Mad Money w/ Jim Cramer 8/25/26

Mad Money w/ Jim Cramer

Jim Cramer dives into the pivotal role of NVIDIA in the AI revolution, discussing its dominance across multiple sectors, investor concerns o

Key takeaways

• NVIDIA is central to the AI revolution, acting as both a technological backbone and a strategic investment hub.
• Critics argue that NVIDIA's investments may create circular deals that inflate sales numbers, but Cramer defends them as innovative and forward-thinking.

Main topics

• NVIDIA's dominance in AI technology
• Investment strategies and circular deals critique

Notable quotes

"If you're going to be part of the AI revolution, you've got to go with the best."

Conclusion

Cramer reaffirms his belief in NVIDIA as a cornerstone of the AI era,

Transcript preview

Speaker 6 (0:00) It's all about the money. I Speaker 1 (0:01) want to be the person in my family that creates generational wealth. Speaker 6 (0:04) How they earn it, spend it, and make dreams come true. I'm Speaker 1 (0:08) not going to sugarcoat it. It's hard, but it's so worth it. Speaker 6 (0:11) Millennial Money. All new Saturdays, 3 Eastern, CNBC. Speaker 4 (0:15) My mission is simple. To make you money. I'm here to level the playing field for all investors. There's always a bone working somewhere. And I promise to help you find it. Mad Money starts now. Speaker 4 (0:32) Welcome to Mad Money. Welcome to Kramerica. I'll be with my friends. I'm just trying to make a little bit of money here. My job is not just to entertain, but it's also to teach. Call me, 1-800-743-CNBC. Tweet me, at Jim Kramer. I wish some video weren't so darn important to this market. That way the company could just do a great job on reports tomorrow night and not be subject to insane, inane, absurd levels of scrutiny. Speaker 4 (1:01) In that case, tomorrow could be another ordinary day like today. Dow gained 160 points. It used to be advanced 0.32%. Now it's climbed 0.66%. But tomorrow won't be ordinary because NVIDIA has truly become anything but ordinary. It's all important, and it is the ultimate battleground. Speaker 4 (1:19) Why are the stakes so high? Simple. Never before has there been a company with so many tentacles in so many segments of the economy. InVita is so big that many money managers actually spent today positioning for tomorrow night's call. I don't like having to give you what, when I was a sports writer, amounts to a pre. That's a slang name for a story that sets the stage for the big game, usually the night before. But you need one. You deserve one. Especially long-time watchers. Especially you club members. who most likely owns some NVIDIA because for years my mantra has been own it, don't trade it. And I haven't changed my tune at all. If you believe, as many of us do, that AI represents a new industrial revolution. Speaker 4 (2:01) And NVIDIA is the room, the steam engine, and the computer all balled up into one. We often hear that other companies have something better or that NVIDIA makes Lamborghinis when we need a Ford F-150. I say if you're going to be part of the AI revolution, you've got to go with the best. Elon Musk has at times wished NVIDIA wasn't so expensive, but he's going all in on their chips with SpaceX, and he even wants to put them in orbit. I'm getting it right with Musk. Of course, archrival AMD's efforts can't be dismissed. Today, OpenAI announced its first custom interference chip named Jalapeno that it says serves the purposes better than NVIDIA's. They want to wean themselves off NVIDIA's crazy hardware. Be my guest. Maybe they can. Maybe they're big hat, no cattle. Google and Amazon have been making competing chips of their own. But they've also been doing plenty of business with NVIDIA and speak incredibly highly of the product. Think of it this way, though. If you leave the comfortable world of NVIDIA, you leave the platform that most engineers want to ride on, most young companies want to ride on. Their chips aren't expensive. Look, they're expensive, okay? They're expensive for a reason. And it's no coincidence that the companies I've mentioned are a huge part of the NVIDIA story, hence why it dominates all option trading night after night after night. It's just too big not to. All that said, we can't discuss NVIDIA's dominance without addressing the critics, because if the bears are right, the stock will tumble regardless of what reports tomorrow. Let me lay them out so you're ready. First and foremost, NVIDIA's made a huge number of multi-billion dollar investments in AI, from Anthropic to OpenAI to Marvell Tech and Coherent, and so many others, really, too numerous to mention. Many of these investments have already yielded large profits, at least on paper. But NVIDIA sells almost nothing that it's invested in. They're letting, let's say, the bets ride. I think these investments allow the companies involved to soar. NVIDIA gives them a chance to experiment, manufacture the wares better. Thanks to these moves, NVIDIA is the sun in what seems like an endless AI solar system. I think that's tremendous. Companies always want to dominate. Why shouldn't NVIDIA use its profits to help ensure that it remains on top? It's not like they're doing anything anti-competitive. NVIDIA invested $30 billion in OpenAI, and OpenAI is downright gleeful about inventing this new chip, Jalapeno, that can compete with NVIDIA's. Word to the wise for OpenAI. I grow jalapenos. Don't touch them and put your hands to your eyes. It's a nightmare. Now, these investments come in many forms. Convertible preferred stock like Marvell, straight out common like Coherent, cash and warrants like Corning, backstops and guarantees from many others. To me, NVIDIA is creative in picking these deals and creative in designing them. But not all agree. The critics say these are circular deals where NVIDIA gives someone money and then they spend that money on the NVIDIA product. I call them lazy Susan deals for that weird spin thing that was on my mom's dining room table. Just this morning, for example, the Wall Street Journal painstakingly laid out the case against NVIDIA, not that we haven't heard it before, suggesting that these investments pump up their sales numbers could lead to obligations that the company can't meet if the AI edifice comes crashing down. It's very dire. They mentioned Lucid, once upon a time a huge company, Telco, that did tons of circular deals during the dot-com era. Lucid was accused of massively counting for it. Then the Journal said, to be sure, NVIDIA isn't Lucid, to which I say, wait a second, if it isn't Lucid, why bring it up? Comparisons, as my mom has said, are odious. Another invidious permutation, the data center. You peer inside a data center, you see plenty of the video. But what if a data center growth is restricted by politicians? Who's seen the polling and don't want to antagonize their voters? The mob has spoken, and the mob hates the data centers. To me, this shouldn't be a mob. We need people talking to each other about what each community needs. Conversations between prospective data center builders and townspeople. That will end the controversy, but the controversy keeps building. And when it does, it drives the stock of NVIDIA down. That had been the trajectory for eight days. Today's small gain did little to bring the stock back to where it was. It seems there really isn't any end of tech that NVIDIA doesn't touch. Last week, we were in Boise, Idaho. We were talking with Sanjay Barotri, the CEO of Micron. Memory chip maker. They're trying to build a fab to produce D-grams, which are in very short supply. You've got workers toiling long hours, six days a week. From the top of the structure, it looks like there are just ants running all over the place. Thousands of them. This isn't one of these construction sites where a couple of people are standing around smoking and someone else is trying to get a forklift to work. This is broad, white, and incredibly important to NVIDIA. As a shortage of high bandwidth memory, that's the stuff that Bitcoin makes, costing them sales. Finally, it's geopolitical. NVIDIA was hoping to be able to sell chips into the massive Chinese market, which would perhaps forestall China's efforts to develop its own high-end GPS. Maybe it would, maybe it would. The U.S. government said, no, you've just lost. Now NVIDIA wants to develop the best open-weight inference chips, in part to keep the Chinese from beating us. You might say, hey, to who, to what? I mean, what does it mean to be beaten? I don't know. We don't want to be beaten. So tomorrow night, we'll see if NVIDIA can withstand the close scrutiny, the withering interstitial fire. Speaker 4 (7:01) An order amount in advance that takes the stock to 235. That's the all-time high set in May of the year. Or perhaps it'll just slink back into some dark place where no one wants to go. Or maybe, just maybe, it's a nothing burger with a positive spin. Possible? Nah, I don't think so. Here's the bottom line. There's no such thing as a nothing burger about the largest stock in the world. It's always going to be bold, challenging, inventive, and dazzling, befitting the greatest businessman of our time. Yes, business person. I'm sorry. Jensen Wong. Let's go to Charles in Maryland. Charles. How you doing, Jim? I am good, Charles. How are you? Yeah, my question is about Under Armour. I understand Speaker 7 (7:42) that Kevin Plank's planning on coming back or his comeback. That's going to do for the company or the shop. Speaker 4 (7:50) Yeah, you know, Under Armour is such a tough thing, and I'm a big fan of Kevin Plank, but frankly, they're not ready. Not with Nike struggling, not with On struggling, not with Hoka struggling. I don't see how Under Armour isn't struggling. So I'm going to say not yet, Satan. Let's go to Will and Colin. Will in Colorado. Hey, Will. Will's breaking up a tad. Speaker 7 (8:16) Oh, okay. I was talking about today. I'm down with that one. Speaker 5 (8:21) What Speaker 7 (8:21) do you think about BJ's wholesale, Jim? You Speaker 4 (8:24) know, look, BJ's Speaker 7 (8:26) is Speaker 4 (8:26) real good. I'm Speaker 5 (8:27) a Speaker 4 (8:27) Costco guy. I mean, sometimes what you have to do is you have to say, okay, listen, I am a certain person. I mean, I'm a dollar store, dollar tree. I like dollar stores, okay? But I really only like dollar tree. I don't like dollar general. When it comes to clubs, I like Costco. I don't like BJ's. It's just a... It's a preference. It's a preference. And I prefer Dollar Tree. I prefer Costco. Look, there's no such thing as a nothing burger when it comes to NVIDIA. And the greatest business person of all time, Jensen Wong. Tomorrow, we're going to see how much Wall Street really cares about this really amazingly important stock. On Mail Money tonight, Dick's Sporting Goods. Speaker 4 (9:08) Just saw its worst one-day decline ever after a dismal quarter. So what's next for the retailer? Hey, don't miss my analysis, and I'm an open-minded fella. Then oil prices dipped today on news about the Middle East. But do they have further to fall? I'm going to let the charts find out. And Intuit is on the move after reporting earnings. But what direction? I'll talk to the CEO. Stick with Kramer. Speaker 6 (9:33) 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. Miss something? Head to madmoney.cnbc.com. Speaker 6 (9:55) It's all about the money. I Speaker 1 (9:57) want to be the person in my family that creates generational wealth. Speaker 6 (10:00) How they earn it, spend it, and make dreams come true. I'm Speaker 1 (10:03) not going to sugarcoat it. It's hard, but it's so worth it. Speaker 6 (10:06) Millennial Money. All new Saturdays, 3 Eastern. CNBC. Speaker 4 (10:15) All right. What the heck is going on with the stock of Dick's Sporting Goods? I mean, this retailer reported a disappointing set of numbers this morning. Saw the stock punch $55, 31 % for its worst day ever. Can you imagine if you owned it? I know, and it's consolidation. I want to console the people who did because it's a pretty good company. It used to be a solid growth stock, but it spent the last couple of years doing nothing of note, thanks to the flagging sportswear market and then management's controversial acquisition of Foot Lock. Foot Lock, remember that one? Closed almost a year ago. Foot Locker was a dog. Still, the stock was trading water until late June, when it started falling from $244 all the way down to $179 as of last month's close. It kind of looked attractive to me, but during that decline, I kept wondering, what the heck is going wrong here? The previous quarter was pretty solid. There didn't seem to be any company-specific news dragging it down. Today, we realize those sellers were pressured, and now we need to figure out if TIX is a broken stock or a broken company. I want to start with the numbers, which were suboptimal from top to bottom. Now, Dick's put up 2.1 % same-store sales growth. Wall Street was looking for 4%. That's disappointing. Revenue came in a little late. Gross margin and operating margin were both down dramatically. The earnings per share came in at $3.53, down nearly 20 % year-over-year, and representing a 23-cent miss for Zexpectations. That's nasty. When the core Dick's sporting goods brand isn't doing great, The real pain coming from the Foot Locker acquisition. Foot Locker's