transcript

Speaker 1:
[00:00] Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the Trade Desk, our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24-7 professional answers and live help and access support by phone, email and in-platform chat. That's how Schwab is here for you, to help you trade brilliantly. Learn more at schwab.com/trading.

Speaker 2:
[00:28] Substance use disorder and addiction is so isolating. And so as a black woman in recovery, hope must be loud. It grows louder when you ask for help and you're vulnerable. It is the thread that lets you know that no matter what happens, you will be okay.

Speaker 3:
[00:48] When we learn the power of hope, recovery is possible. Find out how at startwithhope.com.

Speaker 2:
[00:55] Brought to you by the National Council for Mental Well-Being, the Better Proof and the AdCounts.

Speaker 4:
[00:59] My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer. I'm not going to make friends. I'm just trying to make you some money. My job is not just to entertain, but to do something explaining, educate you. Call me at 1-800-743-CBC. Tweet me at Jim Cramer. I missed it. Sorry. I missed it. Next, tonight we are going full scale self-readministration, 100% flagellation, a bonfire of second guessing. The Cultural Revolution as brought to you by Jim Cramer. As the market once again exploded higher. The Dow gaining 341 points, has been jumping 1.05% to a new record high. And the Nasdaq pulling 1.64%, also to a record high.

Speaker 5:
[02:03] House of pleasure.

Speaker 4:
[02:05] It's time to trash myself and talk about the ones that got away. Since part of my job here, I run this travel trust for the CNBC investing club. Don't hesitate to join, get the free book all signed and everything. I do it to demonstrate how a professional manages money and I do so with an open hand. When I started this educational product more than 20 years ago, lots of people chided me, saying I'd be embarrassed by my mistakes. And then I'd give it up quickly. They didn't know that I am my own worst critic. There was even an article in one of the New York Dailies that was taking odds about how long I could hold out, given that most money managers never like to see what, let's show people what they're really doing, lest they look like true jimogues. Well, here I am two decades later, having been embarrassed many a time, except when it comes to the $400 million, $400 million, I've given away the charity. I wish it were $400 million. Wouldn't that be something? Didn't do that. I recognize that showing you how I reason, how I execute helps you understand how to think, or not to think too. The CNBC investing club isn't based on all my mistakes. That's not true. Tonight, though, I want to walk you through something that is driving me crazy. It's these animal-spirited stocks, the ones that are just making me nuts, because my truth, my trust doesn't own them.

Speaker 6:
[03:28] They know nothing!

Speaker 4:
[03:30] Me, the ones that got away. I love the fish. These are the tarpon you hooked, you reeled up, but then you failed to get them to the boat, the boat being the charitable trust. Now, you and I both see these stocks every day. They rally step by step, inch by inch. They can't stop. They can't be stopped. Fitting for this market, almost all of them are related to the data center and the artificial intelligence revolution! That was easy. I have 16 I'm going to talk about. 16 that I was unable to land, couldn't bring them in. When I see them go by on the crawl, that thing underneath me, I'm driven to distraction. I guess you could say, I hate them! Except I really like what they do and the people who run them. It's just that when I see them fly and I can't stop kicking because I missed out, I want to buy them. But they are so far away from where I first wanted to buy them, that I just have to say, I'm late, forget about it. Except the time after time, it would have worked if I hadn't forgot about it, if I had just bought them today or yesterday, the day before, a week before, a month before, whatever. Which are the tantalizing stocks that have just driven me to ruin? Let's start with memory and storage. Yeah, the devices that hold the data. You ready? You can write them down, but they're so hot, they'll burn the paper. C, Gates, SanDisk, Western Digital, and Micron. I liked all these. Do you know, including Western Digital, one point I owned 4.9% of that one when I was a hedge fund manager. Would have made me $2 billion, even more than the 400 million that I claimed I gave when I only gave 400 million, 4 million. All right Bill, listen to me, listen to me. These stocks are being driven up by desperate buyers with persistent orders that take them higher every day. And now I'm going to tell you how it works. Let's say you want some SanDisk, okay? So many, so many other people. With the stock at say $957, you go in and you place an order like this, 957, right? SanDisk, buy me 100,000 with a $1,000 top. A half dozen buyers are actually putting in that same order at the same time you are, literally. And that's why the stock could rally at 8.4%. Say up to $75. These orders are often put in before the market opens. It's like a train, and they don't want to miss it.

Speaker 7:
[05:39] All aboard!

Speaker 4:
[05:40] These orders and people don't have any quit. And that's how a stock goes up dramatically. Multiple buyers with high tops just buying and buying. Why do these memory stocks work? Simple, shortages. AI needs a huge amount of memory. Nobody in this industry was ready for that level of demand. It'll take them years to build out enough production capacity to meet the demand. Next up, central processing units, CPUs, needed to power agentic AI. These AI agents the next wave of the fourth industrial revolution can do amazing things, replacing many humans at old, dirty and dangerous jobs. But they need the right semiconductors. The bottleneck here is not CPUs from Nvidia. They need better CPUs. Nvidia doesn't make them. Who does? Because you know that the agents need them. Well, that's why everyone keeps buying Intel and AMD, silly. I shouldn't have missed those. I like them both so much. I should be wearing post-its with their names on my forehead. Can you jump some of those? I'll put them right on. Thank you. Next, data centers are filled with networking software in Harbor. Remember, the data center is stuffed with a huge number of chips from Nvidia or AMD or Google or Amazon. More than murder. Here you have it. Are you ready? Because these ones really drive you crazy. More VELTEX. Oh, Manic Double. Credo, Estera Labs, Sienna. They're all on fire and fuego. Then we have the data center hardware, Dell. How did I miss Dell? Cooling infrastructure. Ferdinand Verna is on tonight for heaven's sake. CoreWeave, that in-trader. I speak to him all the time with the T-shirt, whatever he wears underneath that shirt. Doesn't dress up. Doesn't matter. He's like a billionaire. Anyway, there are companies that use photonics to move signals. Coherent, Lomentum. This Lomentum. I mean, they were both on the show. How did I miss that? Finally, there's Power and the incredible bull market in Bloom Energy, which eludes me. And of course, drives me crazy. Okay, that's the list. Now, let's talk about cross purposes. I've been buying and selling stocks for 44 years. And every single year, there's always been this winning cohort, a sector that I've missed. That means I knew the stocks were good and the company was amazing, but I didn't pull the trigger. Why didn't I? Okay, first, I'm a cheapskate. I like to buy stocks that run. Almost all these stocks run every day because the buyers are insatiable. Unlike me, there's no place they won't pay. I don't like to be too doctrinaire here. In 1992, one of my best years, my then trader went rogue on me and decided to violate the discipline on a handful of high flyers, like the 16 stocks I just mentioned, just like them. She would come in each morning, identify which would be the hottest stocks, the one that most of them met them, looking at the charts. She would famously or infamously buy the stocks with outrageous tops. They could only be described as rookie behavior, except she was a pro. Case in point, let's go to Bloom. This is an exciting energy play, can turn abundant hydrogen into electricity. Stocks up 164% year to date, including a nearly $9 move today, $229. Remember that. With a stock like that, I would have waited for a pullback, maybe 218, maybe 200. She would insist that my discipline in this market is really going to cost me. With my attitude, my restrictions, I would never bring in Bloom Energy. So she would pick up the phone, and she would want 200,000 shares, right? She'd tell the broker this. She'd say, sweep the stock, sweep the stock to 235, but you get me in those 200,000 shares or else. That way she got it. Didn't matter what price. That's what you're seeing right now. That's what you're seeing in a lot of these trading houses. That's why these stocks do this. They're doing that kind of order. They believe in these stocks. They think we're at the very beginning of the run. They don't mind overpaying because they believe these stocks will keep climbing, climbing. And they've been right. Me, I'm never that certain. I wish I could be, but I've always maintained the discipline trumps conviction. And my discipline means refusing to chase. But let me leave you with one other thought that maybe can justify it, or at least put it at ease with your mind. My trader would rebel at the idea that she was undisciplined. She said I was undisciplined because I wouldn't pay for the stocks that I knew were right. In a hot market, she thought you needed to have the discipline to pay up for great stocks to avoid missing them. That was the discipline. So here's what she would do. She would perform a mental exercise. She would divide high-priced stocks by 10 to show me that it's not so outlandish. Bloom Energy, Jim? All right, it's a 230. Divide it by 10. You got a $23 stock. Would it really kill you? Would it kill you to pay $24 for a $23 stock? No, of course not. That was genius. We had an amazing year in 1992 because I divided a lot of stocks by 10. You know what? I said, she's right. I'm wrong. Throw out the old rules, in with the new. It worked! In my heart, I could never really do it without her. Still can't. But here's the bottom line. If you want to buy these so-called red hot stocks, don't be hesitant about it. As long as the bond market stays stable and you stay diversified, I think the red hots can keep making money. But you got to do this. You got to divide by 10. And maybe then it will make a lot more sense. Hey, how about David in Louisiana? David!

Speaker 8:
[10:24] Hey, welcome from New Orleans and Jazz Fest. I got a question for you on an oldie but goodie, a stock that used to really high fly and it looks like to me, it's coming back, my friend, from the dead. It's got a partnership with NVIDIA and its operating system is being utilized and all of these self-driving automobiles. I'll tell you, I looked at it and it's Blackberry and I wanted your opinion on that.

Speaker 4:
[10:55] Yeah, we're gonna have to look at that too because I know they got vampires in New Orleans. I've been there, I've seen them and this stock is a vampire. Here's back to five from being down to two. You deserve, David from Louisiana, he deserves more than just kind of a brush off. We'll take a hard look at it. Ben, Ben Stoto, rhymes with photo, he'll look at it. Let's go to Tony in Florida, Tony.

Speaker 9:
[11:16] Hey Jim, I want to let you know that I thank you for taking my call and being a club member since day one. And you always help me out when I gave you a call to see what I have to do. And I got another big one for you today.

Speaker 4:
[11:29] All right, I'm sweating, go ahead.

Speaker 9:
[11:32] It's a health care stock. I know you said in the past it's been a good call, but with this one I'm down a little bit in the red. Should I stay with Mectronic? I'm not Mectronic, sorry. Should I stay with MRK or should I go to another company?

Speaker 4:
[11:51] Okay, I've got to tell you, this rotation out of health care is one of the most breathtaking rotations. We could be talking about a half dozen drug stocks and they would all be the same. I think that MRK is at 13 times earnings. I think MRK is terrific. I don't think that matters at all. I think this stock could drop another five. So you want to buy some and then leave, I like to say leave room. Hey, maybe divide by 10. It's an $11 stock. Maybe it goes to 10 and a half. All right, there you go. Now, if you want to buy some red hot stocks, I say go for it. I think that you can still make money as long as you stay diversified. But understand you're chasin and don't go puttin outrageous top on, all right? On Mad Money tonight, service now, reporting after the bell. I'm gonna run through the nerves of the top brass. Dan, have you seen the recent resurgence in the housing stocks? What is that all about? I'll take a look at DR Horton, the big daddy, and share where I come down on the stock. And I'm sitting down with the CEO of Vertiv to get a sense about where we stand on the AI infrastructure buildup. Divide that one by 10 and stay with Cramer.

Speaker 10:
[12:57] Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Cramer, hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com, or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com. When you're a kid, adults always warn you about this stage of life. Backache, skin changes, going to bed at 9 p.m. And we all think, that could never be me, until you have to catch your breath and sit out around to pick up basketball. But it's not you, it's your testosterone levels declining with age, inhibited by those dang SHBG proteins. Mars Man is on your team with a formula to support testosterone availability, using ingredients Tonganol, Shilajit, vitamin D, zinc, boron and no synthetic hormones. Combined with daily habits, Mars Man experience more consistent energy and improved focus and performance. That could be you with a 90-day money back guarantee. For a limited time, you can get 50% off for life, plus free shipping and three free gifts at mengotomars.com. That's mengotomars.com for 50% off and three free gifts when you check out. And it's also available on Amazon. And when they ask who sent you, don't forget to mention this podcast.

Speaker 1:
[14:18] Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24-7 professional answers and live help. And access support by phone, email and in-platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more at schwab.com/trading. Courage. I learned it from my adoptive mom.

Speaker 4:
[14:48] Hold my hand.

Speaker 1:
[14:49] You hold my hand. Learn about adopting a team from foster care at adoptuskids.org. You can't imagine the reward. Brought to you by Adopt US Kids, the US Department of Health and Human Services and the Ad Council.

Speaker 4:
[15:07] After the close, we got results from ServiceNow, the cloud software company that helped its customers automate all sorts of back office jobs, including IT jobs. Now, this stock's been crushed by AI displacement worries, falling from just under $240 at its peak last year, down to 103 as of today's close. And tonight, ServiceNow's getting slammed again after the company delivered a set of results and guidance updates that frankly just weren't good enough to get investors excited again, even as the company's adamant that business is usual. With most benchmarks better than expected. Now, earlier tonight, I had a chance to speak with Bill McDermott, the chairman and CEO of ServiceNow, about what's now becoming, I guess, a quizzical story.

Speaker 6:
[15:47] Take a look.

Speaker 4:
[15:50] Mr. McDermott, welcome back to Mad Money.

Speaker 6:
[15:53] Jim, it's great to be back with you. How you been?

Speaker 4:
[15:56] I have been fine, thank you. How about you?

Speaker 6:
[15:59] I've been great. Another beat and raise quarter, man. We're on fire here.

Speaker 4:
[16:02] Okay, so Bill, we got to figure this out. You bought a lot of stock. You bought stock personally, which was not easy because you had to cancel a program. You came in very aggressively. You are now beneath where you bought that stock. And my question is, what are people missing about ServiceNow that they used to know about ServiceNow?

Speaker 6:
[16:23] Yeah, that's a really good question, Jim. We're a 600 billion TAM company, so the total addressable market is massive. The RPO growth of the company, meaning the revenue and the obligations remaining with the company, are growing at 23.5%. It's amazing. And we're over 28 billion now in RPO. And our AI business, which is what it's really all about, I'm having to now put a new guide out there on the AI for this year. We're blowing past the billion. We're going to up it a billion and a half, and that probably won't be enough. The bottom line is this, Jim. The more AI that happens, whether it's a hyperscaler, these fantastic language model companies, or even the systems of record that are even getting the AI memo, everything runs through ServiceNow. So ServiceNow is the rules and the rails of every major corporation in the world. And so as AI takes off, it's a tailwind for ServiceNow. And the capital markets have been talking about terminal value in terms of not knowing where that exists for software as a service companies, which first of all is ridiculous for scale ones like us. But I think we're answering that question decisively. Our business is doing great, and it's all about AI, and we agree. And we're not scared. Right, but the language models are actually great for us.

Speaker 4:
[17:51] I don't want you, I don't want Bill McDermott scared. That would worry me myself. Now, I'm thinking maybe it's the problem is the operating margin guidance of 31.5 below the 32 percent and lower from the previous guidance. Could that be it? Could that be what people are looking at as saying that AI is good, but you know what? It does lower their margin performance.

Speaker 6:
[18:15] No, actually, Jim, it's good news because we closed Moveworks, Vesa and now Armis. So the half a point on headwind on the margin is only because we just took Armis into the company. It was actually supposed to be a point. The efficiency already took it to a half a point. And then the next three or four months, that'll be right back on track with the acceleration of our operating margins and our free cash flow. So you're talking about a company here, ServiceNow, that is going to be operating at the rule of 60 very soon between our revenue growth and our free cash flow margin. And what I think is most important for your viewers and great investors, because you attract the best, Jim, is that this is one of the few stories in the entire world where you could have a company talking about operating at the rule of 60. A growth like this, which is unbelievable, and a total AI leader, and one that all the other AIs have to run through, including the language models. All the great AI in the world, and it is great, it thinks, but workflow acts, and that's where we come in. So we are going to price our platform based on an expanding user base. But half of our revenues already is based on consumption of all of this AI innovation. And one of the new developments, Jim, that you should know is the language models are great, and the elastic pricing is also the way they price, and there's no safe zone for that. So all this Wall Street talk about seat-based is going away and so forth, we hope it does because there's so much more money to be made on the consumption or the value derived from AI.

Speaker 4:
[20:05] You absolutely pivoted correctly. I got an idea. I was thinking that when you talked about it, you said rule of 50. Is it possible that they're no longer considering the importance of rule of 50? You and I know how important it is. I've always had the gross margin and the growth, but I've come up with a great idea about how to analyze stocks. As my great idea come out of fashion, as my great idea says, you know what's going to lead you wrong? Because I felt in the last quarter, you did that and it moved the stock up and I was wrong. The stock moved down. I'm wondering whether the rule of 50, 60, 70, 80 has gone out of fashion, Bill, and we're looking at the other side of history.

Speaker 6:
[20:41] You know, Jim, there's some things that will never go out of fashion. And it's called revenue minus expense equals profit. And the more business that you do and the more money you make, the better it is for shareholders. You know, Warren Buffett used to say that in the short run, the market is like a voting machine. But in the long run, it's like a weighing machine. And we're totally ready to be weighed against any brand in the world. We take on all comers. And our company is only getting stronger and stronger. You know, an investor called me this morning and wished me luck on the earnings call today, which will happen soon. And he said, you know, the best place for the Trump accounts, for babies that are born in the United States, would be to invest in ServiceNow. And it's comments like that just make us so strong, so powerful and so full of life. And remember, every language model company, OpenAI, Anthropic, etc., Gemini, great Gemini announcement today, they're all going through ServiceNow. We are the ERP of IT for every digital transformation across the world. All these companies need to work with us. We like working with them too, because the customer is the benefactor. I had a great CIO in my board meeting yesterday and she said, you know, Bill, it's actually de minimis, the fraction that I pay to ServiceNow of my IT budget, and everything in my company goes through ServiceNow. And we actually analyzed if I could possibly replace it with a language model, a la Jim, taken on the terminal value issue. But it would actually be more than 10 times the price with actually no certainty, because everything there is based on the elasticity of tokens. I root for those companies. But I think if you want the rules, the rails, and the platform that's going to transform your company, you're going to need ServiceNow.

Speaker 4:
[22:35] Okay, now of course the Trump accounts have to be invested in the S&P 500. We can't pick individual stocks. Again, just to focus on what people might be missing. Are there people who will say, you know what, I'm used to really huge beats, different lines. I'm used to huge subscription revenue guides, huge beat in operating margin, huge beat in free cash flow. They're not giving me those huge beats that they used to. Is that because of AI.?

Speaker 6:
[23:01] No, actually, the AI is what is the tailwind behind our growth trajectory and the bright future that we have. And I believe strongly, when we took on MoveWorks, we merged it with our employee experience business. It did 5X the revenue that it ever did before, and it did it in the first quarter. That's very impressive. We just got Vezza. Now, you're talking about identity management, where we're managing human and non-human identity. These agents are not humans. They work really hard, 24 by 7, but somebody's got to manage them. But we hope so. And we give you the visibility, the rules, the regulations by which these agents have to run in a major corporation. And now Armis, Jim, this is big. Armis is in nine out of the 10 biggest companies in the world managing operating technology. I think IoT, networks, devices, shadow IT. So this is new revenue coming in to the stream for the shareholders.

Speaker 4:
[24:02] The opposition is great. At the same time, I just got a last question I got to ask. Seventy-five basis point headwind from delayed closings in the Middle East. How many have been closed since the end of the quarter?

Speaker 6:
[24:14] What are you talking about? Deals in the Middle East?

Speaker 4:
[24:15] Things that you said, yeah, caused the problem. I want to look since this was the quarter ended. I know you, you're a closer. Have we gotten closer to closing this?

Speaker 6:
[24:24] And everything is fine. The Middle East is opening up and talks again. We are actually back to doing business. People are out and they're going to the office buildings again. It'll be fine.

Speaker 4:
[24:35] All right.

Speaker 6:
[24:35] So the point on the Middle East was, you have to remember, you're dealing with sovereign clouds in the Middle East. So when they do business, it's recognized not rattlebly, but up front. So when there's a delay in the Middle East, it has an immediate impact. That was the talk of that.

Speaker 4:
[24:54] All right.

Speaker 6:
[24:54] Don't worry about the Middle East and our business there. We're just fine.

Speaker 4:
[24:56] All right. Well, look, we got it out. I want to see what happens. I will say, Bill, I do worry that things that we did trust for so long are no longer as relevant. But I'm going to be the judge. I'm going to let you be the judge because the stocks down more than 30 percent. I think they become relevant again when your stocks is cheap. Let's leave it at that. That's Bill McDermott. He's the chairman and CEO of ServiceNow, and OW., one of the greatest performers of all time. Thank you, Bill.

Speaker 6:
[25:26] Thank you so much, Jim.

Speaker 4:
[25:27] All right. Mad Money is back after the break.

Speaker 10:
[25:30] Coming up was DR. Horton's report, what the market has been waiting to hear from the home builders? Cramer slicing into the numbers to find out next.

Speaker 1:
[25:42] This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Courage. I learned it from my adoptive mom.

Speaker 11:
[26:14] Hold my hand. You hold my hand.

Speaker 1:
[26:17] Learn about adopting a team from foster care at adoptuskids.org. You can't imagine the reward. Brought to you by Adopt US Kids, the US Department of Health and Human Services and the Ad Council.

Speaker 11:
[26:26] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 3:
[26:32] Trailblazing women changing the game.

Speaker 5:
[26:35] One of my favorite pieces of advice, think about what your boss' boss needs. Leadership can look in many, many different forms.

Speaker 2:
[26:43] It really does come down to just trusting yourself.

Speaker 3:
[26:45] Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts.

Speaker 4:
[27:02] Let's talk about the recent resurgence in housing. After a long period where this whole industry was a black guy on the face of the stock market. Yesterday morning, we got results from GR. Horton. Now, that's the largest home builder in America by volume. And there was a lot of interesting stuff going on in the quarter. Now, on the surface, I get it, Horton reported a mixed set of numbers. But the stock still surged nearly 6% yesterday in response because there were some real positives underneath. And if we can get another rate cut from the incoming Fed chief, this entire industry could get a real boost. It almost always does when you get a rate cut. Remember, all the home building stock spent most of last spring and summer climbing, climbing higher in anticipation of rate cuts. But just as those rate cuts finally arrived in September, the group topped out and these stocks have been drifting lower ever since. Along the way, the home builders have occasionally tried to make a comeback. At the beginning of this year, for instance, they bounced on the expectation that we'd see lower rates. But then the war against Iran started. Oil price spiked and those future rate hikes started looking a lot less likely. In response, the home builders fell to the lowest levels since last spring. As for DR Horton, it plunged nearly 29% from its September high to its late March low. However, it also bottomed with the rest of the market when long-term interest rates peaked at the end of March, which is really the beginning of this amazing rally. In fact, from its lows going to the closed Monday night, this stock jumped from 131 to 153. Then we got the latest quarter on Tuesday morning, which sent the Horton stock up to 162. Wait a second, why did that happen? Like I said before, DR Horton actually delivered a real mixed bag of a quarter. First, the company missed its consensus estimates for deliveries by nearly 500 homes. That's a lot of homes to miss by. Consolidated revenue was slightly ahead of expectations. Even if it was down 2.3% year-over-year. But home building revenue came in at $7.06 billion. That was more than $100 billion below expectations and down 1.9% year-over-year. Their total revenue got a boost from stronger land sales and rental revenues, not from home sales. And while DR Horton's profit lines like pre-tax income and diluted earnings per share were better than expected, their pre-tax income still fell nearly 19%, with their pre-tax margin down 230 basis points, and their earnings per share shrinking by 13%. Definitely not a good quarter in absolute terms, even if parts of it were better than Wall Street expectations. So how about the guidance? DR Horton trimmed the high end of its deliveries forecast and reduced the high end of its revenue outlook by $500 million. But wait a second, that said, expectations were so low heading into the quarter yesterday that even this trimmed guidance was higher than Wall Street was anticipating. And there you go. Low expectations really do matter in earning season. High bar expectations are a steeplechase that can't be beaten if you post long root form numbers. Low bar and. Still, if you're wondering why these results tend to stock up 6% yesterday, I still don't blame you. I mean, the truth is very simple. Horton's forward looking metrics were encouraging. Whether you're talking in terms of units or dollars, Horton had much better than expected numbers across the board. Net sale orders, okay, future, were up 11% and expected expectations by nearly 1500 units. In dollar terms, it was up 10%, also much better than anticipated. Horton's backlog, future, grew by 19% year over year in unit terms, or 17% in dollar terms. That's 1900 more homes than expected. Wow, that's good. These are excellent numbers. Saying that management saw some real sales momentum in the period, despite the fact that, to the extent that there was any relief on interest rates in the quarter was short-lived. Those net sales and backlog numbers speak for themselves. But management really hammered home the fact that they're seeing much better demand on the Comfscore. It's quite an upbeat Comfscore. In the earnings release, there was still some boilerplate language talking about, quote, affordability, constraints, end quote, quote, quote, cautious consumer sentiment, end quote, but it was boilerplate. And the company also conceded that it expects elevated incentives to continue, bad, depending on demand and other conditions. But Horton also said that it executed with discipline. And by utilizing those sales incentives, the company still expects to hit its original guidance for the full fiscal year, no estimate cuts. But the conference call management was more positive than that. When asked directly about demand, they said it was good with normal seasonality as the company expected and hoped. They also pointed out that Horton's cancellation rate has remained steady, which is a positive, and even said that halfway through April, they were pleased with sales results at this point. Practically, that consistent kind of talk was all the bulls needed. The home builders had gotten rolling when long-term interest rates peaked in late March, and this better-than-expected commentary from Dr. Horton allowed investors to feel even more confident placing bets on the stock. This morning, by the way, we got fresh numbers from the Mortgage Bankers Association, which showed that mortgage applications for purchases increased 10.1 percent week over week last week. That's pretty good. Remember, we got a war on. It's the largest weekly gain since the week that ended on January 9. Now, all that said, this comeback in Dr. Horton and the rest of the homebuilders is only sustainable if rates keep coming down. The group is hostage to the bond market and, to a lesser extent, the Federal Reserve. A flare-up with Iran and a spike in interest rates could cause this move to fall apart rather quickly. On the other hand, if we do see President Trump's pick for Fed Chairman Kevin Warsh, confirmed in Tommy Manor, and he's able to sway enough Open Market Committee members toward the lower rates camp, and I think he can with those who don't like them saying they abstain, then this could just be the beginning of a fabulous next leg for Horton and the homebuilders. At the bottom line, the report yesterday morning from DR Horton, while far from perfect, had enough good news to keep us interested in the homebuilders here. The biggest surprise was the resiliency of demand in the quarter. We didn't get all that much relief on interest rates, but we still saw a surge of orders, and that bodes pretty well for Horton and its competitors in the future. Now, we just need some more cooperation from the bomb market. Without that, I can't justify getting too bullish. But for the time being, I gotta say, these numbers left me feeling pleasantly surprised and justified the move. Let's go to Rodney in Texas. Rodney.

Speaker 8:
[33:21] Hey, Jim, how are you today?

Speaker 4:
[33:24] Rodney, it's a good day. How are you doing?

Speaker 8:
[33:26] I'm doing great. I'm doing great. I just want to thank you. I've been a watcher of the show for several years now, and I just want to thank you for all the valuable insight that you've given to me and myself and many of the viewers out there. So thank you again so much.

Speaker 4:
[33:40] Well, thank you. It makes me feel like it was every bit worth it. I'm just trying to figure out what I can do again tomorrow for you. That's kind of the way I look at it. Give me the next one. How can I help you right now?

Speaker 9:
[33:49] Absolutely.

Speaker 8:
[33:50] Absolutely. So the stock that I have right now that I've been holding for some time is Airbnb. And the question that I have is with all the challenges that we're facing at a gas pump and other things going on, I wonder what the economy and what many people are going to be doing in the travel and leisure industry and the stock that I have is Airbnb. And I'm curious.

Speaker 4:
[34:09] Travel and leisure is being challenged, but I got to tell you, I read a Wells Fargo piece this morning that said we are finally at the inflection and the stock is about to turn up. I am going with Wells Fargo. I think it's at the right level. I think it is going to do incredibly well. And this is a buy. And I did say, and how to make money in any market. I made the point that Brian Chesky is real. The guy, the CEO, he is real. He has some ups and downs like the rest of us, but holy cow, I think it's going to be good. Now the report from DR. Horton had enough good news to keep us interested in the home butters here and maybe do some buying. The numbers left me feeling pleasantly surprised. I hope they do to you if you read through it. Much more Mad Money had to clean my swizzle in Ferdum. After joining the S&P 500 in March, could the company continue to power higher? It's almost 90% high this year. I've got the CEO. And today we got a quarter for the ages. I'll reveal what it was and why this story is so darn important. Of course, Order Calls Rapid Fire tonight's issue of The Lighting Round. So stay with Cramer. At this point, we got a great quarter again from Vertiv-Holies, which makes crucial power and cool equipment for the data center, of course. Yet the stock actually got a little ding a little. Look, I think that was purely because it came in too hot. Even after this pullback, the stock's up 88% year to date. I hope you have some of these kinds of stocks. Quarter was phenomenal. Vertiv delivered a 17-cent earnings beat off a dollar basis. That's up 83% year over year. Revenue came in higher than expected. Their operating margin expanded by a staggering 430 base points. Even better, management raised their full year sales and earnings forecast and now talking about 29% to 31% organic revenue growth this year. The problem is the stock had already made a monster move higher, but Vertiv keeps making smart acquisitions to expand its place in the data center. So can the stock keep climbing? Let's take a closer look with Gio Albertazzi, the CEO of Vertiv Holdings to find out. Mr. Albertazzi, welcome back to Mad Money.

Speaker 12:
[36:03] Well, thank you. Thank you very much.

Speaker 4:
[36:04] All right, so, Gio, another unbelievable quarter, kind of like when we saw you at GTC with NVIDIA. And I have to ask you, is there really anything that you can do if you're sold out to improve your earnings even more? Because it did seem like from your conference call that you are sold out for this year.

Speaker 12:
[36:24] Well, Jim, we of course continue to see a very positive and very strong year as you have seen. We took our guidance up. But there is still book and ship in our number for this year. So the year is not over. The year is not over. So continue to be optimistic about the market, the direction of travel, and certainly very optimistic about our position in the market. And I think the performance speaks for itself.

Speaker 4:
[36:58] All right. Well, when the stock is about 88 percent, I tend to think, okay, what can go wrong? Because it's been so great. Is there anyone who could come in, Gio, and just say, look, I know Verter's Guide, they can't get to you in a year. I can put together everything they can put together and give you a great price. Could that be happening?

Speaker 12:
[37:18] I think there are multiple dimensions to our competitive advantage. Certainly, technology is very, very much to the center of it all. But our ability to scale, our ability to think the entire data center, not one piece at a time, is certainly a leading service portfolio and ability to support our customers at the project stage and during the life cycle, and certainly very strong relationships in the industry, NVIDIA, but all the customers in general. This is very hard to replicate. Now, of course, the industry is interesting. People like the industry, but I think our position is very, very strong.

Speaker 4:
[38:03] I think we'd love to know also that you're not constrained by the typical four walls of what you do. This collaboration with Caterpillar and the solar turbines, it is in the cornerstone of the bring your own power and cooling. This is the kind of thing I've come to expect from Vertiv. Can you tell people what you're doing there? Because it's quite frankly amazing.

Speaker 12:
[38:23] No, the data center industry, the way data centers are being built is changing. There is a lot of bring your own power, so that data center can be grid interactive, can be power self-sufficient. And of course, this is not just about having turbines or other power generation system, it's about making sure that the entire data center infrastructure is well aligned and ready to support that type of load with that type of power generation. So the partnership you were mentioning with Cath and others, with Oclo and other partnerships that we have are exactly in the direction of enabling the industry to bring your own power and addressing the power challenges to another level to remove that constraint for the industry.

Speaker 4:
[39:15] All right, so let's say I call you, Joe, and I say, look, I have got 2000 caterpillar engines that I have bought, and I am right next to the Marcellus Shale, or right next to the Utica, or right next to the Permian. Could I come to you with all these engines, hook them into the actual natural gas, and say, Geo, I want you to cool my thing, I want you to do it, and I want to be off the grid. Could I make that deal with you?

Speaker 12:
[39:44] There are a lot of the grid data centers that are being designed and commissioning. So that's certainly something that is becoming mainstream in the industry, and we have a primary role in making that happen.

Speaker 4:
[39:59] Wow. Okay, so I know you're, US is strong. Europe's catching up, huh? Europe's starting to get with the program. Who's doing that? Is that our hyperscalers, or do they have enough activity over there that you've got good business?

Speaker 12:
[40:15] Well, definitely, the world is pretty global. The market is pretty global. So a lot of the actors in the space, be them hyperscalers or co-locators that operate here in North America, in the US., are also very active in Europe, in EMEA, and more broadly. But there is also quite a good, vital local market with local co-locators. So it's a mixed bag, but across the spectrum, we see a lot of vitality, a vitality that was not there in the past, especially earlier in 2025. We're pleased with the type of demand that we're seeing.

Speaker 4:
[41:01] One last question. This Vera Rubin is so powerful from Nvidia. I mean, everyone knows it's incredible. Are things sometimes so powerful that even you can't cool them and they run too hot?

Speaker 12:
[41:12] No. The beauty of the relationship we have with Nvidia is that we work together on long-term technology roadmaps so that when their technology comes available in the market, starts to be installed and commissioned, we have the technology, most of the time, already available and installed to take care of the power and the cooling that that infrastructure needs. We want to be ahead of the game.

Speaker 4:
[41:44] All right. That's excellent. Did need to know that. I want to thank you, Gio Albertazzi, he's the CEO of Bird of Holdings. Thank you, Gio. Good to see you.

Speaker 12:
[41:52] Thank you. Always a pleasure.

Speaker 4:
[41:53] Of course. Mad Money is back after the break.

Speaker 10:
[41:56] Coming up, you've got questions, Cramer's got the answers. Get charged up for a fast fire lightning round.

Speaker 4:
[42:03] Next. And then the Lighting Round is over. Are you ready? Skeet got to a Lightroom Christmas. I'm gonna start with Larry and you're next, Larry.

Speaker 7:
[42:29] Hey, Mr. Cramer. Hey, thank you for yourself and your team for all the wonderful advice you guys provide. Thank you. In two weeks, in two weeks, Rene Haas is gonna be releasing earnings for arm holdings. Buy, sell and hold. What's your...

Speaker 4:
[42:51] We put this on the buy, we put this on the buy a couple of days ago for the Chapel Trust. The stock is up to 21 today. I mean, this is the type of thing I'm talking about. You got to be in or what can I say? I think Rene is gonna do a great job. He's got a lot of business. It's a CPU company that was up 20, no, good, good, good, good. Good game. Let's go to Bill in Massachusetts, Bill!

Speaker 13:
[43:15] Jimbo, I'm a proud club member, having a great time. I finished my position in Alphabet at 275.

Speaker 8:
[43:23] It's up 60 dollars a share.

Speaker 13:
[43:25] Should I take a little off? I love it, I don't want to.

Speaker 4:
[43:28] Bill, just like I feel, unfortunately, the sellers are gonna win, I think Alphabet's going to 400. I think you win on both. You win on Alphabet and you win on the sellers. Last night was a fluke, but I enjoyed it. And that, ladies and gentlemen, the conclusion of the, I'm not kidding, Lightning Round.

Speaker 10:
[43:43] The Lightning Round is sponsored by Charles Schwab. Coming up, Cramer's ready to do the hula in celebration of the quarter one club holding just delivered. He's revealing who he's raising a glass to next.

Speaker 4:
[44:08] You usually don't see me dyeing a Hawaiian shirt at the end of the show, do you? So that is not a usual night out. That's because we had a one for the ages quarter from GE Vernova, the power plant portion of the old General Electric. Not that long ago, GE Vernova was the redhead stepchild of GE, the division that held up the long planned breakup because CEO Larry Kolb wanted it to have an investment grade credit rating first, and its balance sheet just couldn't cut it. And for today's incredible quarter, it's hard to believe this is the same business. Here's some irony, break out the champagne at least the my ties. GE Vernova's market cap just passed namesake GE itself, the aerospace company, 303 billion versus $289 billion. That's not the short of unbelievable. How did GE Vernova get to such exalted heights? How about by being the venerable unique player providing power to the data centers and the utilities that are all struggling to meet demand from the data centers? With these results, GE Vernova said the company already had more data center orders in the first quarter than it had in the entirety of 2025, and it's got a backlog so full that it's almost impossible to get a new turban. They pronounced it like that for the next two years. Given the sequential cost savings that they seem to find each quarter, I'm confident that you'll see much better and better margins ahead. When you see that GE Vernova has 100 gigawatts worth of gas power business, that's right, the equipment business, 100. You know what? That's enough to power 100 million homes. Then you can understand why I told viewers of our 1020 Investing Club video that this quarter was one for the agents. We rate stocks by the number for the club, with one meaning buy, two meaning hold, three meaning sell. We usually downgrade stocks after this kind of serious move. A 13.75% gain in a single session? But I said this morning that we can't take it from one to a two. It's just too darn good. CEO Scott Strachek has an unassuming air. I've tried to get him to go on about these incredible numbers, and why not? I mean, don the shirt, partner. I want him to be more effusive about the company's significant growth, not just in turbines, but also electrification. I thought he should talk more about how power was a dead-end business for years and years, a simple replacement of coal business with natural gas, and some maintenance. Not anymore. Now it's all greenfield development. About 80% of their customers are traditional utilities, 20% are data centers. You know what? That actually could start flipping as these big hyperscalers, they don't want to be accused of jacking up consumer electricity prices, so I think they'll try to build their own power plants with GE Vernova. By the way, GE Vernova is the only serious nuclear energy builder, and it's putting up the first new plant in ages in Ontario. So far, so good. It's also going to start building nuclear reactors for the Tennessee Valley Authority, although it straight away says nukes are a 2032 business. Remember, the rest of them that you're trying to buy, they tend to be science projects. Now GE Vernova has WindTube, which used to be the fastest growing business, but now it's a drag on earnings. It can't interfere with the greatness here though, and that's what you should be thinking about. How long can this last? I think it's just beginning. Don't forget the legendary Judson Wong from NVIDIA talks about the five-layer AI cake from bottoms up is energy, then chips, then infrastructure, models, and applications. When you think of power, you need to know that the plurality is made by GE Vernova's machinery. Yep, this GE Vernova quarter was indeed one for the ages. I like to say as always, it's Walmart in the summer. I promise to find it just for you, ready to make money. I'm Jim Cramer. See you tomorrow.

Speaker 3:
[47:29] All opinions expressed by Jim Cramer on this podcast solely Cramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Cramer on television, radio, internet or another medium. You should not treat any opinion expressed by Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com/madmoneydisclaimer.

Speaker 1:
[48:01] Courage, I learned it from my adoptive mom. Hold my hand.

Speaker 11:
[48:05] You hold my hand.

Speaker 1:
[48:08] Learn about adopting a team from foster care at adoptuskids.org. You can't imagine the reward. Brought to you by AdoptUSkids, the US. Department of Health and Human Services and the Ad Council.