Transcription
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 Kramer. Welcome to Mad Money. Welcome to Cra. Other people, my friends, I'm just trying to save you a little bit of money here. My job is not just to entertain, but to do some teaching. So call me at 1800 743 CBC. Tweet me at Jim Kramer.
The crosscurrents are roiling every day. THIS IS ALMOST ALWAYS what happens during this particular portion of the earning season. We have situations that are hard to understand without much time to understand them. We have companies that expect us to look at metrics that seem made up to us. And we have all sorts of macro inputs: oil, interest rates, war. And that's how you get open field running where stocks can reverse on a dime, as can the averages, which traded all over the place until the Dow finished down six measly points, as me to climb 14%, but the NASDAQ lost 0.57%.
Now, it may help to understand the backdrop. Okay, I'm back to waking up at 2:47 a.m. again. I mean, not a lot of people were up at that hour. So you fire up the machine and boom. What do you see? SK High Jinx. Oops. SK Highix down huge and oil up gigantically. So, you know, at 2:49 a.m., it's gonna be a bad opening. And it is. But things are so fluid and confused because we're in the fog of earning season and the snap judgments are whipsawing everything. I'm going to give you some examples.
This morning, we had a watershed moment we've all been waiting for. One model from OpenAI, searching for an answer, hacked its way out of what was thought to be a contained testy environment known as a sandbox, then went online and hacked into Hugging Face's server. Come on. This was amazing. Then Hugging Face used a Chinese model to stop it. I mean, this is insane. It means that the impossible has indeed happened. Agents went rogue. It's how it's war games. It's asthma. Hopefully, it's not Terminator. I'll be back. I think this is one of the biggest stories out there. In a world where AI agents can go rogue, what do you do? Well, you should just buy the stock and CrowdStrike. They have a cybersecurity product that will stop it. But the stock was down big and traders ignored their solution entirely. So much for that idea.
Then there's Genova. We're all sure of one thing in this world: there's going to be a surge in turbine production because we're short on power. The demand for these things. Insane. So you got to own Genova, right? The biggest turbine company in the world. One I've been recommending kind of forever. And what happens? It misses the quarter. Not misses. It misses by a mile. You look underneath, though, and the cash flow is terrific. The orders are huge. The build-out is gigantic. But the earnings are the earnings, and Vernova didn't have them. So the stock plunged nearly 9%. More on that later.
Meanwhile, we've heard nothing out of Nvidia of late, right? Make no mistake about it. I think the world of Nvidia. I wore my Nvidia cufflinks for the morning show just for good luck. But lately, there hasn't been any news. Perhaps we can say that Super Micro, a customer of Nvidia that then sells Nvidia product, had great orders, and therefore we can assume maybe the Dell and HP Enterprise, Super Micro's competitors, must have good orders, too. That market sure thinks so. That could be great. Then Nvidia opens down a couple of bucks. And well, there goes that theory. But wait a second. Out of nowhere, mid-morning, the stock does a 180, ending the day up $4.77, or 2%. I searched all day. I can't really give you a reason why. Delayed reaction? Ball confusion? That makes sense.
I've been pounding the table on Johnson & Johnson for days now. I thought the quarter was excellent. Nobody agreed with me. The stock got hammered. I've been screaming about how terrific its technology is, saying perhaps it's okay to diversify away from disc drives into J&J. No, nobody seemed to care. Then today, we found out that J&J got a green light from the FDA for its Otava robotic surgical system. Next thing you know, the stock's going bonkers. INVESTORS REALIZE THAT J&J, WOW, THEY'RE A TECHNOLOGY COMPANY. I say, "Duh, no kidding." But the market's shocked. LOOK OUT. CHANGING HIS TECH. Although it won't matter for a few years.
It doesn't stop there. For months, the markets hated enterprise software stock: Salesforce, Workday, Service Now. You have to think these darn things deserve a break, right? I mean, these are some of the finest companies, revered for years. They keep getting savage. We're talking to Service Now tonight to see if this co-work can turn itself around, but it's amazing. The enterprise software stock simply cannot catch a bid. And Service Now got crushed during the day before we even saw the quarter. This is not supposed to be happening.
Then by mid-morning, oil starts to come down and we start thinking, "Ah, here it comes. President's going to talk about how the Iranians are begging for a deal, that the talks are going well, that they agree to be defeated and stop developing nuclear weapons." Same story from the spring. Instead, we get the exact opposite. The president ratchets up the stakes, talks about taking out bridges if the Iranians attack shipping. Secretary of State says there are no talks. Then oil reverses and goes down on that news. Now, that makes no sense at all. It should be spiking like bad, but it never visited the highs of the wee hours of the morning.
Meanwhile, interest rates were going higher anyway. The 10-year testing its high. Oh, well, then that means all the interest rate sensor stocks should be going down, right? Oh, no, not at all. Wrong. BEST PERFORMING SECTORS IN the utilities: AP, Separate, Dominion, Duke. Well, it gets even crazier. Pokey Group, one of the biggest home builders, supports a strong quarter. It's incredibly counterintuitive, especially if the president slaps a big tariff on Canadian lumber. It gets even nuttier, people. The consumer goods stocks should be getting clobbered on higher rates. Their dividends aren't worth as much as when you get better returns from the bond market risk-free. Plus, they're being hurt by inflation. Higher oil really stymies their earnings power. They should be going down. Yet, it turns out to be a Proctor & Gamble day. Kimberly Clark, Colgate rally, JM Smucker IS BREAKING OUT. CRAFTINES IS STARTING TO CRAFT FANTASTIC CHART. You can't make this stuff up.
Then tonight, output reports, and this is a perfect example of how confusing things are these days. The company reports an absolutely enormous earnings beat with earnings per share of more than nine bucks. Wall Street was expecting less than three bucks, but you must forget about that immediately because the quarter included $99 billion, just $99 billion in other income, which relates to the company's investments in SpaceX and Anthropic. Good hunting. The rest of the quarter mix. Google Cloud terrific, up 82% versus last year. That's incredible. This isn't a small division, but the bread-and-butter Google search business, tad light, which is what the bears have been warning about as we move into the AI era. But the most important line might have been free cash flow, or actually negative free cash flow, much worse than expected, down nearly $6 billion. That's a result of the company's enormous capex spending, and it helps explain why the company's issuing $85 billion in stock pay for all these investments. The stock's been all over the place after hours, but the cash flow might have been the swing factor and the reason shares ultimately moved lower after hours. Somehow, I don't think we've heard the last word on this one yet, though.
You could say that these moves make a ton of sense. You just need to think through them. Or you can say, "Forget it, Jake. It's earning season. You can't possibly figure this stuff out on the fly. Information's on overload." And you can't just go to the chatbots for answers because they don't know either. You know what? I think these things have the mind of an intern but the language of a CEO. Is it just too hard? Here's the bottom line. There's a reason I tell you to sit on your hands during earning season. Just try to take it all in. Accept the market as its own secrets that will be revealed over time. Don't expect or demand rationality. Don't play the best, this bet the house on the earnings numbers. And in the end, you know what? You don't need to. You just have to own good companies long term. Block out the short-term noise, except when it gives you sweet buying opportunities that are certainly worth taking.
Now, let's take questions. I'd like to start with Craig in Florida. Craig, >> Hey Jim. Craig in St. John's County, Florida. How are you? >> St. John's. I love St. John's. Oh, man. I hope it's not too hot down there right now, though. I really like it in the winter. What's going on? >> It is too hot. I'm going to try and fit this all in. This is my third time speaking to you about SoFi over the years. I believe the future for this company is very bright. Each time I've spoken to you, you've supported my case and the stock has done incredible >> off the bottom. But since its IPO, it is still down 30% and it it's a battleground stock with what looks to be incredible earnings and growth. The stock has rerated from 30 plus while each quarter improved substantially. The recent allegations from Carson Block and Muddy Waters in my opinion have not been addressed properly at SoFi. There is a large amount of shareholders in this name and a majority of the shareholders are also members. What's your thoughts on these allegations? Can we get Anthony back on the allegations? I mean, I can look at the allegations again. I looked at them earlier. We talked to Anthony Nodal a lot and I think that there's not they don't hold a lot of water. I will tell you this. A lot of the stocks have just been kind of locked in a range right now. They don't really have explosive earnings power. And we know that fintech has been a very tough place to be. And it is a fintech par excalance. If you want fintech that's working, you have to own Affirm. All right. You can't always expect rationality in this market. Just make sure you own good companies for the long term. That's what this is about. It's not a game. It's for real.
On May tonight, I'm digging deeper into Genova's latest quarter that I just mentioned after that big miss. Don't miss my take on this club stock. Then General Motors, I don't talk about that one enough, reported an incredible quarter. So, is now the time to get in on the stock as we look for non-tech opportunities? I'll take a closer look. And Service Now is on the move after earnings. I'm sitting down with the CEO amid a busy day for AI and for enterprise software. So stay with Kramer. Don't miss a second of MadMoney. Follow Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743CNBC. Miss something? Head to madmoney.cnbc.com.
This morning, GE Verova, the power spin-off from the old General Electric, reported a widely panned quarter. And in stock, it got eviscerated. This had been one of the best performers out there because it its equipment is essential for powering the data center or bolstering the electric grid. But the stock plunged 9% today. It is a big position for my travel trust. I think that sudden decline is actually an overreaction. And in fact, I think we're looking at one of the great buying opportunities of this quarter so far. But first, let me walk you through the numbers.
Genova reported a healthy revenue beat, 22% growth year-over-year, but it earned just $2.47 per share when the analysts were looking for more than three bucks a share. Now, that is a major earnings miss. So you can understand why the stock got punished, even after it already pulled back pretty hard from its last June highs, uh, late June highs. But that was along with the rest of the AI infrastructure plays. But you know, I I think it would be a mistake to sell Genova here based solely on the earnings miss. While it looks bad, when you look under the hood, going through the orders, gigawatts, pricing, production expansion, and enormous backlog extending to 2030 and beyond, well, I think you see a very different, much more positive picture.
As CEO Scott Tra explained on the conference call, the real story here isn't earnings. It's gigawatts. The expansion of turbine output and a massive backlog. Now, look, I'm not saying we should just abandon earnings per share for gigawatts per share. We can't have another Wingstop situation where the earnings were supposed to not matter anymore. But not every line item is equal. And in some situations, earnings may not be the most important metric when you think of the future. And I think this is one of those cases.
Just look at the backlog. Genova finished the quarter with a $176 billion backlog. That's up $13 billion sequentially, nearly $48 billion from a year ago. That's year-over-year. Those are monster numbers representing about four years' worth of revenue. Management expects the total to reach $200 billion by next year, providing an extraordinary amount of visibility to the company's future business. Specifically, GE Bernova has 116 gigawatts of gas equipment uh either in backlog or covered by slot reservation agreements, up from 100 gigawatts 3 months ago. Manager now expects gas equipment under contract alone to reach at least 125 gigawatts by the end of this year. Wow. You, the orders do not stop. Utilities, developers, data center operators are making commitments years in advance because they're worried they won't be able to secure the equipment when their facilities are ready.
In terms of production, Genova is making the jump from about 3 gigawatts of gas turbine output per quarter to 5 gigawatts per quarter starting in the current quarter. Going forward, that means we're talking 20 gigawatts per year. They plan to grow that to 24 gigawatts in 2028, 30 gigawatts in 2030. They're making these investments because they see the data center as a generational opportunity, as do I. And hey, they'd know. Genova can see years of demand ahead. They're just looking at their backlog. They're currently getting orders for many years into the future, and that's given the company real pricing power. Again, that speaks to long-term earnings power. Plus, every time these guys sell a turbine, their services business gets bigger. Remember, they don't just sell machinery. They also make money from long-term service agreements to keep the stuff running. As the installed base grows, the higher margin services division grows with it.
The other major line shareholders need to watch is electrification, which is basically the orchestration of electricity from generation to consumption. That requires transformers, substation, switch gear, grid software, power conversion equipment, and high voltage transmission systems. All GE Vernova's bread and butter. Hugely lucrative. The electrification division saw orders increase by 66%. Stunning. That's organic growth. Revenue up 68%, rapidly rising margins. The segment recorded book-to-bill ratio of about 1.7, meaning uh, it received a $1.70 in orders for every dollar of revenue it recognized. Its total backlog reached $44.6 billion. Now, I think they're not getting enough credit for that red-hot electrification business, really didn't even exist a few years ago. But it's also a key part of the data center story.
Of course, not every part of Genova is firing on all cylinders. Come on. You wouldn't be down this much if that were the case. The earnings miss did not come out of nowhere. Wind power remains the weak link here, with wind orders down 40% organically. Revenue off 11%. The segment lost $275 million of earnings for interest, taxes, depreciation, amortization compared with a $165 million loss a year ago. Ever since the Trump administration rolled back the tax credits for wind power, the demand for windmills has FALLEN OFF A CLIFF. STILL, that's a relatively small piece of the pie compared to the incredible demand for turbines and electrification equipment. You know, I honestly wish they could just get rid of it. I mean, just spin it off or something. Except I know under a different president, it could be a terrific source of renewable power that could get sponsored again by the government. It's terrific as long as you aren't a whale off the coast of Nantucket or Wayward Bird pretty much anywhere.
Now, the main reason I'm not freaking out about Genova's earnings miss is that their guidance was excellent. The company raised its full-year revenue forecast by a billion dollars. While they maintained their EBIT margin forecast of 12% to 14%, they dramatically raised their free cash flow outlook to between $11.5 billion and $12.5 billion. That's up from a $6.5 billion to $7.5 billion range. That's an incredible increase in cash generation. A metric every bit as good for this company as EPS. Imagine now expects organic power revenue growth to come in between 18% to 20%, up from 16% to 18% in the previous forecast. They raised their outlook for electrification too.
So then, okay, let's go back because stocks tell truth. Why did it fall 9% today? The earnings miss was real, and the stock had also gone practically parabolic. You know what I think about parabolic situations? Me and G Venova needed to deliver something spectacular to keep climbing. Instead, they report a quarter that was disappointing at first glance, even if it looks pretty strong under closer examination. Plus, the broader AI infrastructure trade has been under pressure for weeks now as investors question how long hyperscalers can continue to spend. Some people feel like drunken sailors. Those are legitimate concerns. The Genova certainly isn't a cheap stock up here at 33 times earnings, after gaining more than 74% in 12 months. I think you could argue it was due for a pullback, but I don't see anything in this quarter that breaks the bull thesis. Orders increased 88%. Backlog rose by $13 billion in 3 months. The company expects at least 125 gigawatts of gas equipment under contract by year end. Turbine outputs increasing from about three gigawatts per quarter to 5 gigawatts per quarter. Electrification revenue grew 29% organically as margin expanded by 700 basis points, and data center orders have already more than doubled last year's total. Look, it's only that wind business that's weighing this thing down.
Here's the bottom line. Sure, Jenova did miss its earnings, and I was upset by that, but it was because of wind. It's got an incredible backlog thanks to the strength in turbines, electrification. When you look at the order book and how the company is expanding production, it makes me very confident of the future, which is why I see today's decline. Actually, yes indeed, as a buying opportunity. Uh, but Wall Street can't seem to look past the earnings. I would say this though, if Chieova keeps getting hammered, you've got my blessing to keep buying on weakness, and you might find my charitable trust buying right alongside you, even as we have a much lower cost basis from long ago. Bad money is back after the break. Coming up with GM revving its engines following its latest report. Kramer's going under the hood to see if the stock is ready to race higher. Next, what do we make of this incredible quarter that General Motors reported yesterday morning? Here's a stock that's done very well long-term, and even in the last 12 months, it's up over 50%, but pretty much all those gains were in the second half of 2025. Year to date, GM's only up a percent.
Coming to this year, a lot of people expected we'd get Fed rate cuts from, and I thought I was one of those people, and those are a gift to the auto industry because they make it cheaper to get financing when you buy a car. But we've had no rate cuts, and instead, we got this war with Iran that's caused a spike in both oil prices and long-term interest rates set by the bond market. Rate increases could be the agenda. When the war wound down in April, GM was about to mount a comeback. But since we uh, once started shooting again last month, the stock got slammed, fell from 85 to 75, where it was sitting right before yesterday's earnings report. Fortunately, when GM reported yesterday, they shot the lights out and the stock shot up 5% before Taki went another 3% today. Yep. This company posted sizable revenue beat, putting up nearly 2% growth. Wall Street was looking for a small decline. Even better, GM earned $3.57 per share. Analysts expecting them to earn $3.19. That's 41% earnings growth year-over-year. Much thanks. You know, mostly it was because of higher than expected margins. Now, Wall Street loves margin growth when it comes to the complicated auto earnings reports. Best of all, management raised their full-year forecast for the second straight quarter, taking up its guidance, Florida modem free cash flow and earnings per share. Now, here's the cadence. At the start of the year, GM thought it would earn $11 to $13 per share in 2026. After the first quarter, they went to $11.50 to $13.50. Now they are saying $12 to $14. At the $13 midpoint, get this, it would represent a 23% increase from last year.
How'd they do it? GM's strong quarter was driven by its core North American business, with earnings before interest and taxes up almost 43% in the region. Again, that's all about much higher margins. On the conference call, the self-facing CEO Mary Bar explained that, quote, "Customer demand in North America remains steady, including for our pickups and SUVs, and pricing is consistent." End quote. She goes on to say, "Despite lower than larger than lower than target inventories for most of the year, our share of the US full-size pickup market stands at more than 42% through the first half of the year, which is more than 10 percentage points above our closest competitor. And we grew share year-over-year in both the second quarter and the first half." End quote. Wow.
Honestly, GM rarely gets enough credit for the strength of its pickup truck business. Look, the Ford F-150 has been the best-selling pickup in America for nearly five decades. But between the Chevrolet and GMC brands, General Motors is extremely competitive. The company said yesterday that it's on track to lead the industry in full-size pickups for the seventh straight years. That's a long time. And in the full-size SUVs, GM remains dominant. When you combine the Chevy Tahoe and Suburban with the GMC Yukon and Yukon XL, those SUV sales are three times the size of the nearest competitor with very low incentives and tight inventories. Overall, GM's on track to lead the industry in full-size SUVs for the 52nd straight year. Their crossovers are doing great, too. GM also remained number one in total US fleet sales, capping off its best first half in more than 5 years for fleet sales. That includes its highest government sales since 2009 and record full-size pickup sales driven by strong commercial demand.
Now, earlier this year, GM announced that it was scaling back its electric vehicle ambitions. And the company's taken cumulative charges of nearly $11 billion related to this restructuring, including $2.3 billion in the quarter they just reported. But the move away from electrics is exactly what saved GM's margins. Plus, even though they've made this a much lower priority, they're still the number two player in the American electric vehicle sales, 13% market share.
As GM explained, uh, the overall strength of the business, there were a couple of things that stood out. First, GM is separating itself from the pack with its technology. The company's OnStar business, their safety and connectivity platform, and $800 million in revenues, up 20% year-over-year, and its deferred revenue was up nearly 50% year-over-year. Some of that's thanks to GM's Super Cruise semi-autonomous hands-free driver assistance technology. This quarter recognized revenue for Super Cruise was up 70% year-over-year, and the company added about 70,000 new subscribers. Second, GM continues to be very competitive on pricing. The company said it had three consecutive years of pricing discipline, which in turn is why they now have some of the lowest incentive spending in the industry. They don't need to cut prices deeply in order to lure you in because their pricing never got insanely out of hand to begin with. Finally, GM has been aggressive about improving its cost structure. They've seen 70 basis points of total company margin expansion over the past few years. I know it doesn't sound like much until you realize that GM's major competitors have seen their margins shrink by 400 basis points over the same period. Get it?
All told, everything seems to be going pretty darn well for GM. But the best part of the story, frankly, is that the stock's cheap. Can't find a lot of cheap stocks right now, right? Even with its 8% gain over the last two days, this thing sells for 6.2 times the midpoint of full-year earnings forecast. Yeah. 6.2 PE. That's the kind of multiple you expect from a boom and bust cyclical business that's about to go bust. GM is very cyclical, but its earnings are going higher, not lower. And I'd expect that to continue unless the war with Iran gets much more extreme, sending oil to the triple digits. The analysts who cover this thing certainly expect more growth in 2027 and 2028. Now, if GM stock can get what we call rerated higher, just a little bit, the gains, they'd be enormous. Even if it only starts trading at 8 times earnings based on next year's estimates, which seems reasonable, this now $82 and change stock would go to $119. Of course, that doesn't mean the market will change its mind. As we saw in the first half of the year, the stock is hostage to macro forces, especially the volatile price of oil. But the bottom line, at a time when we're looking to diversify away from tech, at least to some degree, I think General Motors, terrific idea. Despite a tough environment, GM just reported an amazing quarter fueled by automakers. Phenomenal execution given that the stock sells for barely more than six times earnings. I'm betting there's plenty of upside here, especially if peace breaks out in the Middle East. And the higher the price of oil goes, the more likely it is that our government will cut some kind of deal.
Now we want to go to Don in Ohio. Don, >> Hi Jim. I started a position in All State at $220. It's now over $250. Where do you see it going? >> Look, All State is a steady Eddie. I don't talk about it much. It's been good. The reason why I don't talk about it is fact it's a low multiple stock and in a business that's really hard to understand for a lot of people, but All State's been a winner, and all I can say is congratulations, you did a good job.
Let's go to Rebecca in New York. Rebecca >> Yeah, hi, good evening, Mr. Kramer. I'd like to know what your opinion is of Ford. Uh, it's like what was really sinking the past like year, two years. >> You know, Ford, look, I I have a longstanding belief that Ford is very undervalued. Okay. It needs to get the warranty thing better. I think it's doing that. It sells for only eight times earnings. My problem is GM is cheaper. But I will say that I think that that Jim Farley's doing everything it can to get it right. The legacy of what he inherited is a lot tougher than people thought, but he's getting it right. And over time, I can't see why you buy it with a 4% yield how you're going to get hurt. I know that may not be enough for you, but the stock is up in the past year, and I don't think it's expensive. Anyway, if you're looking to diversify away from tech, I think General Motors is a great way to do it. Not sliding forward, but GM a little cheaper.
Now, much more man money, including my post earnings exclusive with Service Now. Then I give you my blessing to oh boy, speculate. As long as you do it wisely. One stock in last night's lightning round reminded me of that. I know how smart you guys are. I listen, I'll reveal it. And of course, all your calls rapid fire tonight of the lightning round. This is stay with Craver.
For over a year now, the enterprise software stocks have been crushed by worries about competition from AI. Take the stock of Service Now, a once beloved company that helps businesses automate all sorts of IT and back office processes. As of today's close, this stock was down almost 38% year-to-date and more than 60% from its all-time high in January of last year. Nobody expected anything good here, which is why the stock got pulverized today in anticipation of earnings, but after the close, Service Now reported a nice top and bottom line beat with its revenue growth accelerating for the first time in four quarters. On top of that, they raised their full-year forecast for subscription revenue. Turns out business is pretty good, which is why the stock bounced in after-hours trading.
Earlier tonight, I got a chance to speak with Bill McDermott, the chairman and CEO of Service Now. Take a look. >> Mr. McDermott, welcome back to Bad Luddy. >> Jim, great to be with you. How are you? >> I am fine, and I hope you are too, sir. >> I am, Jim. Great to be back on your show. >> Okay, so uh, Bill, revenue growth, some serious acceleration. Uh, people were concerned maybe the last couple quarters they didn't have the growth that they wanted. This seemed to be the quarter where you definitely have pretty strong bookings. Looks good. >> It's been great, Jim. You know, we're the fastest growing major enterprise software company and now cybersecurity company, and we're operating at the rule of 56. So the company's firing on all cylinders. This uh AI control tower for business reinvention really driving AI but keeping these companies secure with all the agents, all the critical infrastructure networks and devices. We're in the cyber business, Jim. >> Yes. Look, the Service Now's blueprint for agentic business after what happened today with Open AI and Hugging Face, I thought that this was a a brilliant document, and I did not know that you do this what for a huge percentage of the Fortune 500, you're involved in this? >> Absolutely. Uh, in fact, right now, the AI control tower has really taken the Fortune 500 from AI chaos to AI discipline. For example, you know, this token consumption has become a big issue, as you know. We manage that, enforce those policies, and the kinds of things that are happening in the media today around AI. We have a kill switch that stops AI agents that go rogue. So those things don't need to happen, and they wouldn't happen when companies run Service Now. >> Okay. Now, we do have to try to figure out there is a puzzle because the stock is has been going lower. Uh, there's been a push back by some, and I'm just going to read you one. Uh, one analyst said, sure, Service Now is doing fine now, but customers are going to sign shorter contracts and negotiate better terms for their deals because of the emergence of AI competition. Now, you've pushed back on this point, haven't you? >> Of course, because all you have to do is look at, first of all, our renewal rate, which is the best in the industry at 98%. Um, you look at the term of our contracts, they've actually gotten longer, and that is measurable in CRPO, the current remaining performance obligations, and the remaining performance obligations in the company, which are growing as fast as our subscription revenue. So that is actually factually incorrect. And you know, Jim, when you think about the big picture here, what is the big question for investors? They want a company that has a system of record with the IT system of record for the biggest, most successful companies in the world. Context. We have a 100 billion workflows, 8 trillion transactions a year. We govern and regulate all the AI in the major enterprises in the world, and everything around pricing is outcome-based. But yet, even as we do outcome-based, and half of our revenue in our net new cases are going to consumption, our customers love that we give hybrid predictability and the pricing. And they also love that we're managing the pricing on everyone's agents because we're controlling everyone's agents. Okay? >> So, think about it this way, Jim. There's going to be more AI. There's going to be more incidents, and all these things drive more and more volume to Service Now, which drives revenue. It drives RPO. And that's why we increased the full-year guide. That's why we told the markets we'll be a $32 billion plus company between now and 2030, and we couldn't be more confident. Okay, we're in the bullseye of everything. >> All right. Well, I I hear you on that. I just want to again be sure that our viewers are getting what people are saying because they're probably saying, "Why is the stock down?" I'm going to read you something from Key Bank analyst Jackson Ader. He published a review of your report on Monday, and he said, quote, "We have heard from customers that they renewed large contracts early, nine months early in one case, in order to avoid the large pricing increase that was going to be imposed upon them had they made the switch over to the new pricing model on July 1. Is there a chance that you pulled forward some of these contracts?" >> No, there's no chance. And I don't know what that reference is to a price increase. In fact, the only um prices that I can see increasing are the ones that are associated with how much more business that we're doing. So, we're increasing the volume, and when people do more business with us, we actually lower the price. So, I'm unaware of these cherry-picking stories, but I can tell you this, Jim, the proof is in the pudding. Who else put out a print like we put out today? Who else has beating the high end of their guidance and raising their annual guide? You know, there's a lot of talk out there in the enterprise, and there's a lot of experts, but you know, the enterprise is a little bit like politics. You know, a lot of talk, a lot of progress at Service Now, not a lot of progress everywhere else. And I would like to say >> I'm sorry. Go ahead. I'm sorry. >> Please. >> Well, I was just like Jensen Wong. >> I think Jensen has a good line. He says Service Now is destined to be the best platform, the operating system of enterprise AI agents. Nvidia to me, that's somewhat dispositive of how things are going. I would say, you know, the ultimate voice of the AI generation is Jensen, and the most valuable publicly traded company. We've been building with Jensen AI for the seven years that I've been here. We beat every single quarter that I've been here. We beat this one. We raise for your guidance. We have so many customers that love Service Now. We have six unicorns now, Jim, that are at a billion or multiple billions. We're about to launch another one. I told the market AI control tower was going to be a big thing because there's 2.2 billion agents entering the global workforce in the next couple of years. So how are you going to manage all of these identities? How are you going to manage the other very good software companies in the enterprise that have big install bases and their agents? Well, there's only one company that goes all the way through from workflow now to cybersecurity. You know, we're the fastest growing cybersecurity company in the enterprise, and now we're the eighth largest cybersecurity company in the enterprise. So think about managing literally 100 billion workflows, 8 trillion transactions, >> Right? >> 7 billion devices in real time, and then the critical infrastructure of the most important companies in the world, like the great JP Morgan and Jamie's building at 270 Park Avenue, that's running on Armis. Vasa is managing the identities, and we're running all the workflows for the most important companies in the world. Jim, we're just getting started. Well, look, Bill, you know, look, I want everyone to know all sides. I mean, the stock has gotten hit, the stock goes up, the stock goes down. But I know your true north. When you talk about your company, I appreciate the push back on those comments that I read because those may have been driving the stock down. And yes, I do believe that if Jensen Wong believes that you are number one, he does not award that lightly. Bill McDermott, thank you so much for coming on the show. Chairman, CEO of Service Now. Good to see you, Bill. Thank you, Jim. Good to see you. May >> have money back. >> Coming up, you've got questions, Kramer's got the answers. Get charged up for a fast fire lightning round next. It is time for the white round. Clock by selling the sale, and then the lightning round is over. Are you ready Steve D with Scott in New Jersey? Scott? Hey Jim, I wanted to know whether you think this stock is a buy, seller hold. It's down over like 80% or more in the last year. Symbol FIG. >> Figma. No. I mean, look, it Figma came public. It just had this moment. People loved it. It's a very competitive market. I don't want to be there.
Let's go to Mary in Texas. Mary, >> Yes. Hi, Jim. How are you? >> I'm good, Mary. How are you? >> It's hot here, but I'm good. >> Okay, fair enough. Good point. Power generation. What's up? >> I wanted to find out what your thoughts are on Solar Edge Technology. >> The solar stocks are not doing that well right now. And if unless you have some earnings to go on, Brett, with higher rates, it's really tough to make some money in the solar situation right now.
Let's go to Brett in Maryland. Brett >> Jimbo, how are you? >> I'm doing okay, Brett. How you been? >> Doing pretty good, thanks. Yeah, I had a question about uh Ion Quantum. Um I know the AI and the quantum industries are merging together. This stock has a high beta or PE ratio. High beta as well. >> Is this O andQ? >> Yeah. The problem with O andQ again, I mean, we're dealing with a rate. When rates go up, these stocks are very tough to own. So, I am going to steer clear of it because I see what the rates are doing and it just they're not going in the right direction.
Let's go to Jeffrey in Massachusetts. Jeffrey, >> How are you, Jim? Happy hump day. >> Oh, yeah. Absolutely, man. How about you? What's going on? >> Not too shabby, but got a good one for you here. After a strong Q2 earnings report, would right now be a solid time to buy more INDB. >> Yeah, a good yes, good regionals. And I really support the regionals. I also think there could be a lot of uh, you know, look, don't forget we could have some consolidation, but the regional banks have been a fantastic place to be. I look at you for just you take a look at Key. I mean, Key, we had number cuts. People didn't like it. WHAT'S THE STOCK? GO UP. THAT'S WHAT I LIKE.
Let's go to Isaac in New York. Isaac. >> Hey Jim. Isaac from New York City. My family has been watching you for over 20 years. Thank you for everything that you do. Constellation energy eg. >> Okay. Look, I like these, you know, car. These stocks have given up the ghost. They've come down all the way. I think we got to take a look at them. I think that that was that's a very good situation all the way down here. I'll I mean, are you taking a shot at it? No. We know that power's in short supply. Constellations got it. Oh, and that, ladies and GENTLEMEN OF THE LIGHTNING ROUND. >> THE Lightning Round is sponsored by Charles Schwab. Coming up at the week's halfway point, Kramer's giving his top tips to help you get over the hump. Next, tomorrow, kick off the trading day with Squawk on the Street. Live from Post 9 at the NYSC. Jim, >> we're making our way. >> What do you want to talk about? >> Enjoy the game. >> Remember, my mother always mouthful. >> All right. >> It all starts at 9:00 a.m. Eastern. >> Jim Kramer, the die hard of the dollars. >> Hey, Jimmy. Love the show. >> My 5-year-old grandson loves to watch your show. >> I have to thank you for making us money when it's there to be made. >> Our world is a better place with you in it.
I've been fixated on speculation for ages. In fact, I'm pretty much the only person on TV who consistently recommends buying a speculative stock. Why? Because when you get it right, you can hit it out of the park. That's why. And if you get it wrong, well, you can be grateful that stocks stop at zero on the way down. We know that if you own a stock and it gets wiped out, it hurts. I owned a $2 stock in my hedge fund years ago, Memorex TX, thinking, hey, all I can lose is two bucks. But I kept buying on the way down, and by the time it did go to zero, I had lost $2 million for the fund. It hurt something awful. But as I say in How to Make Money in Any Market, you can own a portfolio that starts with a bedrock position in S&P 500 index fund, and must always start with that, then build out a portfolio of five stocks which you buy gradually over time. That's the program of the book. One of those stocks can be speculative. I think that if one-tenth of your portfolio is in a speculative stock, there's nothing wrong with that level of risk. It's a long shot. We accept long shots in many parts of our lives. You're on couch, you probably going for a long shot. I know you may do some of the parlays on DraftKings. Whoever really wants to buy the favorite Belmont or Kentucky Derby impossible games or chance? No. Some of good opportunities that have an excellent risk-reward as long as you just pick one. Is that wrong? Hardly. Some of the biggest winners over the last hundred years have been long shots. We know that the government has waged war against big tobacco for decades. Surgeon General after surgeon general has railed against smoking. But the stock of Philip Morris, which rebranded then divided into Craft Alry and Philip Morris International in the mid-2000s, has still been the greatest performer of the past century.
Which brings me to last night's show and a call I got from Chris in New York who asked about Keel Infrastructure, symbol KEL. I know it. At first, I'm thinking KE, I mean, they make the astringent I used to take off my makeup every night, but they aren't public. As Chris goes on, I see it's a $4 stock and it, for a lack of a better term, is the ultimate long shot. It's a data center play that's got 650 megawatts of approved power but hasn't yet secured a hyperscaler as a customer. And I'm thinking of the time a couple of years ago when I saw this company, Nebius, at Nvidia's extravaganza GTC. I didn't know them either. Stock was about $20 when Nvidia CEO Jensen Wong took me across the floor to meet these guys. Nebius is now at $218, and Nvidia owns 9.3% of the company. >> Could Keel the next Nebius? >> That was easy. House of Pleasure. >> I looked into it, and I know the hyperscalers are indeed voracious buyers of power. As you heard from Google tonight, Keel has it. I know that Situational Awareness, the high-flying hedge fund that's been early and right, owns 20 million shares of this thing, at least as of the first quarter. Of course, nothing is perfect when you're speculating, or wouldn't be speculation. Keel has negative free cash flow, $577 million in debt, and a ton of crypto exposure. Yep, it's a crypto miner. The former Bit Farms. At least it didn't grow lettuce. Changed the name in April. This one has it all, doesn't it? Plus, BTI, a reputable broker, says it could nearly double from $4 to $8. What can I say? That I don't wish I caught Nebius? That I dislike Coreweave, a huge win, because it started as a Bitcoin miner? No way. I did. All I can say is Chris in New York, I think you might be on to something. And leave it at that. I like to say it's always a bull market summer. Proud by just for you radio money. I'm Jim Kramer. See you next time.
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