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No more guesswork. We're about to go into the wide world of earnings season, so we don't need to hang on every little data point to figure out where to put the money in the market. Oh, we had a nice rebound today. Dow gaining 423 points, S&P advancing 0.59%.
NASDAQ climbing 0.64%. Would have liked that to be a little bit higher. We reassessed how well tech companies are really doing after a jarring day of mistaken assumptions about an artificial intelligence slowdown.
More on that later. I think we need to rebel against the persistent idea that somehow all these trillions of dollars in AI infrastructure spending will prove to be the biggest fool's game of the century. When the greatest investors of our time — I'm thinking about people like Mark Zuckerberg, yeah, Elon Musk, Nadella at Microsoft — all decide that they need to spend big money to meet the demands for AI, I tire of these Wall Street pundits, hedge fund managers telling us, hey, the trade is over. Not according to the largest companies on earth. We're going to — I'm going to explore that tonight too, and not in a happy way. But the correction to the correction is now behind us. So, let's go to next week's game plan in a kind of a truncated week. All right.
And I said Monday, very quiet, no serious earnings or numbers. Tuesday, here it goes: plethora of bank earnings. Now, these stocks have been coming in way too hot in previous quarters, but the banks have been some of the worst performers of late. So, I think they're priced for disappointment. You know what? If they don't actually disappoint, we might actually catch a rally. Which ones am I thinking about? Well, first is Goldman Slacks — that was my name for Goldman Sachs, which we own for the Chapel Trust and I worked at. We're telling club members that there's more to Goldman than just IPOs and M&A, of which, frankly, it's been very little. There's bond issuance and trading in an environment where the volatility has been so incredible. Something is usually good for Goldman's bottom line. And Goldman stock has dropped from $1,153 to $895.
Can it really be that bad? Wells Fargo's been clubbed of late, yet I believe that this stock — another CNBC Investing Club name — is truly ready to roll. The stock sells at just over 10 times next year's estimates, making it one of the cheapest stocks. I think it's going to give you both growth and better net interest margin. I think Charlie Scharf, the CEO, is fired up to deliver. I think it's right here. On the other end, JPMorgan reports too. Now, this bank consistently does well, but its stock is priced for that. It's priced for consistency, and that makes it a little bit dicier than the others, especially when its brilliant CEO, Jamie Dimon, does have a tendency to say things that sound borderline apocalyptic on a conference call. I fear he'll go there if he's asked about AI. I just want to know how the business is doing. I'm old-fashioned, but not a slew of downbeat warnings, please, about a future that he claims will also be very bright at the same time. I don't know. Can you be — I hope he doesn't put the odds of all of us dying in 2030 at, like, 5%. That would all be a bummer too.
Next, I've been telling you that Citigroup is the one to own for any season. I've been doing that for a long, long time. Then the last time I got it wrong. So now I've got to see if they regroup. CEO Jane Fraser has done a remarkable job. She's an incredible turnaround artist. Citi last quarter, just okay. It's not all banks. We also get the results from UnitedHealth Group. I think that company's ready to return to its old beat-and-raise greatness. It comes out at six o'clock. It's like I think they write the headlines before it comes out: beat and raise, and then it comes out.
Now, what I want to address, though, and I think it's a little tricky, but we're going to go there because I want to make you some money, is Johnson & Johnson. I am willing to say that J&J is a top 20 company in this country, but its stock is a terrible trader. Now, what do I mean by that? I'm not talking about absolute performance. The stock's up 26% for the year. When I say J&J is a terrible trader, I'm talking about how it reacts to earnings. As soon as the release comes out, the stock tends to jump up and then it starts a sickening slide down, a real pirouette that seems to last into the early part of the conference call. Usually in the middle of the call, by then, we begin to realize something special is going on, that things are better than expected, and then people start buying the stock back — but not before a lot of money is lost. It is agonizing. With 18 potential blockbuster drugs in the pipeline, among the best cardio and oncology franchises, J&J needs to be bought when the stock gets crushed. You need to be nimble.
It's almost always that way. It's going to be that way probably again. Now, if you buy the stock in the tsunami of red ink in the wake of the published numbers, but before the call gets going, I bet you're going to get what we say is a terrific basis in J&J, your starting point. So, keep that in mind. Giant position for the Travel Trust, has been for ages. Wednesday, we're on macro watch. We get the Consumer Price Index. Fed chief WSH wants to shrink inflation. I'm with him. And believe it or not, I'm starting to see some signs that he's getting it under control, excluding oil. Will the CPI provide any relief? It may be too early for a single 25 basis point rate hike to have the kind of impact that we need as a nation, but I think it could be a nicer start than people realize. That'd be terrific.
Then we have the Producer Price Index the next day. We're watching inflation like a hawk these days. And to do that, we have to care about more than just the CPI. We need to see how embedded it is. Before we come in on Wednesday morning, it was a Dutch company called ASML. They report. They make these gigantic machines. They're like the size of city buses, help manufacture semiconductors. We saw a couple of them when we were in Boise, Idaho, looking at that new foundry and at Micron. If ASML raises guidance and talks about solid demand, then you need to be ready to do some buying. And the ones you want to pick up are Lam Research, Applied Materials. Those are my two favorite semi-equipment stocks in America.
Now, we've got three terrific financials reporting: BlackRock, Bank of America, and Morgan Stanley. So many people think Morgan Stanley is just an investment bank. Wrong. It's also one of the biggest repositories of people's wealth, and it's been incredibly successful at corralling young people who want to invest for the longer term. Needless to say, they also have a ton of super-rich clients. Bank of America, solid, and solid means a quiet increase in stock. BlackRock's a stalwart, the biggest asset gatherer in the world. It's going to be good.
Hey, by the way, Thursday really is a host of earnings, starting with Taiwan Semi. We got a pretty good snapshot of its business earlier this week. But this is the earnings number we've been waiting for. Taiwan Semi could control pretty much any chip stock if it's weak. If it's strong, though, we could have a rally of immense proportions. Now, Nvidia closed really horribly today. I don't know if it can rally until we see TSMC. We also want to see if retail is slow. We're going to find out from the September retail sales numbers. The industry's been roaring of late, and all that spending could turn out to be inflationary.
You notice that theme that I'm giving you? Individual investors have become a real force in this market, a way we really haven't seen since... here now. They've moved the averages and they're getting invested in lots of idea stocks. I love that. Who knows more about what they're buying than Charles Schwab? So we'll listen on that conference call too. Plus the company has an analyst meeting that day, meaning we'll get a real good look at the business. Not much on Friday, but remember what we're looking at here. Bottom line: we have earnings, we have to worry about oil, and we have to start accepting that we're going to have a plus 6% long bond — that's the 30-year Treasury — because of demand for money from both the Treasury and private enterprise, chiefly data center investments. When it comes to bonds, there's too much supply and not enough demand for the moment. It's coloring everything, and we need to respect how challenging the market can be when interest rates head inexorably higher.
How about we go to Mike in Minnesota? Mike,
Mike, I'm good. How are you?
I'm really good. I've been following you guys since day one.
Oh, man. That's fabulous. Thank you very much.
So my question is, I'm holding Intel. I'm down seven or eight percent based on today's close, and earnings are at the end of this month. I'm wondering, should I hold through earnings?
No, you buy through earnings. The stock's come down hideously from 115 to 104. It's really a terrible trader. I know they can't do a buyback. They just did a big issuance at 95, where, by the way, the CEO bought stock. It acts terribly. I know that. But remember, it is up a lot and it has just become a lousy trader. When things are bad, it goes down more. When things are good, it goes up more. I'm not crazy about that, but that doesn't mean I don't like the company, and that's what I care about. Oh, Skyler in California. Skyler.
I'm a longtime viewer, first-time caller, all the way here from Sacramento.
Oh god, I looked at — I lived at 10th and B. Love it. Right near where all the honeysuckle is. This really smells great in the spring. I was living in my car, though.
all right. So, what's happening?
Yeah. I am calling about stock ticker N. It seems like it's finally getting out of the low. What do you think?
Well, it did have — you know, it's kind of a relative thing. It had a better quarter than most in that industry, but I don't want to touch that industry. I don't want to touch anything leisure. I mean, like, I don't want — I think oil is bottoming, and that's terrific, and new management is doing a good job. I think you could make a couple of bucks, but it's a trade, and I'm looking for investments, and it is just a trade. And thank you for watching. It's been watched forever. I think it's fantastic.
Bonds are coloring everything. We just have to accept that this is a different market when rates are this high and climbing, and then we can start thinking about the actual earnings of the companies I just showed you. Oh, Mad Money tonight: news of OpenAI's revenue shortfall sent some tech stocks really tumbling yesterday. Is it really that big a deal? I'm going to crunch the numbers. And earnings out of Delta showing a bright spot in the airline industry. Don't miss my analysis of the latest quarter. And yesterday was a reminder that if you're not diversified, holy cow, you're not going to be able to stay in this market. And that's why we're playing a round of Am I Diversified? David Cramer.
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Midday yesterday, a jarring headline from the Financial Times hits the wires: OpenAI annualized revenue is $20 billion less than previously signaled.
What a gut punch. The whole AI infrastructure complex immediately gets slammed. Nvidia's finishing down nearly 3%. Oracle, which has practically joined at the hip with OpenAI, dropped more than 5%. Smaller new cloud names like CoreWeave got hit even harder, off 8%. Sell, sell. The Nasdaq Composite had its worst session since mid-August.
The house of pain. Now, if this story is true, then that's devastating for the entire AI complex. So is it true? Short answer: not really. Long answer: this is a complicated story driven by obscure accounting policies that generated a blitz of confused headlines. So, you know what we got to do? I got to walk you through this thing because it's really unbelievable this could happen.
As best as I can tell, the confusion started all back on September 29 when a couple of reports said that OpenAI's annual recurring revenue had reached nearly $70 billion. Those stories initially came from Reuters and Axios, both citing inside sources. Then they were picked up by many other media outlets, not to mention a host of posters on social media. Gradually, everyone just accepted — or at least seemed to accept — that OpenAI had genuinely reached $70 billion in annual recurring revenue by the end of last month. That was the baseline assumption before yesterday, and it was powerfully bullish.
Then the Financial Times came out and said the $70 billion figure was wrong. In fact, the real number is more like $50 billion. That sure looks like a $20 billion less-than-previously-signaled miss, right? It looked to many as a major shortfall, and it crushed the entire complex.
But the problem is these numbers are not apples to apples. To understand what's happening here, you need to know that OpenAI and Anthropic, the two leading AI labs, account for the revenue earned through third parties differently. Basically, when you buy access to Claude or to ChatGPT, you can do it directly, or you can go through the big cloud infrastructure firms — Amazon Web Services, Microsoft, Google Cloud. Of course, those firms, they take a cut. I bring this up because Anthropic includes all the revenue from that type of third-party sale as its own revenue. The cut that goes to AWS or Microsoft is then recognized as an expense. But OpenAI doesn't do that. They only recognize the revenue they actually collect from these third parties. Apples to oranges.
So, here's what seems to have happened. According to some much clearer reporting from CNBC and Bloomberg, you can get a real picture of how distorted things got. At some point in late September, OpenAI shared with someone — probably its own investors or prospective investors — that if the company reported the same way that Anthropic does, its annualized revenue would be close to $70 billion. Presumably they were trying to give these people the apples-to-apples comparison to the largest competitor.
Then what happened seemed to be a game of telephone. Someone who heard that from OpenAI tells it to someone else, and that person tells what they heard from to a reporter from Reuters or Axios. Then that $70 billion number gets reported, and since the story came from two different news outlets, well, it's got to be fact. Then the Financial Times gets its hands on this $50 billion revenue figure this week, and they report it as a major news story. Fair enough. Everyone thought the $70 billion number was real, so this makes for a sexy negative headline. At first glance, it's a disaster for the AI complex.
In reality, though, these various news outlets were actually talking about two different numbers. The $70 billion is OpenAI's gross revenue, which it doesn't use for its own financials, and the $50 billion is its net revenue, which it does use. The business isn't doing worse than we thought. It's just that an errant comparison with Anthropic got loose, and people got confused. Much selling for nothing.
Look, while we're on the subject, I need to also talk about another thing that was going on, and it's been driving me crazy. Both the Reuters report and the Axios report last week said that OpenAI's annual recurring revenue had reached nearly $70 billion by late September. Putting aside whether that's gross revenue or that's net revenue, it really shouldn't be called annual recurring revenue. This is a real metric that software companies use to track their subscription contracts, hence recurring. The customer is obligated to spend a certain amount of money at certain intervals for a defined period of time.
While the AI labs do have some contracts like that — they sell subscriptions to Claude and ChatGPT — they also have many customer arrangements that are basically consumption-based. The amount you pay is based on the amount you use. And you know what? That's not recurring revenue. If we get a better version of ChatGPT, like OpenAI launched with Astra last month, then they could snatch a bunch of enterprise customers from Claude. Anecdotally, that seems to be happening. Or those customers could just switch to cheaper open-weight models. So again, I think it's wrong to quote these companies' overall revenue totals as annual recurring revenue.
What makes this so tricky, though, is that the more accurate term is the same acronym, ARR. It's the annualized revenue run rate, but that's just the revenue total for the most recent month multiplied by 12. You can say, 'Who cares?' Well, I care. That's who. Because annual recurring revenue is more durable. It tends to get a higher price-to-earnings multiple. When you're trying to value a company, Wall Street pays less for non-recurring revenue than they do for recurring. Too episodic. It's a major difference. And the journalists get it wrong all the time.
The same goes, by the way, for the distinction between gross revenue and net revenue. Given that these AI labs are either not very profitable or genuine money losers, they're most likely going to be valued on a price-to-sales basis. But that means you need to use the right sales numbers. You're going to end up overvaluing the company.
In the end, I don't think OpenAI did anything nefarious here at all. Certain reporters, eager to get some sort of scoop about the state of the business, got confused about what exact metrics they were hearing and reported something that lacked crucial context. Of course, OpenAI could have — they could have saved everyone a lot of trouble and corrected the record when those reports were coming out last week. Although, as a private company, they're under no obligation to disclose that to the public.
But the real takeaway here is that nothing actually got worse yesterday for OpenAI or the broader AI ecosystem, even though some of these stocks did not come back at all. When I did my checking, I heard things actually for OpenAI were better than expected up to this point. This only goes to show that we really need to see the details of these AI labs' financials, because until we do know more, there's probably going to be a lot more days like yesterday when the whole cohort gets hammered on pure confusion.
Now, this should end whenever Anthropic's IPO prospectus is revealed to the public, which should be in the next few weeks. If the company is still targeting a mid-November IPO, the sooner we get these numbers, the sooner we'll know if all of this AI capital spending by the hyperscalers has been worth it. But the bottom line: in the past two days, what we've seen is that we can't wait for these leading AI labs to open the kimono and show us what they've really got financially speaking, because until that happens, too often we'll be trading on hearsay — a very quick way to lose money.
Back after the break. Coming up: was Delta able to land a strong quarter? Cramer's calling up the numbers to find out. Next.
When the price of oil is at $91 a barrel, the Fed's hitting the brakes on the economy with rate hikes, you'd expect that to be a nightmare scenario for the airlines. For decades, these were textbook boom-and-bust stocks, and the busts were brutal. It's why I have stayed away from them for years. But lately, I've pointed out that the top airlines seem to be transforming into something more durable, with loyal business customers who consistently pay up for the best seats at the front of the plane. That thesis is really being put to the test here. But right now, I really like what I'm seeing.
This morning, Delta Air Lines, one of the best, reported a small earnings miss paired with a similarly modest revenue miss. Worse, they did slash their full-year earnings forecast by 24%. That's big. Management now saying they could earn $5.10 to $5.60 per share, which is down from the $6.50 to $7.50 range that were the estimates. But after opening lower and trading down nearly 4% this morning, the stock battled back all day and turned positive just before the close because Wall Street saw this coming. And Wall Street was right.
At the same time, they're talking about earnings of $1.15 to $1.65 for the current quarter. The midpoint's only 3 cents below what the analysts were expecting. Delta's even guided for 20% revenue growth when Wall Street was only looking for 18%. Basically, they're taking a terrible beating on profitability from high fuel costs, but demand for flights remains strong.
Delta paid an adjusted $3.61 per gallon of jet fuel, up 60% year over year. The adjusted pre-tax profit was roughly $1.5 billion for the quarter, up about 1% from last year. For the full year, they're looking at a $6 billion increase in fuel costs, but management believes they can put up a pre-tax profit of $4.5 billion. That's only down $500 million from last year. That's incredible. Delta's been able to generate enough additional revenue to offset most of the damage.
All right, so I mean, I think this was really kind of an impossibility, how they pulled this off. Okay. The company's premium revenue grew 18% to $6.82 billion. They're now making more money from first class, business class, and expanded legroom seats than they are from coach. Premium sales increased 6%. But on the conference call, we heard an especially encouraging detail: premium load factors rose almost two percentage points, while fares also increased too. Delta added premium capacity, filled more of it, and charged more too. This is the best kind of demand, and it's proving to be pretty sticky.
This is the long on money, short on time customer that I always talk about. After COVID, people who have been stuck at home decided they want to make up for lost time, and what do they do? They travel. They get an experience. I thought that might be temporary. Increasingly, though, it looks like a lasting change. The same way that the Great Depression permanently soured my parents' generation on banks.
Now, this morning, Delta CEO Ed Bastian came on Fox to speak with our own Phil LeBeau. He said he wasn't seeing a slowdown in bookings. On the conference call, we learned that the fourth quarter was already more than 60% booked, with encouraging early trends for the first quarter of next year. Even prices are up. It's incredible. Even with inflation squeezing the consumer, Delta's well-heeled premium customers don't seem to know the difference.
And look, the strength extends beyond the front of the plane. Main cabin revenue increased 12%, with unit revenue up 17%, while seats declined modestly. Across the company, capacity was essentially flat while revenue rose nearly 16%. In the old days, the airlines would expand aggressively when times were good, then get pancaked flat when the economy slowed down.
In more recent years, they've been a lot more disciplined about adding new capacity, and now it's really paying off. It helps that there aren't a lot of planes for sale from either Airbus or Boeing. Corporate sales grew at double-digit rates across every sector, led by banking, technology, and energy. The week after Labor Day was Delta's strongest corporate sales week in history.
Can't make sense. That's unbelievably good. More than 90% of respondents to his corporate survey expect travel to increase or remain stable next year. Domestic and international unit revenues also improved broadly. That's fantastic. I mean, in the Zoom economy, that wasn't supposed to happen. It's obviously happening.
Then there's loyalty. This year, Delta's on track to receive more than $9 billion from the American Express SkyMiles partnership. Cardholder spending grew at a double-digit clip for the eighth consecutive quarter. The rewards program is arguably the best part of the business. The company also has an outsourced airline maintenance business that saw 28% revenue growth this past quarter. Just through September, it's brought in about a billion dollars. Delta thinks they can more than double that business over the next several years. Basically, this airline is much less hostage to actual flights than it used to be.
Oh, within the core airline business, it certainly doesn't hurt that Delta led the industry in on-time arrivals and departures this quarter. No wonder premium customers are willing to pay up. There's finally an airline that gives them decent service.
Now, the fourth quarter outlook assumes jet fuel at approximately $4.25 a gallon, including a 40-cent benefit from the Delta refinery. They own a refinery. That refinery provides a very useful offset, but it's not enough, obviously, to cancel out the impact of oil at $91 a barrel. So Ed Bastian painted a pretty darn bullish picture long term. Delta's been raising fares to recover those fuel costs, and so far there's been limited resistance from their customer base. Once the war with Iran ends, or at least fizzles to the point that oil can come down, this airline will be printing money.
Of course, that assumes the rest of the industry stays disciplined about adding new planes and holds the line on pricing. But I'd be willing to take that bet because there just aren't enough new planes that can be bought, and Delta is in much better shape than it used to be.
The analysts are seeing the same thing. Wolfe emphasized the company roughly doubling earnings despite the fuel shock, suggesting that Delta's accelerating unit revenue could stand out against competitors. Jefferies liked the revenue momentum. UBS viewed the results as solid. Bernstein was more cautious about costs and the fourth quarter outlook. Goldman noted the strong revenue guidance largely matched investors' expectations.
But look at this. The price targets here — you've got an $82 stock. Wolfe has a $90 price target. Jefferies, 95. Bernstein, 100. UBS, 105. Goldman Sachs, 114. That's a real vote of confidence. With the numbers being missed, these are beautiful price targets at these levels. The stock's trading just over 10 times next year's estimates. Not expensive. UBS and Goldman are looking for Delta to earn more than $8 a share next year. Consensus is about lower, about $7.68.
Those forecasts depend on fuel, fares, and costs, but the recovery potential is pretty meaningful. If the earnings also become more predictable, investors could eventually award Delta a higher price-to-earnings multiple. And that is the old — that's what I talk about in the book, how you can get a higher PE, and that's how a stock can go higher.
All right, how about the latest broadside from Elon Musk? Solved this problem. When Delta picked Amazon's forthcoming satellite internet service, Leo, for its next-generation inflight Wi-Fi rather than Starlink, Musk predicted that Ed Bastian would lose his job over this. Regular viewers know I like Starlink. Maybe I love Starlink. But in his interview this morning, Bastian basically refused to engage with Musk. He stayed focused on the customers and the business, which is doing much better than it has any right to do in this environment.
So, let me give you the bottom line on this very encouraging, terrific story. I'm not rushing to buy an airline, okay? Not into the fuel spike. But I buy the story that Ed Bastian told Phil LeBeau. Delta's putting up incredible numbers to the point where they're able to offset a huge chunk of the increase in fuel costs. Once the price of crude comes back down, I think they'll make out like bandits. There's a reason the stock bounded hard from its lows this morning and finished the session in positive territory. The reason is Delta's better than ever.
Now we're going to go to Stanford in California. Stanford.
Hey Jim, how you doing today?
I am doing well, Stanford. How are you doing?
I'm great, thanks. I want to get your thoughts on Otis Elevator. I know they have some exposure to the Chinese housing market, but I know the stock's been pretty well punished.
Okay, now this is a tough one because Otis, candidly, China's not been great. They're really much more in the service revenue game. The stock has come down. It's down 24% for the year, but I see no catalyst. Without a catalyst, I can't recommend a stock just because it's cheap.
All right. I buy the story that Delta's Ed Bastian is telling. Once fuel prices normalize, I think Delta could be in a great position. Now, much more Mad Money, including Cramer's favorite game, Am I Diversified? And Wall Street and financial media love to get stuck on esoteric terms. But I think it's time to retire one of them that's really getting on my nerves. You want to hear about this? I'm going to explain. And while your call is rapid fire tonight, just the lightning round, so stay with us.
The S&P is near record highs, but that doesn't mean you shouldn't be prepared for volatility in this market. When one article about a private company can send an entire cohort of stocks deep into the red, it's a reminder that you need to be diversified if you want to stay afloat and stay in the game. That's why tonight we are playing Am I Diversified? That's where you call in, you give me your top five holdings, and I tell you if you're diversified enough, or maybe you need to mix it up a little. We're going to start with Mary in Idaho. Mary, what do you got for me?
Well, Jimmy, it's been a minute since I talked to you. Happy TGIF.
Yeah. Great day of the week. I finally gave up on Chewy. Much as I hated to, I just couldn't bear to see it go down any further.
I hear you. You're a user, but you know, I mean, that's about the extent of it, isn't it?
Yeah, it is. I mean, I can't envision ordering dog things from anywhere else because they are so good.
But, um, sometimes you just have to close your eyes and say it's going to get better.
All right, so let's go over what we got. The five stocks I have are my two own — it don't trade it — Apple and Nvidia. Um, Marvell, JPMorgan, and Amazon.
Wow. Okay. All right. This is a little tough for me, Mary. Yeah, I can't — I'm not going to try to tell you to sell one of these because I say it don't trade. Hey, we had a good trade. They always said buy Apple down there. I get 332. But here's the problem. And JPMorgan, I think it'll put a good quarter. Not a great quarter, good quarter. The stock's a little bit too high versus the others. But that's okay. It's a nice steady slope. Buy more JPMorgan when it gets hit.
All right. Now, these are ones where Matt Murphy runs Marvell, and I've known Matt for years, and we got Andy Jassy on Amazon. These are both trading together. And the notion of being diversified is you don't want to have too many stocks trading together. We are going to have to — Matt Murphy, close your ears — we're going to sell Marvell, and we're going to buy some J&J next week when it reports. Okay. So, we're going to sell Marvell Monday and buy some J&J.
We'll let you keep Amazon for right now because Amazon right now is being much more of a — I mean, look, I should tell you to sell the Amazon too. I just don't want to do it. I don't want to sell all the stocks I really like. Mary, I'm making an exception for you. I happen to love Amazon, but this has too much tech, and you will get hurt on a bad tech day like we had yesterday. But, thank you for the call. Glad you got out of Chewy. Can't seem to hold like the 25.
All right, next up we've got Joe in my home state of New Jersey. Joe,
hello Mr. Cramer, and thank you for taking my call. And I just want to let you know tomorrow I will be in Lavallette surf fishing, and I still haven't gotten a striped bass. Hopefully tomorrow is the day.
You will, man. I fish there. I fish Normandy Beach with Fordo. You know, I do a lot of fishing in that area. I love LBI fishing. Love it.
My five stocks are Apple, Costco, Cisco Systems, Microsoft, and Merck. Mr. Cramer, am I diversified?
All right. Now, this is another tough one. Joe's got me over a barrel here. Well, obviously I like Merck, and I think that they are doing incredibly well. It's just been a good, good period for them. Sold a bunch of number bumps today. Costco — I go to my Neptune Costco down there, Joe. I don't know if you passed the Neptune Costco on the way down to Lavallette. If you did, you were going the wrong way, but that's okay. It's pretty good. Apple's on it. Don't trade it.
So, now what do we do? We have Microsoft and Cisco. Now, I got to tell you — I mean, I don't know. Chuck Robbins is probably listening. Chuck never misses the show. Chuck, we're going to have to get — you have to trade your Cisco, Joe, because you got too much tech. And wherever we look, we've got data center exposure. Whatever. I think that you need to be thinking Wells Fargo. I really like Wells Fargo. They report next week. I think it'll be very good.
Microsoft again — Satya, I love Amy Hood. I mean, like, I'm looking at my executive, Bruce knows how much I think of Amy Hood. Great, tremendous commencement address at Duke this year. And for instead of that one, instead of Microsoft, I want to go with RTX. And I'm going to go with RTX. We're in Boeing right now. But RTX is down worse than Boeing, even if you can imagine, because there's also a defense just for this moment, and I want to see how that acts. But anyway, I have to make these changes because yesterday this portfolio was killed, and that's not what people want.
Now, let's go to Tony in Florida. Tony,
