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 Cramerica. Other people, my friends, I'm just trying to save you a little bit of money. My job is not just entertaining; it's to put it in context. So call me at 1-800-743-CNBC or tweet me at Jim Cramer. Look, I'm a stock market junkie. Always have been, maybe always will be. I performed my first lightning round at a graduation ceremony from Harvard Law School in 1984. In a lightning round, all stocks, big and small, are created equal, and any percentage gain is a win, regardless of what stock it emanates from, even a tiny one.
But for a couple of days of the year, we just can't focus on those percentage gains for smaller companies because we have a handful of behemoths that are now the hallmark of this market, and they control the process. On a day when the Dow was up 98 points, the S&P gained 28%, and the NASDAQ mounted a late-day comeback to finish up 27%, you need to know some stocks are more equal than others. What makes for a higher-priority stock in this market?
First, it has to have nation-state status, where the ability to raise money in return for offering an endless amount of services can just happen like that. It needs a big boat instead of an army and a major part of the GDP of an important governmental entity like the US. It has to make a huge and growing amount of money per product. The products have to be sold to either the consumer or the enterprise, or ideally both. Management has to have cutting-edge technology, has to be willing to go outside the comfort zone and spend more money than they have, and they must have an impact, a reach far greater than a lot of the companies.
Only very few companies qualify as nation states. The public ones are Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta Platforms, Tesla, and now SpaceX. The private ones are Anthropic and OpenAI. Their heft is so extraordinary that Mad Money cannot go without covering them. Now, I don't want to jump the gun. Even these 10 companies, no matter how powerful, cannot withstand the currents of war and interest rates. They are not kayaks or dinghies in an ocean filled with five-handle Treasury yields and triple-digit oil prices. They're more like aircraft carriers, not easily blown to and fro, but not immune either. As always, macro factors can upset any flight path.
At this moment, oil and rates are having an outsized influence when it comes to the direction of these stocks. Today, oil jumped as the president talked about launching some sort of short, intense action against Iran, maybe the Houthis. It was all a bit vague. At the same time, Fed Chairman Powell spoke after the two-day Federal Reserve Open Market Committee meeting, and he made it very clear that inflation was still too high, but that before the Iranian war and the roaring price of oil just made it worse. He said you can't ignore the price of oil just because it could go down one day when you were pumping expensive gasoline into your car right now.
Powell traced a picture of economic strength that is too strong for your taste because it's fueled by all sorts of excessive spending without much restraint by consumers or by corporations. We could all take his Spartan words to mean different things. I heard him say that we aren't going to get inflation down to 2%, his target, with this much spending. He reminded us that the power of his interest rate sword is big, pointing out that some companies have been more discerning in their spending after that quarter-point raise he already gave us. If he could tamp down more of the spend, then he can get the inflation rate in line, and maybe he can do that by jawboning. I like that. I listened. I didn't hear anything that could derail the biggest companies. In fact, in a serendipitous moment, Oracle came out and talked about how its data center spend is paying off, lessening the credit quality issues that have dogged it.
Powell's statements didn't do that much to the market. It wasn't an accelerant. It wasn't a glancing blow either. I sense another rate hike in December. Maybe there are some big decisions that will be deferred and spending curbed, but I think the interest rate increase is working. All that said, the nation-state companies that reported tonight, Alphabet and Microsoft, weren't impacted all that much by a tough-talking Fed, but they were impacted by the pending results.
Alphabet and Microsoft, both with market caps of just under $4 trillion as of tonight's close, have tentacles that do not confine themselves to their own lanes. They skate in multiple lanes. Alphabet in search, YouTube, Chrome, Waymo, Google Cloud Services; Microsoft in enterprise, consumer software, Azure, LinkedIn, video games, Copilot. They have all developed really good artificial intelligence capabilities.
Alphabet was the big story tonight, though, and it was not a positive one. Alphabet posted a disappointing double miss on both the top and bottom lines, sending shares down sharply after hours. Revenue grew nearly 25%. We should be happy with that, right? But search, which accounts for about half of sales, came in about a billion and a half dollars below expectations. That's likely to reignite the debate about whether AI is eating into Google's core business. The bright spot was cloud, where revenue more than doubled and beat expectations, growing 103%. Gemini now has more than a billion monthly active users. Capital spending also came in below expectations, though the company signaled a significant increase in capex for next year.
Free cash flow was also negative $9.1 billion, something you hate to see from a company that used to spew cash and had a pristine balance sheet. Part of the challenge now is deciding how much computing power and how many of its custom AI chips go to paying cloud customers versus its own products, including Gemini. Cloud is delivering, but that wasn't enough to offset a disappointing quarter for the core business that pays for these ambitions.
Microsoft, on the other hand, wow, great story. Beat on every single line. Total revenue grew 19%, easily beating expectations, while the company's earnings per share surged 32%, topping the consensus estimate by 19 cents. Highlight: Azure business grew 48% year over year. We were only looking for 45% growth. That's pretty stunning. I remember we were hoping to get back to 40% for Azure, which is their cloud business, but the AI tailwind keeps getting better and better and better.
Aside from that, Microsoft showed a degree of spending discipline that makes this unique among these so-called hyperscalers, which is why I think it's going to leap out and be the best of them. Capex came in much lower than we thought. Now, remember, with Microsoft, you're never out of the woods until the conference call's over. That's happening now. So we'll see what they have to say, especially about their capital spending plans and their guidance for the current quarter. But assuming no major surprises, this was the winner from tonight's two big Magnificent Seven reports. Don't worry, there's a lot more coming. And remember, I'm calling it the MAG 10.
We own both of these for the Charitable Trust, not because of the size of this quarter's performance. We own them for their body of work. Their market capitalization is simply a function of their greatness, although a company can be the size of an aircraft carrier and also be overvalued. I am concerned that that could be the case with Alphabet after Google's poor showing tonight. But the bottom line: we saw tonight why you can't ignore these stocks. Drone Pearl, we saw nothing that shocked us, nothing that enraged us. Apple's going to catch a downgrade or two. Search could really be hurting. But Microsoft, it's justifying the monster move it made off the bottom back at the end of June earlier this year. Let's go to Andrew in South Carolina. Andrew,
It's incredible. Is this Professor Cramer?
You bet it's Professor Cramer. How you doing?
I'm all right. So good.
I've got a defensive stock. It's pulled back massively near its 52-week low, gives you a secure 4% cushion to wait, and it's about to pull off the second-largest food merger in history. I'm practically at break-even on my position. Should I double down on the seasoning and spice up my portfolio, or clear the table and walk away from McCormick?
I think down here at 46, you can't walk away. They've made an acquisition. They paid too much for it from Unilever. But at this point, I think that the damage has been done. This used to be a very high-multiple stock. It no longer is. Actually, the multiple's almost been cut in half. You stick with it, my friend. Let's go to Chris in Colorado, please. Chris,
Hey Jim, I got a question about... I need your advice on my Palantir stock. It accounts for 30%.
Buy, buy, buy. Okay, it's Palantir. Buy. They're the smartest guys I've come across. I'm not kidding. I feel that strongly about Palantir. Let's go to Sam in Pennsylvania, please. Sam.
Jim, listen. I was putting on the stock screener to see stocks, companies that are high capital efficiency. I was looking at high ROIC and consistent sales growth. That's where I came across this interesting company, Argan. AGX is the ticker. See, they're contracted manufacturers of, or they're contracted to build power plants, specifically natural gas. Stock's come down dramatically. I think it could be a buy here given the consistent, you know, this is a strong ROI, a strong ROE company, and it's in a secular growth area. You know, we need power generation, whether it's AI or general.
I totally agree with you. We looked at it. We kind of liked it. We, you know, I got to tell you that hasn't certainly made it be a buy because it's still going down. You know something? I know this is going to sound silly, but Sam, you got to understand this is the worst chart I've ever seen. Period. End of story. Today showed us that you ignore Alphabet and Microsoft at your own peril. They're nation-state stocks. They deserve to be treated as such, even as Alphabet did not report a good quarter.
Well, mainly tonight, Chipotle has been cut in half. So, what will it take to get the stock moving again? I'm talking guac with the CEO. And ServiceNow's making a comeback along with other software stocks. So, does it have more room to run at today's report? I don't know. Looking a little toppy. I'm going to talk to Ras. And how is WM digesting higher fuel prices? I'm getting all the latest when I sit down with the company CEO after earnings. So, stay with Cramer.
Don't miss a second of Mad Money. Follow @JimCramer 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.
All right, what do we make of these numbers from Chipotle Mexican Grill this evening? This is a stock that's been more than cut in half from its 2024 highs, was down more than 20% this year heading into the report. After the close today, Chipotle reported, I guess, what some people regard as a mixed quarter. Same-store sales rose 2.1%. I like that. It's better than expected. Both customer visits and the average check increasing. That makes three consecutive quarters of positive transaction growth. Earnings came in two cents below expectations. Restaurant margins fell a tad short. So, can Chipotle finally get the stock's momentum rolling in a difficult environment for restaurants? Let's check in with Scott Boatright. He's the CEO of Chipotle Mexican Grill to find out. Mr. B, welcome back to Mad Money.
Hi, Jim. Good to be back. Good to see you again.
All right. Thank you, Scott. Same to you. Well, we got 2.1% same-store sales. Now, that is appreciably better than what people were looking for. So, and I love the fact, by the way, that you've got some good traffic. How do you explain the fact that you were able to beat the consensus of people who thought that things had petered out from the previous quarter?
Yeah, it was a really challenging quarter from a consumer perspective, but I'll tell you, our recipe for growth initiatives, as outlined at the beginning of the year, are starting to pay real dividends for us. The good news is, Jim, we're still early days in that strategy, where the core tenets of the strategy are yet to unfold or are unfolding and will build in scale over the coming months. So I'm confident in our ability to drive demand through LTO innovation, deeper engagement with our rewards members, which rewards comps outpaced in-restaurant comps this quarter. And we're seeing a lot of real broad support from all income cohorts as well as age groups.
Well, that's important. I mean, some people, you know, the rap is always, hey, look, it went up too much in price. If you're seeing all cohorts come in, then maybe the price is right, so to speak, for more people than I know I realize.
You know, I think we still all have this urgency around creating a compelling value offering for our consumer. But I'll tell you, the lower-income cohort outperformed the higher-income cohort for the first time last quarter, probably in the last two years, which is encouraging for us, which tells us we're on the right track. And our value-for-the-money scores continue to hold steady. We saw a really nice jump in the last quarter, which we're really proud of. We're going to continue to lean into that momentum.
All right, so let's go into something that I have historically not cared as much about versus same-store sales, but I didn't candidly like the direction because it reverted to a pattern from before. Restaurant-level operating margins back to 23.3% where they were in Q1 2026 after jumping to 25.2% last quarter. What do you make of that?
Yeah, Jim. So, some of that was deliberate. We are intentional around promo spending for the quarter, given what was going on within the industry, whether it was the supply chain challenges that the industry faced kind of mid-August, and to arrest and resupport the momentum we had in the business earlier in the quarter, we did some additional spending which cost us about 40 basis points of margin. Also, we had some one-time hits in labor as it relates to insurance line items that were unanticipated and particularly transitory. So, we have confidence that between the dislocation of our pricing and inflation, which we've talked a lot about this year, and the intentional spending that we did in the quarter, we feel like we're still on the right trajectory to hit our long-term algorithm.
And I thought that food costs falling to 29.5% of sales. Again, I want to see that because it makes me feel that maybe inflation is in your industry and at your company a little more in control than others.
Yeah, we think so, Jim. We're still seeing inflation as it relates to steak and freight costs are up year over year at a pretty significant clip. But nothing we can't manage as we go forward with the right strategy and the right approach. Again, I think it's early days for our great brand. And you know, I think it's important for people to note that while we're early days in the strategy, if you think about the strength of the Chipotle brand, as strong today as it's ever been with extraordinary fandom, we have food that hits people's needs no matter where they are in their life. Whether it's GLP-1, whether it's keto, Whole30, high protein, high fiber, we're your go-to stop for high-quality, great food at a great price point. And I'd like to remind everyone that we have still industry-leading economics. And Jim, we have more growth ahead of us than we have behind us. And so we're going to continue to grow and expand. We're going to build a new Chipotle this year about every 24 hours. That growth will continue into 2027. We feel front-footed in a really challenging environment, Jim, and we're going to continue to lean into this momentum.
Well, let's talk about the challenging environment because I'm listening to Fed Chief Powell today. He's talking about spending remains robust. And then I think to myself, are there too many restaurants that are in the same kind of bracket that you are? For years I only thought of you. Okay, there's Chipotle and that's a step above everybody. And now I don't need to mention competitors, but you know there are a bunch of them that people go and they say, 'Oh, good. Another 15 to 17 that's really good.' Is there too much in your range right now?
You know, Jim, I think of us as being more of a category-defining brand within the industry. And I think that's an important note. I don't think there's anyone that really delivers an offering as compelling as ours. When you think about the way we source ingredients, how we prepare those ingredients fresh every day in-restaurant and deliver them at a speed and abundance you can't get anywhere else. If you just take a look at our highest-penetrated markets like Ohio and Florida where we have extreme competition in those markets, those are the markets we're growing the fastest in today, Jim. And we're still seeing the highest returns in the system out of those markets, nearing almost 80% year-two return on investment, which gives us confidence we can grow in any environment. I think there's still a lot of white space within fast casual as a percentage of the overall industry spend. There's a lot of headroom for us.
Right, that's very dispositive and I appreciate that granularity, which really does help me put to rest that category. Just on the one-time only labor issues that you talked about there, what, in wage inflation, these bonuses that you gave? I know you need to retain the best people, but is it getting too expensive, or really will it be, you took care of it and maybe you bonus people and they'll stay and we don't have to see that again.
Yeah, I think it's right-sized, Jim. Most of that inflation came through insurance and workers' compensation measures, which we'll talk about, which we talked about on the call. Yes, I don't think it's related to employee comp. I think we do have better, industry-leading wages for our team members and industry-leading benefits. We've had those for years though, Jim. And while we've seen modest inflation, I think it's normalized this year. And the labor market seems to be resilient. I mean, we're continuing to be at all-time staffing levels. Our Avocado, our AI assistant, has really helped us keep our restaurant staff with better applicants, shorten the time from application to hire, and we feel front-footed as it relates to labor.
All right, one last question. You're bringing back one of our faves, the brisket. That was very well received. When you see something like that, do you expect that maybe you'll get a bump again because it was obviously such a popular favorite?
Yeah, as we talked about on the call, Jim, you know, we saw some choppiness coming into Q4. We're guiding Q4 to about a two. We think our exit rate on the year is going to be between three and 4% growth, which really talks about the strength of what we're going to see with Brisket and some of the other timing of promos that we have for the fourth quarter. November and December set up very well for us. And again, our initiatives and recipe for growth, whether it's catering, which we're launching in Q1 of the upcoming year, there's a lot of momentum in the business that will continue to scale and build over the next few months. So, should be an exciting quarter for us.
Thank you, Scott. Very encouraged by the most important metric, which is same-store sales. And I once again, I always thank you for your confidence in us and coming on our show. Appreciate it.
Thank you, Jim. We appreciate being here.
Thank you. Scott Boatright is the Chipotle CEO at CMG, and Mad Money's back after the break.
Coming up, with ServiceNow shares on the move, Cramer's getting the inside scoop with the top brass next.
The enterprise software segment faced a big test tonight after the close when ServiceNow turned in results for the third quarter. Look, ever since it bottomed at $81 and change this past spring, this stock has been leading the group's comeback, climbing nearly in a straight line to over $150 today at the close. Tonight, the company turned in a result that was strong. All right, not perfect, but strong. Company's revenue results look good, as did booking numbers, which is what I care about. That's encouraging. On the other hand, it missed by two cents on the bottom line. Cash flows for the quarter were considered a bit light. Guidance was similarly mixed, but we got to get to the bottom of that. Is it enough to keep the stock in rally mode? Let's go straight to the source with Bill McDermott, the chairman and CEO of ServiceNow. Mr. McDermott, welcome back to Mad Money.
Thank you, Jim. Great to be back with you.
All right, so Bill, there's a ton to go over here, but first I want to give you some credit. You came on the show when the stock was at 104 and you were very loud. You bought $3 million of stock. You were making a statement, and the statement was this is getting ridiculous. How did you know that it was overdone and that whatever it was on Wall Street had disconnected from the fundamentals of ServiceNow?
Jim, this is a unicorn growth company. You know, think about Fortune 500 economics with a super intelligence control tower that's literally reinventing businesses all over the world. So I knew the exceptional super intelligent economics where you have a capital-light, margin-rich, consumption-driven company that's really providing AI value without all of the big cost items like chips and capex and data centers. We just have a margin profile that's perfect and a growth company operating at the rule of 57. When you add up free cash flow and margin growth, it's the only company I'm aware of that's doing that in the enterprise software world.
Oh, that is true. And now Armis, which you bought for 7 billion. To some, it was a head-scratcher. Why is this man moving into cybersecurity? In retrospect, I think people now call ServiceNow because they don't know what to do. Everybody's scared. And I think that you've got the right property to be able to help.
Jim, you said it right. The super intelligence control tower actually takes the right model, it hires it for the right job to solve the right problem to unlock the real opportunities that companies have out there. So we're unlocking the value from the entire super intelligence ecosystem from silicon to intelligence, and we're executing this on one platform. So you and I spent a lot of time with my good friend, our good friend Jensen at Nvidia. Think about AI governance that takes software all the way through to the silicon, and it's an industry first of its kind. So you have a long-running personal AI agent at ServiceNow. It gets better with every interaction. It has runtime enforcement. So ServiceNow sets the rules and rails, Nvidia NeMo Guardrails enforces them at runtime. So we have a kill switch that can revoke the passport for a person, an agent or a robot and block the action at the point of execution, not after damage is done. And that's what everybody wants. They want a secure, super intelligent control tower to run their business and drive profits for their shareholders. And that's what we're giving them.
So, Bill, why do some of these people in these frontier models say that there is no such thing as a kill switch? Are they just wrong?
Well, they're looking at it a little bit differently. I'm looking at the enterprise software world, and I think that's why OpenAI today announced a major partnership with ServiceNow because they all want to turn frontier intelligence into governed enterprise execution. So if you think about the super intelligence control tower, we're using OpenAI voice now, ChatGPT, to simplify AI risk assessment. And we have something we call Shift Zero where you're stopping threats before they become incidents. And if you think about builders out there with Codex, they're now going to run it through ServiceNow with rules and rails. And that's the same announcement we made with Google and several other great companies today like Anthropic, AWS, Cisco, OpenAI, of course, Stripe, Nvidia, and many others. And that is what's missing, Jim. One control tower that connects your people, your agents, all your LLM models because they're all great companies. It unifies your data. It integrates with a complex infrastructure and enterprises, and it gets you to value fast. Customers want value now. Okay?
And they don't want a proof of concept. They're tired of the stories and they're tired of laying out money without getting a return.
I am absolutely sure that is the case.
But I also have to deal with what we see on the tape, so to speak. And we know the tape's wrong a lot because it's been wrong a lot when we come to ServiceNow. But people are saying, 'Listen, there are estimates out there. It missed the earnings estimates by two cents. They're not looking at the revenue growth, which was really strong, the RPO, which is terrific. They're not relating it to what we look at, growth in margin. They're saying no, he missed by two cents, and that's just not excusable with this high market multiple.'
Well, let me offset that a little bit. First of all, the two cents has to do with the interest on the companies we just bought. And the companies we just bought that impact EPS, but we now in this quarter, and we just bought them in April, announced a 150 basis point improvement in operating margin. We have free cash flow at 36%. And we have our revenue in RPO, and everyone said you'll have shorter duration contracts and they'll be lower in value. Actually, just the opposite happened. Our RPO is growing now to 30 billion at 23% and our subscription revenue is at 21%. That's operating at rule of 57. 21 plus 36 is 57, and I told the markets we'll be 60 soon, meaning operating at the rule of 60. So two cents is interest expense on 5 billion because we chose to allocate the capital to debt because we generate so much free cash flow. But in one snapshot, yes, EPS $1.02 versus an expectation of $1.04. And everybody knows in software that's the least important measurement at the time. And Jim, I got to tell you, what other company can say that they're growing the way we are with no compute constraint, no memory constraint, no data center buildout constraint, just pure free cash flow, operating margin, and revenue growth? What other one? Not a single one. So shareholders, I gave you my word. Back as you said, Jim, early in the year, and the story's only gotten a lot stronger now. Do you know we are growing our consumption on this hockey stick of tokens I have out there 13x year over year, 500% month over month? So, as you see these revenues, just remember I've got tokens out there on the street with ServiceNow that we're getting these customers live faster. And as they get live and they go through their first tranche of consumption, they will renew that, and that will be a hockey stick formation that is unlike any other in the enterprise. So, I would just say this is a great quarter, Jim.
All right. Well, that's where we're going to leave it because I think that people have to digest that and say maybe they're looking at this. I thought you explained the two cents very well. They should be looking at the things that you and I know what really matter, which is RPO, revenue growth, new customers, all those going your way. Bill McDermott, chairman, CEO of ServiceNow. Bill, thank you for coming on the show.
Thanks a lot, Jim. Appreciate it.
Mad Money's back after the break.
Coming up, was Waste Management able to pick up a clean quarter? Cramer's digging in with the CEO to find out next.
A couple months ago, WM, the leading waste management recycling company, announced that longtime CEO Jim Fish will be retiring at the end of this year. Now, this is bittersweet news because the Jim Fish era has been one fabulous era for shareholders. Since he took over, get this, as CEO almost exactly a decade ago, WM shares up nearly 250% with total shareholder return, though, more important, 300%. That significantly outperformed the S&P 500 industrial index and the Dow. Last night, the company reported third quarter results delivered what looked to be a mixed set of numbers thanks in large part to higher fuel prices. That's why the stock dipped a bit today, down over 4%. I'm not too worried. The higher fuel price headwind is out of the company's control. Plus, WM also reiterates its four-year outlook with the quarter, which is what I care about. So, let's take a closer look at the story with Jim Fish, the outgoing CEO of WM. Mr. Fish, congratulations on your upcoming retirement and your fabulous work for shareholders.
Thank you, Jim. I appreciate it.
Okay, so one thing that you did, you were able to change and adapt all in your 10 years. The company really had to deal with some things that people don't realize. You were basically at one point, if there was a lot of housing, there was a lot of housing things to be able to cart away, and that was a big part of your business. That almost disappeared. In the meantime, you went into the health, into this medical waste business, which has been fantastic. How did you see this storyline coming?
Well, I think when you look at healthcare, I mean, look, we're all getting older. I read somewhere that the average American was 29 years old in 1980 and now we're 39 years old. So, if I were to ask you, what business do you want to be in that'll take advantage of that? It's got to be healthcare related. So, we like the healthcare business. The volume picture, which they asked a thousand questions on that today on the call, is a long-term growth strategy. What we really wanted to do was take some of the cost out, fix the systems, and all of that has been done over the last two years.
Now, I think it's important people might say, 'Well, wait a second. They missed the quarter.' You made it very clear it was diesel. What you didn't have to make clear because people understand it's also in the deck: your company has tremendous defensive characteristics.
