Mad Money 02/24/26 | Audio Only

Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cray America, other people, my friends. Hey, I'm trying to make a little bit of money here. My job is not just to entertain you, but to educate, teach you. So, call me at 1-800-743-CNBC. Tweet me, Jim Cramer. Why does Wall Street have to make things so darn hard?

Right now, with the entire market turning against the once-beloved software companies and the old Magnificent 7, we got this new silly term to express what investors have allegedly fallen in love with. It's called HALO, which means heavy assets, low obsolescence. Today the market looked for HALO wherever it could find it, and the hunt produced solid results, with the Dow gaining 370 points, the S&P jumping 7%, and the Nasdaq advancing 1.04%. Now today was a recovery where we saw buyers for everything. Why? Because we're getting oversold. Too much buying pressure on HALO, too much selling pressure on the new despised software companies. What's really going on here? Are we honestly looking for companies with low obsolescence?

No. Do we really care about heavy assets? Hey, if that were true, how do you explain the strength of the consumer package good stocks like PepsiCo, P&G, J&J, and Colgate? They're the hotties. I think the HALO acronym misses the point entirely. What do we really want? Well, we want companies that make things and do stuff that we can understand. We want to avoid stuff we can't or don't comprehend because you can't get your head around it. That is probably the kind of stock that Anthropic can knock off, can wreck with a simple press release. And you better believe that release will come out, because as good as Anthropic is at creating agents that write code, it is even better at writing press releases that target specific industries. It may be the best I've ever seen. I mean, perhaps they're so important that humans write them.

Anthropic introduces disruptive press releases in an aggressive cadence, and they make it sound like Anthropic is going to wreck whole sectors, taking with them the investors and the companies and those that lent them money, destroying slap-happy private equity and private lending outfits left and right. Now they're having a spat with the Department of War. Oh, I hope Anthropic leaves the Department of War intact. It's useful.

Yesterday, Anthropic put out something that sounded like it could hurt IBM, and IBM stock lost over 13%, like this. It was one of the worst declines in ages. IBM has the same problem as the hard-hit enterprise software cohort. It's difficult to understand because some of its businesses are complicated. It was an astonishing decline for a company that is actually doing quite well. Unfortunately, all the sellers need to know is that there's a successful software company, or in the case of IBM, a hardware company that sells software. Anthropic will mimic it for less money, but you just using its AI. Customers will pause their purchases to see what Anthropic can do, or maybe just ask vendors for shorter contracts for less money. Either way, it's bad news. Could free some IBM business. I guess people think that suddenly once unassailable companies with great moats seem like they might not, might be worth nothing. Yes, nothing.

Maybe these software stocks can have periodic bounces, but if you don't know what they do, if you don't know what they make, if you can't explain the business to someone else, you can't own it. The bounces are all relief rallies. A few days of hours reprieve for more selling. They cause the stocks of private equity companies that are invested in disruptive industries to bounce, too. I mean, Workday had a relief rally today, but then it reported disappointing numbers after the close. Ouch. No relief for you, Workday. You should sell the bounces because they're temporary. I say all hail Anthropic, the destroyer of everything. At least that's the storyline that they're telling, and now Wall Street believes in it.

Now, let me tell you why HALO is funny but too obstruse and stupid for us to use. We don't really want stocks of companies with heavy assets and low obsolescence. Oh, give me a break. We want the stocks of companies that make products that are in short supply, that people want and have heavy demand. It just so happens that the companies which make the most in-demand products in the world are companies that make memory devices for every kind of technology, especially artificial intelligence. There are four of these: SanDisk, Western Digital, Seagate, and Micron. These are companies that have to allocate orders carefully because they have so little product. Memory prices can skyrocket, and customers have no choice but to pay up because AI data needs to be processed and stored. There won't be a price where these memory and storage products do get too expensive. But we don't know what or where those prices are. How high, how big, I don't know. There's been no demand destruction of any real kind because this stuff is essential. These stocks go up every day before the market opens because the buyers simply can't wait until 9:30.

I've never seen anything like it in my career. Now, someone did put out a report today saying to dump SanDisk. It might give you a good chance to buy some. I'm inclined to take it. Watch it start going up at around 9:00. Second most powerful theme, again, a technology theme: the semiconductor capital equipment companies that make the machines needed to boost memory and storage production. There are only a handful of these. Think KLA, Lam. And then there are other companies that test what these companies make. Again, only a handful. I like Teradyne. This memory storage is the most severe shortage I have ever seen in my career. It was not orchestrated by design. It occurred because the CEOs in the supply chain were caught flat-footed by the flood of data and didn't believe that the data center demand could be so insatiable. They had been surprised positively before, only to be crushed when a ton of supply came online to meet the new demand. Not one of these companies foresaw this data center explosion or the power of AI. Practically nobody in the industry did, except for, of course, one person: Jensen Huang, the CEO of Nvidia, which reports tomorrow. By the way, he did tell anyone who would listen that the shortage would occur. Still, I don't blame the memory makers for holding back on adding capacity. They've been burned too many times before when demand eventually dried up. This time, it's not drying up. It's an ocean of demand. We want companies that have so much demand that they have to ration out their product to customers. Because there's not enough capital equipment to expand memory production. And these machines take a long time to build. The shortage likely won't end anytime soon. It's just not going to end anytime soon. And by the way, it's not about money. It's about time. The time it takes to make the stuff. Many bears say it can't last, and there are a ton of them. The bears always come out of the woodwork when your stocks are red-hot for a long time. They're betting that one of the big hyperscalers or the clients will pull back and stop spending. But with big deals like the hundred-billion-dollar order Meta placed with AMD this morning, you better believe they're going to need all the memory and storage they can get.

Now I keep hearing about HALO names that were supposed to like energy. Fine, but there's a lot of energy out there. Hamburgers, I mean, huh? If you look at beef prices, steel, not if the tariffs go away. How about healthcare? Just the distributors. Anything in finance? Right now, we're hearing that finance will be destroyed when white-collar jobs are destroyed by AI, until we find out that's not possible and people get a little more positive. You got to stay away from that group. Skip it. What else do we need so badly that we'll pay anything for? Well, how about Caterpillar? We like their stuff. Turbines, Genova. Hey, how about things that move other things? FedEx is good. How about value-oriented? Any trucker. How about value-oriented companies like Walmart, Dollar General, Costco, Dollar Tree, TJX? They report tomorrow. All those companies make things and sell them cheaper than the other guys. You know what? Johnson's good. Colgate, Procter & Gamble, Hershey. Don't think HALO. Think understandable things.

The bottom line: I know it's a small list, but they all make things and do stuff we can understand, and they're all on demand. There are others. I can't think of them right now. That's because Anthropic right now is in my vagus nerve right here, and it's threatening my whole cerebellum right here. So, let me get back to you. Let's go to Robert in New York, please. Robert.

Okay, Robert, that was the $10,000 one. Can I have the $15,000 endorsement now? Just kidding. I know you speak from the soul. You speak from the soul.

Thank you. Okay, let's get to work.

All right. Well, blind squirrel finds nut. I got to add that because people say, 'Ah, he's cherry-picking.' Of course, it wasn't me. I will tell you this: what happened is it was a business-to-consumer company, and people got a little way late because of how much it cost to be able to borrow money. It's become a business-to-business. And when it became business-to-business, it went to the moon. And I tell you now, it's going to the stars. And I want to thank Robert. It was a touching testimonial. We want companies that make things and do stuff. We do not want HALO, HALO. We want good stuff that's in demand.

Well, anybody tonight, SoFi has been taken down with this broader AI selloff. But is it warranted? Then we're learning that building data centers is a lot more expensive than we thought. So, who could benefit from this development? I'll reveal the name of an energy company that I think you should keep an eye on. And Elanco Animal Health, Alano, struggling to gain traction following the 2018 spin-off from Eli Lilly, but now it's really coming together. I'm going to get the state of play from the CEO himself. So stay with Cramer.

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So last night I got this call from Don in Florida. He wanted to know about SoFi Technologies, the digital bank that tends to trade more like your typical financial tech company. Historically, I've been a big fan of this one, and I kept recommending it as a quote 'fire' in late 2024 and the bulk of 2025. Eventually, though, the stock got just too hot to handle. So, by peak last November and by December, I was telling you to wait for a pullback when it was at 25. And then in January, when the stock ticked up to 28, I reiterated that it just needed to come down more before I tell you to buy it. And you know what? Now it has. It's at $18 and change, off about 10 bucks from when I said hold off. Dragged down by the broader AI displacement selloff. We've seen some nasty declines in health management companies because of the stock brokerage too, and former fintech darling. Somehow that's come to include SoFi, which is now down about 30% year to date.

After that call from Don in Florida last night, I got to tell you, I thought it was worth coming to this one with fresh eyes because at the end of the day, SoFi is a bank, and banks are not under threat from artificial intelligence. They're consumers of AI, not the prey of it. Think of it like that all times, as which they are. It just seems that Wall Street hasn't gotten that memo. When SoFi reported at the end of January, the stock just got clobbered, and it's been falling ever since. But you know what? The actual numbers were excellent. 37% revenue growth, 160% earnings growth, both higher than expected. SoFi's overall membership count grew by 35% year-over-year, 35% to 13.7 million people. Their net interest income jumped 31%. Fee-based revenue was up 53%. I mean, this is a great business. It is practically printing money.

Now, SoFi's guidance for the current quarter came in a little light on every single line, but look, these guys have a long history of practicing UPOD, which is under-promise and over-deliver. The company has beaten revenue and EBITDA expectations in each of the last 18 quarters it's reported since coming public in 2021, and it's beaten the earnings estimates for the last nine quarters in a row. That's not shabby. More importantly, when you look at SoFi's full-year forecast, these numbers are nothing more than sensational. For full-year 2026, SoFi expects total member growth of at least 30%, and with revenue growth coming in at roughly the same level. Adjusted EBITDA, net income, and earnings per share are expected to grow by 52%, 71%, and 54% respectively as gross margins expand. Now all those numbers were much better than Wall Street was expecting when SoFi issued that forecast about three and a half weeks ago. I mean, that's so—in other words, they issue something in three and a half weeks and then they just clobber that.

On top of that, SoFi issued what it called medium-term guidance, saying that it expects adjusted net revenue to rise at a compound annual growth rate of at least 30% for the next three years, meaning that through 2028. I love that kind of thing. In that time frame, SoFi also expects its earnings per share to rise at a 38 to 42% compound annual growth rate. Guys, these are astonishing. There's absolutely nothing hurting this business right now, which makes it kind of crazy that the stock pulled back from 32 to 18 in the past few months. Again, this is not some throwaway financial technology company that can easily be replaced by AI. It's a fast-growing bank with digital traffic.

So, I've been recommending this stock all the way back since it was $5. And what caught my attention, why I liked it so much, frankly, is its CEO. It's Anthony Noto. I've known him for almost 30 years, when he was a banker, helped bring TheStreet.com public in the late '90s. Because I think this is the—he's made this bank into the preferred financial services platform for millennials and Gen Zers. Nothing I've seen lately has changed that assessment. In fact, I feel like the thesis is just stronger than ever. SoFi has phenomenal product growth in the fourth quarter, largely because of cross-buying, meaning customers take more than one product from these guys. About 40% of new products opened in the fourth quarter were done by existing SoFi members. They're gradually colonizing the consumer banking business.

Now, consumers increasingly view SoFi as a full financial services platform rather than just a purveyor of individual financial products. They might come to SoFi initially for a personal loan to help pay off credit card debt, but then they find that they like the company's digital banking platform, too. Then they find out that SoFi Invest—they found this product called SoFi Invest, that's a self-directed brokerage platform. It's pretty good. Or they realize that they might like some of the company's robo-advisor or ETF solutions, or they might move an IRA account to SoFi. The company's current success with cross-selling, combined with the robust guidance for not just 2026 but the next three years, I think it tells you all you need to know.

Finally, let's talk about why I think it's safe to buy SoFi right here. Right now, after its severe pullback, the stock now represents good value down here at $18 and change. Management says they can earn 60 cents per share in 2026, meaning SoFi is trading at around 31 times this year's earnings forecast. Okay, so let's see. That's not cheap in absolute terms, I know. But you got to remember that SoFi is on track to grow earnings at a 54% clip this year and to keep growing earnings at around 40% through 2028. Growth-oriented money managers like to look at what's known as the PEG ratio, PEG. That's price-to-earnings-to-growth. And SoFi's got a very reasonable PEG ratio of just 0.6. The lower the better with the PEG ratio. Paying just over 30 times earnings for a company with a 50% plus growth rate is a legitimate steal.

Plus, the stock looks outright cheap based on some of the earnings projections for the out-years. Looking at Wall Street's earnings estimates, SoFi sells for around 23 times next year's numbers and just under 19 times the 2028 numbers. But don't forget those estimates again are probably too low. If you believe SoFi's medium-term guidance, and I do because I think CEO Anthony Noto does again have that habit of beating the expectations, then the stock's really trading at about 17 times its 2028 earnings forecast. That's really good.

Bottom line: for months now, I've been telling you that SoFi stock needed to come in a bit. I was concerned it could drop a lot after its enormous gains of 2024 and 2025. Well, that's what happened. It pulled back more than 40% from its mid-November highs, coming all the way down to 18 and change. And now I think it is too cheap to ignore. The business is strong. The forecast is beautiful. And when you look at what's been dragging SoFi stock down—the AI displacement thesis—the stock feels like the proverbial baby that got thrown out with the bathwater. It's a bank, guys. It has a federal charter. It's not going to get replaced by Claude or OpenAI. Frankly, if I were one of those two and I wanted to destroy the banking sector, I'd just buy SoFi, or at least send out a press release that you plan to buy SoFi. Well, that's all it takes these days. They have money back in the press.

Coming up, it's still February, but spring may have already sprung for Bloom Energy. Cramer's picking apart the numbers to see if the stock can stay fertile. Next.

Over the last few months, we've learned that building data centers might be a lot more expensive than the hyperscalers were expecting. That's not ideal for big tech, but it's for the companies that supply equipment that will keep these warehouses full of servers running. I want you to consider a company called Bloom Energy. We've talked about them. They make solid oxide fuel cell systems that can supply clean energy right at the place where it needs to be the most. Their fuel cells take hydrogen, or more commonly natural gas, then break them down through an electrochemical process without combustion to create electricity. The hydrogen ones are clean, and the natural gas ones are ideal for carbon capture because they don't actually burn anything. So, well, you know what? Green still matters. People think of it as a perfect backup power generation system for when the grid does go down. That's why the stock is up an astonishing rate: 1,837% over the past two years, including a nearly 600% gain since last June and a 91% gain year to date.

But whenever you see a stock rally like that, you have to wonder if it's the real deal. Especially when we've seen this kind of move before, right? I mean, think about it. See, Bloom Energy came public almost eight years ago at 15 bucks and quickly ran up to 38 in September of 2018 before reversing and then spending the next year going lower. Eventually, the stock bottomed at $2 and change in 2019. Then its stock soared during the COVID bull market, flying to 45 in February of 2021, only to roll over again, ultimately sinking to about eight bucks at its lows a couple years ago. Bloom then caught fire thanks to the rise of the data center, racking up some magnificent gains. Now, of course, the stock got hit hard when the data center trade cooled off late last year. Remember, getting cut in half early November through mid-December. Since though, the stock's come roaring back, and it's now well above last year's highs.

Now, I got to tell you, I think this one's legit. I just don't know if it's too legit to quit. Bloom Energy's latest rally is not like what we saw in 2018 or 2020. This company has announced a series of major deals with a set of very legitimate partners. Data center operators are desperate for on-site power solutions, and this is a tested technology. Walmart, Google, FedEx—they've been using Bloom's fuel cells for years. What's changed is that demand for them is now off the charts. In late 2024, Bloom announced a deal with American Electric Power, the Ohio-based electric utility that operates America's largest power transmission network. AEP knows electricity better than anyone, and they wouldn't work with a company that's more of a science project than a legitimate player. At the time of the announcement, AEP ordered 100 megawatts of fuel cells from Bloom Energy, with the option to buy another 900 megawatts if they wanted to. At that original announcement, an Ohio regulator greenlit a project among AEP, Bloom, and Amazon Web Services last summer. And just at the beginning of the year, AEP disclosed that it's buying the full thousand megawatts of fuel cells from Bloom for $2.65 billion. I mean, talk about an endorsement.

Now, last July, Bloom Energy announced a deal to deploy fuel cell technology at select Oracle data centers. And it's got a great partnership with CoreWeave, too, dating back to 2024 when Core was a company most people hadn't even heard of. They really are one of the best at building data centers around. So, their endorsement, CoreWeave's endorsement, carries a lot of weight. What else? Last October, Bloom announced a $5 billion partnership with Brookfield Asset Management. Now, that's an investment firm that specializes in major infrastructure projects, including data centers. That is a huge endorsement. Brookfield might be the savviest of data center creator-financiers. I really have come to really like these guys. If Brookfield says they're good, they're good.

Of course, this story is not just about contracts. It's also about sales and earnings. I wouldn't be so confident about Bloom if the numbers weren't excellent. Bloom Energy first turned profitable in 2024, reporting 28 cents of earnings per share. Then last year, their earnings nearly tripled to 76 cents. We found out the final result for 2025 about two and a half weeks ago on Feb. 6, when the company delivered a stunning set of fourth-quarter numbers. Bloom posted a massive revenue beat, while their earnings came in at 45 cents per share. I mean, the analysts were looking for 31. More importantly, Bloom's new full-year forecast was much, much better than anyone expected. They guided for $3.1 to $3.3 billion in sales. Wall Street was just looking for $2.2 to $2.55 billion, and said to expect the earnings to go to $1.33 to $1.48. You know, people were only looking for a buck 11. This may be one of the best beats of the year. In other words, after Bloom turned profitable in 2024, then their earnings nearly tripled last year. They should roughly double again this year.

The stock's been flying because of that big AEP purchase order and this unbelievably strong quarter. All that said, while Bloom Energy has become a phenomenal growth story, that doesn't necessarily mean the stock's worth buying here. We got to suss this out a little. But when I first covered the story back in September, I admit that I said the same thing: wait for a pullback. But that turned out to be way too cautious. The stock was only at 73 at the time, and you would have more than doubled your money if you bought it there. I heaped a ton of praise on the company, but the stock had already run so much that I was afraid to pull the trigger.

Still today, Bloom rallied another 3.7% at 166. It's trading 118 times the midpoint of this year's earnings forecast. If you're willing to use the estimates for the out-years, the stock sells for 57 times 2027, 36 times 2028. That's more reasonable, but it's not what anyone would ever call cheap. Besides, a lot can happen between now and 2028. Plus, don't forget Bloom is an incredibly volatile stock. I mean, there's a pretty good chance that we get another pullback here, one that gives you a better, more palatable entry point. Sure, this stock's had a stunning rally over the past few months. That was in part because of short covering. And at this point, I'm betting most of the short covering has run its course. At the same time, it'll become harder and harder for Bloom to surprise to the upside simply because when you keep beating the numbers, the analysts finally get wise here and they take the numbers up really big. Last time Bloom had a big pullback in the final month of 2025, the stock fell almost 50% in just over a month. Of course, I don't think you can bank on that happening again. But if we get, say, about a 20% pullback, I would feel a lot more comfortable about recommending this one.

Bottom line here: if you're questioning whether Bloom Energy's fundamentals are real, I got to borrow a line from the legendary Teri Hatcher in Seinfeld. They're real and they're spectacular.

Oh, Jerry in Florida. Chair.

Well, look, it's a great question. I think that in the end this is a company that's loved and provides a valuable service, and they're going to fix it. And I, you know, I liked this company from when it was literally like a teenager, and then when it was like a hundred, I said buy it. I can't back away from it because of that problem. I think that this company is a very good company, very well-run. The data center buildout has been terrific for energy players like Bloom, and you don't have to question their fundamentals either.

Now there's much more ahead, including another winner. We're going to talk to the CEO of Elanco Animal Health, moving higher today on earnings. The humanization of pets theme back in fashion. I'm going to sit down with the CEO. Then the enterprise software space has been disrupted by AI, as I keep talking about, but I've got to get you on my page here. So I'm going to give you my forecast on how I think things could shake out. And of course, all your calls rapid-fire in tonight's edition of the lightning round. So stay with Cramer.

I love a good comeback story right now. There's a great one playing out in Elanco Animal Health. That's a veterinary medicine company spun off by Eli Lilly all the way back in 2018. Stock struggled to gain traction for a long time, but it's now up 137% over the past 12 months and almost 17% since the start of 2026. Elanco rallied another 6% after it reported a very strong quarter: 12% revenue growth driven by strength in both pet health and farm animals, and a two-cent earnings beat off an 11-cent basis. At the same time, management gave a very solid full-year forecast. This is a growth company, people. I want to know if it can keep running. Let's check in with Jeff Simmons, he's the president and CEO of Elanco, to find out. Mr. Simmons, welcome back to Mad Money.

All right, so Jeff, when we first met each other, we met each other on the floor of the exchange. I looked your company over and I said, 'Wow, Eli Lilly really did not want to own Elanco. There's a lot of things that have to be done. You have to get some growth. You have to clean up the balance sheet. I was worried about animal health. You had a division about aqua. I don't know.' You changed everything. Congratulations.

Well, let's do this. Let's consider you like a human health company, because I think that the people then would be as excited about Elanco as I am. A human health company. We know they come up with new drugs. The drugs are big. They try to come up with blockbusters all the time. They grow the total addressable market. They go overseas. Your company does look like a typical human healthcare company. So maybe we look at it like that.

Well, give us a couple, because those of us who are pet owners may be using this stuff. And I know that I think you're absolutely right. We know the brands. We don't know the brands that we get for human, but we know them for our dogs.

Okay.

Well, let's talk about that. The accelerating global animal protein consumption, projected to grow up 5% annually in the US alone. GLP-1 usage, muscle retention, aging population, overwhelming consumer demand. And you are doing something to meet that demand.