Mad Money w/ Jim Cramer 2/3/26

Welcome to Mab Money. Welcome to Cramerica. Other people, my friends, I'm just trying to save you a little money here. My job's not just entertain, but I'm gonna educate, I'm gonna explain everything tonight because it's crazy out there. Call me 1-800-736. Tweet me at Jim Kramer. Be nice. The clients win. The purveyors lose hardware companies try Software companies shrivel up and die. Industrials profit! Enterprise service companies wilt!

The result, yeah, daylight today, with the Dell tumbled 167 points, that's a big plunge, 0.84%, NASDAQ pump of 1.43%, which seems horrendous, but was much worse for the stocks of anything connected with the once love cohort. That was software! Is it really that simple? The market spoke up today and it said yes, everything software must be thrown away. Anything remotely connected to software is suspect.

Including companies that just collect data. But any client, a bank, a consumer packaged goods company, an industrial company is golden, at least for now. Even if their earnings aren't so high. Maybe you should have seen this coming. In the last two months, we've seen lots of different high-quality enterprise software stocks, Salesforce, ServiceNow, Adobe report really good numbers, only to watch their stocks wither and get blown away.

The market has collectively spoken. The pin action is awful. These companies either produce software that can be replaced by something that's made by AI, or at the very least, AI can cut into their user base.

Which matters because these cloud software companies typically charge by what's known as per seat. Never mind that none of this has actually happened yet. Wall Street's convinced that it's going to happen because of AI. Wall Street is a prediction machine, and the prediction for software holders

The house of pain. Pain! Now we thought that some types of software were immune, like inf infrastructure software companies like Datadog, MongoDB, they were so f popular and favorite. And it's always recommending these things like Atlassian. I mean what they could do no wrong. What I didn't count on was a story about how anthropic an AI service dedicated for business is business to business we call it.

has developed programs to help automate legal work and they're starting to make inroads at law firms. We've seen these before, but nothing ever caught fire. My contacts indicate that most law firms still don't trust these programs, and I don't blame them. But this story somehow resonated with the market. Anthropic's work was the first truly convincing product that some thought would cause the big layoffs that make bringing in the product worthwhile.

Anthropic is a loved AI system. While there were many straws on the camel, that was the one that broke the camel's back. Now most of what we've seen today does seem like panic selling. buying of the companies that pay for software, everyone from Procter Gamble, which had a big quarterback way up. FedEx, Union Pacific, any company that spends a lot of technology on a lot of technology, especially software, is winning right now.

But there are others who see this pattern, they decide to avail themselves of ETFs that allow them to short the heck out of software, such as the iShares, Expanded Tech, Software Sector ETF, or the IGV, as it is known. Why would you like to be known as IG V. Hi, I'm IG Vic. The ones with the biggest weighties in that fund, with the exception of Palantir, which reported a terrific quarter today, were obliterated, laid to waste. The top ten, including Palantir, are all familiar names.

Listen to this. Microsoft down three percent. You know that's already been hammered a lot. Salesforce down seven percent. I I can't look at it anymore. Oracle down three percent. Intuit down 11%. Hey, I like my taxes with Intuit. App Lovin' down four percent, whatever happened that's app hate now. Adobe down seven. Whoa, no so great. Palato Network's down five. CrowdStrike down almost four percent and service now. I knew her when. Down seven percent.

What are we doing with this lesson? Are the declines ever done? Or are all of these enterprise software plays about to be rendered obsolete thanks to our artificial intelligence? As usually it's a little more nuanced. I'm of two minds here. One is to say we ought to take advantage of their sale to pick at the other tech stocks that are being dragged down by the blunt force instrument that is this ETF. For example, you know what we did today? We bought CrowdStrike for the travel truck.

This is a cybersecurity company. It shouldn't even be in the enterprise software cohort, but it's being brought down by that stupid ETF. The idea that somehow someone is going to use AI to create a software company that identifies and stops bad guys from North Korea and Albania just ain't gonna happen.

I'm calling that fanciful. I have no idea how CrowdStrike got in this stupid ETF in the first place. It doesn't belong there, and the makers of the index should know better, but they're faceless people. They hide behind the index. We'll never know who they are. How do they live with themselves? Well, probably pretty easily and make a lot of money.

But the other mind says you can't jump in front of a speeding freight train. All aboard? Far better to just own the stocks of companies with big software spending that can presumably save fortunes. Public companies that can dig begin to take out quite wells fargo. They just hired a technologist from Amazon Web Services to help the bankers find the hidden savings. That's a winner.

Oddly, for the vast plurality of the punished companies, there have been and maybe won't even there have been, but I haven't seen them any big estimate cuts. What's happening is simply that their price turnings multiples are shrinking. Something I painstakingly explained in the chapter about shrinking price earnings multiples and how to make money in any market.

Wall Street's paying less and less for these earnings. And the earnings aren't going away, they're just paying less for them because that's what you do when you're worried about the future. The problem with a shrinking priced earnings multiple Is that you don't know how low it can go? Will Salesforce trade down to 14? How about 13? How about twelve times earnings?

I have no idea. Same with Workday. Roper Technologies. Used to be a hardware company. Now it's a collection of Ho Hum Enterprise software businesses. How could they do that to themselves? Many of these software stocks have almost no natural defenses, little to no dividends, and not much in the way of buybacks. They're poor little lambs who have lost their way. Sell, sell, sell. One more thought. You saw a lot of private equity stocks get hammered today.

That's because many of them own enterprise software companies that want to come public. That window is now closed. We don't want any more of those. There are already too many of them, way too many. And by the way, who understands what half of them do? And uh that includes people who work there. The bottom line, bulls have to hope that the software stocks have no contagion.

Theoretically right now, they don't. They shouldn't. There are winners, the users, and losers, the providers. Logic says the pain will not spread beyond this cohort. But then again, the markets aren't always logical. Let's take calls. How about we go to Ian in Florida? Ian. Hey Booya Jim, how you doing? Booya, Ian, I'm doing well. How about you? I'm doing great. Kanye from sunny Florida, member of the club? Yes.

Jim, why did I ask you uh what do you think about Broadcom here? Is it a good time to get into it? Okay, I'm two mods of Broadcom. It's not a good time to get into it, but it's a great company. So what are we gonna do? We're gonna let it come down. It did bounce today. I hope that Hogtan does a buyback. He's got the earnings. I'm gonna throw in, let me throw in NVIDIA because we're gonna talk to him later. These this company is a winner in this environment, not a loser.

And I will be right, just gonna take a little while. Maybe till like Friday at 3 a.m. contagion outside of these software stocks. Logic says there shouldn't be, but you have to remember that the market isn't always logical. Great stocks will prevail if they're backed by great companies. Bring AI into more corners of the economy. Both companies. Also getting to the bottom of the so-called rocky relationship between NVIDIA and OpenAI that some journalists write on every I hope you guys have fun

Then our burrito's bouncing back. I'm sitting down with the top brass of Chipotle. Fresh off of Ernie's yet up there and turnaround efforts are underway at the restaurant chain, and they're real. Green in today's race. was down instantly because people are so dark done never mind At Jim Kramer. Tweet Kramer. Mad Mentions. Send Jim an email to Mad Mention. At 1-800-743-CNBC.

cnbc.com All right, what do we make of all this handwriting about artificial intelligence? Earlier today, NVIDIA announced a partnership with Dassault Systems. That's a French maker of software for 3D modeling. Basically, this is all about creating digital twins, save money, do better, industrial design applications. I bring this up because AI is genuine uses. It's not just about moving money around.

Earlier today I got a chance to check up with Jensen Wang, he's the co-founder, president, and CEO of NVIDIA, no stranger to the show, and Pascal Delos, he's the CEO of Dassault Systems, to learn more about this team up and how NVIDIA is doing. Take a look. Gentlemen, welcome to Meb Money. Hey Jim. How are you guys? How's it going? All right, Jen, so let me get right at it. Uh today you just announced a long-term strategic partnership that I think centers on bringing artificial intelligence.

Into the real world economy. It's part of the fourth industrial revolution. Now we're talking about trillions of dollars, trillions in creation of new iterations, aerospace, autos, materials. You've been working together for ages. Why is this particular partnership so important? We started working with Dassault systems 25 years ago during the last platform, major platform transition, from workstations and mainframes to personal computers.

Now we're working together again in this next computing platform transition, when we move from classical general purpose computing to now accelerated computing and AI. This partnership between us is incredible because the next frontier of artificial intelligence is physical AI. This is where AI understands the physical world and we apply artificial intelligence. to design, simulate, validate, and operate incredible systems.

And as you know, we're in the beginning of the next industrial revolution, the largest infrastructure build-out in history, and we're building all of these plants, chip plants, computer plants, and AI factories. And all of these plants are going to be powering the industri industries of today.

car companies, aircraft companies, and you know, so on and so forth. And so Dassault Systems it's at at the center of that. And for the first time we're integrating all of NVIDIA's platform technologies, Nvidia Q to X NVIDIA AI, NVIDIA Omniverse into the Dassault Systems suite of tools. This is completely revolutionary.

uh are going to be affordable with this. So Pascal I've been thinking uh one of the major air airlines aerospace companies told me we gotta get back into the fast game. We gotta be able to make it so there's a plane that can leave New York and land in London in three hours. But it's too expensive to design. How would you make it so it's not too expensive?

This is the purpose of the partnership, which is to accelerate the design and the simulation and everything we have to build virtually before to make it real. Now right now you know we can uplift many, many things. There are many, many uh things like certification of the airplane, like the quality management, like the compliance check which are becoming late into the process.

With what we are building together, we could uplift them and give the ability to squeeze the time to be much more expensive. uh productive and much more accurate the first time. I do want to say that And Jim look sure the stuff that we're doing together will make it possible for us to simulate with artificial intelligence and accelerated computing

So much larger scale and so much more quickly. Just give you one example. Instead of simulating some parts of your design and then using your uh putting your your product into air into a into a uh air chamber or into a crash simulation, we're gonna do everything digitally. This idea of a virtual digital twin so that we could

basically do all product design and testing completely digitally is gonna save enormous amounts of time, enormous amounts of money. Okay, so Pascal I was with uh an incredible Far Star Chat

with Jensen and David Ricks from Lilly and they're talking about developing new drugs. You have a life sciences division. But most of these drugs just cost too much money and the iterations are too expensive. What could you do to make it so that we would see uh iterations of things that we could never dream of because of this partnership. You know, it costs, on average, 2 billion to develop a new drug. and more than sixty percent is spent on the clinical trial.

And why this is expensive? Because you have to test it physically in the reality. There is a way to virtualize part of the clinical trial. That's what we do. We call it the synthetic control arm, which is a way to create a virtual cohort if you want. trial rather than to have to do it completely over the time. This is really squeezing it significantly.

And based on the different uh case we have we could probably gain something like fifty percent of the cost. We're gonna do the same that we do with planes in a wind tunnel. We're gonna do drugs in a virtual wet lab.

And we could discover and engineer new drugs uh much, much more effectively as a result. I do hope people listening know that it's not just hyperscalers that use these

uh chips and that this economy is ninety percent. Ninety percent of the economy involves exactly what we're talking about. Maybe ten percent involves what I do want to ask Jensen about because there's a lot of confusion. And I want to clear it up. And I want to clear it up right now because I think we can put a four into the confusion that we're hearing.

There's a lot of talk, Jensen, about the open AI investment. Now, I find it after a while tedious. However, many people in the press are convinced. That you want to walk away from a major initial investment of$100 billion into OpenAI, that it's stalled, that you're not that interested, that there's been a lot of private criticism, even for the$10 billion per one gigawatt that you put in. Can we end this? Is there really controversy about this?

No, there's no controversy at all. It's complete nonsense. We love working with OpenAI. We are incredibly Honored and delighted to be able to invest in their next round. And so they we're we're uh privileged that they're inviting us to invest. Uh for each one of their rounds we would love to be invited and we would consider of course investing in it. This is one one of the most consequential technology companies in history.

And this will by far be one of the most exciting investments and I'm I'm delighted to be to be uh invited and we'll consider every single one. Uh we are we are uh going to invest in their next round. Uh we're looking forward to to uh Sam closing it and he's doing he's doing terrifically uh and we will invest in the next round. There's no question about that. Okay, then it it is confusing to me why both the initial deal that was announced and we were talking about

uh one that has not been confirmed where you're talking about putting money with them. This is separate from the second one with the deal in order to be able to invest, again f to be able to make it so that uh one gigawatt, ten billion. And then the second thing about the investment with the Uh i in in a possible in a possible IPO. We keep hearing from the Wall Street Journal, from Reuters, the deals on ice, that it can't be done, that there's so much dispute.

Another thing that makes me upset, Jensen, is that perhaps it is possible that there's motivation here to kill the deal because I'm not hearing anything from either party that sounds like Well nothing that we're doing on the inside is that dramatic. You know, there's a lot of there's a lot of there's a lot of stories about it. Um but I think that I think that uh OpenAI and Sam are doing a great job raising this current round. This'll be the largest private round ever raised in history.

And I don't know any other company that possibly could do this. I mean all of this is possible because the amount of offtake, the amount of traffic, the amount of interest that they have in their in their product, what they need more than anything right now is compute. When they have compute, it will directly translate to revenues for them. Because as you know, in the world of AI, infrastructure.

The computing the AI factories is what tr what produces the tokens, the AI that ultimately drives their revenue. And so the more compute they have, the greater revenues they will have. And so I'm, you know, their their trajectory, their revenue growth trajectory is going to be unlike anything the world's ever seen. And this is this is a a a great investment opportunity. I'm delighted to do it.

In in working with with open AI, there is no drama. Everything is this round's gonna get done. It's gonna be the largest round in history. There's it's gonna be oversubscribing. It's gonna be two rounds terrifically. There's two rounds. There's a September deal. Uh well you talked about ten billion uh b per gigawatt.

And that was pre-AMD, for instance. And then there's the round for the IPO. Are both of them on? Because the first one has th there's a lot of talk that that one has just kind of gone away, that you're not gonna do that that deal, the original hundred hundred billion. This is the last I will ask of this because I think it we can put the end right here to questions about whether that first deal is on or off.

The first deal's on. It's on. I I think there's a there's a round that OpenAI is gonna do that Sam's gonna do before the IPO. And and uh if if that round is is uh is on, then we're in we're in. And I think the round is in is on. Okay. Uh and then there's a there's of course uh an a uh an IPO in the future and we love to be participating in that as well. And so this is This is a fantastic company and and it's uh as you as as you I've said before, this is a once in a generation company.

We're delighted to invest in it. Well, it doesn't sound like that there's a rocky relationship between the two. It doesn't sound like the deal's on ice. It doesn't sound like there's grave problems. It doesn't sound like there are eight different sources saying this one can't happen. It doesn't sound like any of that to me. And is and and there's no drama involved.

Everything's on track. Alright, I'd like to go back to substance. I appreciate the uh The horse race deal, it's important for some people. I'd rather talk about The ninety trillion that is the world economy. And I want to go back to Pascal because I think that it's only fair to say that maybe we can look to you uh to design quickly machines and factories.

Involving memory, which is the single biggest block right now to what we all want to accomplish. It takes years. I was with Sanjay Morochi the other day. I cannot believe how long it takes to build even a disk drive factory. Can you cut it down? In fact, when you build virtually, You can automatically uh do not only the engineering part, but you could do the testing, you could do the commissioning, you could do the ramp up. So everything usually you do physically

you can anticipate it and to do virtually. This is saving a lot of time and a lot of money to make this happen. And when you have to build so much factory around the world That's the only way. Okay, and Jensen, last word, humanoid robots, you showed me one almost ten years ago, and you weren't satisfied. You weren't satisfied with the hand. You weren't satisfied with what you could tell them.

Uh to the partnership together. Can you develop robots much faster than anyone else when you put when you put your minds together on this? Dassault systems builds the tools that the world makes machines from. Cars and factories and robots and you know all kinds of consumer electronics, products, even luxury goods.

It's designed in SolidWorks or designed in Katia, it's simulated in Simolia, it's simulah, it's it's uh of course uh the factories are simulated and operated and planned, you know, using using uh uh Del mia. There's so many IAs. In fact, uh all of uh all of Dassault Systems tools, these Katias and Simu simulias are built on top of NVIDIA.

And as a result, you know, the the speed and the and the capability and the scale are just incredible. Uh th this the future and this is where the era we're in now is Using digital design virtual twins of the products. They're going to be built by virtual twins of robots operating in virtual twins of factories. And all of this will be designed digitally in tools and they will be designed, validated, operated, and

All done inside these virtual twins running on top of NVIDIA sim NVIDIA computing platforms. And I am and so this is this is just this is the way it's gonna be done going forward. Saw it my I hope to see it in my lifetime. Thanks Jim. Thank you. Well you've heard it. I think it's the last word. That's Jen Smuang, CEO of NVIDIA, and Pascal Dulot, CEO of the SO system. Coming up, was Chipotle able to cook up a tasty quarter? Kramer's sitting down with the CEO to find out. For the restaurant shame.

What's going on with the stock of Jipoli? This stock been making a comeback over the last couple months. But when it reported after the close, Wall Street was a little mixed about this one. Even though the numbers came in better than feared, management's full-year same-store sales forecast.

was a slight light and the stock plummeted and after hours trading, I think that Wall Street's gonna be wrong here. I think this is getting mighty attractive. So does the company. They've been buying stock hand over fifth. Earlier we had a chance to dig deep with Scott Boatright, he's the CEO of Chipotle. Take a look.

Mr. Burrett, welcome back to Matt Buddy. Hi Jim. Thanks for having us on this afternoon. Of course, uh Scott. I look at the numbers and I think look pretty pretty much better than I feared all the way down the line. Uh including operating margins are terrific and I was concerned about comp stores. I think that you've could alleviate that. What is making you feel like I you have to feel this is the beginning. This is the beginning of the turn that we talked about.

Yeah, Jim, I'll tell you as I look back on twenty twenty five, I think about the year is a year that we made a lot of progress on many fronts which were critically important to informing the issue of strategy, but also a year of resiliency. You know, we've sho we have demonstrated it through

you know the past 10 years or so that the brand can be successful in any consumer cycle. 2026 will be no different. We will win. We have a winning strategy in front of us that I'm really excited about around recipe for growth.

And uh I'd love to talk to you about it. Well why don't you tell me about threscu growth and if you I know that you've got a uh a a terrific chart which talks about uh what I think is very sound business judgment about what you're gonna do, so why don't you go through that? Yeah, so at the core of it all, um, Jim, we've gotta continue to protect and strengthen the core around operational experiences and culinary excellence for both the in-restaurant consumer as well as the digital consumer.

We're gonna spend time this year really evolving the brand messaging, leaning into many menu innovation and new occasions that drive demand. modernizing um the the our business model by leveraging industry leading technologies and AI technology as we move forward, as well as revamping or reigniting our rewards program, which I'm super excited about.

We'll continue to expand access around the globe for Chipotle consumers, whether that's here in North America, Western Europe, or at our partner operating restaurants. And then leaning into industry leading talent that is not only energized, but really focused on speed and agility. Well, I gotta tell you, Scott, of these, the one that has really caught my eye, the evolve brand messaging and accelerate menu innovations new occasions.

I love the protein cup and menu innovations that are both a little bit lower in price, which is good,'cause you said you wanted younger people to come back But protein is it. It's what people want. The commercials really resonate. It's got to be driving people to your stores.

Yeah, we're seeing a r a lot of really positive momentum in the business after the launch of the protein menu, which gets us excited with an opportunity to really accelerate growth uh here in twenty twenty six around new menu offerings. Uh as well as approachable price points. that have a meaningful impact on the consumer, specifically the lower income consumer, uh which we're seeing to rebound um for us as well.

So we're excited about what's in front of us. Menu innovation this year will be nothing like you've seen historically. We're going to launch four new protein LTOs and also pepperin, sides, and dip. That'll drive new occasions. And what we're seeing, Jim, is when the consumer comes in and tries an LTO for the first time.

uh their annual spend and frequency goes up exponentially as compared to a consumer that doesn't try an LTO. Now will it matter if it's done before for instance you got a one two post. You have a terrific Super Bowl ad strategy. I mean it. I think it's great. And then the next day we have Chicken Al Pastor back in the stores. Will people r uh gravitate to that? Uh people who didn't know Chipotle, because you know that's my no, that's a lot of people's favorites LTL.

Yeah, so it's our most requested LTO in the brand's history, Jim. We couldn't be more excited to bring it back. It launches on February 10th. Full ad campaign, full media um uh uh you know, uh plan and strategy. So

We're excited about the product, but it's only one of the really great LTOs we have teed up for the year. Can you give us a little bit of secret to the others? You know how much we love the LTOs. We talk about'em constantly and Chicken Out by Store is our favorite from uh really our favorite too.

Uh you may see another uh true and proven favorite. You may see something new on the menu, Jim. I can't give you the sneak peek that I want to give you. I will tell you our culinary teams have been working around the clock. Throughout 2025 to bring forward innovation that is on brand, on trend, that we know our consumers are asking for and looking for.

that'll drive meaningful transaction growth in twenty twenty six. Now you're doing a lot behind the scenes too. I mean you give you're starting to promote I saw all the promotions you gave for the people who run the great stores, which is what we want. We want people smiling at us, we want people happy, but I guess you also have to you know maybe uh let some people go. Not everybody bought into the plan and I think I see it. I think a lot of us see it. Those us regular people

see a different Chipotle's. There's a different feel. I'm not kidding. There is. I appreciate you saying that, Jim. I couldn't be prouder of how hard our teams have worked this past year on the Chipotle business. We are hiring a couple of new new key positions for the organization that'll help us really support and strengthen our strategy in 2026.

We're gonna hire a new chief digital officer that'll really take on digital commerce as we reimagine our rewards program. Uh we continue to lean into our third party business to understand our strategy between different partners in three third party. as well as bolstering and making our white label uh more approachable and more meaningful as well.

We're going to hire a new VP of Emerging Technologies to help us really get our full our business forward as it relates to industry leading technologies and really harness the power of AI to drive efficiencies in the business as well. And then of course lastly we're looking for a new chief marketing officer that'll really take our brand through the new brand voice and the new brand narrative that we're looking to create here in twenty twenty six. Well it's happening. I wanna know.

Uh how I can win uh at least a part of a million dollars on real food on game day uh with Instagram reels. You got something good going. I think it's very funny and very exciting. We like it. It's our way into Super Bowl to do an activation that's meaningful for our most loyal guests. And so we're gonna hand out over a million dollars worth of free burritos.

Couldn't be more excited about giving our wholesome and nutritious food to those that care about our brand the most. So it'll be a really exciting Super Bowl. You know, uh I was talking to um Brian Nickel the other day from Starbucks. Now he feels that w some of the underperforming stores he just has to close them.

What is your feeling on the underperforming stores, what you have to do? Because I'm sure there will be people who say, listen, if you close them, we'll get the comp stores up and then the stock will go higher, not lower. As we look across our portfolio and we go through an annual analysis, Jim, as you can imagine, we are very fortunate as a brand. Chipotle really doesn't have restaurants. that are underperforming as it relates to margin impact or margin growth.

We do have a handful that we see each year, but it's it's in the tens, not hundreds. Uh and then we take a a very hard approach to thinking how do we either have an offset strategy for that location or close the location permanently. Uh but it is our goal to continue to grow this great brand with restaurants and as you know we have the lowest build costs of most restaurants in the space with the best economic model and the best returns and so our restaurants just perform well.

All right, well you look I you know I'm always gonna be concerned because I do wanna see positive comps and people will sell restaurant stocks that don't have uh positive comps and will go down. But I saw you bought back seven hundred and forty two million dollars worth of stock at thirty four fourteen. Um then the stock did go higher, but now it's coming back. Are you are you going to do that?

We're gonna keep buying, Jim. We bought back a record number of shares in 2025, just over$2 billion worth of shares. We have a plan in place this year. We just got board approval for another one point eight billion for the year. We will continue to buy back opportunistically and continue to return value to the shareholders. Well look I wanna congratulate you. I know again uh

The stock doesn't necessarily affect the changes. We do know the changes. They're definitely you told me you were gonna have to get tough. I know you had to do that. I know no boss wants to do that. I know it's working. I can't wait till February 10th because Chicken Al Pastor comes back. Thank you so much, Scott Bartwright, CEO of Chipotle Mexican Grill. Good to see you, sir. Jim, thanks for having us on. Enjoyed the conversation. Thank you. Me too. May I might even be back here for the break.

Coming up after a strong surge in the past Pharmaceutical giant Merck looks to be moving. Kramer's meeting with Find out what could be in store. This morning Merck reported a very solid quarter, but gave what some people thought was a soft full-year forecast. Yet the stock finished up the session more than two percent.

Why? Because investors realized that the guidance was dragged down by one time costs related to a big acquisition this year. How could they not know that? This is one of my favorite pharmaceutical stocks.

So let's take a closer look at Rob Davis, the Chairman CEO of Merck. Mr. Davis, welcome back to Bit Money. Thank you for having me back. I appreciate it, Jim. Absolutely Rob. So when the news came over, I turned to my colleague David Faber and I said, Don't you see it's so much more than Key Trude?

That was the theme of this quarter, wasn't it? It really was. I mean if you look at where we are, I would say uh the our transformation is underway. We're starting to see new launches that are starting to drive our growth. And but importantly we have uh some really critical data readouts that have come, new product approvals.

And as we look forward now, given the progress of our pipeline, we now see line of sight to over$70 billion of potential commercial opportunity from probably one of the most diverse portfolios we've had in years. Over 20 big growth drivers. uh contributing to that ten alone we can probably dive into that are really critical. Well we want to do that but first I want to say people have to understand that is a very high number, a much higher number than you used when you were last here.

Yes, it's twenty billion dollars more than where we were same time last year. All right, so let's go over some of the big drivers because I know you've got some positive results for some phase three studies. Yeah, no, they are. Uh you know, in fact we have so much that in some ways investors are asking us to try to to compartmentalize it for them to understand it. So we've what we've focused on are really ten

key growth drivers. These are are three assets that are launched, one that has positive phase three data, which is enlicitide, and then six that have important phase three clinical readouts over the next twelve to eighteen months. Those alone Account for seventy percent of the seventy billion dollars I was referring to. Let's talk about enlicitide. Uh I take a drug called Rapatha. My cholesterol has plummeted.

But it hurts. It hurts like the dickens. I have to do it every two weeks. Boom! And I don't look forward to it. You have something better for you, please? Well, you know, what we have is, and this is really the magic of macrocyclic pepti technology, which is something we've invested heavily in. But we're able to basically create in a pill form the same as a monoclonal antibody. So the same way it acts.

the same binding characteristics that a monoclonal uses we have in the form of a simple to take, easy to use pill that brings uh like uh efficacy that you would get with a drug like Rapatha, but at

affordable cost and something that we'll be able to take to the globe. Now I before we go on to some others, is there anyone who would choose a give themselves a shot over a pill? I don't know. Well you know what we see in the research would say that I think generally people if they can take a pill uh they they prefer it, especially in this population, as you know, and I'm I'm actually on all these medicines myself.

Um you're taking multiple pills. So really you're used to it. If something you do in the morning And I think it's something that will be very easy for people to be compliant with. Do you think it's possible that it could have like I feel for a repatha that it may be actually reducing plaque some maybe even in my brain. I know that's just like You know, could happen, could not. Would you ever do studies with your drug to see what else it might do?

Um you know down the road we we we will but obviously we're very focused right now on trying to drive for secondary prevention. And I wouldn't make a point because I know people often focus on us around what you see as the monoclonals. We're not necessarily trying to compete with the monoclonals. We think we need to expand the market. If you look today, only six percent of people who could be on these drugs are. Our question is why? We need to get more people on them and if we do this.

It'll lift the tide for all boats. Okay, now we you were here when Minrevere uh the great stuff uh is going. Now look at the numbers already. It's it's doing pretty darn well. Yeah. No, WinRivere has been really it's a it's a miracle drug. Uh if you look at this, and we talked about this I think the last time I was on. PAH is a devastating disease. Uh primarily affects women and childbearing years of life.

uh mortality rates are are pretty high and it's it's really uh it's just devastating. But what we've been able to do with uh p with what we have with Win Revere is now bring a treatment. that's starting to show uh positive results. And importantly, we actually have just read out phase two results in the cadence study, which potentially could expand this beyond pH.

into pulmonary hypertension related to left heart disease. Oh wow. That could double the size of the mouth. I was gonna say that is uh pre unfortunately very prevalent. Yeah. Now uh I had become uh a believer that I take the flu shot but it doesn't really it's not that effective. You've got something for us that's quite different, aren't you? We do. So we did a deal we actually just closed this month, uh, for th for the company called Sidera Pharma. Uh they have a uh uh an investigational

long acting, antiviral. It's straining Gnostic, so it doesn't matter. It works whether it's influenza A or B, and it will last for the season. So you take shots At the beginning of the season, it protects you for the full season and we showed seventy percent seventy six percent

uh reduction in the risk of getting the flu for patients who were on that in our phase two study. We've now moved into phase three and obviously we see it as very important. There's a hundred and ten people who are high risk. or immunocompromised or over the age of sixty five. This is a perfect antiviral for that population because it brings the protection they need. No, I really thank you for that. Now one last thing that we were talking about before we started filming.

I see something and you see it. Uh we're starting to give a better price journeys multiple to really superior companies. We didn't even have to talk about Keytruder. There's so much good here. There would have been a fear that Key Tudor would take you a single multiple, some would go

But really good companies are starting to get rewarded for really good science and your company's one of them. Well I appreciate that and I'm proud of what my scientific team have have done. My superpower, if you will, is I get out of their way. And I I enable them to do what they do best, which is find great science and invest behind it. And we sit here today with one of the deepest, broadest pipelines we've had, and our ability to have a real impact for patients, I think.

uh is going to have a meaningful impact for years into the future which I'm very excited about. And at the same time for people who are worried that there could be a government intervention, I'm not seeing anything from HSS that's against your vaccines. And I also know that you finished the most favorite nation.

And that that's behind you. So it's the government may actually be not really involved right now with Merck other than to say, hey, listen, that's a good drug. Yeah, no, so if you look at it and maybe with the the the most favored nations agreement, you know. We shared the administration's concern that we have to find ways to lower out-of-pocket costs for the you for people in the United States.

And we had to get prices up in other markets around the world to pay their fair share. So through the deal, we were able to strike, we achieved those objectives. It does have impact, but it's manageable and if it can ultimately achieve the goal set forth, I I'm fully supportive of it. So I think we're aligned with the administration and as you said, I feel like we've

We've uh job done on that front on achieving the objectives they want to achieve. And people need to do know that they're not gonna be blindsided. That's over. Well I want to thank Rob Davis, CEO and Chairman of Merck and remember.

We accepted that Key Truder is an unbelievable drug and we dealt with all of the future, which is why don't worry about what's going on now. Key trudor's fantastic and it will be. But I think you need to know well in the 30s line of sight, that's your takeaway. Mad Money's back there. Thank you, Rob.

Are you ready? Ski daddy turned for the light round clearance and right start with Bob in Ohio. Bob! Hey. Fantastic. Love it. Um, what are your thoughts on Gladstone Land Corporation? Land, symbol land. Um I don't know what they actually owe. They own farmland. Don't know where, don't know when. I think you should caching caching that one. Uh okay, next. Let's go to David in Texas. David Yeah, my stock Jim is uh Solstice Advanced

Oh, I know Sol Solstice is terrific. It's a spin of behind well. It's been just a horse. We own We were too quick to sell it. It's a fantastic stock. And that, ladies and gentlemen, conclusion of the Nighting Round. The Lightning Round is sponsored. Coming up, much has been made of the potential Impact of OpenAI's financial commitment. Should you be worried? Kramer is doing the calculation.

Not that long ago, I thought that OpenAI, the company behind ChatGPT, could be the Achilles heel of the fourth industrial revolution, the one that NVIDIA Jens Monk talked about earlier in the show. We know OpenAI is blown through billions and billions of dollars. They've made all sorts of deals, including a$300 billion transaction they owe to Oracle to build data centers over roughly five years.

They don't have the cash right now, but they're number one in the gender of AI space, and despite what you may read in the endless hit pieces in the paper, I think they will be able to raise the money. Will OpenAI get it in several tranches, with one involving Jensen putting money into the company, maybe$10 billion a clip for each gigawatt? Well, they get it in a private fundraising round involving many buyers at evaluation, say a$500 billion, uh$700 billion,$800 billion.

leaving room for a trillion dollar IPO? Well will NVIDIA come in with anything they want because they've been such close partners for such a long time. You heard Jensen earlier, it's a very close relationship. Something that OpenAI C CEO Sam Altman posted on X just that he agrees less last night. If that's the case, then why the heck did I have to ask Jensen about the relationship with OpenAI? Simple. There are a bunch of articles that indicate their partnerships on the rock.

that NVIDIA might not participate in any fundraising rounds, that the deal is chimerical, that it might not work out at all because OpenAI has problems with NVIDIA's chips, or that NVIDIA would like the deal to be more exclusive and exclude rivals like AMD or Broadcom or else. To me, this stuff is all inside baseball and probably wrong, but it's become the most important stumbling block to open AI coming public, which would be the best way for them to raise a lot of money very quickly.

I spent a chunk of valuable time with Jensen to clear this up. If you listened, I think you came away with a sense that no more questions need to be answered. It's done. There's no distance between Sam and Jensen. I did this interview in part to help you through the thicket created by the business media, where negativity always draws more attention than positivity, and many aren't constructive.

When somebody writes that there are seven or eight people at OpenAI who don't like NVIDIA, or there are some Zecs at NVIDIA that have objections to OpenAI, in the end, all I can say is These companies have CEOs. And for now, Jensen Wong and Sam Moltman are on the same page. And last I looked, they are in charge. I like to say this always, Bull Market Summer, Thomas Ryan, just for your ear, man, money. I'm Drew Clembert. See you tomorrow.

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