Mad Money w/ Jim Cramer 1/21/26

Hey, I'm Kramer. Welcome to Matt 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 to educate, teach you. Call me 1-800-743-CBC. Tweet me at Jim Kramer. I'm gonna say it, even though it sounds ridiculous. This stock market rallied today because we didn't attack Greenland.

We didn't send the 101st airborne into Copenhagen. President Trump said there ain't gonna be no war no more, and even promised not to hit our allies. with tariffs because he quote formed the framework of a future deal, end quote, with the Secretary General of NATO. He's optimistic it will happen and will no doubt, I think, be the best deal ever, even exceeding the Louisiana Purchase. Y you really can't make this stuff up, can ya? Y yet it's the truth.

As I was waiting to get on TV this morning for Squawk in the Street, the stock futures were weaker. Step by step, inch by inch, they were growing down. Then President Trump spoke, sounded like a man of peace, and then the stocks roared. As I happened, I I turned to my colleague David Faber and I said, Greenland invasion ruled out. Here comes the futures. And that's exactly what happened.

It's insane, people. It really is. But the market orderly finished up today, Dow rocking five hundred and eighty nine points, S B closing up one point one six percent, NASA finishing up one point one eight percent. As war was tabled and then a framework for Greenland occupation seems to be in the offering. How the heck did we get to this crazy point?

At first, uh I like to play with an open hand. Let me just say I hate talking politics. It's not in my area of interest or expertise. It's way too polarizing. For most of my professional career queer politics didn't really matter. Uh regulators can matter, budget deficit could matter, government shutdowns can matter. Most of the time, though, the president doesn't have much impact on the stock market, at least not on a day-to-day basis.

The last president rarely got involved in the markets except when one of Biden's aides drew up a list of our friends to determine which companies could get Nvidia's latest chips. His regulators tried to block virtually every merger too. But the White House itself wasn't regularly moving in the market. I you know, the White House, see this? They were oblivious to this place, believe me.

Even in President Trump's first term, he didn't directly try to move the averages, except when the economy froze up during COVID. This time though, Trump too is so different as crazy. From trade policy to tax policy to capital return policy or military policy, ramifications to the stock market are more important than anything other than the direction of interest rates, both the long rate set by the bond market and the short rates set by the Fed. And remember, Trump wants to set those two.

There are huge stock market reverberations to almost everything this president does, and I think he knows it. I remember when he called the bottom after Liberation Day Fracas literally by posting on True Social that it was time to buy stocks. A great time to buy. I David Faber and I were on the desk trying to figure out dispassionately what could happen. Well it turned out the president was right. It was an amazing bioprint. Which brings us to the Greenland Imbrogli.

The president's been stewing over this Greenland issue for a while. We have a lot of history with Greenland. There's a huge Air U S Air Force base built during the Cold War. It's very important to our nation's defense. Some might argue that we should have s sovereignty over such a critical base, but Denmark's a member of NATO and we run NATO until very recently it might as well have been on US soil.

But this president doesn't respect Denmark or NATO for that matter. He seems angry at the whole Scandinavia because he lost out on the Nobel Peace Prize. Look out, Oslo! Enough of the history. Uh yesterday we were concerned that Trump might decide to take Greenland by force.

Uh the notion that we would actually go to war with our allies over Green Greenland, of course, was totally absurd. But because this president is willing to use pretty much anything in the US arsenal to get his way from tariffs to uh bombings and kidnapping world leaders, sellers took control of yesterday's session. They were scared. Normally, you expect interest rates to go down as people seek the safety of treasuries. Not this time. NATO members own about$3 trillion worth of U.S. bonds.

Why they would hold them if they're worried about the United States uh declaring war on them, uh no, not gonna happen. So sellers swarmed in, dumped treasuries ahead of the pending US Denmark War. When rate shot up we saw Frantic move out of high price to earn his multiple tech stocks.

As well as anything related to housing. That was the s that was really yesterday's market. The latter is brutal, by the way, because there had been hope that the president was going to authorize buying mortgage back bonds to bring down rates. Yesterday look like that that lay a garner.

So even though D.R. Horton, the largest home boater, reported pretty good quarters, stock got crushed. That was on Greenland. Today though, we got to take the Greenland warriors off the table, not just the possible invasion, but also the threat of tariffs, and Horton then screamed higher. So did Home Depot, which jumped$9.53 or 2.5%. That was the Greenland Peace dividend.

Of course, not everything went right from the stock market's perspective. The presidents also decided to prohibit corporate home buying. Something he thinks is needed to get housing prices down. He signed an executive order banning it. Of of course I don't think he has the authority to do that, but like with the tariffs, neither Congress nor the court seems willing to push back or even care.

And he reiterated the ten percent capital and uh credit card interest rates, something that I believe would be an economic disaster because the credit card industry would just stop letting. JP Morgan's uh Jamie Diamond told us that. Still one more area where the congressional action is needed, but you go tell Trump that. I'm not going there.

In this world of presidential intervention, you need to know two things. One, the president is the best bully pulpit in the world, and two, he can go to war, but the world only ends. Tonight we have Joe Walk on the CFO of Johnson Johnson Giant Pharmaceutical Company. The president ran, among other things, on lower drug prices and then he got them. He also ran on reshoring, got that too. Then it ended and these drug stocks have had a sensational

Well, let's say run after the peace dividend. Joe Walk explained that to him. Is the president's bark worse than his bite? He certainly does a heck of a lot of barking. You can't help that. But you have to try to figure out whether the worst case will really come true. This time the worst case was an invasion of Green Greenland.

You have to ask yourself if the president's threats are too outlandish to really happen. In this case, the bond market rebelled, and because the president doesn't want to wreck the economy, he changes his mind. He's given you so many buying opportunities in this game of international domestic chickens since he took over that all you gotta do is just gotta wait for the hot ones and then do some buying.

But what right really matters here is that you never know when the president and his team are going to strike or what sector will be hammered. Only fossil fuels and the derivatives seem to get the president's unmitigated backing, unless of course they're unwilling to bid pitch in on that Venezuelan reboot. So here's the bottom line. My goal on this show is not to judge. It's to profit.

Unlike the first Trump administration, Trump too is far more comfortable taking the market down, not up. Just be ready. You should get plenty of good buying opportunities over the next three years. Heaven knows he sure seems to love to provide them.

What if we go to Sargon in Hawaii? Sargon. Hey Jim, how are you doing? Nice talking to you. Oh same Sargon. What's happening? I have a question about Barry Gold. Um, so it's two questions. Do you think it's gonna go fifty five dollars or above? And what's your price prediction for that?

Okay, I like the new management of bar of uh gold now it's called gold dot com, but I really prefer you to be an Agniko eagle. I am a gold bug. I do not trade gold, I own gold. If gold is down I buy, if gold is up I don't. Gnico Eagle had a big tournament today that was down. I think it'll be down again tomorrow, and I'm a buyer. I am a gold buck. Vince in Florida Vince. And any Jim, give me your opinion on uh Jet Blue. Should I hold it or sell it?

I'll tell you I had a pretty good trip the other day in Jet Blue and I've come back from San Francisco. The people are really nice. I want to thank them for being so great. Uh do I want to own the stock? I think United Airlines is amazing. Uh this guy Scott Kirby, uh I w I'm like he's like so smart. I mean I gotta tell you that guy is dyno might. But you can't fly there just'cause the stock's up, but you can't buy the stock. Whoa. Fimpk. How about Gabe in California, please? Gabe.

Hello Jim. Thank you for taking my call. My pleasure. You have uh so I have this stock. You've been uh positive on it for quite some time. With the recent turmoil, what are your thoughts on DraftKings? Okay, uh you know it it is incredible. I sw I saw a downgrade of Flutter today. DraftKings I'm waiting look, it's gotta have these other states. It's gotta have Texas, California, and Florida. It just has to. At this point

Stock's not gonna go anywhere. I thought they would have uh they'd be all on the ballot. Uh I don't know. Um it hasn't happened, and that's been disappointing to me. But it always calls. Unlike the last time around.

You gotta get used to that. I'm trying. Man, let me tell you, as I mentioned, Johnson Johnson's earnings were buoyed by positive news out of its cancer fighting division, along with an upbeat forecast. Sitting down with the CEO of the pharma giant and hear about the company's path forward, do I like that stock? Then as goes open AI. So goes the data center build out. I'm thinking you look at potential risk to the market if things go sideways for the AI.

Yeah. I'm explaining what I'm talking about. Can be Bull killer! Don't miss a second. Jim Kramer A question? Tweet Kramer. Dag, mad. The mad money at CN. Call at 1-800-743-CNBC. All right, what do we make of these earnings from Johnson and Johnson? This morning the Pharma Titan reported a healthy revenue beat and a very modest earnings beat with a strong full-year forecast, which would I care about.

However, the stock was unchanged. Now it was down much more than that intraday in response to the print. In part because it was up more than forty percent last year and had it run up another five percent year to date going in the quarter. One of the best farmers there is. So could this be a buying opportunity? Or today I had a chance to speak with Joe Walk, he's the chief financial serve Johnson Johnson. Why don't you take a look?

Well first, thank you for being here on what I think is really a marvelous day for J and J. It absolutely is, Jim. Thanks for having me. It's an honor to represent Johnson and Johnson coming off a year like 2025 and what really the outlook is for 26 and beyond.

It does seem like twenty twenty six unbelievably after twenty five. It you're setting up it's going to be a better year even than last year. Absolutely. You know, Jim, when we were s if we would have sat here last year for twenty twenty five

Investors had a lot of questions. People in the media had a lot of questions, right? How are they going to handle the Stellar loss of exclusivity? What's the med tech performance going to be like? Will these new products and pipelines that they talked about emerge? Well a number of cards turned over and

Not only did we get face cards, I think we have some ACEs in there. You look at pharmaceuticals. Now$60 billion in revenue. It grew 8% in the quarter, 5% for the year. That's after absorbing$4.4 billion of Stellaris lost sales. Without that impact

The base products, the products that we're going to count on for twenty six and beyond, growing around fifteen percent. Medtech, thirty-four billion dollars. What I loved about their cadence is improving growth each quarter throughout the year. And it's not just about yesterday or tomorrow.

We have uh fifteen, I'm sorry, eleven new product filings in phase three in the pharmaceutical unit, sixty clinical trials that are active for new products in MedTech. Uh highlighted by our Dean Novo submission to the FDI on ro robotic surgery. What I think is really impressive is is that you're giving us actual

Actual numbers. I mean a lot of guys are talking about look, and I think this third maybe phase three, this, maybe phase that, which makes me feel that I can get confident about 2030 numbers. No one else has that. Even Lily, I don't feel confident. Yeah, no. W I mean we're highly focused. Joaquin's done a great job with the management team. We're strong in three areas in pharmaceuticals, oncology, immunology, neuroscience, and then in med tech.

with the separation of orthopedics somewhere in mid twenty seven. Uh we'll have vision care. We'll have surgery. And we'll also have cardiovascular, our highest growing platform. We've been the market leader in contact lenses, really propelled by our AccuView, one day, Oasis Max, extreme comfort, less fatigue for users, but it it handles presbyopia and astigmatism all in the same lens. But the real story there, Jim, is just the outstanding performance we've had with some new product launches.

in our vision surgery space. So cataract is the number one surgical procedure worldwide. In the US it's about three to four million procedures a year. Uh uh uh across the globe, about 25 million procedures a year. By the time we reach 80, about fifty percent of us will have a cataract, which is really the breaking down of proteins, clumping together, causing cloudy vision. We have uh two pruh platforms, Technous Odyssey, Technis Pure C. If you want to remove spectacles altogether.

go with Technus Odyssey. If you w if you drive at night and you have glares and halos, you wanna go with Techni Technis Pure C. But these have grown close to ten percent in twenty twenty five. Now I was back in San Francisco I was struck by how many acquisitions seem to be done just because people companies feel like they have to make an acquisition. That is not J and J Way.

Two acquisitions in MedTech are extraordinary in terms of taking a franchise and just leapfrogging over everybody else. Speak to those. Yeah, so Jim, we've done uh about fifty-four billion dollars in capital deployment for acquisitions over the last three plus years. Abumet and Shockwave were instrumental to really revitalizing our cardiovascular portfolio, building on our

Strength in electrophysiology. We did another acquisition known as capillita or um intercellular therapeutics, which has a great acid in capillita on the pharmacide. Those three acquisitions took about uh forty five billion of the fifty four billion at'cause people are fascinated by this. They're seeing the advertisements. Absolutely. This is really something that is changing.

the world when it comes to depression, which almost everybody has failed. Nothing new in fifty years, Joe. Yeah, well Jim, it builds on our seventy year history of working in neuroscience. You were one of the first vocal uh proponents of a a drug called spravata, which has now helped 200,000 patients worldwide who suffer from treatment resistant depression. This is our next step in the evolution of neuroscience uh presence.

Uh capillita is a drug that uh modulates the pathways around serotonin, dopamine, and glutamate. It's uh amazing in that it's indicated for bipolar one and two, schizophrenia, and now recently adjunctive therapy for medical uh major depressive disorder. This is a easy to start. easy to use drug. And the way I say that is because It has very limited side effects versus placebo. No weight loss, no impact on lipids, glucose, no reduced sexual function. It is a great drug. It's great for patients.

It's also gonna be great for our business. We project that's gonna be about five billion dollars in the coming years. Extraordinary. Extraordinary'cause it's everyone's failed. Everyone. Now let's talk about uh what's happened with the government. There were a lot of people who felt that when brought in this most favored nation

uh strategy that the president had that it would really hurt the profits, it hurt it hurt the margins. uh and at the same time that the big rebuild that he wanted, the on shorey so to speak, wouldn't would hurt the out years. It looks like that if anything, I can put this in the past And in a positive way. Yeah, I think that's right, Jim. I mean we had great engagement. Joaquin and the team have really uh been engaged with the administration even before the inauguration last year.

And it's to us it's emblematic of how critical they view life sciences as the w U S being the preeminent country in the world. It's good for economic growth, it's also good for national security. Two different things though. The the the investments that we're making, the fifty five billion dollar marker that we put in US investment over the next four years, starting last year, um, was really based on solid tax policy that began in

Trump's first term with twenty seventeen TCJA. It was then reinforced with last year's passage with the OBBA. Um that really is the premise for for where we want to place our investment. In terms of the the MFN deal as you you've called it. Uh we've struck a deal. I it it actually makes me prouder about the guidance that we were able to put out because it beat analyst expectations and they had no idea what the impact from that was. So

The um American citizens should be applauding the Trump administration. It is worth billions of dollars in reducing drug costs. We'd like to now turn our attention to the intermediaries who really don't put any capital at risk, who keep discounts away from patients. Fifty to sixty percent of every drug dollar from the manufacturers goes to discounts and rebates. Why are patients still paying more?

Uh we know that there are in there are but without bringing them up, there are some people who regard it as being attacks on the system. We'll take care of them at another time. I do want to point out that uh there was a time when I'd listened to your call and the the conversation should be tow tow too. Yeah. I found it very limited this time and I do want to point out that when you change your strategy, decide to go after the plaintiff.

is really when you saw the stock go from one fifty to to two hundred and twenty. Are you sticking by that strategy of going and defending every single case where J and J is being uh I I'd say he Absolutely, Jim. Last night there was a uh uh uh on a recommendation from a special master to a judge

with respect to the Dalbert hearings. Uh they upheld most of our experts in their opinions. They dismissed a lot of the expert opinions of the plaintiff's attorneys, but they really didn't uh uphold their gatekeeping duties that's required by Rule 702 in the Federal Rules of Evidence. Um That doesn't matter. Because the story about J and J and what ninety nine point nine nine percent of people at our offices are working on is finding those next cures for cancer immunology.

important devices and and medical technology that really make a difference for patients. We will continue to fight these meritless claims. We will continue to aggressively highlight and expose the tactics of plaintiffs' attorneys. the third party litigation financing, which quite frankly is is nothing more than a a shakedown and it undermines American businesses. Uh I wanna end on an extremely positive note. When I think about what you're doing with cancer, I don't see the

Well, we're going to keep people alive for two years and hope that something happens. I'm seeing cures from you. I'm seeing uh diseases that were uh fatal that are now maintenance. Uh these are big diseases too. Yeah, and Jim we had some outstanding data come out in multiple myeloma. So we have four products, uh eight out of ten patients on who ha suffer from multiple myeloma.

uh are taking a Johnson and Johnson product. We have a product for every patient. Some great data though combining two of those products are start of the portfolio, DARGLEX, which is a C D thirty eight, and then a um bispecific antibody known as Tech Vali. We combined those and we took hard to treat multiple myeloma patients, those who were not responding to therapy

And the outcome is 83% progression free survival after one year. And we need to point out that these are not about to have a loss of exclusivity. That is correct. Excellent. I want to thank Joe Walker, he's the CFO of Johnson and Johnson. Joe, good to see you. Thank you, Jim.

Biggest risk to the market in twenty twenty six. the most exciting names of 2025? peeling back the curtain to Well this week I'm on a mission. I want to focus on what could go wrong with this market, not just because stocks sold off hard yesterday. We're bouncing back today. Once President Trump said he's formed the framework of a future deal for Greenland.

I'm just trying to be disciplined. The averages have had a tremendous run for some time now, so you need to consider what might derail this bull market. Okay, look, if the market was down usually these last few years, believe me, it wouldn't be like this. We do the inverse and explain what could go right. There's a lot to consider here, but right now let's talk about the biggest chink in the armor of the massive, incredibly important to the market, at least, AI data center build-out.

It is powering literally hundreds of stocks of all sorts of varieties. It can't go bad. And I'm talking about OpenAI, the sprawling hyperscaler that invented ChatGPT and it tends to dominate the artificial intelligence world.

Now last fall we started hearing about OpenAI placing hundreds of billions of dollars of orders uh with Oracle. That's to build out data centers, NVIDIA, Core Weav, AMD, Broadcom, Amazon Web Services. Some of these deals raised some eyebrows because companies would invest in open AI and then

Hmm, open AI would use that money to buy things from them. All right, that's called circular deals. I it's not my problem here. Initially it sent the AI data center stocks into the stratosphere, but Wall Street quickly started wondering what how how the heck OpenAI would be able to pay for all this stuff.

Reasonable, reasonable concern. They added up and a CEO Sam Waltman said they committed to$1.4 trillion in compute spending over the next eight years. That works out to$175 billion per year just on computing power? Wow.

Remember, OpeningLive finished last year with a$20 billion annual revenue run rate. Okay, amazing accomplishment given how quickly they got there, how young the company is, but is nowhere near enough to cover these bills. Short management says they can generate hundreds of billions of dollars in annual revenue by 2030. But that's so far above the numbers that they're putting out now that it's hard to put much faith in that forecast, although of course I want to believe.

You know what, it didn't help that t that his CFO Sarah Fryer threw around these comments at a Wall Street Journal conference about a possible government backstop glass remember if things got tight. Those comments crushed the entire group again. Even though the company oldly walked back the comments, you never want to contemplate that a company you might invest in could need a government backstop.

There's a reason that so many of the major AI data center stocks actually peaked in late October or early November. Open and AI had been the driving force by much of the last year's AI rally, and it had become a question mark. Question mark of their own doing, frankly. And that was the top of many of the AI arms dealers.

Then in mid November, Alpha released its latest AI model, Gemini three, which quickly uh became regarded as the best in the business by a lot of us who just heard no, I shouldn't A lot of reviews. Reviews were positive. Alphabet had been counted out because doubters couldn't imagine how they could prevent Gemini from cannibalizing Google search. I was one of those doubters, but they just put the search results uh on the same page. Uh problem solved.

You just gotta go see it. I I promise you, you might switch. There's a good chance you'll switch from ChatGPT if you j if you go to Gemini. I have. We have to ask, if OpenAI has no longer got the best gender of AI platform, can we really count on them to make enough money to just cover their spending commitments? Logical question. The truth is these guys were always going to have to raise a lot of money to pay their bills. The only question is how richly their stock will be valued.

In December, OpenAI got a$20 billion plus cash infusion from SoftBank to complete a funding round from March of last year. Later that month, we started hearing that the company was looking to raise$100 billion in another private funding round, perhaps at a valuation of more than$800 billion. There's also been chattered that they might be considering a very, very large IPO, but CFO Cerfier shot that idea down back in November.

I doubt they'll do an IPO anytime soon, and if they did, I bet they would have to reveal a set of financial s results that would show significant losses, very negative cash flows. Frankly, I'm just not sure that the public investor really would support the deal right now, especially if they're trying to raise hundreds of billions of dollars. Now, with the new year we've gotten some additional news on the open AI situation. Some of it's actually good.

Let's start with the positive. This past weekend, Sarah Fryer, that's that CFO, published an update about the business, including some new financial details, and there were some great numbers in here. Both weekly active users and daily active users continue to produce all-time highs.

While their compute spending has skyrocketed, their annual recovery revenue has grown at the same pace, which suggests they aren't wasting their money. This year, Fryer says their focus is on practical adoption, meaning finding ways for real-world industries to harness their AI platform. That's encouraging. I thought the exposition, frankly, was brilliant. Like its author. And it gave me conviction that OpenAI is thinking big and won't just be a business to consumer operation.

As for the more negative news though, uh two things really stood out. First we continue to see more and more interest in Clawed Code, another rival. This one is uh a product from OpenAI's and uh Chief, I'd say uh Well I let's say that they're they're not uh they go up against each other pretty hard. How about that? I I'm trying to think about it because I don't want to call these guys are all kinda prickly. I don't know if you know that. Uh anthropic is a very good business to business site.

By the way, clogged code is one of the reasons why most enterprise software companies have continued to get hammered in the New York because it is so good. I asked it a question, I literally wrote a program.

I wrote a program. I couldn't believe it. I don't know how to write a product. It's easier for me to write a Netflix program. In other words, Anthropics Claude has emerged as one of the most favored AI platforms for the enterprise at the same time that Google's Gemini is increasingly seen as the best AI platform for the consumer. So where does that leave OpenAI? I honestly don't know. Although we know OpenAI has its obviously enterprise.

How about the second negative development issue? This one I really don't like. It's a long-standing lawsuit from Elon Musk, who co-founded OpenAI back in 2015, when it started as a nonprofit venture, and it's starting to look uh like it could be a major problem for the company.

Earlier this month, a judge ruled that the case could proceed to a jury trial, which should start in late April. According to a court filing from last week, Must is seeking up to$134 billion in damages from OpenAI and its partner, Microsoft. I'm calling that negative.

Thousands of pages of evidence from the case have been unsealed this month. And s speaking of someone who went to law school, some of the details in here look pre-suboptimal for OpenAI. The company already sent letters to the investors warning them to expect, quote, deliberately outlandish claims and quote from Moss. There's an old saying, don't get into a pissing contest with a skunk. And that's exactly what this lawsuit feels like to me. I usually don't use that saying, but I put it in.

So as we begin 2026, here's what I'm thinking about OpenAI. First I have a pretty simple question. Can this company complete the private fundraising round that was rumored in December?

OpenAI wants one hundred billion dollars, the largest private funding round in history was uh was when these guys raised forty billion last year from Saltbank. The largest IPO in history is when Saudi Aramco, Saudi State Oil Company, raised just under thirty billion in twenty nineteen. So I mean It's not gonna be easy for OpenAI to raise a hundred billion no matter what.

Then of course there's the question of whether or not they can get a valuation near what they've been rum what's been rumored, call it eight hundred billion or more. If open I can truly raise one hundred billion at an eight hundred billion dollar valuation,

Do you know what? I think the whole data center complex could really get going again after a three-month pause. But what if investors insist on a lower valuation, say$500 billion, which was the last valuation used in October for secondary sale? No confidence is part.

Beyond fundraising, we need to see OpenAI make even more progress on the revenue growth front. Otherwise its optimistic long-term forecast just won't seem credible. And I say that fully knowing that open AI's revenue growth is astounding. So here's the bottom line on what I think is probably the biggest issue for 2026. Open AI has become the Achilles heel of the AI data center complex.

If it can raise enough money that I'm betting the whole group can roar and the taunt of Achilles will disappear. But if OpenAI can't raise that money, If they keep losing money and they keep losing share to Gemini and Claude, or if they lose the lawsuit to Elon Musk. Well that's real bad news for m the many data center companies that are relying on open AI for a big chunk of their orders. I think nothing is more important for the success of the AI complex than open AI.

But there are enough question marks to make me more cautious than last year. And as I intend to say at tomorrow's investing club meeting, there are many other sectors that might be more attractive if this company lets us down.

Let's go to Lanai and Florida, Lanai. Booyaski Daddy, second time caller, longtime listener. Are you all you've done to make me a better investor? Oh, thank you. That is the goal. It's a simple goal. I was telling my daughter that yesterday, Lynn I said, look I want to make people better investors. If they make money, fantastic. Let's go to work.

All right, my stock is Motorola Solutions ticker MSI. I've owned it for years and it's had a nice run, but it's backed off. What are your thoughts? Buyers? I think Greg Brown is doing a terrific job. I like the company very much. I have to tell you, I thought they were gonna give Axon a run for the money. I'm actually not giving up on that. I think it can still happen. And thank you for the kind words. I'm really focused on this in 2026. We are going to make you a better investor. or else.

Alright, open AI. whole group is going to suffer and then maybe the whole market will. Much more hand money had it.

This time I'm going to focus on the potential introduction of new supply of stock, something I'd like to think I'm a bit of an expert on. I'll reveal what the risks are true portfolio. But for one area of the market Well let's just say it didn't come out the red light. Why your call is Rapid Farn tonight's...

Yesterday we got hammered, but today the market came roaring back after President Trump promised that he wouldn't try to take Greenland by force. Although he still wants it and may have a treaty in hand without new tariffs.

Which apparently all we need to do to get a rally going. Still, I think it's worth considering what could go wrong for a market when we're still uh not too far from the highs. That's why I've been highlighting potential issues all week. Now though, I want to focus on something that's historically been just lethal to move forward. Throughout history, I'm talking about a supply shock from a wave of stock offering.

Remember at the end of the day, the stock market is above all market. And markets are controlled by supply and demand. If you remove supply through mergers and buybacks, It helps the averages levitate. But if you flood the market with new supply from stock offerings. Sell, sell, sell, sell, sell.

Eventually there's not enough money to sop up the supply and we go lower. After the big run that we've had for the past three years, including the extremely frothy action we've seen in the past few weeks. My biggest worry about new stock supply comes from existing companies. We've seen huge runs in speculative stocks that make little or no money. Those companies will all need to raise capital eventually, probably through secondary offerings.

And the best time to do that is when your stock is flying. For example, Check out Resolve AI. It's a British company that says it's developing AI software for e-commerce. But one that's still a long way from profitability. Like I mentioned last night, Resolve pre-announced some solid revenue numbers last week and the stock will fire. Coming into this past weekend, it was up nearly 80% year to date. Year to date!

But that's no longer the case because yesterday morning Resolve announced it's selling 62.5 million shares at$4 each, raising$250 million in gross proceeds. That four dollar price was a thirteen percent discount from Friday's close, and the stock ultimately plunged twenty-three percent yesterday.

If we're losing another 1.4% today, the big gains of the past week, okay, they've completely disappeared. Of course, sometimes companies are more subtle with their fundraising. Instead of selling stock, they'll sell convertible bonds that can be transformed. into equity at the owner's discretion. Just look at strategy. That's the old micro strategy which has borrowed a lot of money to turn itself into a leverage Bitcoin play.

Strategy's done that through convertible bonds. They offer they often issue zero convert bonds, meaning they don't even have to pay interest on them, and with conversion prices that are well above the spot level of their shares. Strategy share price has come down a lot over the past several months. At$164 today, it's down sixty-four percent from its fifty-two-week high last July.

The main reason is that bitcoins come down, but it doesn't help that there are all these convertible bonds floating around that could turn into stocks. Maybe sooner than you think. The next source of the new supply comes from insider sales, meaning when top executives, board members, or large shareholders sell stock in their company, these insider sales have to be disclosed via the SEC filing. So you can monitor them and when you see it, powerful warning sign.

These are the things I worry about. Of course, we haven't seen a ton of secondary offerings or incidents selling in the past three weeks. Still, I'm watching it. Finally, let's address the big source of news to stock supply that I'm most concerned about that could be coming later this year, the IPO market. Do you know that the IPO market is maybe my number one worry for 2026? Because it's going to be so big.

I expect the IPO market to keep recovering in twenty twenty-six. Last year we had just over two hundred deals, collectively raised forty four billion according to Renaissance Capital. The IPO research firm this year uh the same firm expects two hundred to two hundred thirty deals raising forty to Sixty billion dollars. If Randos is right, then the market will be fine. You know why? Because sixty billion is actually not enough to overwhelm us with supply. I I like that.

My concern is that we could have a a wave of colossal deals later this year. Companies like Databricks, they've been on our show, the data storage and analytics company, or Elon Musk's SpaceX, or this anthropic, the parent of Claude, or even OpenAI, although I think the latter's unlikely. Still, those are four of the largest privately held companies in the world. So if any of them comes public, we're talking about some of the biggest IPOs of all time, a deluge of stock.

Databricks was valued at$134 billion in a private fundraising round just last month. SpaceX was valued at$800 billion in a secondary sale last month. Anthropics reportedly working to raise money at a$350 billion valuation. Typically in an IPO a company sells roughly say twenty percent of its shares to the public, but even if these companies only sell say ten percent, you're talking about a hundred and twenty-eight billion in stock issued from just databread.

SpaceX and Anthropic alone based on those valuations just cited. And that's that is a very positive way to look at it. These three could raise proceeds that are two or three times higher than what Renaissance expects for the year. And for what it's worth,$128 billion is not that far from the record,$142 billion in total IPO proceeds from 2021. Not a good thing. By the end of twenty twenty one the market eventually ran out of steam.

And we had a brutal correction that lasted most of 2022. The flood of supply from those 2021 IPOs and that horrible wave of SPAC mergers was a major contributor to the end of the bull run. Again, this isn't something that's gonna happen overnight. Maybe none of these uh huge privately held companies decides to come public. Maybe the deals only happen toward the end of the year, but it might be sooner than you think.

Just today the Wall Street Journal reported that Elon Musk wants to complete a SpaceX IPO by July of this year because he's trying to get ahead of the anthropic deal. The article also said that Musk wants to raise money in order to build data centers in space up.

For now, just know that these potential mega deals present a real risk factor for later this year. Because in order to raise cash to buy newly issued stocks, Giant money managers will typically have to sell something else and that will put downward pressure on the entire market. What happens? Your best stocks, which you think everything's fine about, may get sold down just so the big funds can raise enough money to buy Databricks, Anthropic, and SpaceX. Bottom line.

When stock swore, the market often gets hit with a flood of new supply from secondary offerings. from insider sales, from IPOs. The flood hasn't hit yet. And we don't know how serious it will be, but there's a very good reason to believe that it's coming sometime this year. So keep your eyes open. Oversupply has killed many a bullet. It could always do it again. That money's back after the break. Coming up, Kramer takes your And the sky's the limit. Lightning round.

And then the lighting round is over. Are you ready? Skip the light on Chris Road. Let's go to Ian in California. Ian. Hey Jim Booya! Booyah Ian, what's going on? Well I'd really like to know what you think of surf robotics. Okay, we're not gonna go into robotics other than to say that we want Tesla. And I know Tesla's done nothing, I heard that a hundred thousand times today, so maybe it's time that Tesla did something. Let's go to John in New Jersey.

Jimbo, how you doing today, buddy? Alright, partner. What's shaking? Okay, so I called you before about this company. You weren't sold yet. That's okay. I didn't cry about it. Now Eric Jackson and Anthony Pomp. have drilled into the open army. We keep swinging. There's no quit. Now Pomp is dropping an interview with Kaz tomorrow. It's gonna be electric. You got management that's all in with performance pay, million dollar open market buys from the boys themselves.

Uh there's no hype here. This all um you know, this ain't hype. It's a real company, it's a real mission of tilting the world back to home ownership. Homes have been frozen, open door is gonna melt it. Kimbo open door boom. All right. The reason I did is I said you can own one of these stocks. You can own

A wild speculative stock that company doesn't make money because you think about all those things and the pomp and the circumstance. Here's the issue. That's the one. I don't want you on a lot of others, okay? But I was gonna say you can own that. No one else, by the way, on in the history of the Western world would re would would actually endorse that except for me. And let's at least get that done. Let's go to Terry in Florida. Hi, Jim, it's Gary.

for Charlotte Florida club member. Um I bought I bought this stock about a year and a month or so ago and it's down fifty five percent. Um the uh fifty, one fifty and two hundred moving averages are all pointing down about forty five degrees. degrees. I'm wondering if I should just dump it here or h buy more and hold for the long term. The stock is

Fiverr International F V R R. You know, you gotta hold it because it doesn't lose money, but it is the most commoditized stock that I've that I've been asked about this week, and this is a week of great commodity. And that, ladies and gentlemen, is the conclusion of The Lightning Round. Coming up, the memory chip market has So should you buy in? Kramer's discussing whether it's too late.

Discipline trumps conviction. That's been my watchword for decades, and it saved me millions of dollars over my 44 years of professional investor. But every now and then discipline becomes a real killer. Right now, when it comes to the semiconductors, especially the commodity semiconductors, discipline's been a horrendous tactic. I want to confront that tonight.

First the visceral side. Every day I come in and I'd watch the stocks of Micron, Western Digital Santa, see it explode higher. All the moves are parabolic. It's one of the greatest runs of all time. They have no quitting them. That's agonizing to watch when you don't own them. And I don't own them for the Travel Trust because I don't chase. I know it's a sucker's game, or at least it has been.

Chasing these stocks historically led to big losses as you tend to come in late and then get hammered as buyers turn holders and holders turn sellers. Historically it's better just to admit that you were too late and wait for a better moment. But all this discipline and thoughtfulness has failed me with the memory stocks this time. History says these commodity tech stocks follow pricing, so they can go higher and higher and higher, but ultimately they peak and pirouette and flay you alive.

Until this move, there's never ever been a time where pricing has gone up so far so fast. I can recall say a 300% increase in pricing between 2016 and 2018 for a sharp decline totally gaffed you. That's a huge move, but the decline seemed just as sharp. This time we've got an astounding, unheard of, 400 to 500% move in memory price.

No peak in sight. Why is that? First, the explosion demand from artificial intelligence is so huge that companies like Micron, Seagate, Sandisk, and Western Digital are going full out, just trying to meet the demand. They can raise price at will though because demand has completely overwhelmed supply. As someone who once owned 5% of Western Digital 35 years ago, I always thought this could happen.

It's why I took such a big position, but it failed me back then as a hope for shortage never materialized too much supply. I was lucky to get it alive. This time the company can't keep up and the marketplace is so desperate that there's seemingly no price that they won't pay. Hence the big game.

Last week Micron broke around a hundred billion dollar facility that will produce its highest end chips. They won't be producing those chips though until twenty thirty. And not much of a help if you want memory to get cheaper. In the past when we had these spikes, the semiconductor capital equipment makers would go all out and come up with what's necessary to make a ton of money, even if it alleviates the shortage. But the companies that make this kind of machinery

aren't up to the task either because they too have never seen anything like it. So buyers are taking up applied materials, KLI, Lambert Search every day because their stuff is in short supply too. As long as there's a machinery shortage, the m the memory shortage isn't going anywhere.

Hey, look, they weren't clueless. Even a couple of years ago there was a huge clut of these kinds of chips. They had a long boom bust industry history. I don't think it's changed, but try telling that to the people who've ridden sand disk up a hundred and eleven percent this year.

Of course, there are other companies that make the memberships, such as SK Heinex, Samsung, Grand Giants that are both dominant players. When I tried to ride these cycles before, I got blindsided by those two companies, having more supply than I thought. The pretty darn secret of Causing these mistakes, uh these markets, I'm sorry, to go into equilibrium and then just to outright crash.

Hasn't happened this time though. It would be annoying to watch these rallies if they kept to themselves, but these products tend to go into a lot of different end markets. Mostly uh uh pertinent PCs, servers, cell phones. As the memory makers go up, their customers' earnings go down, which is causing a lot of weakness in Dell H B.

And yes, you've wondered, Apple, that's why it's been going down. It's been eating into their profit margin the whole time. That's why Apple's been such a lousy performer. Can you get in on a temporary downturn? You can try. But I hesitate to recommend it because we don't know what Heinz and Samsung are up to. That first decline might be the big precursor. That's why in the end I have to stand here and suffer. I miss it. I regret it. I got it wrong.

Micron or AMD at a lower price. I like the latter. Or maybe there won't be because I don't chase parabolic. All right. I don't usually have to suffer the consequences because I don't. But I still stick with my discipline because every time I've abandoned it it's blown up in my face.

And I'm not gonna risk it to catch what could be near the tail end of this incredible rally. I like to say there's always bull market summary, prom start fine just for your hero mad money. I'm Jim Paymer, I'll see you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNPC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another media.

You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable. But neither CNBC nor its affiliates andor 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 forward slash madmoney disclaimer.