Mad Money w/ Jim Cramer 10/1/26

Mad Money w/ Jim Cramer

Jim Cramer reviews the third quarter market performance, highlighting a significant recovery in software and AI-driven infrastructure stocks

Key takeaways

• Moderna saw a 175% surge driven by breakthroughs in melanoma vaccine development.
• The rise of AI agents is significantly increasing web traffic, benefiting CDNs like Cloudflare and Akamai.
• Micron's recent earnings beat was fueled by massive demand for high-bandwidth memory (HBM) chips in data centers.
• Nuclear energy IPOs such as Fermi have experienced catastrophic declines following management instability and execution failures.
• High interest rates are creating significant pressure on consumer staples like Home Depot and McDonald's.

Main topics

• AI-driven web traffic
• Semiconductor market trends
• Nuclear energy volatility

Notable quotes

There's always a bull market somewhere.

Conclusion

While speculative energy plays are currently high-risk, the long-term

Transcript preview

Speaker 7 (0:00) AI is here, transforming how we work, live, and lead. And the women I talk to aren't waiting for the future, they're shaping it. I'm Julia Boorstin, Senior Media and Tech Correspondent at CNBC. This is CNBC Changemakers, where I talk with the female leaders transforming business as AI reshapes the world. Follow and listen to CNBC Changemakers, Women Leading in the Age of AI, wherever you get your podcasts. Speaker 5 (0:29) 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. Speaker 5 (0:47) Welcome to Mad Money. Welcome to Kramerica. I'll do it, my friends. I'm just trying to make a little money. My job is not just to entertain you, but to educate you, do some teaching. Call me, 1-800-743-CBC. Tweet me, at Jim Kramer. When a quarter runs to its conclusion, you have to look at what went right and what went wrong. We talk a lot about bonds here. We talk a lot about oil. We know interest rates are flying and the Fed's tightening again. Always a tough situation for stocks. And a third aircraft carrier with 10,000 troops is reportedly on the way to the Gulf. Disconcerting. But on the first day of a brand new quarter, October 1, you need a compass. You know what provides you the best compass? What can navigate you the best? Last quarter, luckily, today was a sedate session with the Dow advancing 21 points as it'd be climbing 0.19%. And that's like edging up 0.04%. Though I thought it was going to bust out until we heard about that aircraft carrier going to the Gulf, which stalled a nascent and much-needed bond market rally. We all use our S &P 500 as our benchmark in this business. Now, the index finished up 2.03 % for the third quarter. Not bad, not great. But if you own Moderna, you got rich as it finished up 175 percent, except there was a one off gain because Moderna, after years of toiling in the oncological wilderness, came up with a big one, a melanoma vaccine, along with his partner Merck. The medical community is trying to figure out exactly how big this could be. Doctors are hoping this vaccine will virtually eliminate a recurrence of melanoma. And that's why the stock soared. It's come back a bit because of talk that there might not be a follow through to other cancers. I get that. But the fact that Moderna formerly viewed as a one trick covid pony now is something that could be huge in cancer. I think it verifies the excitement and the move. Next up is one I had to look up called Everpure up 66 percent. Turns out Everpure is pure storage and data storage company, except for this quarter, it's become a hyperscaler play. Speaker 5 (2:50) Medichow's ever pure to handle some of its storage. Others may choose it, too. The stock's had a miraculous run. I wouldn't be surprised if it's got more upside. Some stocks are bounce-back stocks. Remember that saspocalypse thing, that theory where all enterprise software would be destroyed by AI? Viva, a company that makes software for life sciences, have been put through the AI displacement meat grinder. Speaker 5 (3:13) When the displacement didn't happen, those betting against it blew up and the whole group came running back. And that's how Viva finished up 61 percent. At just over 30 times earnings and almost 135 points from the bottom in April, I've just got to say, uh-uh, I'm not going to be in this one. I'd rather be in the bounce back that is Salesforce, a competitor that has a lot further to go. Finally, there's Palantir, also up 60%. I believe in these guys. They're among the fastest growers with great gross margins and smart, tough leadership. I've been using a $250 price target. I've been too aggressive so far. The stock got as high as $207, and then it got wild. It is now back to $190, where I would still buy Palantir. Okay, now, how about the worst performers, the ones that really... did not help. How about that? Versus Fair Isaac, the keeper of the FICO scores, down 50%. Looked like a split to me. Bill Pulte, the head of the Federal Housing Finance Agency, jack of all trades kind of, believes FICO to be too powerful and too expensive. He's been trying to get more competition to make it cheaper to get a loan. I'm in favor of that, but the banks I surveyed, they actually like FICO. They think it works. It's worked for years. They trust it. Fair Isaac's been a winner for so long, but now has a powerful opponent in the government who wants to go away. Next, app love and wants to favor the momentum crowd for its ability to connect advertisers with the right audiences had the feel of in-app advertising all to itself until Android came in and wrecked the story, leading the stock to fall 44%. Now, it's still a $94 billion company. That's just way too much market cap for me. Hey, then there's a great one, Corning. It fell almost 40 percent. Now, this one's misleading because it spiked from eighty eight dollars at the beginning of the year to two hundred fifty five dollars at the end of the previous quarter. So Corning stripped down to one hundred fifty four. Last quarter was pure profiting. We had a big moment this one for the Chappell Trust because we visited Corning factory where they make the glass for Apple. Howard's Berk, Kentucky. From that trip, I became certain that fiber is the future of the data center, not copper. So I'd happily buy this one back if it ever dips again, which it doesn't seem to want to. All right, what about the Nasdaq 100, which finished up 2.47 percent? The gains here don't offer much insight, sadly. Bitcoin finally rallied and took that. And that took strategy. Remember, you used to be micro strategy. A lever Bitcoin repository up 76 percent. Now, look, if you like Bitcoin, I got an idea. Buy Bitcoin. I already covered Palantir. Workday rallied 56 percent. Cloud software cohort came roaring back and we got some takeover chatter. We know that cybersecurity is incredibly important. We own CrowdStrike for the Chapel Trust. I'm feeling real good about it because it rallied 39 percent. Losers. All right. There's that app Lovin' again, down 44 percent. But here's another one. One that I buy. KLA Corp. Semiconductor Capital Equipment Maker. We have a widespread chip shortage that can't be solved without KLA. Hence what we sold today with Micron. Crazy that stocks down 35%. Then there's Rocket Lab off 31%. Some delays, some dilution, lower margins can even bring down rocket stocks. You want rockets? SpaceX. In the end, I think the best lessons from the third quarter came from the 30 stocks in the Dow Jones Industrial Average, which finished down 2.7%. Speaker 5 (6:24) The winner was Salesforce, up 46.5%. This is another saspocalypse survivor. Still one more stock that was leaned on by that situational awareness outfit, giving Salesforce a chance to buy back a lot of stock much lower. And it reported a great quarter, along with a big partnership with Anthropic. We're sticking with it for the Travel Trust. Microsoft's rally is just beginning. The stock jumped 37.5 % in the quarter as the market fell in love with enterprise software again. I think Microsoft has a lot more room to run because it's only up about 6 % for the year with Copilot, their AI product on fire, and some genuine acceleration to their Azure web services business, as well as a hint of profitability from its data center build out. I really like this one. Speaker 5 (7:07) Chevron, the Iranian war raised prices. Venezuela beckoned. I still think it's number one stock because I feel like the fossil fuel gang. And there's Amgen, catch-up trade, plus 16%. You know what? I like J &J, which just got absolutely blasted today. I'd buy that one. Dow's losers, worst for last. Caterpillar stock, that one's like Corning. It had a monster run. Then it got hit with 24 % profit, taking it in the third quarter, just like Corning. Given that its engines have become a very good source of data center power, This might be a buying opportunity, even though the stocks run huge. IBM missed its quarter and fell 22 percent. You know my rules. You miss a quarter, you got to wait a quarter. I like IBM, but rules are rules. Then there's two that are such name brand companies, I just can't bring myself to throw them away. Home Depot down 19 percent, a bad pick for my travel trust. And McDonald's off 15 percent. Now, Home Depot is hostage to interest rates, which have one of the most vicious increases in a quarter that I can ever recall. No relief to the despot until rates go down. McDonald's, they can't seem to get out of their own Speaker 3 (8:03) way. But history says Speaker 5 (8:04) that when it gets this cheap on a price earnings basis, well, why don't you stay tuned? Here's Speaker 3 (8:08) the Speaker 5 (8:08) bottom line. Ultimately, I think we'll remember the third quarter as the moment when software bounced back and some amazing data center plays to come to profit taking. But my big fear right now is the impact of higher interest rates on the stock market. We'll see how that plays out when earnings season comes around in a couple of weeks. Right now, it's not looking like a positive. Why don't we go to Mikey Michigan? Mike McBike. Speaker 2 (8:32) Hello, Mr. Kramer. Thank you so much for taking my call. I greatly appreciate it. I've been listening to you for 20 plus years. Oh, Speaker 5 (8:39) thank you, Mike. That's good, man. You stick with us. You're cadre. What's Speaker 2 (8:42) up? All right. I appreciate it. You actually motivate me to get my bachelor's degree in finance because I read your books and it intrigued me. Within finance. Speaker 2 (8:54) I was wondering if we should pull the trigger on Morgan Stanley with the buyback authorization. The Speaker 5 (9:02) answer Speaker 2 (9:02) is yes. Speaker 5 (9:03) I mean, I think, well, Ted Pick's company's been brought down along with the rest of them, and his is doing better. I think you want to buy the stock of Ted Pick. You want to buy the stock of Morgan Stanley. I want to go to Tim in Speaker 4 (9:14) Maryland. Tim! Speaker 4 (9:17) Booyah, Jim. I'm Speaker 5 (9:19) talking Speaker 4 (9:19) about NEE. NEE, Next Era Energy. Is it electric or what? Speaker 5 (9:25) It's electric, but no, I don't want to own that stock. As a matter of fact, I've been right to avoid that stock, and so I'm going to double down and say I really want to avoid it. Let's go to Robert in Ohio. Robert! Speaker 4 (9:36) Hello, Jim. Hello, Robert. What's Speaker 5 (9:39) up? Speaker 4 (9:40) The stock I was wondering about is Medtronic, DLC, MDT. Okay, now, Speaker 5 (9:47) I am so glad you brought this stock up. I'm going to tell you what, this is why my job's hard. Medtronic had a great quarter. Jeff Martha's doing a fantastic job. I thought they put everything together. They're even getting rid of the commodity stuff. And what happens? Stock goes up and then goes back down. That's why this market is so daunting. I like Medtronic, but I got to tell you, at 14 times earnings, I don't know what supports it. I buy a little and then wait a little more until it goes down. Darn, it should be higher, but I can't make it go higher. In the third quarter, software finally bounced back. I'm curious to see what happens this quarter when we see... what companies are saying about higher rates. On MailBuddy tonight, can McDonald's finally deliver the turnaround it desperately needs? I'm going to take a closer look at the stock. Then as the AI trade shifts, we've seen a quiet rally in one key area of the market. Don't miss my deep dive on the stocks that keep the internet going. And when Fermi came public, I said this nuclear power plant was kind of more of like a business plan than a business. One year later, I'm checking to see how the business plan's turning out. So stay with... Speaker 6 (10:53) Kramer! Speaker 6 (11:01) Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC.