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 Cramer. Do you want to make friends? I'm just trying to make you a little bit of money. My job is not just to entertain, but to do some teaching. So call me at 1-800-743-CNBC. Tweet me, Jim Cramer. All right, we had this IPO today. Seven-character company Cerebras priced at $185. Stock opened at $350, instantly making it worth $17 billion on a fully diluted basis, and it goes all the way up to $386 before closing at $311. Now there is a word for that. That word is fanciful, because it was fanciful to pay that much the whole time. And that's putting it diplomatic. Notice I didn't say idiotic. I didn't say stupid. As much as I'm certainly itching to do so, but that would be judgmental. And on a day where the Dow gained 370 points, the S&P advanced 0.77%, and the NASDAQ climbed 0.88%, we had to witness this already overvalued stock come public at 111 times last year's sales — not earnings, sales. And it blew through that level with ease. That wasn't enough. Instead, the crowd went to north of 230 times sales. 230 times last year's sales at its high. That's just great.
Listen, I've been in favor of the semiconductor rally the whole way. I mean, has anyone been a bigger cheerleader for the thing? I mean, cheerleader for the data center. I love the data center. The fourth industrial revolution that Nvidia CEO Jensen Huang promotes, hook, line, and sinker. But today, today's IPO made me sick to my stomach. Oh, I got nothing against the company. In fact, Cerebras has good technology, especially when it comes to inference. It competes admirably with Nvidia. It has a deal with OpenAI for $20 billion. Something with Amazon Web Services, too. CEO on Squawk today. Smart fella. Doesn't matter, because today's action was right out of 1999. And you know, I've been reluctant to use that term. See, you uninformed people using market orders to pay anything for an unseasoned company that was valued at just $8 billion back in October. $8 billion in October, $95 billion today. You can't be serious. Did it cure cancer while I figured that maybe it was working on the inference? I might have missed that. I cannot tell you how many times we saw something exactly like this happen in 1999, over and over again. People were willing to do this nonsense endlessly. They heard something was sizzling hot. They knew the sector was steaming too. So they put in market orders by not caring what they paid. You know why? Because they didn't know what it was anyway. And they just smelled a sure thing.
She's back. High bandwidth memory, HBM chips. This is potato chips. Not real chips. Potato chips. But I got them at the Nvidia trade show known as GTC. The chips, the real ones, are made by SK Hynix, which is an incredibly important data center semiconductor company. Korean colossus, market capitalization of almost a trillion dollars. It's not the closest compared to Cerebras, but it's close enough. SK Hynix sold $35.5 billion worth of chips last quarter. Cerebras sold $510 million worth of chips in the entirety of last year. That kind of volume, it is very hard to justify Cerebras being worth a hundred billion dollars. I bring these up because it's a joke, and I don't want the joke played on you. You cannot do this, people. You cannot pay these prices. I remember back in 1999, I was writing for thestreet.com, since I co-founded it four years before. I'd plead that people not use market orders. Even for when thestreet.com came public, I urged people not to buy things they didn't understand, because these were stocks that were just way too hot, and there were too many people who didn't know what they were doing. That was a mania. So far, we haven't had mania. People ended up losing fortunes in that mania when the whole dot-com edifice collapsed in March of 2000. Of course, Cerebras is not going to blow up like those 300 landmine companies that came public between 1999 and mid-2000 before it collapsed, and they all vanished. This is a real business we're talking about. There were plenty of real businesses with stocks that got way too hot in the dot-com era.
Could the bankers have done something to control the situation? You know, I never mind criticizing the underwriters if I think they screw up. I've attacked them for years. Morgan Stanley ran this deal. And you know what? I got to tell you, they did a great job. They originally looked to sell the stock between $115 and $125. Then they kept moving it up because they saw the insatiable demand for this thing, but they weren't going to price it anywhere near where the rabid buyers picked up the stock during the day. They had no choice but to leave money on the table, unwilling to price the deal at a totally unjustifiable price. They weren't going to do that. Quite the opposite of 1999, where many bankers were anxious to bring anything public. Cerebras is a real company. There had to be a price put on the darn thing. They had to, right? I mean, couldn't just not have a price, and $185 seemed reasonable. Anything over $300 seems nuts. Now, maybe there'll be another big wave of buying. I mean, there was with Figma before it went down. And now Figma reported a good quarter close. Maybe Cerebras will win a huge contract for $40 billion from Anthropic or Microsoft. It all be well. Otherwise, though, we could go down the rabbit hole. What a shame.
It took away from the extraordinary performance of Chuck Robbins. Cisco showed an incredible acceleration in both sales and earnings. Cisco was the largest company in the world at the peak of 2000. It was selling to all the big customers at the time, the companies that were building out the internet with massive amounts of fiber. A lot of it never got lit. A lot of the customers didn't have enough money to pay again. Investors lost fortunes on Cisco back then. This time, Cisco deserved the run. Today's 13% rally was completely justified and then some. It wasn't a mania. It wasn't fanciful. How about Nvidia? Look, it's finally moving up. It's 4.4% today. Good reason. There's a very good chance that based on forward earnings estimates, Nvidia's stock is now cheaper than the average stock in the S&P 500. Cheaper. Now, that's absurd. The company's growing at a much faster pace than almost any large-cap enterprise, and it sells below an S&P market multiple. Now, that's crazy. Now, it doesn't have to be this way, people. Perhaps there are people who will say, 'Look, I've been there. I lost so much money when the IPO market got too hot in 2021 or 2014, or when it was totally overwhelmed in 2000.' But my fear is that was now too long ago, and there are just not enough losers from then who know not to repeat those mistakes. Maybe we just have to live through it again. I'm trying to stop it. I know this. I always said that if I saw this kind of nonsense, this overenthusiasm again, I would scream from the rafters that this has to stop. I would simply stop praising the red-hot sector for a moment and say this ends badly. Please, please exercise discipline. Understand what these companies do and why they aren't worth this. Here's the bottom line. I don't mind stocks that go up huge on shortages. I don't think Micron or SanDisk or Western Digital or even HBM chips from SK Hynix are overvalued, provided the Chinese don't flood our markets with cheap memory. Cisco, Nvidia, fine with me. But Cerebras, it's like a Sondheim play: Send in the Clowns, because today that's exactly what happened.
Ian in Florida. Ian, booyah.
Booyah. I am doing well, Ian. How are you?
It's going good. I'm a five-time caller and a club member as well.
Oh, thank you. Thank you. You know how hard we try to do this. Jeff Marks and I, we got some good names coming up. What's happening?
Yeah, you do great for us. Uh, thank you. Jim, I wanted to ask you about, um, it's kind of an aerospace stock. Uh, it seems to be, um, kind of in it's diddling in the middle right now, but I like the company. What do you think about GE? Is it a good time to buy?
Buy GE is Larry Culp. I've been watching the stock go down and I'm like, all right, come on. Come on. And by the way, I'm going to throw in Boeing. You're a club member. Down 11. Why? Because it was up in anticipation of a big order. I mean, you know what I mean? Look, stocks don't go up and up and up. Not real ones at least. And Boeing's good and GE is good. And thank you, member of the club. And please, people, be careful. I don't mind stocks go up on shortage. But the action we saw today on Cerebras, that's got me on guard. I'm just on guard. I just, I'm worried. I am worried. On Mad Money tonight, Charles Schwab outlined new revenue growth targets at its investor day, and I'm getting the latest on the road ahead for the financial services leader, which seems very inexpensive to me. And Cerebras just came public in that largest IPO. So, should you be buying something else? I don't know. I'm going to give you my take. And Trane Technologies helps keep data centers nice and cool. So, does that explain why its stock has been red-hot recently? I'm finding out more from the company's top brass. So, stay with Cramer.
Don't miss a second of Mad Money. Follow Jim Cramer on X. Have a question? Tweet Cramer #madmentions. Send Jim an email to
[email protected] or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
Okay. How could the stock of Charles Schwab get its groove back? Especially just a few months ago, this retail brokerage firm seemed unstoppable, with the stock hitting a new all-time high in early February. That seemed right to me. But then it got knocked down during the recent AI displacement selloff, even though it's really not an AI victim at all. Then the stock got hit again last month when Schwab reported, even though the numbers were better than expected, it was a very good quarter. Today the company hosted an institutional investor day where they raised their full-year revenue growth forecast pretty substantially, went from 10% to more like 14 to 15%. Yet the stock actually got hit again, down 1.9%, in part because management also predicts higher expense growth. Look, I think the market's misjudging this one and not valuing this incredible franchise correctly at all. But do not take it from me. I got a chance to sit down with Rick Wurster, who is the president of Charles Schwab, to get a better read on the situation. Take a look.
Jim, I'm doing great. How are you?
Well, you know, I'm confused. I'll be honest. I thought the 'through the client's eye' strategy is great. The numbers that you presented were much better than I thought. And yet, the stock did not react. And I'm wondering what I'm missing, because as far as I can see, you're doing everything right.
Jim, our business is certainly performing exceptionally well. And it does start with seeing through clients' eyes. What we focus on every day as a company is making sure we deliver for our clients the products, the solutions, the expertise they need to live their best financial life. And by the way, Jim, it's one of the reasons that I admire Mad Money. You have done a lot for the retail investor to help them understand the power of owning stocks, being invested, the value of compounding. We're trying to do the same thing here at Schwab, and it's working. You might not see it in our stock, but you certainly see it in our business fundamentals.
Well, look, those of us who started and cut our teeth on Schwab know that's exactly the way you've been. It's how the charitable trust was set up with, and I just think you guys have the right orientation. And what's terrific is you raised it. You had 10% revenue growth. Uh, you had to 14 to 15% top-line growth, and that to me shows that you're doing really everything right.
Yeah. Our business really is operating at a high level right now. For the last 10 years, we've grown the top line 14% a year and the bottom line 16% a year. And that's because we're doing right by the client. We see record client satisfaction scores with our clients. They're increasingly bringing new assets to us, and they're also doing more business with us in areas like wealth and lending. They're coming to us saying we want more help from Schwab, and that's accelerating our business as well. So, we're operating on all cylinders here and doing everything we can to delight clients, and it's working.
Well, you guys are also doing something, and thank you for the kind comments about Mad Money. Another thing you're doing that's very in sync with me was that you're trying to get young investors to own, trying to get them to understand, trying not to play, trying to invest. How are you able to do that? Because I think you've got some options for people, particularly for parents, to try to get young investors involved that I think are reasonable and make it so that people understand that investing can be fun, but it's serious business.
Jim, we share a passion with you, which is trying to get Americans to invest, to save, to understand the power of compounding and the impact it can have on your financial life over time. We are doing a lot for the young investor, and I'll tell you, the young investor is a thoughtful investor. I sat with a group of young investors a month ago, and it was during a period of high volatility, and I asked them whether they were worried and pulling back on markets, and they said, 'Why in the world would we do that? We're saving for our retirement 40 years from now. We're sticking with it, and we're adding as the opportunity comes along.' We just did launch teen accounts for young investors ages 13 to 17. And that was really important to us to send a message to young people in our country about the power of being an investor, particularly in an environment where lots of young people are getting a message about gambling. And we want to give a message about the fact that markets have positive returns over time, whereas gambling, not so much.
That's very true. Now, Rick, the one thing that I, and I'm sure you wrestle with too, we want to give the clients through their eyes what they want, and sometimes we have to give them stuff, and it may not be what we want. For instance, in your digital assets page of your terrific deck today, you've got a rollout of a spot crypto offer that's begun with an employee launch in coins available. Now, for me, I know that they want it, and so I would have to give it to them, but candidly, Rick, it's not the kind of thing I want to see them do. What do you do when you have a kind of a conscience issue, but you know the customer is always right?
Yeah, great question, Jim. What we've focused on is client choice. We've always stood for having what investors may want or need to have a balanced asset allocation. And there's many investors that can make a credible case for why crypto could make sense in their portfolio. What we're not doing though, Jim, to your point, is we're not putting it in our recommended asset allocation. So when a client comes through the door and says to us, you know, my age, what should my mix of assets be? We're not including crypto, but we have it on our platform. And if people want it, they think it's an important part of their asset allocation, they certainly can include it.
Okay. All right. I think that answers it. And I think that's great. It's what you're offering everything, but you're not necessarily emphasizing everything, which is terrific. Now a lot of people feel, Rick, that you guys, maybe it's this AI issue you have, that people are going to go around and look at whatever rate is like the best. And you know what, I studied that for CDs, and it's really not true, and I have a feel it's not true for you either, but it's something that investors claim is a concern for Schwab.
Yeah, there's been an AI narrative that has overhung our stock now for a few months. And first it was that there was going to be an AI tax tool that was somehow going to disintermediate our business. And now the focus has been on our cash strategy, which is an area where we, when clients come to us, they come to us to invest and trade. We put their money in a cash sweep vehicle so that it's ready for them to invest when and when they want in what they want. That strategy's been working for us, but there's concerns that AI is going to somehow make it go away. We think those are overblown. Our strategy is working. We shared metrics today that showed we've never been more competitive than we are today, and our clients have never been more satisfied. So, we think the strength of our value proposition is winning in the marketplace.
So, you think you have to kind of shadowbox until people realize, like they did for the cybersecurity companies. Everyone thought they were going to disintermediate, and then they had to go through this eight-month period of pain, and then suddenly the stocks just went up 25%. I think maybe you just have to just wait it through until people realize that whatever they're worried about, it's not happening.
Jim, I think you're right. And as you know, in the short run, the market can be a voting machine. In the long run, it's a weighing machine. And we've been delivering great results quarter after quarter. We're trading at 12 and a half times our consensus earnings for next year for a company that's grown the bottom line 16% a year for the last 10 years. So we're going to keep focus on delivering for our clients, that should lead to great financial results. Ultimately we think that will be rewarded in the market.
Oh, I totally agree. I remember at 60, your predecessor was on, and I was like, you're buying stock, and everyone is just so panicky. If it were so bad, why would you buy? And it was the exact bottom. And I just feel like right now, I don't get it. But now, if you're listening to you, I get it. There's just a lot of mistakes about how people view your company right now. Uh, it's the same company as always, as far as I'm concerned. That's Rick Wurster. He's the president and CEO of Charles Schwab, which we have liked since the beginning of the show. You can go check it out. Mad Money's back from the break. Thank you, Rick. Great to have you on the show.
Coming up, one of the hottest IPOs in recent memory just hit the market. So, should you be buying in? Cramer offers his thoughts on Cerebras next.
Today, as I said at the top of the show, got the largest IPO of the year, or at least so far, when Cerebras Systems came public with a bang. This is a semiconductor company that makes what are known as AI accelerators, huge dinner-plate-sized processors that are purpose-built for artificial intelligence workloads. And the market lapped it up, as I said, after pulling in an attempted IPO last fall when the AI cohort briefly went out of style. Cerebras refiled to come public in mid-April. Originally seeking to sell 28 million shares at a price between 115 and 125. By the beginning of this week, they raised it to 30 million shares at a price of 150 to 160 because there was just so much demand. Then last night, the IPO priced way above that, $185 per share. And today, the stock immediately skyrocketed, opening at $350. While it pulled back over the course of the day, it still finished the session up a staggering 68% from its offer price if you got in the deal, but well below its high of the day. Now, you know that I thought the enthusiasm is way out of control here. He knew nothing. But let me explain why Wall Street can't get enough of this thing, so at least you know the other side of my anger.
Cerebras is one of the few companies that saw AI coming years and years ahead of time. Way back in 2015, they realized we need a whole new type of computer architecture for the data center. One of the big limiting factors for AI is communication speed. And because communications happens much faster on a single chip than between chips, Cerebras developed the largest commercial chip in the history of the computer industry. Each of these things has 4 trillion transistors. That's a T. Four trillion. To put that in perspective, Nvidia's super advanced B200 chip package, that's the Blackwell GPU, although it only has 28 billion transistors, which I thought was a lot. Because all these transistors are packed into the same chip, Cerebras' technology has become incredibly useful for inference workloads. That's when an AI platform retrieves information from a trained model and puts it to use. According to the prospectus, this company's AI accelerators can be up to 15 times faster than leading GPU-based solutions. And in some unique cases, they're over a thousand times faster. Cerebras can also help train an AI model 10 times faster than the usual hardware lets you. So true advantages. They either sell this technology directly to customers or allow clients to basically rent computing power through their own cloud business. They also offer inference services through partners like Amazon and Microsoft among others.
Now, last year though, Cerebras got 86% of its revenue from just two entities in the United Arab Emirates. One a cloud computing company, the other a university. The UAE is halfway to be a war zone right now, but that hasn't diminished the enthusiasm for this stock. Plus, Cerebras has been making strides to diversify its business. In January, they announced this $20 billion multi-year deal with OpenAI to deliver 750 megawatts of compute. In March, they reached a deal to deploy their monster chips in Amazon's data center. So, these are good contracts. That's the story. What about the numbers? All right, they're impressive, too. Cerebras put up 269% revenue growth in 2024, then 76% revenue growth last year. Of course, the company's not yet profitable. Cerebras' adjusted operating loss more than doubled last year to $96.1 million, and its adjusted net loss more than tripled to $75.7 million. Their cash flow from operations is still negative, but the losses, they're not too distressing because this company's still in its growth mode, and the growth is really incredible. Plus, Cerebras has no debt, and they just raised $5.7 billion in cash from the IPO. So, hey, listen, they can afford to rack up big losses for years in order to keep expanding. I don't think they'll do that. Put it all together, I like the story very much. The story of the company, not the stock. They're two different things. The company makes a very convincing case for the technology, and with the arrival of inference, Cerebras is in good position to grow like crazy, especially now that they're winning business from OpenAI and Amazon Web Services. So it is a great company, but man, at this red-hot start for the stock, it's very hard for me to get comfortable with this valuation. At $185, the offer price had a fully diluted valuation of roughly $56.6 billion, where it was trading about 111 times last year's sales, not earnings, sales. Okay, that's important. Keep that in mind. Up here at $311, it's more like...
187 times last year's sales. So, now let's get the compares. You can write them down if you bought it, so you know what you're doing here. Even though there's really no comparison what they're doing, I like these. I'm going to give you these. Nvidia trades at roughly 26 times last year's sales. AMD trades at 21 times last year's sales. Broadcom trades at 33 times last year's sales. Those just aren't in the same ballpark. And of course, Nvidia, AMD, and Broadcom have the added advantage of being extremely profitable. You can value them on an earnings basis. Even the most expensive AMD sells at 108 times last year's earnings. I don't like that, but I get it. It's getting the same multiple in earnings that Cerebras got on sales at the moment it came public. Now, it's almost twice that. See, that's wild stuff. It's just — look, it's too bullish. Of course, Cerebras is getting that valuation because it's growing like a weed. But you know what? These guys had 76% sales growth last year. 76. Okay, that is not that much different from Nvidia, which was at 65. So really, if you buy the stock up here, you're betting on the idea that Cerebras will have much better growth in the many years in the future. Honestly, this valuation, you're basically expecting revenue to be several multiples of what it is right now in a fairly short period of time. Maybe that's possible given the company's impressive technology, but that seems like a real leap of faith to me. I don't like it. It's not their fault. It's the fault of non-rigorous investors and traders and flippers. Really, I think that what's happening here is that Cerebras has a sexy story and a perfectly timed IPO. When the company pulled its IPO last fall, it instead raised $1 billion in the private markets at an $8 billion valuation. So, in other words, in the fall, this was worth $8 billion. Now, less than eight months later, it is worth more than 10 times that amount. See that? Tell me that isn't silly. You who bought it, tell me you didn't do something silly today. Think about what's happened over the past couple months. The Philadelphia semiconductor index has exploded. It's up nearly 70% in just the last six and a half weeks. Many individual companies involved in the data center buildout have more than doubled over the same period. Think the memory plays or CPU specialists like AMD or Intel. And some of these smaller, more speculative companies like Neoclouds and some networking or photonics plays, they've risen several hundred percent. Against that backdrop, along comes Cerebras with its differentiated process story, with chips that it claims are much faster than Nvidia and ideal for the inference era. No wonder people can't get enough of this thing. But the bottom line, while there might be a situation in the future where I can recommend Cerebras, I just can't even get close to justifying the valuation of Cerebras given how much it's already run right out of the gate. And those valuations I just gave you, I hope you wrote them down because they're just what I call dispositive. From now on, I say keep your bat on the shoulder and hope the stock gives you a giant, giant pullback because at these levels, no, it's too rich for me. You'll have to buy it up here without my blessing. I can't go back to 1999. You shouldn't either.
Let's go to Barbara in California, please. Barbara.
Hey Jim, I've been watching you for 26 years, and you have as much energy today as you did then.
Thank you. Now, come to play. Thank you. Seriously. Seriously. Okay. You like Marvell. Do you still like Marvell?
Oh, yeah. Marvell's — that's Matt Murphy. He's doing an amazing job. He bought that optical business. He's really crushing it. I mean, you know, like if you want to look at Marvell versus say what was being hyped today, Marvell's so dramatically cheaper. And it hit a 52-week high today. It can go higher. Remember Matt came on the show when he bought like a ton at 70 and he was really upset. Remember he came on and he said, 'Listen, I am the signal, not the noise.' Well, he just — he gave you almost a triple. All right. Look, Cerebras does look like it's going to be a great long-term growth company, but I can't recommend the stock right now. The great — remember, stock and company. Okay, two different things.
Watch more. Moneyhead. Trane Technologies, known as a leader in the HVAC space. But could its involvement in the data center buildout unlock a new level of growth? I'm checking in with the CEO, then I'll break down how Nvidia fits into the equation with our relationship with China as the debate heats up over its access to the Chinese market. Maybe it's budging to a deal. Well, why don't you stick around and of course all your calls rapid fire in tonight's edition of the lightning round.
This market is full of industrials that have caught fire because they own a piece of that great data center buildout. Take Trane Technologies, TT, the climate control company with a stock that's up nearly 24% in the year. Now, a good part of that's because it prevents these warehouses from overheating. A little over two weeks ago, Trane reported a healthy top and bottom line beat with its backlog up a staggering 30% year-over-year. Commercial HVAC bookings in the Americas up 40%. Applied equipment orders surging 160%. The whole business is thriving, but that data center side is really on fire. One reason why management raised their full-year forecast convincingly. So, can this thing keep running? I got a chance to check in with Dave Regnery, chair and CEO of Trane Technologies, who's come on the show multiple times, and this stock has been a winner. Take a look.
Dave, welcome back to Mad Money.
Jim, I'm always glad to be on your show. Thanks for having me.
Well, I'm thrilled you're here. I mean, it's — look, just another great year for you and the stock's up 23% already. I guess it's pretty much it when I read through the deck, almost everything you feel better about and it's already been good, but it's getting great again.
Yeah, we had a very strong start to the year. First quarter, our order rates have been just, you know, off the chart. I mean, up 24% in the first quarter. Our backlog is at — you know, we used to talk about backlogs being record when they were at $4 billion, $6 billion. Our backlog at the end of the first quarter is $10.7 billion. And that's just equipment. And remember, a third of our business is services.
Well, I was going to say one time I just was saying I like Trane because the service revenue is strong. So, and — but you're — that's a great — the service business is a great business.
It's a third of our company. It's had a compound annual growth rate over the last seven years of low teens. Compound annual growth rate. This is a very resilient business and it's a third of our company and we invest heavily in it. We just opened up a new training facility in North Carolina, first of its kind. We bring every technician through our training center twice a year. And this is — think about — we have in the United States, we have I think 4,500 techs. We have another 3,000 or 2,500 globally. So we have 7,000 techs now.
And now you have got some pretty much mission critical. If you go down, a billion-dollar facility doesn't generate any revenue. That's just not good. So when you're in the data center, I think those guys have to be ready every second.
Data center customers are very risk-averse and they want to make sure that their equipment is going to work. The other thing data center customers want to do is they want to make sure that not only can you ship the equipment, but you could commission the equipment on site. So, a lot of our training classes is training technicians to be data center commissioning people. So, what they do is they're able to go to the data center, mechanical contractor finishes the install. We then go make sure the equipment is working the way it's supposed to be working.
All right. Now, you're in a great industry with great companies almost all come on. How are you doing wallet share versus organic growth from Greenfield?
