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. Other people, my 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 at Jim Cramer.
Beautiful stock prices are in the eye of the beholder. And to the holders of SpaceX, there's nothing more gorgeous than a price of $21.80, up $9.30 today alone. That's where this stock went out on a volatile session where the Dow gained 329 points, S&P dropped 0.57%, and then Nasdaq tumbled 1.15%, with a real assault on the semiconductors, which are perhaps a source of funds to build positions in SpaceX.
Now, we've watched the levitation of a stock that's vaulted past some of the biggest stocks on Earth like Meta or Amazon. And at one point today, SpaceX was on par with Microsoft at just under $3 trillion, though it pulled back after that to remain at fourth place. Sure, the stock is called SpaceX, but it might as well be called Elon Musk. There's no way this company, which could see losses for many years, deserves such a high valuation on its own. It only gets there because it's run by Musk, who this weekend tweeted that the company might have $1 trillion in revenue by 2030 and more than $1 trillion by 2031.
Now, if SpaceX really has that kind of long-term sales power, then it's a steal down here with a $2.6 trillion market cap. But sometimes Musk gets ahead of himself when he's talking about the distant future. His numbers are three times the estimate of Morgan Stanley, which did plenty of due diligence for the IPO. That kind of forecast is not made lightly. In the old days, by the way, before say Trump's second term, the SEC wouldn't let you get away with making such rosy projections right after the deal has been sealed. But these days, the regulators, I don't know, they don't seem to care.
So, what does it mean that the stock of SpaceX keeps charging higher? Depends on how you look at it. Let me give you a bunch of perspectives that are floating around. Then I'm going to tell you where I come down. First and perhaps least important is the actual earnings story arrived at by looking at profits of each of the parts of the company. Normally it's a matter above all else, but SpaceX is not a normal stock. So let's break it down for you.
You got a communication system in Starlink that could replace almost every internet service provider in the world. It offers a superior product for as little as a third of the price. So I don't see how Starlink can be stopped. Maybe Netflix makes a bundle deal with them that could add 320 million people to its current 10 million user count, which is actually closer to 18 million if you include more than 7 million Starlink mobile subscribers. Frankly, I think Starlink could end up with a billion subs just from people in rural areas with bad broadband connectivity. The whole world's going to change because of Starlink.
Some people think it could be worth the entire value of the company, but that's now become a stretch with the stock's move to the stratosphere. It's got a rocket business which just for scarcity value could be worth, well, I don't know, name your price, because no one else has been able to reuse and relaunch rockets on a regular basis. It's got the old Twitter which can be worth something if you put in the right management.
Then SpaceX has its AI business. They have a gigantic amount of Nvidia chips that are being rented out by Anthropic and Google. Anthropic will spend at least $1.2 billion a month to rent Musk's hoard. Google will pay $920 million per month, and that's just from this one company, and Google makes its own chips. Also this morning, SpaceX confirmed it would buy the popular AI coding platform Cursor for $60 billion in stock as agreed upon earlier. You can use Cursor as your code-writing partner as a heavy hitter.
Then they have Grok. It's a competitor to ChatGPT, Gemini, Claude. Until this moment, I thought that Grok also ran. I can't imagine it stays that way given how much money SpaceX has raised, given Starlink, given all these other things. These are powerful properties all under one roof. Are they worth $2.6 trillion? Only if you use some imagination. But that's, you know, maybe an awful lot of imagination.
Fortunately, nobody seems to care too much about the near or even medium-term numbers. Instead, most buyers are looking at what SpaceX could be down the road. I like this. I think you could expect Musk to take over his sister company, Tesla, which would put him entirely in charge of his empire. I say that because I think he'd be fed up with some of those more pesky Tesla shareholders. He'll have easy voting control over the merged entity. No more worries.
For Tesla's $1.5 trillion valuation plus say a 25% premium, you got a massive auto business, including self-driving, terrific battery business just getting started, potentially gigantic robot business. It's the latter that I think is the most important product. And if it connects with Starlink, I believe you'll have a robot operation where they'll easily do what you want, just like self-driving cars, leapfrogging China, by the way, get them on Amazon. Remember, this is what could occur, not what you have seen so far.
SpaceX might be able to send data centers into orbit, eliminate the biggest problems: power and heat. Sun will take care of the energy. Space will take care of the cooling. The initial size could be a small enterprise data center that weighs, say, I don't know, 2,000 tons. That would still require multiple trips. But SpaceX is good at putting things up into orbit regularly. And with all this new cash, it's only going to accelerate. Mineral mining in space, why not? Okay, I hope for a reason.
Then there's the dream people are buying into. Now, let me tell you what I think, what I see. When you buy SpaceX here, you're really buying Elon Musk's brain. I think the cult of Musk is for real. But that's not the right way to look at it. What you need is to look at this as something different from an ordinary stock. That's how you really justify paying up for SpaceX.
Hey, look, maybe for some it's a keepsake. You want to say you own stock of the greatest innovator of all time. Why not? You want to be able to look back to your kids and say, 'I bought stock for you.' Musk stock. You may have missed Warren Buffett and Berkshire, but you didn't miss Musk.
Second, some people really, they believe they're buying a piece of kind of like a team. You know, like, you know, the Green Bay Packers have a stock. It's like that. These people are never going to sell. They're owners of a collectible that is a growth kicker. They want to be part of team Musk. He's letting you in with them. They're never going anywhere.
Finally, some are betting on the biggest meme stock ever. Last night, I saw this stock go from 190 to 213 overnight. It was an incredible move with buyers just taking it and taking it and taking it and taking it with almost no downtakes. It was deliberate overnight buying to push the stock up. The kind that sent Palantir here from $50 to $200.
These people have nothing but a belief that they can take a stock higher with the buying and it'll stay up. It won't change just because the stock at the end of the day was actually only up nine bucks instead of 20 where they had pushed it to. These aggressive buyers could be right.
We're going to see a Russell rebalancing on Friday that will add to the stock, it'll just add to buyers. Then in a couple weeks it'll be added to the Nasdaq 100, more buyers. Both are expected to spur huge waves of purchasing. Perhaps the people buying it now just want to get ahead of that.
Now I'm sure there are plenty of doubters out there. I was out yesterday and I heard everything from Musk is overstretched, he's going to go bankrupt, it's crazy to pony up here when there's so many other cheaper stocks, to a populist argument that SpaceX might be toast if we end up having two anti-AI presidential candidates come in 2028. But the bottom line, there have been doubters the whole way and the stock's already surged from $135 to $21.80 in a matter of days. While you're sitting here trying to justify SpaceX's valuation, the buyers are relentlessly pushing it up right in your face. And I bet they keep going.
Let's go to Sean in New York. Sean, hey Jim. Sean here from Rockland. How you doing? Enjoy. I'm doing well. Thank you for calling in, Sean. How can I help?
Uh, I wanted to ask you about Vertiv or talk about it or give some insights to it. I'm pretty top-heavy on it. I've held it for over a year and done well with it, and now I've got a bunch of long-term LEAPS on the recent pullback.
All right. Now, Vertiv, we heard Dave Cote speak about it last week. Now, Dave is chairman. And I can tell you that he tells a very positive story about a huge number of orders. The stock has had a bit of a setback here, come down. I have belief that many stocks look just like it and that they are going to come back. I do not think it's over. I just think that a lot of companies like Vertiv have seen their stock go down as people sell Vertiv in order to be able to afford enough money to buy the king of the data center, which also happens to be SpaceX.
Let's go to Brett in California. Brett, Jim, I appreciate you bringing me in on the segment. Thank you. Of course. Hey, quick question. Are you still hitting those early morning workouts before work?
I was, yeah, I like, I get up at 3:30 and I get hit for a couple hours and I like it. My trainer gym keeps me in shape. Thank you for asking. What's going on?
Yeah, that's why I like, that's why I follow you because I love your discipline. I know how busy you are, but...
Well, Jim is the one with the discipline. I'm scared of them. Go ahead, Jim.
Here's my thought. I started adding a small position in the, like, late 200s and I just want to see if I still can keep adding to it or did it run too much. It's GE Aerospace. I don't know if they...
No, I think GE Aerospace is fantastic. You know, we own Boeing for the Charitable Trust and GE, people disregard as a cleaner story. Larry Culp does a terrific job. I think Boeing can pull up, but this one hit an all-time high today. I want to say congratulations to you for having the courage to stick with it because it did have a big downturn. The stock did, not the company, and you stuck with it. Congratulations.
Let's go to Ann in Indiana. Ann, hey Jim, I'm a club member. Thanks for everything. I hope you're on the call tomorrow. We got a noon call. It's going to be fun. Some fireworks. What's up?
Thanks. All right, so I don't know if I missed the dip in Casey's buying opportunity, but you know, you can only have so many high PE stocks, right?
Yeah. You know, we really, really like Casey and sometimes I see stocks like this and that dip was made to be bought. You're so right. Let's do this. I think you buy 25 shares. Let's say you want to have 50 shares. Maybe you buy 10 here and then let it come down because it is an $865 stock. And remember when you have a stock at $865, divide it by 10. Think of it as an $86 stock and try to get some more when it hits $80. And thank you for joining the club. I'm counting you tomorrow at our noon meeting. Don't miss it.
All right. Look, there will always be doubters of SpaceX and its valuation, but that won't stop the stock from surging higher because there's multiple reasons why people love it. On Mad Money tonight, Adobe reported a beat-and-raise quarterly last week. So why is its stock still in free fall? I'm running through the numbers to find out.
Then, Yum Brands announced the sale of something I've wanted for ages, Pizza Hut, this morning, and I got the company's top brass to break the deal down. It is a different company without pizza. And shares of ZoomInfo have been on a tear over the past year. I'm going to sit down with the CEO to learn more about the business. One of our viewers, Brian, asked us to look into it. We look into what you tell us to stay with.
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.
Look, late this week, all anyone cared about was the SpaceX IPO, causing some huge stories to fall right through the cracks. Take Adobe, the digital design and e-commerce software play, which reported ostensibly a strong quarter on Thursday night, only to see its stock plummet nearly 7% on Friday. It's puzzling.
Like nearly all the enterprise software players, Adobe's been a house of pain, down more than 70% from its peak in 2021. In fact, it's down more than 40% year to date. At these levels, the stock sells for just 8.5 times the midpoint of this year's earnings forecast. That's an unfathomably low multiple for what used to be one of the most beloved names in all software. So what the heck is wrong with Adobe?
Okay, a lot of this comes down to competition. At first it was competition from other software companies: Canva, Figma, Shopify. Then a couple years ago, we started hearing about all these new programs from the big AI platforms. Programs that have gotten very good at writing custom software. Now, this is really the root of the AI displacement thesis that has crushed the entire enterprise software edifice, and that includes Adobe.
Even though the company's grown earnings at a double-digit clip for five years in a row, the stock keeps drifting lower. Adobe traded at more than 50 times earnings in the late 2021 period. Now, its multiple is in the high single digits because people simply won't pay as much for the numbers as they used to.
And lately though, we've seen some old-school software stocks starting to bounce. The IGV, which is the iShares Expanded Tech Software Sector ETF, bottomed over two months ago and has rallied nicely from its lows before turning cold again a couple weeks ago. Datadog, MongoDB, Workday, they've all delivered some nice rebounds in response to better-than-expected earnings.
That's why I wondered if maybe, just maybe, Adobe might be able to turn things around when it reported last week. But then, even when they delivered a beat-and-raise quarter, the stock still got hammered. Like I said before, the results were not the problem here. They're just not.
See, Adobe reported a healthy top and bottom line beat: 13% revenue growth, 18% earnings growth. And it wasn't the formal guidance that tripped up the stock either. Adobe guided for $6.67 to $6.72 billion in sales, okay, for the current quarter, well ahead of the $6.52 billion number that Wall Street was looking for. So much better than expected sales.
The company expects to earn $6.05 to $6.10 per share. That was roughly 30 cents ahead of what the analysts wanted to see. Even better, Adobe raised its full-year forecast substantially. They're now talking about 12% sales growth, 16 to 17% earnings growth. That's crazy. You rarely see a stock with double-digit growth trading at a single-digit price-earnings multiple.
So, the numbers were strong. And honestly, I thought Adobe told a pretty good story on the conference call, too. Shantanu Narayen, the chairman and CEO, explained that rather than being hobbled by AI competition, the company's own AI offerings are, quote, 'accelerating customer behavior at an unprecedented speed,' end quote. Yeah, Adobe has a bunch of AI products for both digital design and marketing.
Their AI-first annual recurring revenue, the ARR, just tripled year over year. Firefly, the AI creative suite, saw its annualized recurring revenue grow at a 50% clip just versus the previous quarter.
So, if the numbers were great and the story is compelling, what the heck sent the stock into a tailspin? Okay, there are a few issues here. First, Adobe recently made an acquisition called Semrush. It's a brand visibility and search engine optimization platform. They paid $1.9 billion for it last November. When you back out the numbers from Semrush, aha, Adobe's net new annual recurring revenue would have been down more than 3% year over year. Down. Buying the core business might be decelerating.
Second, Adobe touted its success with attracting premium users for its creative suite, meaning customers who use the basic product for free, then pay up for extra features. Specifically, Adobe's creative premium monthly active users grew from 50 million to 90 million year over year. And Adobe said this was, quote, 'based on the early success of Firefly,' end quote.
Because of this success at attracting premium users, management wants to, quote, 'expand the Firefly premium experience,' end quote, which could be pretty expensive and lead to fewer people upgrading to the paid version. See, a lot of people didn't think like that. Basically, Adobe thinks it has an opportunity to bring in more people to its ecosystem. So, they plan to forego some near-term revenue in order to lure these people in.
That might be the right strategy in the long run, but in the short run, it scared away a lot of investors. The shareholders want Adobe to monetize its AI tools quickly. Delaying that just gives the bears one more reason to tear the stock to shreds.
And then there's the last thing, and the thing is just huge. It really got people going. With last week's earnings report, Adobe announced that its CFO Dan Durn, kind of a big figure in the industry, would be leaving the company effective yesterday. Turns out he's leaving to become the CFO of Marvell Technologies. Marvell's, you know, it's a company we've liked for a long time. That's Matt Murphy's company. He was really thrilled to get Durn.
Regular viewers know that you never want to see the CFO resign. That's worse than a CEO resignation sometimes because the CFO is the keeper of the numbers. But worst of all is when both the CEO and the CFO are leaving. And Adobe's CEO announced his plans to step down back in March. Fortunately, he'll be staying on as chairman of the board. Still, Adobe's now looking for a new CEO and a new CFO at the same time. Not a great place to be.
Plus, the CFO leaving for Marvell really hammered home the idea that the best opportunities in tech right now are all in semiconductors and hardware, not software. Put all together, you can see why Adobe got slammed last week. Didn't help that this happened at the same time that people were selling everything tech to raise money for the SpaceX deal.
So, what do we do with Adobe now? Honestly, I'm baffled. It's hard to tell. On the one hand, Adobe's down 70% from the high and trading at less than nine times earnings despite putting up double-digit earnings growth. Part of me feels it's just too cheap to ignore, right? But on the other hand, Adobe's been too cheap to ignore for a long time now. Yet, the stock keeps getting clubbed like a baby seal.
Plus, the entire enterprise software cohort remains pretty hated on Wall Street, by the way, including today. So, here's the bottom line. Given the numbers, I could bring myself to recommend Adobe down here, except that we don't know who's going to be running the company. Maybe Adobe can turn itself around, but the stock won't turn until we find out the next CEO and the next CFO.
So, please, if you want to bet on a comeback for Adobe, at least wait until you can put a face on the company's future. Let's take some calls. Let's go to Jonathan in Florida. Jonathan, booyah. Jim, Snap just revealed the new specs at Augmented World Expo. They are lighter and pack some serious compute into a pair of glasses. But Jim, I can't believe the street is punishing this when they've been begging for an AI wearable with full augmented reality. 1 billion monthly users, less than $10 billion market cap. Is this a gift or a curse?
Well, I think that the company itself has now cemented itself as a disappointer no matter what they do. And I know that's probably cruel, probably not fair. I watched the segment that was on today on CNBC. Seemed interesting. But you know what? They do not have credibility on the street. And I am a big believer that I happen to have Meta's goggles, glasses. I have all of them. I've got the ones that are sunglasses, but also the ones that are regular. And I like Meta, and I think Meta is the one to buy, not Snap.
Let's go to Tom in California. Tom. Tom. Hey. Booyah. Jim. Booyah. Tom. What's up? Hey. Long-time listener, first-time caller. Wanted to get your take on Meta. I know. Go ahead.
All right. Meta. Well, I'll talk about Meta better because I just said I like Meta. Meta is doing a program that we featured on Mad Money. Dina Pal McCormick is doing some amazing things to help small and medium-sized businesses and younger, well, actually everybody, to learn how to do trades. That's right. To learn how to be an electrician, you're going to be a plumber, learn how to work in a data center. And I can't salute them enough because it's going to make a big difference because they're putting the money up for you if you want to be a tradesperson.
All right, thank you for calling in. Mad Money is back after the break. Coming up, what will Yum Brands look like now that it has cut out Pizza Hut? Cramer's digging in with the CEO. Next.
This morning, Yum Brands, long one of my favorites, made it official. The restaurant company KFC, Taco Bell, and Pizza Hut has decided to sell off Pizza Hut. The China business goes to Long Range Capital. That's a private equity firm paying roughly $1.5 billion, while the mainland China business goes to Yum China for $1.2 billion. Oh, that's a big chunk of change here.
At the same time, Yum's board of directors approved a $4 billion buyback, which is equal, by the way, to roughly 9% of the company's current market cap. This is meaningful. I think this is a brilliant move. KFC has been solid. Taco Bell's terrific, but pizza has been a drag. So, let's check in with Chris Turner, the CEO of Yum Brands, to get a better sense of this transaction and where the company's headed. Mr. Turner, welcome back to Mad Money.
Jim, it's fantastic to be with you. Thanks for making time.
Well, I'm so glad you're with us because, you know, I think that this is one of those situations where the two main brands that are left are really capable of having terrific earnings power. What made you think that it was just maybe too difficult to turn around Pizza Hut? Let's go with the main ones that are doing well.
Well, look, we have three terrific brands outside of Pizza Hut. And then Pizza Hut is a tremendous brand. I love that brand. Going back to my first date with my wife many years ago. But as I was coming into the role, we assessed what Pizza Hut needed and it needed big, bold action. And the right thing as we conducted our review of strategic options was to position Pizza Hut outside of Yum. We've got Long Range Capital outside of mainland China and Yum China in China. This positions Pizza Hut for even greater growth going forward. And for Yum, it allows us to focus even more on those three brands. Of course, the two biggest there are...
Taco Bell and KFC. They have incredible white space opportunities in front of them. And we're talking about raising the bar, battling for the future consumer, accelerating restaurant economics, and reaching the full potential of Bite and our technology ecosystem. If we can do that with even more focus on those brands, we're going to accelerate growth in a huge way.
Well, let's talk about Taco Bell. It's really one of the great success stories. Does not get nearly enough credit. The numbers are extraordinary. I don't know. It's got to be in the top decile of what the restaurant chains are doing. Those numbers are amazing. How are you able to get such high single-digit same-store sales?
Oh, you know, Taco Bell, you look at Q1, as you said, on a two-year basis, 18% same-store sales growth, far ahead of the industry in the US. And it's because Taco Bell's magic formula is working and delivering what consumers need in this environment. First, you got to have a buzzy, cool brand. Taco Bell is that. You got to have cravable food. You got to have an easy, convenient experience powered by digital. And you got to have great value. And when you do all four of those things together, boy, the consumers show up and they love your brand. Of course, Taco Bell is increasingly growing outside the US. One of the most fun things about the World Cup has been welcoming these visitors to the US from around the globe. I don't know if you've seen on social media. Many of them are going and visiting Taco Bell for the first time. Of course, now when you live around the world, there's a good chance that there's going to be a Taco Bell close to you. We now have 1,200 Taco Bells outside the US. Massive growth opportunity. There should be thousands and thousands and thousands of Taco Bells around the globe someday.
Well, we have it right now with KFC. Sometimes, look, there are periods where KFC is strong and periods where it's not as strong. I know that you're a little unhappy with KFC right now, although it's still more positive than a lot of others. What can you do to reignite that brand? Because boy, they've got some great — you've got some real deals going on right now with KFC.
Oh yeah. Look, the KFC brand is a powerhouse. It's our largest brand. There's 34,000 KFCs around the globe. Only about 3,500 of those are in the US. We're working hard to drive better performance in the US business, but in the international markets, we have tremendous momentum. A couple of weeks ago, I was in Korea. That is an incredible manifestation of the KFC brand. You talk about raising the bar, battling for the future consumer. The elements we talked about earlier, that's coming to life in Korea. They've doubled their sales over the last three years. I'll be in the UK later this week where we had our biggest LTO promotion ever a few months ago, Pickle Mania. But KFC UK has been on fire and you're seeing us — we still build a new KFC every three hours somewhere around the globe. The KFC team is doing a tremendous job driving that brand.
So, what are you going to be able to do? You have so much opportunity, but you're still deciding that the stock deserves a little love here. That's a very big, serious buyback that you announced.
Well, yeah. You know, Jim, we have always done a great job returning capital to our shareholders. Our priorities: first and foremost, if there are investment opportunities, we're going to take them. Last year, we made a big acquisition of Taco Bell US stores that we brought back in-house because we believe in the Taco Bell brand. Second priority is to maintain a healthy balance sheet. Third, we pay a competitive dividend. And fourth, anything that remains, we return to our shareholders through repurchases. And of course, we're going to have some proceeds from this deal, and the board did a great job in approving a $4 billion repurchase authorization. So that'll be a big part of our plan going forward.
In the time, Chris, since I've been following your company, it's been about 20, 24 years now. Digital has been really important to you. AI now, I'm seeing AI. I'm wondering whether this isn't the AI. Nvidia once told me, look, we're going to be able to make it so that when you have drive-thru, it can speak 27 languages, really driven. Not many companies took them up on it, but you are putting a lot of AI to work.
We are. You know, our digital business is now 60% of the global business. Last year, we had a $40 billion e-commerce business. That's tremendous scale. We started the AI journey a few years back. We trained all of our senior leaders on how to think about bringing AI to life in the business. And of course, we are powered by talent and culture. So we're bringing AI to life in a very people-centric way. You know, we also run a hospitality business. And our consumers tell us over and over again that hospitality starts with a human connection. It'd be a little creepy to have a restaurant with no team members in it. So our AI strategy is focused on empowering our team members to deliver a better experience in the restaurants and empowering all of our team members to do their jobs in an easier, faster, more productive way.
That's what we want to hear from AI. We don't hear job loss, we hear job better. Last thing, I know the consumer took a hit when gasoline went up and you talked about that. You're really upfront about things that have been obstacles, particularly for the people who are a little more stretched in this country. Now it's going to come down fast. Do you think there'll be a nice rebound, or are you afraid that the companies won't lower the oil costs like they should?
Hey Jim, our brands can deliver what the consumers need in any environment. We've shown that over our long history. You take Taco Bell in the US. Taco Bell is always focused on delivering what the consumer needs. It's such a consumer-centric brand. If you're looking for value, you know, you can go to that Lux value menu, $1, $2, $3 items. The Lux cravings meals, five, seven, and nine. Tremendous value on the Taco Bell menu. But there's also always a lot of exciting innovation that's coming down from a menu innovation schedule. I had a tremendous meal at Taco Bell over the weekend. The chicken cantina roll quesadilla. If you haven't had that yet, go out.
We haven't. And I think it's time we happen to hit your place every time we've — sometimes we have good nights out. And the next time we hit it, I mean, it just happens to be what we're — not alone in that. Something I've been doing for 40 years of my life. Chris Turner, CEO of Yum Brands. Chris, congratulations. This is a very big move and you know, I called for it for a long time and you went and did it and I applaud you for making the move. Great to see you.
Thanks so much, Jim. Great to see you. Big milestone today for Yum and for Pizza Hut. We're looking forward to the future.
Guys, take a look at what happened to Darden when they decided to go away from Red Lobster and they just decided to focus on Olive Garden. This is going to be the same thing. It's going to be nothing but up. Mad Money's back after the break.
Coming up, you called looking to learn about Zometry. Now Cramer's going straight to the top brass to get the answers. Next.
Last month, Brian in California asked about a company called Zometry. That's an AI-native marketplace for custom manufacturing. I told him I like the space, but I didn't know the business well enough to recommend it. So I extended an open invitation to the CEO to come on the show and he took us up on it. Here's a stock that's up almost 45% year to date, 180% over the past 12 months. Now, if you're any kind of manufacturer or even a smaller business that needs something custom-made, Zometry can help you source all kinds of parts and assemblies. They're the first to digitize this entire process. Last month, the company reported blowout quarter and also announced a major partnership with Siemens, including a $50 million investment. I think that's a major endorsement. So let's take a closer look with Randy Altschuler. He is the co-founder and CEO of Zometry. Randy, welcome to Mad Money.
Thank you so much for having me. You know, when you start the company from zero, imagining you'll be on Mad Money is awesome.
Please. Your company is excellent. I want people to hear about the two-sided nature of it and how it really wasn't possible before AI because so many companies say they do AI and they don't. And this is a dream come true for both manufacturers and for customers.
Yes. So it's a huge market, over $275 billion spent on custom parts and it was offline, it was analog. And you've got customers. So we use AI, as you mentioned, to tell them if you can make it, tell them a price for it, tell them who can actually manufacture it. And our customers are leading companies in all sorts of industries, from aerospace to semiconductors, technology, industrial. And then the manufacturers are hundreds of thousands of small manufacturers here in the United States. 98% of manufacturers are small businesses. We give them business by joining our online platform.
You know, people have to realize before you — I mean, there's a slow bid, slow, right? You don't know what's going to happen. There's no checkout ahead of time. We don't know. You validate everybody. But the main thing that I thought was incredible was that you have a very small miss rate. You predict it and it comes back.
It does. It's really awesome. And that's because we've been, you know, doing this now for 13 years. We've been training our algorithms on real-life outcomes. What are customers looking for? What are the outcomes of their orders and what can manufacturers do? So that helps us become increasingly accurate.
And as you get more accurate, you actually end up having better gross margins and have fewer misses that you do eat if it doesn't work.
Exactly. So since 2020, our revenue has grown 37% CAGR. Our gross profit has actually grown even faster as we become more and more accurate.
And I think people need to understand that Siemens is one of the greatest manufacturers on earth. For them to give you that endorsement is a major thing. Tell me what it means to have a company like that on your team.
