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. Madam Money starts now.
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cray America. Other people, my friends, I'm just trying to make you some money. My job in terms it's entertain, but to explain and to educate. So call me at 1800743 CBC. Tweet me at Jim Kramer.
So I'm crossing Broadway right near the exchange and John from Los Angeles stops me this morning. HE WANTS A SELFIE. HEY, I'M COME ALWAYS THRILLED TO DO A SELFIE. I WOULDN'T HAVE A SHOW IF I DIDN'T. So of course I'm gracious. After the selfie, John wanted to ask me a question. Even as a beer truck was backing up right into him. AFTER I SAVED HIS LIFE BY telling him to move back, he asked me, "Isn't this market too frothy, Mr. Kramer?" I said, "No, even as we had a fairly good day with the Dow rising 10 points, S&B gained 38%, NASDAQ jumped 0.90%." But he said, "Uh-uh, Jim, it seems like 1999 to me." I said, "I lived through 1999 with hundreds of companies coming public that had no earnings and a ton of companies building out an internet that simply wouldn't play ball." Many of those companies went under, taking trillions of dollars with them, souring a whole generation of buyers who got blown out never to return.
I told him I didn't have time to explain and that dastardly BEER TRUCK WAS BACKING up into again tight spot. So I told him to watch the beer truck and watch tonight for a more complete answer. So why isn't this 1999 then? First, when you compare markets, what you have to do is you have to make them apples to apples. Okay? As I say in how to make money in any market, that means you're going to compare the price to earnings multiple of the indices or individual stocks to each other. A high PE multiple means a stock's expensive, unless it also has an incredibly fast growth rate to justify the valuation, in which case that could be acceptable. You also need to measure prevailing interest rates because that's a good proxy for comparing the price earnings ratio and the value of stocks versus a risk-free alternative. Let me knock out the latter first because there's pertinent information from today from this morning thanks to a stunningly positive consumer price index reading we got the 8:30 at the end of 1999 which was I regarded as the fulcrum of the overvaluation. the yield, what you got if you owned a bond, the yield on the 10-year Treasury stood at 6.4%. I'm going to repeat that because you don't hear that anymore, 6.4%. It's now just under 4.6%. Which means, among other things, we simply don't have the inflation we had back then, something that would inflate the value of the entire SP 500. We hear so many bears fret about 4.6, 4.5, but 6.4 before is a very much vicious vicious competitor to stocks. So that cuts to making stocks a lot more compelling now than they were then on the basis of that risk-free alternative.
As I mentioned, the CPI came in very light today, much cooler than expected, and rates dropped nicely. We know that there's a dip in gasoline, but that won't last because of the president's Iran strategy. With the war back on, oil's coming back up, but we got welcome declines in apparel, used vehicles, auto insurance, and medical care. All of which have been high and sticky until now. Why do we care about this? Because as long as inflation stays very fairly tame, it's unlikely that the Federal Reserve will feel the need to com or feel compelled to raise interest rates. At the end of the dotcom era, the Fed was not our friend. Then chairman Alan Greenspan hiked rates six times between June of 1999 and May of 2000. You don't get a dot crash scenario without a series of tremendous rate hikes. and we simply aren't there yet. New Fed chair Kevin W spoke today and he he didn't sound like he's going to tighten if the CPI stays at these levels. I regard that as very bullish for stocks.
In terms of valuation, what I know John was most concerned about going into 2000, the year of the dreaded decline, the S&P 500 was trading at 25 times forward earnings. Right now, the S&P trades at 20 times forward earnings. Remember, apples to apples. That's a big difference. And while 20 isn't exactly cheap, it's certainly not expensive like 2,000. And to date myself, it's nowhere near the 29 times earnings we were seeing right before the crash of 87. That was the worst single date moment in the history of the stock market. But the real tale of the tape comes from the difference in everyday stocks. So let's go over a couple. Many of the major stocks back then had high really high skyhigh price during multiples. Cisco, one of the largest stocks in the markets by market capitalization back in 99 was selling at 95 times earnings. Even as those earnings were on the verge of collapsing, now it's at 27 times earnings and they are on the verge of accelerating.
I can go over chapter and verse how overvalued and frothy stocks were back in 99. I know because I bought a company I brought a company public back then at $19 a share, but the stock opened in the low60s. I screamed holy hell to the underwriters that they failed to control the deal and that's why it opened so high a and it made it ridiculously overvalued from day one. But the public was so crazy for docom stocks that it was a common pattern. We had 330 stocks that came public and failed many in a similar fashion to the street. Thank heavens we survived. They had no earnings, some cases no sales. Is that the case now? Not at all. Not one bit. Instead, let's talk about what happened today. I want to talk about some plain vanilla stocks that are shockingly cheap that represent this market well that and I spoke to the CEOs of these they don't even get like what their stocks are doing selling so well let's start plain vanilla bank of America which everyone knows today reporting revenue growth of 15% asset management fees up 19% investment banking up 50% global banking net income up 20% global market net income up 72% much better credit quality and efficiency and what happened the stock went up 1.88% to an alltime high. Yet, Bank of America's stock sells for 12 times next year's earnings. 12. Well, that's exhibit A against those like John who think froth predominates. How about Goldman Sachs? We're going to spend a lot of time on that later, but it had 78% net income growth, 92% earnings per share growth, 55% growth in investment banking, 32% growth in fixed income, commodities, and currency trading. These are all pretty unheard of when it comes to the stats of the business. best in the history of the firm. Yet, even after its 9% gain today, the stock sells for around 18 times earnings. More on that one. The best blowout I have seen in many years and certainly the biggest non- tech blowout that I have ever seen. When we come back from the break, I didn't know it was possible. Or how about JP Morgan? Biggest bank in the world. Get this. It had the highest net income of all the banks, the highest revenue growth, the highest the largest deposit base, highest return on equity, the largest capital return, the highest investment revenues of all the major banks that reported today. The stock which at one point in the gloom of this market was down $6 down $6. Closed up $8.36 or 2.5% all-time high. The down $6 was before the market traded. People are such dopes. But what does it trade at? 15 times earnings. 15 below the market multiple. Best bank in the world. How the heck? Anyway, so these are ridiculously cheap. They're insane. And you think that's frothy? Oh, so you're worried about tech then? You think it's way too high? Have you considered the $26.5 billion that SKH, the Korean semiconductor company, raised last Friday in our markets? What if I told you that stock, even after it skyrocketed $41 today? House of Pleasure still trades at about four times next year's earnings according to analysts at Barclays who initiated coverage today. Yes, it's that cheap. It's downright nutty cheap. It's like ridiculous cheap. I mean you could like I don't know Gemini in cheap and it should come up or maybe like I don't know Claude cherry picking. You think I'm doing that? Hardly. Micron another red hot commodity chipmaker trades 13.5 times earnings. Sandisk stock's up 643% this year already but only sells at 27 times earnings even though it has stupendous earnings growth. Finally in tech world let's consider Nvidia the world's largest stock. It looks to be trading in slightly more than a market multable by some measure. 23 times next year's earnings is the uh one that's prevailing. Dell taking a lot of business from a flagging IBM. More on that one later. Trades at 25 times earnings. And I think those estimates are way too low. Those stocks are going to turn out to be much cheaper than we think. Now there are plenty of stocks that do have higher multiples or no multiples like SpaceX which can call the perception of the market. I know that something like SpaceX can feel very 1999 but THOSE GUYS HAVE HUGE revenues and I think a lot of hope. Bottom line, well I shouldn't use the word hope. A lot of uh let's say they're going to make a lot of money one day. How about that? Bottom line. What typifies this market is the inexpensive nature of so many big cap stocks in so many sectors. There is some froth, but the froth does not represent what we trade, what we own. It just stands out like a sore thumb and nothing more. Or if you're into the canary metaphor, may I just say this one's a canary, but it's at the warf, not in the coal mine.
Nick in New Jersey. Nick. >> Hi, Jim. I'm into Boston Scientific at 102. What should I do now? >> Nick, you've got to wait two quarters. That's my rule. That was one of the worst misses. Even though I like the healthc care sector, I don't particularly like the equipment sector. A lot of those stocks are doing badly. Intuitive. Hey, I got to tell you, intuitive, surgical, and intuitit, that would have been a good piece to do today. I'm looking at my executive producer, Regina Gilan. Should have gone into it. And to it, how if you intuit it, it's bad. If you think maybe it's good, there might be some froth, but it doesn't represent what we own. I'm telling you to let's say don't let it dominate and don't let a beer truck hit you. Oh, man. Tonight, IBM just had its worst day ever. So, what sent the big blue deep into the red? I'm breaking down the surprise earnings disappointment. Then, one bank has been outperforming the others in earning season. I'm going to tell you where I come down on what I just mentioned. That beautiful Goldman Sachs quarter. Hey, and get this Zoom. It just had its best growth in years. So, is now the time to get a piece of this 15 times earnings company? Again, no froth. I'm checking in with the CEO. 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 was supposed to be about bank earnings. Five major banks reported, but then IBM pre-announced some hideous numbers and the stock got torn to pieces, down over 25% in a single session. All right, look, I've been an optimist in IBM for two and a half years now, but the stock's back down to a level it first reached nearly 2 years ago. So, we have to ask what the heck happened. First, let me set the scene. Not long ago, IBM's software business was posting its best growth in ages in large part because much of their software seemed very useful to AI developers. At the same time, their consulting business was on fire as they helped other companies harness AI without spending fortunes. A little over a year ago, they also launched a new mainframe model that was selling very well. Today that got derailed. This morning IBM pre-announced weaker than expected numbers pretty much across the board. CEO Arvin Krishna explained that because IBM was lapping the launch date of its latest generation mainframes in the second quarter, its infrastructure business was up against very tough comparisons. But what played out was even worse than expected, driven by a shortfall in both mainframes and related software. Here's how he put it. I'm going to quote, "In the last few weeks of June, we saw clients shift their quarterly capback spend towards servers, storage, and memory purchases to secure supply constraint infrastructure ahead of expected price increases." End quote. Basically, there's all this tech hardware that's in short supply that we talk about all the time. Prices have soared. So, companies are spending a lot less outside of the data center in order to cover the costs. They can't cut their cyber security budgets. That's too dangerous. So, anything outside of these core areas could be in big trouble and anything includes IBM.
Now, Kush took ownership of the miss, which was certainly nice to see. He's not one of those CEOs who's in denial about reality. He knows IBM dropped the ball and he admitted it. He then went on to note some of the limited highlights from the quarter, including double-digit growth from my favorite business that they have, Red Hat, strong performance from its acquired businesses, Hashi Corp and Confluent, good numbers from the distributed infrastructure division, continued growth in signings for the consulting business, and some cost cuts. Krishna also noted that the company launched a new cyber security initiative called lightwell and he had some positive things to say about IBM's quantum computing business as well that I have spoken to you about many times but when we saw these numbers and read Chris's explanation what instantly struck us is that this is the first tangible evidence of a trend that we've been hearing about for the past few weeks right now the people in charge of corporate IT budgets are being forced to prior prioritize into three buckets of spending You want to take these down if you can because you're going to start hearing more and more of it this earnings earnings excuse me they spend on cyber security tech hardware and AI tokens. Anything outside of these buckets is a much lower priority which is how you get a quarter like this from IBM. Let's take them one by one. Starting with cyber security. Back in April, Anthropic released its Mythos cyber security model which then fully launched in June. And this thing scared the heck out of most companies, thousands of companies frankly, and it's for good reason. Mythos or Fable 5 as the publicly accessible version of the model is called, has the ability to identify security vulnerabilities in a way that no human or a model has ever been able to before. It's proof that hackers using AI can indeed tear through most of these corporate networks, hence the need for more cyber security spending. why Crowd Strike was up so much. Uh I'll tell you that's one of that's the antidote I think but we're talking to IBM here. Second bucket hardware. This is a bucket that's become much more expensive over the past year because of the explosion in memory and data storage pricing that's caused huge gains in stocks of Micron Seagate Sandis Western Digital SKH Heinix. saw that tonight because their products are in very short supply to the point where they can charge insane prices for this stuff and you need all this uh to build a computer or a phone or a tablet, let alone an entire data center. IBM explicitly said that customers were prioritizing this stuff over their mainframes. Everyone knows these shortages could last until 2028, which means pricing could go ever higher. So big spenders are eager to lock in as much supply as possible right now. So pretty much all tech hardware has gotten substantially more expensive. And this might just be the beginning. Bad news for IBM because it means there's less money left over in IT budgets for IBM. Finally, a third little harder to understand third bucket is AI tokens, which means more use of the leading AI platforms, which have mostly moved to a consumptionbased pricing model with tokens being the basic unit of measure. Companies don't want to get left behind in AI, right? in the AI year they've got guy they got to be present. So they've been willing to let their employees use tokens liberally whether that means using AI platforms for some productive process like the rewriting your software code or just experimenting with AI to try to find new ways to use it. See a lot of that we've started to see griping about the ballooning cost of AI this year. So maybe there could be a crackdown on token usage at some point but for now that type of spending is being allowed if not always encouraged.
What happens when those three main buckets of IT spending get prioritized as they have been? Other types of spending need to be deprioritized. Unfortunately for IBM, they have too many products and services that fall into the other types of spending. Even if they also have a decent overall AI narrative as I've been talking about for a long time. So, even though IBM stock plunged 25% today, which certainly seems excessive compared to the size of disappointment, I can't tell you to buy this stock on weakness because I think the weakness could very well be persistent. Sure, the stock now pretty cheap. Okay, it sells at around 17 times this year's estimates, but those estimates will have to come down overnight. Yes, IBM's dividend yield is back above the 3% level. It's nice, but that's not a good enough reason to buy the stock. I like that Christian took ownership of the miss quarter. He's a good guy, good executive, and I think that IBM still has some AI tailwinds that were totally disregarded in today's beatdown. But frankly, I'm too worried about these trends to say that IBM is now safe to buy after this decline. We're at the point in the year where IT managers are putting together the budgets for 2027. And you have to assume that these three priorities that I just identified will continue to dominate, which means anything outside of them will still have a real problem. I hope that IBM truly is just seeing its deals get delayed and not cancelled. But I can't tell you to buy a stock because I hope something is true. Hope should not be part of an equation here. So, let me give you the bottom line. Corporate IT budgets are getting squeezed by skyhigh prices for all the hardware that's in short supply, which means less money to spend on stuff from IBM. That's the new reality and I have no idea when it will change which is why I can't recommend IBM not even after today's severe decline. Bed Money is back after the break.
Coming up, on a day dominated by big bank reports. One emerged head and shoulders above the rest. Kramer's explaining which next earnings season kicked off in earnest with a parade of bank quarters and I thought they were all terrific. Typically on the first real day of earning season we get results from a few banks usually three or maybe up to four. Today for the first time that I can recall, we got results from five major banks on a single morning. The first national uh the fir the four national commercial banks with large investment banking businesses and that's JP Morgan, Bank of America, Wells Fargo, and Cityroup. And we also heard from Goldman Sachs, the preeminent investment banking, Pure Play, the only one bank left as a report, Morgan Stanley. We hear from them tomorrow morning. Honestly, it feels like the banks ARE TRYING TO GIVE ME A HEART ATTACK HERE. As I mentioned at the top of the show, these results were generally pretty good. But one bank quarter was clearly the best of the bunch, and that's my former employer, Goldman Sachs, which I happen to own for the travel trust. Expectations were very high for Goldman coming in, meaning both the literal consensus estimates from the analysts who cover the company, and the general expectations reflected in the fact that the stock was indeed up 48% over the last 12 months going into the quarter. Uh, you'd have to believe it's going to be unbelievable to move the needle here. Generally speaking, we all knew that Coleman's results would be strong because there's been a bonanza of IPOs in debt offerings and M&A transactions. Those are the investment banks bread and butter. But even though Wall Street had great expectations, the company still managed to surprise the upside in major way. Throw in a fantastic story told by management on the conference call, and you can see why the stock shot up $94 or 9% today to another all-time high. Just how great was this quarter? Let's start with the headline numbers, which were truly extraordinary. Goldman generated $20.3 billion of revenue in the quarter, up 39% year-over-year and more than $4 billion ahead of its of expectations. That's an insane beat. The company's efficiency ratio, which is their expenses divided by revenues, giving you a percentage where lower is better. Okay, lower came in at 57.4. That's down from 63.4 the year before. That is a staggering improvement. almost impossible to execute. Needless to say, that decline in cost produced astonishing earnings. Goldman earned $20.98 per share, more than six bucks higher than Wall Street was looking for. Nearly double what they earned the year before. When I was speaking to Dave this morning, I was glum. He said, "What's the matter, Jim?" I said, "I'm glum. I don't work at Goldman Sachs anymore." I mean, holy cow with these numbers. And whether you use return on tangible equity or return on equity as your preferred measure of profitability, Goldman came in well ahead of expectations and saw a huge jump from the second quarter of last year. I mean, these guys, they're practically they're probably pretty buddy. The driver of Goldman standout results was the stalward investment banking and the sales and trading businesses, which Goldman collectively calls global banking and markets. That division had revenue of 15.52 billion dollars, up 53% year-over-year and well ahead of the 11.72 billion that the analysts were looking for. Now, all the subsegments within that division had substantial growth. Investment banking fees were up 55% year-over-year, three 3.4 billion thanks to all the M&A, IPO, secondary offering, debt offerings that we've seen. Fixed income, currency, and commodities uh trading grew 32% year-over-year. That beat expectations handily. But the biggest upside surprise came from Goldman's equities trading operation, which grew an incredible 72% year-over-year to 7.42 billion. I never thought it could have that kind of firepower. That unit was only expected to have just over 5 billion in revenues. Meanwhile, Goldman's smaller asset and wealth management business also had very good quarter. Revenues up 20% year-over-year, 4.6 billion when the analyst only looking for 4.3 billion. asset and wealth management unit had 20% growth in management fees, reflecting higher assets under supervision, but a 222% year-over-year surge in that segment's investments revenue certainly didn't hurt either. This kind of performance is incredibly important because it is not episodic. It doesn't need big deals. It's sticking with big gross margins regardless of M&A, regardless of whether they're more SpaceX deals. Well, one of the conference CEO David Solomon explained that his firm's benefiting as its corporate clients seek more scale to quote invest and compete more effectively. That desire for scale has driven a significant increase in dealmaking as we know with large cap corporate M&A up 90% through the first half of 2026. Boy, they've been getting their fair share, huh? On top of that, Goldman's benefiting from the rise of artificial intelligence. As Solomon said, quote, "The AI investment cycle is expanding capital needs beyond core technology into infrastructure, energy, and data centers, generating a ripple effect across industries. This is creating significant opportunities for Goldman Sachs to provide structuring, financing, risk management, and capital markets execution across both public and private markets." End quote. here. It's worth noting, by the way, that Goldman was not only the lead left underwriter for the SpaceX IPO, meaning they're in charge. It also led Alphabet's huge secondary offering, which was the largest equity offering of all time for about a week until SpaceX came public. Anyway, these are two very lucrative pieces of business. Again, with terrific gross margins. Now, Goldman, even when times are good, there's always a question of how long can the good times last. That's why the stock's price during multiple currently around 19 never gets all that high. it doesn't get above the market mable. But one analyst this up brought it up today on conference call asking them to compare the current moment to quote the dotcom year or even during the 2021 period end quote. The implication was well maybe we are at peak period uh because 2021 happened to be the top of when we had a lot of IPOs. But Solomon's answer was interesting and I thought pretty encouraging if you were bold. He said basically the Goldman is so much larger now, so much more diverse, and I'm paraphrasing here, but so capable of making money in very different ways that he feels as though the current moment is much more durable, that's the key word, than than in significant investment cycles of the past. I think that helped contribute to today's terrific rally. We felt a little more confident. So here's the bottom line. The five big banks report that we got this morning were all pretty darn strong, but the report from Goldman Sachs was indeed a cut above the rest. This investment bank is seeing incredible strength across the entire business right now. And while it's fair to ask how long the strength can continue, Magic believes the business is more durable than it's ever been. And personally, I think we're still in relatively early innings of this fundraising and dealmaking cycle, which is why it is a top five position in the charitable trust. An important point we'll be discussing when we convene our club meeting this Thursday at noon. Join up now. I'm promising you won't want to miss it.
Let's go to Venus in Michigan. Venus >> Mr. Kramer. Woohoo. We're Kramer and here me and my daughter Katia. She's 10. Say hi, Kata. >> Hi, Mr. Craven. >> Oh, hi. >> How are you? >> How are you? Good. >> We just left the beach. We're doing awesome. It's 100° here in Michigan today. >> I feel like it's 100 degrees right now. I'm under a lot of pressure from this uh from a kid who's got some horse sense. Let's see what you got. Glad see what you got mine. Uh, tell them what stock we're asking about. Um, SoFi. So, this is what I want to know about SoFi, Mr. Tony. >> Okay. Well, she should be a client of SoFi. You got to get young people involved there. No, come on. That's what Anthony's trying to do. Get the younger people to save. And I agree with him. The stock's been stuck a little bit around the 18 and a half level. I think that's a great level to get involved. I think that this is much more than a bank. I think it is more of a a service company that happens to be in banking. And I like everything that Anony's doing there. He is the CEO. All right. The bank earnings have all been strong so far, but Goldman stood out even among a strong card. And yes, I think City was not that bad. Come on. I think the strength and Goldman can continue. Now, there's much more money, including my students with Zoom Communications. Then there's a lot of negativity out there starting to bring even me down. I'm telling you how to fight the negative headlines and keep your head in the game. And it is really difficult. Of course, all your calls, rap, and fire. Tonight is the lighting round. So stay with Kramer.
Oh, I got a real treat for you tonight. We're going to be speaking with Aruan. He's the founder and CEO of Zoom Communications. Now, you may first heard of Zoom during the pandemic. Zoom was on the present but then we got over co and while Microsoft teams and Google meet became much bigger competitors led to a tough uh let's say tough decline in the stock but over the past 12 months zoom stock has rallied almost 22%. But you know that even up here it sells for just 15 times earnings in the latest quarter the company had its best growth in years. Management raised their fullear forecast across the board even adding a billion dollars to their buyback authorization. Zoo is pushing further into phone, contact center, workplace tools, AI products that can turn conversations into notes, follow-ups, completed work. It's like a brand new company to me. Plus, they made a $51 million investment in Anthropic back in 2023. Well, it's currently valued at 1.3 billion. Could be worth a lot more as we get to a who knows an IPO event. So, tonight I want to check back with Eric about the journey he's had with Zoom. Eric, welcome back to Van Money. >> Thank you, Jim. Thank you for having me. It's so awesome to be back. >> Oh, well, I'm so thrilled you're here and to have you in person. Before we go over all the things that are extending Zoom well beyond core collaboration, do a broader modernization engine you've got going. I thought it might be good for you just to talk about how Zoom came about, the journey, how you got to this point because people don't know the story. >> Yes. So, I left Cisco back in 2011. I started Zoom and today we just celebrated a Zoom 15 years anniversary. Over the last 15 years, we were focusing on the product and truly build a great product to delight of our customers and we're onto a Zoom 2.2 journey. Now, now we are talking about some tremendous uh really some great AI use cases. I'm talking about transcribing calls, summarizing notes, generating potentially executing next actions. you're starting to get some pretty great enterprise work and a nice acceleration. What are the things that are really making people excited including the enterprise about what you're doing now? So, first of all, Zoom's value goes far beyond the meeting. We power the prepar preparation before the meeting, the collaboration during the meeting and action that follows. Essentially, we embed AI into every stage of the work conversation, uh, collaboration, action and completion. And we really want to become a system of action that can connect a work from a conversation to to competition. That's why enterprise customers really like our mission. So I mean for instance you mentioned Raymond James the firm I really like and that they become a client really very large client. Would they be looking up um some contact center uh interactions and finding out maybe some commonalities or are they just using it to be able to figure out how how to make it so everybody's better at sales? What's the what are the use cases there? >> So they are a customer for a long time when we shared our AI vision with them. They really get it you know from accommodation to completion. That's why they deploy our customer AI company and with our AI technology to improve their day-to-day workflow. And how about a a Figma? What a great client. We think that they might be taking over in that particular segment of AI. What what are you doing with them? >> So, you know, Figma, right, is a design company. They focus on the vertical market. We leverage AI also focus on the vertical use case as well. Like we have a product for the sales department, product for HR department, product for the contact center, also the product to leverage AI focus on the vertical market as well. >> Okay. Now, I love the the Zoom customer experience insights, the inquiries, the query contacts, and it would seem to me that these are the kinds of things that you could always take a Zoom client that found and you've got that great method. You let everybody kind of try it and sample it and then how do you get them to know about these uh these products because it seems like when you tell them about them, they take it. That's great question. That's one of the problem we are facing as I mentioned right zoom is a value you know goes far beyond meeting quite often customer they do not know that I have so many vertical product and you know build for those lens of the business or vertical use case you know our marketing strategy is make sure first of all make sure the product works and then gradually let's customer understand we have we have you know entire platform now you do have some very tough uh competitors big big companies how are you distinguishing yourself from them and how can you have good growth knowing that they um are well let's say they're very well-known uh companies that already have a lot of business with different companies that you might be calling on. Yeah. Our strategy always look at everything from customer perspective. For sure we have a few very big competitors but our threat always to build the best product to delight customers and essentially build a trust because when customer when they are using zoom they feel very happy because our culture is to deliver happiness to our customers and how are you able to grow AI companion paid users 184% uh year-over-year and my notes reach 1.5 million licensed users in just 4 months. What are you doing? So first of all product just works. The second is ease of use and also the you know especially like AI company is part of our package. It's for free at no cost you know customer love that it works very well ease of use and also for free. That's reason why you know in terms of year of year uh growth and 184 growth. Now the the company uh the growth here is rather astounding versus where it was a couple years ago. Do you think that you bought back so many shares? When will um you get that recognition that I see which is that this is a very new zoom faster growing or will you just keep buying in the shares if they keep it at this level? >> Yeah, we have a strong balance sheet so you know you always had a strong bounce from the very beginning. I know you always cared about that. >> Yeah, because we look at from shareholder perspective, right? We just is a billion dollar buyback. Make sure you know and focus on you know anti-dilution, right? make sure your shareholder they feel happy, you know, make sure we have a long-term shareholder. So, >> well, it does seem when you speak with people, Zoom became uh like like the old Xerox or like Kleenex or these it's just one of these names where said let's let's just do a Zoom call and then when you find out it's not a Zoom call, it's the other guys, you panic BECAUSE NO ONE KNOWS HOW TO USE those guys. We all learn how to use Zoom. Have you ever noticed that the strangest when people say, "Oh, I do want to do a X call that's not yours." People want to do a Zoom call. So Jim, you are right. Huh. When I receive a link from other solutions, I'm I'm panicked too. The good news is for the few minutes it did not work. And other side, Eric, can you send me a Zoom link? It works. >> It always seems to now anthropic. Did you just have a good feel about it when you you saw the product? I know you've always been a very wise investor from day one. I'm a huge fan of what they're doing. You s great company because such a is great model and uh they are a great customer, a great partner and uh yeah we we we love this partnership. Now you're a good partner of Salesforce too. Are they doing okay? Service Now I know you know them because some people are worried about these kinds of just traditional software companies. Will they do okay? I mean I know that you can really from where you are you send in a good purge they let us know. I think not only they are doing okay I think they will do very well you know in the future as well. I think the market sort of overreacts. I think you look at their their product they consistently deliver huge value a business impact to customers. >> Right. Well look I I just got to it's just exciting to have you. you changed the world and we all know you uh as the person who created a new way that we talk to each other and they really ought to know that there's a new way that your business is a very strong corporate business enterprise business because it still doesn't get the credit it deserves. That's my view but I think it's going to be many others soon. That's Eric. He's the founder and CEO of Zoom Communications. Guys, I know it's had a big move, but when you take a look at the fundamentals, the enterprise business, how inexpensive it is, I think it makes a lot of sense to be able to buy right here. Eric, thank you so much. Thank you for having Man Bunny's back after the break. Coming up, you've got questions, Kramer's got the answers. Get charged up for a fast fire lightning round next. It is time. It's time for the light round. Bye bye bye. S just turned on the quarter stock then my staff prepares the gra and then the lightning round is over.
Are you ready ski dart with Dan matches Dan? >> Hi Jim. Thank you very much for taking my call. I appreciate it. >> Of course. Okay, I need your most trusted advice on a company called Kattos. Defensive Securities, Kos. >> Absolutely. Defend stocks have literally been cut in half, including this one. I think that they've been punished enough. I actually want to buy Kattos. I've been put for a long time. It did go up to 120 without me. I think it's a good level here. Let's go to Dave in Texas. Dave, >> evening, Jim, >> good evening. >> My question is for My question is for equipment share. The stock continues to fall. Hit a 52 week low recently compared to its peers. Is it a buy? >> Which one is it? I'm sorry. >> Oh, I got that one wrong. I got that wrong. Uh I thought this would be like United Reynolds and it wasn't. It's disappointing and I can't stick with it. I just didn't see the difference between this and you or I and I made I made a mistake and I'm sorry. Let's go to Tom in Connecticut. Tom. >> Uh hey Jim. >> Tom, what's up? was uh wondering what your uh thoughts are on Shener LNG. >> I've never lost faith in Shener. We actually were the first people to interview people with Shener and they are still doing great things with LG and I want to continue to back them because I think we're going to own the LG export market because we have the most of any country in the world. Kenny in Florida. Kenny, >> hello. Uncle Jimmy in beautiful Delray Beach, Florida. You know, I love it there. Hey, next time you're down here, let's go down to Atlantic and uh get a drink. >> Hey, just outside of the rooftop bar at that hotel right there. Okay. >> All right. Way to go. Give me a call. Hey, just want your thoughts on Pico and where you think it's going. >> I don't know. See, my problem is I don't know what it owns and so therefore I'm afraid after this tremendous run that I'll be coming in late to the party and I can't opine on what it has. Let's go to Glenn in New York. Glenn. >> Hey Jim, it's Glenn from Staten Island. The gasoline price is being so high. I'm vacationing in my backyard. What's your opinion on Pool Corp? P O L. >> Pool needs more transactions in the housing business and transactions are at a 40-year low. So, I cannot recommend Pool. Let's go to John in New Jersey. John, >> Jim, how are you? I want to thank you for all the good that you're doing for the little guys. >> A thank you, man. That's the game plan. You got the game plan. How can I help? >> Thank you, sir. Um, Super Micro SMCI. >> No, I think that team is I think that team is a suboptimal uh suboptimal uh group of executives. I prefer either Dell or even HPE to those guys. And that, ladies and gentlemen, CONCLUSION OF THE LIGHTNING ROUND. THE LIGHTNING ROUND is sponsored by Charles Schwab.
Coming up, Kramer's going on the offensive and taking the doomsayers head on to show you there's still good in this market. Next We all have stories we grow tired of, sick of even, but are afraid to call them out. As an avid reader of the business sections for the last 44 years, I'm going to give you some of mine. The first are tomes that start with something cute about how stocks may look cheap, but and then there's some statistic of some short seller who tries to tell you why stocks are overvalued and you should get out now.
These kinds of stories must be sold in Kansas, the supermarket. There's so many of them. They are endless and they always sound so darn authoritative. We had one yesterday talking about how the earnings estimates could prove to be far too high or the current earnings are overstated. All of them. I had a laugh. I mean, as a young investor, I might have even been tempted to sell my stocks if not for my experience as a journalist, which taught me that press loves negativity. I own a cyber paper myself. So hard to get the journalist to write anything positive about anything. Then there are the stories like the ones we're seeing right now about the semiconductors and how they are no longer uh going to be able to better uh let's say no longer be able to go up on better than expected earnings. That's the big move is over. Sure, but after today's rally, I wonder if they're getting oversold. Maybe they were just recharging that whole time. Fact is, we don't know if the sellers are almost done, nor do the journalists. Selling without knowing more could be a big mistake. The semiconductor index was up almost 3% today. Maybe that's the restart. to be bearish in the group just simply because it went down. That doesn't make a lot of sense to me. How about stories covering the importance of the bomb market and a given Fed honcho whom we all seem to be keying on suddenly because that's what the media says we should be keying on. One Fed official who was a dove now wants rate hikes. Woo! That's causing otherwise smart people to blow out of stocks because you can't fight the Fed, even if that one official doesn't represent the Fed. These stories have cost people fortunes, but they keep coming and coming. In fact, they're sought after by people who don't know they're misleading investors, especially on a day when the CPI actually fell month over month for the first time since 2020. Believe me, if the CPI is going down, rates aren't going up. I wish you could sticker these stories as possible irrelevant or wrong, but they won't let you do that. Hey, maybe they just shouldn't be highlighted. Maybe they shouldn't be done. Oh, I got a bunch of other favorites. There are a couple of people who are over the years have shorted stocks, been negative for ages. Their records are never talked about. Yet, when they bring up a stock that they hate, it's presented as something groundbreaking. The press, not the short sellers, then knock the stock down. It's painful, especially when there's no follow-up. You usually end up kicking yourself for taking these stories seriously. Or how about when there's an analyst, an ice cold one, who talks to you about how you got to say sell Dell because of the rising cost of memory price. As if Michael Dell hasn't thought through. Yeah, you got a lot of those at 150. Now it's at 457. We had a downgrade of Apple today from a guy who hasn't been right for Apple about Apple for ages. He missed the whole move. could have cost you fortune. Now, he made a splash with his downgrade. The worst. Someone who warns you that if the 10-year goes over 5% or the 5year goes over 4%, you got to sell everything. I hear this stuff every day. It's incredible. Now, let's talk about the truth. The Dow has gone up 51,000 points since I first started to hear this garbage. It's meant to have an impact of garbage. It's meant to make you take action. It's meant you to get out. It wants you to sell. Now that we have a new Fed chief, I'm hearing he's going to take up rates. even though the CPI was tamed today. Now that we have a new earning season, I'm hearing the stock's already too high. Now that we're back at war, I'm hearing that there's huge downside. To which I say, do you like the companies you own? Then get ready to buy more into this heavily crafted negativity. Are you in an index fund? Get ready to buy more. And if you're short, well, then you don't need me. You have the rest of the media to do your bidding. I like to say as always, bull market started just for you and your mayor Muddy. I'm Jmer. See you tomorrow.
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