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How can you not love a market where Nvidia's Jensen Huang can send stocks into the stratosphere like it's magic? Last night, for example, he pronounced Marvell Technology Company, we love the next trillion-dollar company. He says this outfit with a $200 billion market cap suddenly shoots up 32.5% in a single session. He sits down with Rene Haas, the CEO of Arm Holdings, and jokes about how every time he announces a new product, Arm stock goes higher. Arm has been unstoppable for a week now.
These are huge wins for anyone who owns them. They are making people fortunes. They are making people millionaires. All these comments coming out of the Computex Festival in Taiwan have colored the tape. Even if you really can't tell, Dow edging up 229 points, has to be advancing 0.13%. NASDAQ edging up 0.03%. Kind of a nothing day. But there's something quizzical here too. Marvell and Arm are emblematic of this market's ever-more-narrow nature. If it's not in the data center or connected to artificial intelligence and connected to Nvidia, then Wall Street's just not interested at all. Now, I was fine with that for the Travel Trust. We got plenty of winners, including some that I'm trimming because they've just run up so much. There have been no hurry to it, though. However, last night, something else happened that really jarred me to the core.
Alphabet, a total surprise, you noticed. Google, one of the best, most respected companies on Earth, decided it had to raise $80 billion to continue its build-out of its data center business. Ouch. I thought they had raised enough money in the bond market. That was wrong. At the same time, I watched David Faber's excellent interview with OpenAI's Sam Altman in front of a construction site for a data center, 250 acres worth of land in Michigan. The site was gigantic and to the naked eye, largely empty. While Sam has plenty of partners, the whole facility is going to cost more than $15 billion. And then Oracle CEO Clay Magouyrk told David that the tech that goes into it will cost another 30 to 40 billion more. Oh man, where is that money going to come from other than from you if you're a shareholder? These revelations, plus a bit of a pause in a host of growthy stocks, my word, connected to software that ran out of juice after a three-day streak of strength. It's got me thinking a little more circumspect. In other words, tech seems to have found some newfound vulnerabilities. The build-out of AI is looking like it is going to be a lot more expensive than we thought. That's what Alphabet's saying. That's what OpenAI is saying. That's what they're all saying or will be saying in the next few weeks. And I don't really like that.
Now, I don't like to be contrary for the sake of being contrary either, but I do want to take advantage of the fact that the market could turn on a segment that is voracious and needy for money like the data center is becoming. The cost is getting too high, people. Even as Jensen Huang does say that the more you buy of his chips, the more you make. And you know, I believe that, but it's not yet self-evident. I want to find an antidote to some other sectors where growth stocks and non-growth sectors are now being thrown away. I want to be systematic about it. So, here's what I thought. I drew up a list of the worst-performing sectors in the S&P 500 this year, looking for stocks that seem way too out of favor within those sectors. The most miserable part of this market right now are the banks. People have lost faith in the bank stocks because of credit worries. Nothing drives buyers away like credit issues. And with the economy weakening thanks to the price of gasoline, we have to ask ourselves which financials can withstand the pressure. Now the investment banks like Goldman Sachs, Morgan Stanley, they've got relatively little exposure to consumers. They have been monstrously good stocks to own. We love gold. We have a big position for the trust. But honestly, if you're looking for a fortress, I like the stock of JPMorgan here. It's got balanced growth, sells for only 13 times earnings. It's the best bank in the world. It's not — that's 10 turns to be called less than the average stock. I'm not going to give you the performance of Micron by telling you to buy JPMorgan. You're not going to get it. But anyway, you're not that early on Micron. You could be early on JPMorgan. JPMorgan is the equivalent of Micron. You normally don't get to buy the stock so cheap. And no one would regard it as a lousy franchise. Even as the stock's down 7% year to date, you can buy JPMorgan and put it away. Mighty hard to buy and put any tech stocks away right now. Next worst is healthcare. Oh my. This group has just been annihilated.
I've never seen it trading this bad ever. There are myriad problems. The federal government's been putting pressure on drug pricing. The FDA is not exactly friendly. Investors are worried about competition, especially for the GLP-1 formulations. Now, it's easy for me to suggest Eli Lilly, as it has multiple versions of GLP-1 drugs, including a new one that may be the first that sheds fat without muscle. I know people on this one from the so-called gray market of candy. I barely recognize them because they look so much better and younger and stronger. Notice this version has not been approved for these things, but I think that if approved, it'll only give Lilly the unassailable knockout punch against Novo Nordisk because it's got fat-busting without muscle-crunching. The worry I have with this one, though, it's the same unreliable fellow shareholders who go to own tech also own Lilly. So I'm going to do something completely out of favor and recommend one that we're buying for the Chapel Trust gingerly, as club members know, which is Johnson & Johnson. J&J has 10 commercialized drugs that bring in more than a billion dollars. Several more coming. Growing medtech business helped by some terrific acquisitions like Shockwave and Cardio Repair. Meanwhile, J&J is divesting its prosaic commodity artificial hips and knees business, something that could further raise its price-earnings multiple, which currently stands at a very low 19 times earnings. Plus, unlike almost every other drug company besides Lilly, J&J has no big patent expirations. Instead, it has more potentially big drugs on the come. Buy this one slowly because, like the banks, there is very little support for the stock right here. Well, then why start now again? Because we don't know when this vicious rotation will end. They take you by surprise. We need some staples. I've got an odd one. How about a stock I haven't talked about at all? How about Kimberly-Clark? Here's a premier Kleenex, paper towel, toilet paper, diaper company. World-class set of brands right now sells for just 13 times earnings, 5.25% safe yield. I like Kimberly-Clark because it's merging with Kenvue, J&J's former consumer products division, which didn't get much love as the company was determined to move into faster-growth pharma. It will be run by the terrific Michael Hsu, who has synergies galore that he can exploit. Deal closes in the second half. I'm not worried about RFK Jr.'s version of Tylenol. To me, like the talc suits filed against J&J, the issue has become litigation noise. Gives you an extra bargain. Got two fast-food companies that are down on their luck that we all know: McDonald's and Yum Brands. The former missed the quarter, something that's very rare. I don't think that's going to happen again. As for Yum, yesterday we started hearing chatter that they're in talks to sell the underperforming Pizza Hut business to an outfit called Longrange Capital. I thought this one would explode higher on the news because the remaining KFC and Taco Bell are two amazing performers. I think the love affair with those has taken the stock down to well below where it should be. A Yum free of Pizza Hut is a Yum that's going to trade much higher. Finally, all right, I'm going to put my neck out there. I want to take on the risk of owning Kellanova with CEO Steve Cahillane, the miracle worker who made you a huge amount of money with Kellogg in that breakup at a time when the rest of the industry was falling apart. Steve came on the show not that long ago and laid out a vision that could turbocharge old lost brands. I hope he can pull it off and save the dividend. Currently yielding 6.85%. Now this is faith-based investing, though, as I have faith in Steve after what he did with the arguably more difficult Kellogg. But I don't have all that much faith in Kellanova after previous management gutted the company.
Now understand why this list is so important. Things could get tough in tech because there's some $500 billion that might need to be raised in a very short period of time for this data center build-out. If more companies sell stock like Alphabet, it's going to put pressure on the entire group. And that's when you'll need something non-tech like the stocks I just mentioned. See, those stocks are less likely to be a source of funds because someone who owns Kellanova is not someone who's going to end up trying to sell that one in order to buy some OpenAI. Bottom line: you're foregoing some risks, but more important, these are the stocks that will start going higher if tech retreats. And we have to start thinking like that. You'll wish you had some when the time comes and the momentum tech stocks run out of momentum.
Hey, how about Frank in New York? Frank, how are you today? Boy, I'll tell you. This was a good day. I went to the dentist. I had no cavities. That's the kind of thing I now live for as a person, right? No cavities is a huge win for someone like me.
Boom. No cavities and great integrity. What a combination.
You're very kind. I wish my dad were allowed to do that. He called me at 71. That guy said, 'Yeah, great integrity.' Thank you, Dad. So, what's up?
Hey, Jim. I thought after Netflix was done bidding for the movie studio and all of that, it would revert back to its old price, 115. They're in a crash by themselves. What's holding this stock back?
Okay, so here's what's amazing, Frank. You and I are thinking alike. I saw today at 83 and I said to myself, 'All right, I got to do a piece about how this stock got down to 83.' It shouldn't be. It shouldn't be down 11%. You were on to something. I am going to do it. I can't just say, 'Yeah, I agree with you,' because obviously that's not rigorous, but I think you're on to something and I'm going to follow up on it and we're going to get down to the bottom of it. That's the end of the top. I wanted to show where I had a pain in my tooth and it went away. Dr. Cramer's incredible. He spells it with a K. Now, it might not seem like it now, but you still have to own some non-tech names in your portfolio. Hey, thank heavens for boredom. You'll thank me once these momentum stocks start running a little bit out of steam. Got a big action-packed lineup. That's — you always say action-packed. It's just something you say on TV. You should never say it in real life. Starting with my conversation with Palo Alto Networks, the cybersecurity kingpin is jumping out after a true, actual, real blowout. I'm going to sit down with the CEO, learn more about the quarter. Then Signet Jewelers just reported a sterling quarter and I'm learning more about how this company can keep delivering diamonds to investors. I think it had a really good quarter. And Cisco's already up more than 65% so far in 2026. Old dog, new tricks. So could this legacy tech keep its momentum in the AI era? I got an idea. Why don't we sit down with the CEO, Chuck Robbins? So stay with Cramer.
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I want to make of this quarter of Palo Alto Networks. After the close, the stock's been all the way up and come all the way down. It's kind of just going around. Let's go right to the source with Nikesh Arora. He's the chairman and CEO of Palo Alto Networks. Learn more about the quarter and what comes next. Mr. Arora, welcome back to Mad Money.
Jim, nice to see you again.
Okay. So, Nikesh, in the last, I don't know, 90 days, how do people figure out what you knew was truth from the beginning?
I don't know, Jim. I think we just finished our conference call and I think we declared the 'Sasocalypse' dead for cybersecurity officially.
Well, it's very clear that it's been a boon for you, particularly because you've got a couple of things going. Everybody needs to be privileged now because there's millions — we got machines all over the place and they got to be stopped, and I don't know who else has a solution like you.
Well, Jim, look, I think what we've seen — a lot of people have discussed 'Mythos' in different public environments, and I think what is very important to understand: AI has the capability to understand bad code. AI has the capability to take vulnerabilities, stitch them together, and figure out a way to attack cyber infrastructure. Now we have to find antidotes to that. There's no easy way around it. The antidote in the short term is a lot of testing, a lot of blocking and tackling, which I think a lot of people are trying to do as we speak. Lots of consulting companies are involved, cybersecurity vendors involved. But remember, these models have a 30% false positive. So when you think it found something, it may not have found something. It may not have found something it should have found. So there still needs a lot of cybersecurity capability and expertise brought to bear to figure out where the problems are solved. That's a short-term problem. What this does prove is there's only one long-term solution: to consolidate, platformize, bring all your cyber data in one place, and fight AI with AI. And that's become apparent to not just the market but to everyone in the last, I think, 90 days or so, that we are a net enabler of better cybersecurity. We're not a victim of amazing AI that's going to happen in the future.
Well, I mean, there are some daunting things, and when I read your stuff sometimes, I just — I'm like David Faber. I'm not scared out of my wits about it, so to speak. Although he's okay. But machine identities, 109 to one. That's how many machine identities there already are.
There already are. Look, there are service accounts, there's agents, there's all kinds of non-human identities that are out there which are doing stuff in the back. They're talking to each other. Now, as you look at your cybersecurity, if you look at your IT enterprise, you have humans, you have machines, you have agents. You have got to manage all of them because any of them that's unmanaged becomes a potential attack vector. So that was our thesis for buying CyberArk, because CyberArk is the only true identity security company that actually stops things from happening, not just keeps track of them or catalogs them. We figured that was in pole position to build this capability to help us manage the entire enterprise from an identity perspective. We relaunched it and built more products under the brand ID three months ago, and as you saw from our results, we seem to be making good progress in the first quarter having CyberArk as part of Palo Alto. We have amazing plans for them going forward, but it's going to be crawl, walk, get them amazing, build more capability, get out and make sure every customer has that capability.
Now it's got to be that these particular gremlins, if as smart as they are, if you don't have a platform, won't they find the crack and get in? Won't that be something that they are programmed to do?
Well, Jim, you know, if one thing the last two years has taught us is more data gives you better AI. That's obvious, right? If you look at all these models, you're saying, 'Let's train them with more and more parameters, more and more bits, because the more bits you put into training, the better the outcomes are.' Every enterprise is chasing, 'Let me get more data.' You have companies that do training data, they're flying into the stratosphere because they're helping train models to get better and better and smarter. Guess what? Cybersecurity needs the same thing, which means you have to bring all the data together in one place, train your defensive models so they can fight the aggressors of AI. And there are very few companies out there which are providing platforms that allow you to integrate data and allow you to have a whole bunch of capabilities under one roof. And that's why networks...
Now, how many incoming calls have you had since 'Mythos'? I mean, how many people just say, 'Listen, I don't know, should I be scared? Am I okay?' I mean, just people who just know you as someone who understands this business, been around a long time. Just saying, 'Am I dead? Are they going to wipe me out?'
Jim, across the company, we've had 1,200 customer interactions where they've asked to talk to us. We've spent the last six weeks talking to 800 of them. We have 400 more to go. Just to give you a sense, we did 1,200 meetings all of last year. We've done 800 in the last 12 weeks, right? So, we're busy. We're busy. And this is not just about 'help me buy something.' This is about 'help me understand what the problem is. How do I solve this problem? How do I deal with 'Mythos' today? How do I deal with the next version of 'Mythos'? How do we deal with the following version of 'Mythos'? What does the world look like in six to 12 months when these AI models keep getting smarter?' So the customers are smart. They don't want to solve just the problem today. They want to understand how to get ready and position themselves for six to 12 months from now. And the answer is: consolidate, automate, platformize, and use AI.
And that's what's happened. You have a — what, a $200 million deal with a leading frontier AI lab. A giant — that's a giant Fortune 500 power producer, $80 million deal. These are huge deals being done just like that.
Well, Jim, you've always maintained if you want to build a large enterprise company, you have to have large customers. You have to have large happy customers. And the only way you do that is you can bring a lot of products to bear, make them work together, have the customers see the value of those products together. I don't want to sound like a broken record, but you have to platformize.
Well, there were many companies in this business when you and I started talking. There's another company we're all familiar with. Everybody in this business seems to be friendly. It's you and George Kurtz. But now I don't know anybody else. Are you just a duopoly now after having a dozen companies in this business when I first met you?
Well, Jim, I think like some of us took a very platform-centric approach and said the customers need for us to do the heavy lifting and to bring all these capabilities to bear. We have to get out of the feature business, get into the platform business. And I think George did a tremendous job at CrowdStrike. Very proud, you know, very admirably what he's done. We're still slightly bigger than him. So, please tell him that when you see him tomorrow. But no, I think both of us are trying to do the right thing by the customers. Trying to make sure our customers are protected. We're trying to make sure the customers have an antidote to fight AI. We're trying to make sure that our customers can go do what they need to do because they can trust us to protect them.
How did you know to take CyberArk, which I always knew as the — you know, that was the keys to the kingdom. It was a very small group of people. How did you know you had to blow that out to everybody? And how were you able to do it so fast?
Well, Jim, you know, we're still early days. I think remember, what's very important is our first phase of M&A was to take product companies, find a way to integrate them into our platform and put them into our go-to-market engine to make sure our customers had the capability across the board. I've always wanted to look at subsectors of cybersecurity to see when is that sector going to hit an inflection point, because typically when you hit inflection points you need innovation and people are willing to change. And as the AI train started moving, we said, 'Wait, this is going to create a whole bunch of new set of vectors, new identities, capabilities, machine identities.' And then we said the only company that is so well respected in identity that does security, cyber — and you don't know Udi, Udi is a great guy, a great business. They just needed a little more sort of, you know, push to get more innovative quickly. And I have to say the team's amazing. They've responded very, very effectively. In fact, the entire team is in our headquarters today. We're working with them. We're trying to make sure that they become the platform of choice for identity in the future for both human and non-human identities. That's our aspiration. It's good progress in the first quarter together with us, and hopefully we can continue to make progress with them going forward.
Well, congratulations. Great quarter, all coming together. I knew it would. The other — I don't know where the doubters went, but I don't think they're in the business anymore. I want to thank Nikesh Arora, chairman and CEO of Palo Alto Networks. Thank you. Always good to see you.
Thank you. Thanks for having me back.
Coming up, is it time for investors to put a ring on Signet Jewelers? Cramer's inspecting the stock with the company's CEO next.
This morning, Signet Jewelers reported a surprisingly strong quarter. The retailer that you know is Kay Jewelers, Zales, Jared, a bunch of digital brands, including Blue Nile, delivered an 18-cent earnings beat off a $1.38 basis with inline revenue and slightly better-than-expected same-store sales growth. Even better, Sig gave solid guidance for the current quarter and raised its full-year forecast across the board. Not many retailers have done that. That's why the stock jumped 3.75% today. Of course, this thing's been a real wild trader over the years, seeing it rally from $45 at its lows in March of last year to $110, its highs in October. Then the stock pulled back all the way to $71 a few weeks ago. But despite widespread worries about the consumer discretionary space, it's now rebounded to $88. So, could this be the start of a larger recovery? Let's take a closer look with J.K. Symmachus. He's the CEO of Signet Jewelers. Mr. Symmachus, welcome back to Mad Money.
Oh, thanks for having me. Glad to be here.
Okay, so J.K., I want to posit this. For a long time, this thing's been a tiger. Wow. I saw something this quarter. You know, the cadence wasn't that great in the sales. It went up and down. The end was good. But you are making this company a lot easier for people like me to understand who have followed it. And I am thinking that that means you are actually going to have that slow progression higher rather than the up-and-down oscillator. Is that possible?
Yeah, I believe so. You know, our mantra is to perform while we transform, and I think that what you see in this quarter is consistency. We saw growth — you know, 15 out of the last 17 months positive comp performance, positive comp performance across all brands save for two: James Allen, which obviously we've closed down as a business.
Right, we're going to talk about that.
Diamonds Direct, which is actually showing sequential improvement, and we saw a balance across the business with...
All categories up on a balance of both unit improvement, sequential improvement to the trend and AUR growth. So, you know, I think the headline for this quarter is consistency, which I think is something that, you know, we're positioned to deliver.
And that's what I want under the Grow Brand Love strategy. I see focus on top brands: Kay Jewelers, Zales, Jared, and Blue Nile. You bit the bullet on James Allen. There's nothing wrong with biting the bullet. You want courage from management in order to get things so that we revealed as now a free cash flow machine.
Correct. Yeah, you look at free cash flow, $600 million, EPS growth of 30%. I mean, this is a great business. It's a business that matters to consumers. It's a business that's really undervalued relative to its performance. And I think the key to that is durable growth, but also consistent performance. And that's what I hope we're starting to show the ability.
I couldn't agree more. I turned to Ben Stowe and I were working on it. I said, 'Did you see the cash position here?' And I said, 'How do they do it?' Because they're making a huge amount of money and it's not hidden by all different divisions. Now I do want to understand what is the plan to make it so that there's going to be a little more synergy among the different divisions to be able to cut some of the costs.
Yeah, I mean, we've worked hard over this last year to really rebalance our thought around what's distributed at brand level and what's centralized. So when you think about centralization, think about places where we can better leverage scale: how we buy media, how we generate content as a company and leverage that economy of scale, the economy of scale that comes with operating a better e-commerce environment. Sourcing, thinking about a cohesive diamond sourcing strategy where and how we choose to play big or where we want to operate as a smaller company. That's really what's driving the centralization side of it. Those things that are about customer experience, they really are best distributed to brand. We had centralized those, which had an effect of really kind of pulling the brands on top of each other.
Now, as we move into this year, we were really excited about we've leveraged the benefit of centralization and starting to see our operating model work. You see that in our SG&A. You see that how we're able to, despite some of the balancing act between top line and gross merch margins, we're still expanding our operating margins. That's because of that centralization. Now the work in year two of Grow Brand Love is about how do we really differentiate and bring distinction to these brands centered around four core engines: Blue Nile, Jared, and Diamond Strands.
I can't tell you how great I feel about that because I myself, and I've studied the company now for a long time, have not been able to figure out why one sells at one and one sells at the other. And you can't do that. It's the kind of thing that confuses the consumer. We've seen this over and over again. The great retailers know how to differentiate. That's where you're going.
I think that's really where the unlock and more value for the company is, not just for investors and for us as a business, but also for consumers. We're in a category that matters. The more we target the right consumer group, the better off we're going to be.
You know, there's so many things. Look, I love the changing pay structure. New website, that's about time, isn't it?
