse. And then, you know, we lived through the 2020 SaaS apocalypse when you're like, 'Oh, how are you going to survive through the pandemic?' And here we are, Jim. We're in another SaaS apocalypse. It's a series of SaaS apocalypses.
Well, everyone told me that your older business, what would happen is that there would be fewer seats, the customers would pay you less, and you wouldn't be able to transition to Agentforce in time. I don't see a drop-off in the number of seats from the older business.
Oh, Jim, not only do we have more seats, we're also introducing incredible new products. You know that we have our incredible new ITSM product. That's a seat-based product going after our friends at ServiceNow. We have five amazing conversions now from ServiceNow to Salesforce, including companies known like Sunrun, Cornerstone, CoolSys, Mystone, Temps Valley Police, and others. So more seats, seats, but Jim, in every case, it's apps and agents. You know, we are selling not just apps, we're also selling agents too. And you know, because the first time I ever used the word, I think, agentic was on your show, and I think you had to stop the show and go, 'What word did you use? I've never heard this word before.' But now, Jim, everyone knows what an agentic is. And also, everyone knows what Agentforce is. But Agentforce is now an $800 million business, up 169% year-over-year. And our customers are deploying apps to seats with humans. You know, there's still humans in the world. Well, at least there's two. I think me and you, right? I don't know how many other humans there are.
How many are there in the Army? How many are in the Army, which is a customer? How many are there? Wyndham, which people don't realize is 8,200 units. You're talking about probably the most, let's say, place that you need agents to be able to handle round-the-clock calls of any other customer.
Jim, the Army deal is a $5.6 billion deal. Unbelievable. And here's another one. We have this other brand new life sciences product, you know, that's also about apps and agents going after Veeva. We closed AstraZeneca, Novartis, Pfizer, Takeda. Turns out there's still some humans in those companies too. And they want apps and agents. All right. And you know, Jim, I'm case number one. You know that because like on my service this year, we've talked about it. I'm running a huge call center, contact center, service operation, but I've also extended it with agents. You can see it at help.salesforce.com. So that's been amazing. This week I qualified 50,000 leads for my Salesforce that's now 15,000 reps all over the world using agents. And Jim, I am deploying apps and agents. So our opportunity is bigger and more exciting than ever.
But you must think that people don't recognize that because you're upping — you're talking about a $50 billion buyback right now. You're a $170 billion firm. You'll be buying a gigantic amount if you're in the marketplace.
Jim, that is because of one thing. You keep telling me how cheap our company is because we're going to do over $16 billion in cash flow this year. Now, I know cash flow isn't real anymore. I read that also on these social media feeds. You know, Jim, revenue is not real anymore. Margins aren't real. Cash flow is not real. RPO is not real. Nothing is real anymore. So therefore —
Marc is being facetious, people.
I am. Thank you for clarifying that because, Jim, here's the funny part. You got to look at companies, not just ours, but so many others, and go, this is very low prices, right? And so, yeah, we're going to buy back because we are convinced. And yeah, when I looked at our price yesterday, I'm like, buy it all back. Look at the prices. I mean, that's just as much as I can get right now.
You raised your — the $60 billion is now more. You raised what you think you can do. A lot of people felt that you'd never make that. They're right. You're going to make more than that. Correct.
Jim, you see our margin numbers? Do you see we're delivering more than 34% margins? The cash flow numbers. We already delivered $15 billion in cash flow for the year. When you have — we're doing more cash flow, Jim, than Walmart. I know Walmart's got a trillion-dollar market cap. We're envious.
