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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer. Other people, my friends, I'm just trying to make a little bit of money here. My job is not just to entertain, but to do some teaching. So call me at 1-800-743-CNBC. Tweet me at Jim Cramer. When we look back, I would say this was that moment when Dell simply took over the hardware computer space with one of the biggest blowouts I could ever recall. On a day where the Dow jumped 363 points, advanced 2.22%, the NASDAQ gained 2.1%. Dell, with a 102-point gain or 3.2% in one session, defined today, creating still one more day of tech strength, even if we did see some recent winners get hit with a bizarre round of profit taking at the end of the day sell-off.
Dell's quarter was a true surprise, and Michael Dell should be very proud. But there's one great tech quarter after another in May that we saw great results, and nearly all of them were connected to the same thing: the data center, in some way, shape, or form. Today, away from Dell, we actually saw some stunning strength in a host of software companies that have underperformed of late. I'm talking about stocks like ServiceNow, Atlassian, Salesforce, Microsoft, all of which were simple winners this month. Their gains were in some ways as shocking as the declines to some of the great hardware leaders in the last few minutes of today's session.
At Dell, they saw incredible strength across all their businesses, but the fastest growing segment came from Dell's partnership with Nvidia, the AI pioneer, with a stock that's been a bizarre underperformer of late, including today, where the company's stock fell four points in the last few minutes of the trading session and finished down an ugly $3. It was a wild and inexplicable fall for the largest stock in the world. I didn't think it'd collapse so fast on no news. No news at all. Maybe that's a good place to start our game plan then, because the week begins on Sunday night when Jensen Huang, the CEO, gives his annual Computex talk in Taiwan. Maybe something he says could reverse today's inexplicable decline.
This year, Jensen plays host with some of his favorite partners, including Rene Haas at Arm Holdings. That stock held up. Matt Murphy from Marvell. Intel's Lip-Bu Tan. That stock did not hold up. And Qualcomm's Cristiano. Computex has been a stake in the ground really for many years now for Jensen Huang, and I think he may unveil something special here. Now, why do I feel that way? We got a potential hint when Nvidia's official X account posted a cryptic tweet teasing, quote, 'A new era of PC.' The account for Microsoft Windows posted the same message. Grasping at straws, doing everything I can for you. Maybe what we saw in late-day trading was some sort of end-of-the-month rebalancing out of some semis and into depleted software. Let's hope Nvidia can give investors a reason to get excited again with its Computex presentation, and we can get back to talking about the fundamentals and not just endless flip-flopping trading.
Next, when we come in on Monday, we may have a deal with Iran. Who knows? I know I'm in the minority though for what will happen. I'm believing this. I think that will be very quickly a wash in oil, and I suspect a very fast plummet to the 70s from the high 80s to low 90s when it comes to the price of oil. I want this market to broaden beyond tech, but it can't do that because of the war and the shackles that the Hormuz blockade is putting on the consumer. Now, the American consumer is remarkably resilient. That's been one of my themes. You know that I said it last night. But they can only take it so far. For example, we can't have banks, among the weakest of all stocks this past month, rally until the war is over and the price of oil comes down, because the risk of a spike in defaults because of expensive gasoline is just too darn high. We can't expect a housing boom as rates have gone up, even as again I'm contrary, I expect a decline when the war ends. We can't expect lots of travel. These are all important props to the economy, and they need to kick in if you're going to make any money beyond tech.
Monday's also got a host of important corporate events. The Federal Express less-than-truckload division is going to be spun off as FedEx Freight, which will trade under the symbol FDXF, as in Frank. We own FedEx for the Travel Trust, so we'll have full coverage about what the breakup means to you if you're a fellow club member. I think FedEx Freight could be a true winner given the not-so-benign neglect it suffered through for so many years as part of the combined company, although I still favor parent FDX. Now, Merck on Monday evening, very odd, in the actual 6 p.m., hosts a meeting to review its cancer portfolio after the 2026 American Society of Clinical Oncology conference. That's the most important cancer confab of the year. Merck's cancer dominance has been challenged of late by J&J. Let's see what Merck has to say.
The next day we've got some market-moving tech news. We know after speaking to Sridhar Ramaswamy, the CEO of Snowflake, earlier this week that he'll be hosting an analyst day on Tuesday, and I expect the stock's phenomenal post-quarter rally, which continued today with today's 7% gain, will roll on. Yes, it was that good a quarter. A real conversion from an enterprise software company with some artificial intelligence to a genuine AI company that stores data. The latter's worth a lot more in this market than the former, as shareholders blessedly found out this week. Now that same morning, we see Dollar General. We see if it's as good as Dollar Tree, which reported a blowout quarter yesterday morning. Dollar Tree has sensational numbers and a bright forecast despite its poor clientele being weighed down by higher fuel costs and inflation. I expect the same thing to happen with Dollar General.
We also hear from national jewelry company Signet, which could tell us about the state of the consumer, as everything they sell is discretionary. Obviously, I find Signet to be an excellent barometer of the times. After the close, we get results from Palo Alto Networks. That's a cybersecurity company that we own for the Investing Club. This stock tends to run into the quarter, and then when it reports, we get hit with some profit taking. It's possible we can see the same pattern again. It's been the way of Palo Alto, except the cyber threat situation is more extreme now than it's been in the last few quarters. Let's see what happens. Then there's Ulta Beauty. Now, we saw them not that long ago. You know, the stock's down 15% this year, and today an analyst cut their price target ahead of the quarter next Tuesday after the close. Maybe the analyst knows something. I don't know. It was jarring.
Wednesday morning, Medtronic reports. Speaking of jarring, this long-term winner's become a short-term loser with the stock down 23% year to date. Medtronic is not alone. Most of the medical device stocks are down, with the worst being one of the best just last year. Boston Scientific, almost 50% down. I wish I could be aggressive recommending Medtronic right on Monday morning, but I can't. And now we've got to wait to see the quarter. That group's so awful. After the close, club members beware. We have both Broadcom and CrowdStrike. Two very important positions for the trust. Both hit their all-time highs today, so I have to be a tad circumspect. You know how I feel when stocks run up ahead of a quarter.
Broadcom stock hasn't done all that much this year. I think it'd be delivering good. On CrowdStrike, it's gone parabolic though. It might be able to brave the profit takers on a good quarter, but it most likely will be greeted with some noticeable profit taking, as it has been like the last few CrowdStrike quarters, because it's an expensive stock. But the company's been a bulwark against cyber criminals, especially since Anthropic privately released this mythos and scared the dickens out of all of us. We also hear from one of the strongest stocks this year, which is Five Below. Now that's well off its highs, now down nearly 25 points. I like it very much, and I go for it given its consistency and its price points for purely discretionary products. Yes, I would buy Five Below ahead of the quarter.
Thursday, results from Ciena. This had been a networking player. It's come off a lot from its highs, even though it's up almost 150% for the year. I think Ciena's got its own proprietary technology, and there's more than enough room for it to grow for this one, thanks again to the data center. Next, if you've been following the turmoil at Lululemon, it's hard to believe that they can beat the estimates. This could be a reset quarter, and you don't buy ahead of a reset quarter. Finally, on Friday, we get the Labor Department's non-farm payroll report. Could this be the moment when we start seeing all the building jobs related to the data center show up? They really haven't shown up yet in the numbers. It's a very important series of numbers that we are going to get though, and it does need to be weak enough to justify a rate cut from the Fed. I think new Fed chief Kevin Warsh needs to see a truly soft employment number before he starts aggressively pushing for lower rates.
But the bottom line, beyond the data center, this market could really use some peace in the Middle East, or at least something that can reopen the Strait of Hormuz, bring down the price of oil, and allow the bull market, which is so much centered on tech, to broaden out to more economically sensitive sectors. Otherwise, hardware, software, who knows? But they all seem to be in play as a magnificent month of May draws to a close. Let's go to Arthur in New York. Arthur.
Hi Jim. Thank you for taking my call. Really appreciate it. Love what you do.
Thank you, Arthur. Thank you.
Hey Jim, I needed your opinion on e.l.f. Beauty. I have this stock all over the map over the last three years. This company's been growing 25 to 50% a year. The stock has just been beat up. Am I buying more now, or am I holding on to what I have?
I'm worried about it. I'm worried about it because, you know, they get a lot of stuff from, you know, it's made in China. And what really bothers me about it is the inexplicable decline and the very large short position. I am, call me confused about e.l.f. I don't understand how the stock did indeed fall apart. Let's go to Patrick in Virginia. Patrick.
Booyah from the Shenandoah Valley there, Jim.
Booyah. Chief, what's up?
Well, I wanted to ask you. I bought Nvidia back in 2017 when you called it the stock of our generation, and then in the next eight years it grew to represent about 60% of my entire individual stock portfolio. And so I've been diversifying it over the course of the last year, and I wanted to get your opinion on GE Vernova, even though there's other companies in the space that have some seemingly more attractive value.
I think GE Vernova is absolutely terrific. We know that it's come down nicely from its top. It's at a very good level. I still like Nvidia very much. I'm not backing away from Nvidia. I just need to know what the heck started what went on in the last hour, because it just seemed, let's just say it didn't seem right. How about that, and leave it at that. Okay. This market needs a few more catalysts to broaden it out besides the data center. Maybe we'll get that in June. Got to hope so, because you can't just keep trading the same stocks.
On Mad Money today, Gap shares plummeted on the company's latest earnings. But were they really as bad as Wall Street seems to think? I've got to dig deeper into this one with the retailer's CEO. An investor sent Agilent shares soaring on its beat-and-raise quarter. What is that about? It's a medical device company. Those are not doing that well. I'm going to find out with the company's top brass. And after a great Investing Club meeting this week, although I did beat myself pretty badly, I'm taking a look at some of the more amazing questions we get from our amazing club members. So stay with us.
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What the heck happened to the stock of Gap today? Last night the retailer reported a mixed quarter. Gap brands doing well, but Old Navy did a little worse than anticipated, while Banana Republic and Athleta also missed expectations. The reason the stock plunged over 15% today though is that Gap gave soft revenue guidance for the current quarter because of weakness in the Old Navy division. It's the largest division, and the company cut its full-year sales forecast even as they raised their earnings outlook. Now, the stock is back to where it was in late 2023, which was just a couple of months after CEO Richard Dickson took over and started to orchestrate a real turnaround. So, what do we do now with the stock? At this point, it's trading at less than nine times the midpoint of this year's earnings guidance. Very solid dividend, good buyback. On the other hand, the turnaround's not playing out as well as we had hoped. I think we need to do more digging. Earlier today, I got the chance to speak with Richard Dickson, the president and CEO of Gap. Take a look.
Richard, welcome back to Mad Money.
Okay, so we've got some things that are tough obviously that we're going to go over, but I do want to start with something that I thought was surprising: the excellent Gap numbers themselves, because they were very, very strong.
Good. I love that you're starting with that. I'd even zoom out just a little bit more because we did deliver progress across key metrics for the quarter. This is our ninth consecutive quarter of positive comparable sales. Three out of the four brands growing. Comps on the total were up 2%. That's up against 2% last year. Overperformed on gross margin by 30 basis points, winning across income cohorts. We returned $450 million in cash to shareholders through dividends and share repurchases. The performance at brand was varied, but let's talk about Gap for a minute because...
...double-digit comp, up 10%. And that's 10 consecutive quarters of positive comps. It was a standout quarter up against 5%. The playbook is being executed with excellence. We are now seeing consistency in women's, progress in men's, improving trends in kids and baby. Category performance across the board in Gap remains healthy, particularly in denim. We've been incredibly disciplined in delivering clear and consistent brand messages, which is truly resonating with consumers, particularly Gen Z, through the collaborations that we've been driving, which have been incredibly exciting and culturally relevant. Yeah, I will say the brand will also be accelerating its store remodels as we build on the success of the test stores that we did in the past year. We're also relaunching fragrance this fall, which is going to be another brand-building momentum driver. And overall, I would tell you Gap is back on the forefront of the cultural conversation. It's an iconic American brand. We've got significant runway to build upon. Great product, great storytelling, great execution. Lots of runway to continue the progress.
Okay. So people might say then, why is the stock not up? And the answer is Old Navy indeed. And you were very abject about it losing momentum. You did not blame tariff. You did not blame the environment. You put it on your shoulders. You talked about a dynamic environment, which means that things changed very quickly. So tell me why you had to guide, actually guide down to negative because of Old Navy, because it was something that had been going quite well in the other times that you have been on the show.
Yeah, Jim, I appreciate it. You know, we operate with integrity and transparency. The good news here, which is being clouded a bit, is we delivered a 1% comp growth, and that's on top of last year's 3% growth. This is also the brand's sixth consecutive quarter of positive comps. As you know, we've been pursuing categories like denim, active, kids and baby, all of which posted growth versus last year, up 6%. And we continue to build upon that with relevance with our customers and momentum. Seasonal categories got off to a weaker start.
Within that, particularly dresses, where we've admitted and said we just did not have the right fashion quotient and value equation. Dresses just didn't deliver the right execution. Now I will also say we overinvested in inventory slightly and didn't correctly anticipate what ended up being a decline in the dress market. Our dress assortment did resonate in occasion dresses, which have much more specific end use like weddings and Easter. We are seeing a change in customer acceptance of dresses during key peak moments like summer stock-up now, instead shifting to more versatile categories and styles that can be worn year-round.
But how can that be? Just to hear you say it makes me feel like, okay, you missed some things, but don't take apart the stock. With all the buyback that you're doing, you're shrinking, you have a good dividend. People are just reacting to this one division, and I think in part because you had fixed it, we thought it was on to the next, but then it seemed inconsistent. And I think people are not recognizing, they didn't think that you did something that could be inconsistent because you've been so solid in all these different ones.
Look, we are continuing to be consistent. We grew in the quarter 1%. Now, would we want more growth? Do we expect more of ourselves? Absolutely. Of course we do. But the consistency that we've been demonstrating quarter after quarter, season after season, six consecutive quarters of comp growth with Old Navy, market share, stability, leadership across nine out of the 10 categories in the industry. And really important to recognize, we're calling it out. This was a seasonal challenge in a category. Now, as these changes have begun to take hold that we've effectively driven, we're seeing trends improve. Now, given the performance that we had in Q1 and the continuation of seasonal products in Q2, we are taking a moderated view of the year, but of course, we're driving for better results. And as we look to the second half with the seasonal product behind us, I'm really confident in our ability to drive improvement.
Again, when you shake things down then, I mean, I felt when I listened to you that you shouldn't, I think I said I figured that you would just say, listen, we're done with that part. We're going to be, maybe we are low single digit, but you took to, you were negative, and it made me feel like, wow, maybe I'm missing something. I don't know how Richard could be as negative as he is given the fact that he laid out a pretty good scenario for the future.
I'm absolutely not negative, and we are taking a moderated growth approach as we continue to drive Gap with double-digit increases. Banana is solid. Old Navy got off to a slower start, and it is a large-based business. We're giving ourselves and our investors the room, if you will, to get through these seasonal categories and then really overdrive in the back half. But that being said, we're transparent. You know, as the changes are taking hold, we have seen trends improve. We are holding our operating margin outlook. Our gross margin outlook is unchanged at flat to up slightly. We continue to maintain our cost discipline with SG&A as a rate to sales that is flat to last year. And despite, Jim, the lower sales outlook, we're also raising our earnings outlook to $2.30 to $2.40, which reflects 11% growth year-over-year at the midpoint. While this is our current outlook on the top line, of course, we aspire to outperform. The brands strive for continuous improvement, but on the balance sheet...
...you have, and we were again concerned. You were tough on yourself for Athleta. I found myself thinking, do you need an off-ramp Athleta because it's really missing, and you said it's behind schedule.
Athleta is an important brand in the portfolio. It's an important brand in the industry. Very few brands are over a billion dollars in this industry. It's the number five active brand in the space. Now, we've admitted and shared we are in the rebuild year. Maggie Gower, who joined us in August, has taken several actions to strengthen the brand. She's streamlined the assortment considerably, which is resulting in better AUR, better margins even with a challenging top line. We've been repositioning talent, filling in key roles. If you look at the website, you could see we're delivering much better creative execution. We've gotten some new merchandise in. It's checking really well. It's small. They're early reads, but we do believe that this brand has strength to deliver, and it's on us to prove that. And so stay tuned, you know, as we look to slight improvement in the back half. We believe we'll continue to chip away at this and find the growth pattern for Athleta.
And one of the reasons why I respect you coming on and saying this is that you did not take the cop-out. You could have very easily said the consumer's weaker. You did not do anything like that. You were consistent in saying that you've got to do a better job. And I admire that. An executive that blames the environment, well, you know what? That just doesn't hold water for me. And I thought that was really important that you did not do that.
All right. Thanks, Jim. I mean, honestly, we see our consumer, we love our consumer. We're seeing strength in customer behavior. We've sustained AUR growth and we've gained market share. I mean, the product is resonating on whole. We're winning across all income cohorts, low, middle, high income customers. This is demonstrating the breadth, the relevance, the resilience of our portfolio. So, no, this is not a consumer issue. This is a seasonal challenge where we got off to a slower start in seasonal merchandise. The good news is the season gets smaller and smaller as we get into the back half, and you're going to see us with a robust and determined, motivated perspective to deliver opportunity.
If you weren't returning all this money and weren't growing, then I'd say, but you were tough on yourselves. And I think people aren't used to seeing management as tough on themselves as you were. I want to thank Richard Dickson, president and CEO of Gap. No excuses here. Hold it as it is. That's what matters to me. Thank you, Richard.
We got this, Jim. Thank you.
May I be back after the break?
Coming up, can Agilent Technologies continue to build momentum after a strong quarter? Cramer is finding out from the CEO next.
What do we make of these results from Agilent, letter A, one of the major arms dealers to the life sciences industry among other precision enterprises? Earlier this week, the company reported magnificent top and bottom line beats. Management also raising their full-year forecast. Yesterday, the stock in response jumped 17%, although it's still basically just flat year to date. So, there might be opportunity. This quarter was interesting because some of Agilent's key end markets were indeed weak. China, food, academic, government spending down, but the rest of the business was so good, it more than made up for that softness. We're talking about strengthened drug development, drug manufacturing, cancer diagnostics, semiconductor material testing, airport security screening, and lab automation. Next week, they're presenting data on some new products to the American Society of Mass Spectrometry meeting, and it's going to be very important. So, can the stock keep running even after this incredible move? Let's check in with Mike McMullen, who's the president and CEO of Agilent Technologies, to find out. Mr. McMullen, welcome back to Mad Money.
Thanks a lot, Jim. Great to be on.
Okay, so Mike, you really did just some remarkable work here. Why don't you first tell us, remind us of what Agilent's doing in general, and then strictly walk us through this quarter, because obviously it took a lot of people by surprise.
Yeah, so we're a critical part of the tools company in pharma, chemical and advanced materials and diagnostics. So really along the value chain of those industries. And the stock saw a very big jump, something we haven't seen for quite a while in 20 years, but a really fantastic jump. And we provide our technologies. I'm very proud of what the team delivered. And when you think about the markets that we're in, you know, pharma, healthcare, those areas are really important and really growing for us. Chemical and advanced materials, really important, of course, with semiconductor reshoring happening and pharma reshoring happening, and of course clinical and diagnostics testing. So, we're very satisfied with our internal efforts. We put a huge amount of effort into transformation, innovation, our portfolio resilience. And you put that together with steadily improving end markets all coming together, we deliver this strong performance. And of course, we're really optimistic about our prospects going into H2, but we're also very clear-eyed about the dynamics in the world, but we're very much looking forward to the rest of the year.
Right. Mike, let's go to some things that, for instance, people might know. We know that GLP-1 drugs are maybe going to be the biggest drugs in the world. I saw today France said they're really going to, and everybody gets reimbursed. So it's obviously something very big, but I also fear counterfeits. I also fear phony compounds. What can you guys do to be sure that the stuff, that the GLP-1s are clean, clear, accurate, and healthy?
