'Mad Money w/ Jim Cramer 5/26/26

Up more than 200% so far this year, including a 19% gain just today on a very gross research cut about its whole year prospects. Micron is now the 10th largest company in America. Part of the most emotional, exciting bull market in history. Although Micron's one of many semiconductor companies that have been knocking on the trillion dollar door. It caught fire this time because memory was always a boom and bust business, but this time the boom seems unrelenting.

It's run by the contemplative Sanche Marotra, no stranger to our show, of course, he's self effacing and low key. I know I've been far more promotional than he has about Micron's prospects. In the end, it's been a monumental transformation, which is why some analysts say Micron's still cheap at these prices, and there's a rigorous case to be made that that's true.

And look, it's not easy breaking into this trillion dollar club. Why don't we do this? Let's look at the other ten members so you know. Let's start with the world's largest company, and that is yes, NVIDIA. It reported a fabulous quarter last week.

I believe the company needs to pivot its cash management strategy more toward Apple under previous CFO Luca Meistri, where it bought back a huge amount of stock while boosting its dividend consistently. Back then, Apple shrank its share count by a third. Now NVIDIA may be on that path already. They announced a twenty-five cent dividend. That's twenty-five times the previous one.

And they it's a quarterly dividend. And they added eighty billion dollars to its buyback authorization. I think they may need to say that this is the new normal. Otherwise, they might not be able to attract enough new buyers. It should also trim some of the biggest winners in its stock portfolio for additional firepower.

Worst case scenario, if all the major accounts already own NVIDIA stock, that's what I keep hearing, then the company ends up buying it by itself. I think that is a fabulous use of capital. Next member of the club, Alphabet. Oh, there's a lot to like here. YouTube, the largest video company in the world, way more than everyone's self-driving car. Uh it search including Google and Gemini and Google Cloud, which is the best horse that I want to bet on. streams higher price lookout NVIDIA

Third, Apple. Okay, it's got the best hardware, it's now snared one of the best AI platforms with Gemini, the logical extension of Google, which pays Apple a fortune, by the way, to be the marquee search product. Now, Apple was thought to be behind in AI.

For all the stuff that you read in the papers, did you ever switch your handset to another company because of that? Of course not. Now they have a very smart Siri that's getting smarter and smarter. Nothing comes out of Apple unless it's near perfect. Lately that's been paying off with an ever higher stock price and a lot of acclaim. Now here's a tough one. This is Softie, Microsoft.

That's a terrific cloud business. But it's weighed down by enterprise software and Wall Street disdains its AI product co pilot. So then why does my charitable trust still own it? Did I go to college to get stupid? Hardly. Because we simply cannot believe that Microsoft won't fix things. It has so much money, it has so many smart people. I have to believe they can figure it out. If they can't, then the stock will have to go.

Something we will discuss tomorrow at our noon call for CNBC Investing Club. Hey by the way, I hope you join us. The club's got this great four buck deal. It stands till tomorrow afternoon. Come will you just join?

I got that wrong. The new chips actually most certainly will hold their value for several years. Pretty similar to NVIDIA's, but for a lower price. Gotta point it out. I think that's one reason why NVIDIA stock is actually stalled. while Amazon's stock has been going ever higher.

Six is Broadcom. Now this is sleeper because you don't see its name anywhere. It makes custom chips for Google, Meta, ByteDance, Anthropic, which buys Google's chips too. Broadcom also has its own enterprise software business called VMware, Gateway to the Cloud, among other things. CEO Hawk can

Lots of people think that Elon Musk will merge this company with a soon-to-come Public SpaceX, where he has a dual class structure that uh that would allow him to break away from the noisome, unhappy Tesla shareholder base. I don't blame him if he does it. The next two companies need to worry about keeping their trillionaire status and staying in the top ten.

There's meta platforms and Berkshire Hathaway. Now we just aren't sure Meta's doing beyond we what it's doing about Facebook and Instagram, eyeglasses, AI, WhatsApp. Now that's actually a pretty powerful suite of products, not saying that. But the company has not excelled in a visible way, at least not in a way that makes meta seem like it's printing money the way it used to.

We know they're spending a lot of talent. Uh we know that they've been able to pull multiple rabbits out of a multiple hot. But we're in a what have you done for lately business? And the answer here is not a Hey, pulling up the rear is an insurance and reinsurance company with a very solid leader, has a lot of other good properties, much in oil and gas and in a railroad.

That is alas what Bertrand Hathaway really comes down to. Now that Warren Buffett has stepped down, people are gonna get bored with earning this stock and the only thing that's really gonna keep him in there is that they don't wanna pay the capital gains tax. When they bring the register, that's what you have to do.

I like the mosaic of businesses, but a lot of people are in this stock because they believe in Buffett, so they might actually want to retire along with him. Pon the eleventh largest US company, holy cows. Smaller than micron, but still just over one trillion. Eli Lily! The drug maker had seen huge growth at scale in recent years because of the strength of the GLP-1 drugs for diabetes and weight loss. But as good as it's been, the Lily story somehow continues to improve.

Last week we learned that it's got this new weight loss drug, it's called retitutide, retitrutide, which was very effective in phase three trials, seems to be able to bust fat, not muscle, although that's not what the company is hailing or clinic. And over the weekend a separate gene therapy treatment showed great data when it comes to reducing cholesterol. Now there's a reason this is is the only healthcare company to earn a trillion dollar valuation. Brilliant manager.

Now I left out the foreign stocks, but let me mention them if you want to think about the whole world.

In the world of AI, Wall Street's falling in love with hardware just like software, like the one stock of uh the once red hot stock of Zscaler, which disappointed this very evening. Meanwhile, we've got three big IPOs coming this year that could potentially join the club right out of the gate. There's SpaceX, Anthropoc, and OpenAI. More on SpaceX later.

What's the real takeaway here? The bottom line is that we're on the verge of a new era where I think the trillion dollar club may be a heck of a lot easier to join than in the old days when the club excluded the riffraff. AI has changed the order of things. No, it's not being debased. It's just becoming more inclusive. As it should be. Robert New York, Robert!

But in the end these companies deserve to be judged on the merits. And that's why tonight I want to go over SpaceX financial. Then after the break, I'm going to zoom out and give you the big picture, bull thesis, that's got Wall Street so excited about this one. Full disclosure, the numbers here are not very impressive, especially when you consider the kind of valuation this company's already getting.

SpaceX has gotten complicated over the years. In addition to the rocket business, they've got Starlink for satellite internet and Elon Musk's AI platform, XAI, which also owns the social network formerly known as Twitter. SpaceX's revenue has grown from$10.4 billion in 2023 to$14.0 billion in 2024 to$18.7 billion last year.

In the first quarter of this year, it's posted just fifteen point four percent revenue growth, though, and that's a major deceleration from last year. That's not much revenue for a company that's eyeing a two trillion dollar market capitalization. People go nuts for this one. It'd still be difficult to get there. If you just look at the last 12 months, SpaceX sales falls somewhere between in between Dollar Tree, that's an$18 billion company, and America Prize Financial.

Of$41 billion company. At$2 trillion, SpaceX will be trading at roughly 100 times trailing 12-month sales, which is crazy expensive, even as a lot less prosaic than the two companies I just mentioned. Then there's the question of profitability. Using the strictest gap numbers, SpaceX is currently losing money. They had an operating loss of one point nine billion in the first quarter and net loss of four point three billion dollars.

However, using the more charitable earnings before interest, taxes, depreciation, and amortization numbers, which is standard for a capital-intensive business like SpaceX. Then you get a better story. This company is putting up tremendous EBITDAC growth for the last few years, but in the first quarter of this year, this profit metric was down nearly thirty-five percent versus of the previous year.

Of course this is an inherently lumpy business. It's made some big acquisitions, so it's really hard uh to tell how how much we should read into the recent EBITDA shrinkage. What else? Even though SpaceX has a pretty clean balance sheet, one that should be pristine after it raises$60 to$80 billion from the IPO, it's also burning cash like a drunken sailor.

The company's free cash flow has gone from slightly positive in 2023 to down 5.4 billion in 2024 to down 14 billion last year. And in the first quarter, their free cash flow came in at negative 9.1 billion. is downright hitting us, certainly going in the wrong direction. Why? Because SpaceX is investing heavily in AI infrastructure and its Starship launch program. The real question is whether those investments are worth the cost. So let's do this. Let's take each part of the business separately.

The space division is SpaceX's bread and butter, basically using reusable rockets to offer four higher launches to both the government and to the private sector. The connectivity business is Starlink, things satellite internet service, the available even in the most remote locations on Earth. Finally, the last business segment is AI, which includes XAI's compute infrastructure, as well as the company's AI model, Grok, and of course X, the platform formerly known as Twitter.

The space segment has been able to steadily grow its mass to orbit over the past couple years. That's the amount of weight it's physically bringing into space. Last year SpaceX represented 80% of global mass to orbit transportation, and it's still growing steadily. Very positive.

There are two things that we're watching for the space business. First, its revenue growth seems to be slowing a bit. For the last few years it's grown at a high single digit clip. And in the first quarter of this year it was down twenty eight percent. Again. This is a lumpy business. Second, the space division is taking a turn for the worse in terms of profitability.

Their IBITA was nearly cut in half last year and it came in negative during the first quarter of twenty twenty six, thanks to the cost of their starship program test flights. Next, there's Starlink. Okay, now this is by far the most attractive part of the SpaceX uh mosaic, at least at the moment. The number of Starlink subscribers has more than quadrupled just since 2023. Connectivity revenue was up fifty fifty percent last year.

And in the first quarter of this year it was up thirty-two percent. That's all from subscriber growth. Mo most importantly, the profits from the connectivity segment have steadily grown. Including twenty nine percent EBITDA growth in the latest quarter. While that's a slowdown uh from last year's eighty six percent clip, it's still pretty impressive.

Starlink's the engine that powers all of SpaceX as the company invests heavily in AI and space exploration. You could argue that when you buy SpaceX, and this is really important, you gotta note that You're getting Starlink and then a bunch of money losers that may or may not pay off in the future. I'm trying to be stark here. I'm trying to be really clinical. Finally speaking of money losers, there's the AI segment. Right now it's a money pick.

SpaceX did get$3.2 billion in revenue from the AI business in 2025, up 22% year over year. And it had 13% revenue growth in the first quarter, nearly all of which is either from selling ads on X or selling subscriptions. But the bigger story is that the losses have ballooned for XAI. Like everyone else in the

They've been spending heavily on data centers and that's put a real dent in the numbers. Of course, Elon Musk views the AI business as the vast majority of SpaceX's future total addressable market or TAM, so presumably he's happy to make these investments. But man For the time being this has proven to be v a very expensive endeavor.

By the way, in its uh IPO perspectives, SpaceX does break out as capital expenditures across its three divisions, okay? Their ca total capital X expenditure has gone from four point four billion in twenty twenty three. to twenty point seven billion last year and ten point one billion in just the first quarter alone.

Now that's mostly from the Starship project and the space business and especially the AI investments at XAI in the first quarter. Their AI spending more than tripled it year over year to seven point seven billion. Expensive like everybody else. That in more detail than then it's probably more than you ever wanted, but you must know if you're going to put in for the deal. It's the basic financial overview for SpaceX. You must know this. At least it's what the business looks like right now.

And if you haven't picked up on this point, I'll say it explicitly, purely from the numbers, it's very difficult to justify giving SpaceX a two trillion dollar valuation. But the bottom line is that people have been willing to pay up in the private markets, and I bet they'll pay up in the public ones. Why? Stick around after the break, and I'll explain the rest of the SpaceX story. The part that can't be captured by the four walls of the spreadsheet canvas, the part that can justify the system.

Stake of the offer.

See, there's more than just the numbers in this perspective. SpaceX is an Elon Musk vehicle, and that means it's all about the story, about a vision for the future. If you believe in that vision, two trillion dollars, it doesn't seem that unreasonable. From the very start, SpaceX lists its mission as building, quote, the systems and technologies necessary to make life multiplanetary, end quote. So you can see this document is one of great optimism.

They even included a chart that talked about a twenty eight point five trillion total addressable market, although as critics pointed out, that's nearly the size of the entire US GDP last year. Now, I don't want to get into the details too thick though, because that's almost beside the point with this one. Long story short, SpaceX believes it can make a fortune. As long as it keeps investing mainly in artificial intelligence.

The prospectus lists a ton of different long-term great growth opportunities in space, in Starlink, in AI, where they're talking about deploying data centers in space where solar energy can create a real edge over terrestrial data centers with huge power demand. But I'm more interested in their near term plans. There are three in particular that make SpaceX relatively enticing right now.

First, let's talk about the Starship program, which is SpaceX's effort to create a much larger, reusable rocket than their current product line. The idea is that this thing will be able to deliver 100 metric tons to Earth's orbit and then come right back down.

That's nearly double their heaviest existing rocket, and Magma believes they can get to two hundred metric tons in the not too distant future. Hey, they just did the twelfth test for Starship last Friday, one that hit most of its targets. The plan is that these will go into operation sometime in the second half of the year. If SpaceX can really make that deadline, that'll be a major boon for their slowing space division.

The second near-term growth opportunity mentioned the prospectus is SpaceX's recently announced deal to lease some of its NVIDIA-powered data center capacity in Memphis to anthropic. Apparently Anthropics agreed to pay SpaceX$1.25 billion per month through May of 2029 for the right to use its compute with capacity ramping in May and June for reduced fees. In other words, SpaceX is AI segment, which had$3.2 billion in revenue last year, could see an incremental$15 billion in revenue per year.

Starting almost immediately. SpaceX all also said that they quote expect to enter to additional similar services contracts, end quote. All this amounts to a a new hyperscaler like business for SpaceX, similar to Amazon Web Services, Google Cloud. This anthropic deal alone dramatically changes the economics of the AI division, typically transforming it from a money pit to a moneymaker.

The third year-term effort that we got more details on the prospectus is SpaceX's deal with Cursor. That's an AI startup that lets clients write software code through simple text prompts. It's kind of similar to Claude Code or you might have heard of OpenAI's Codex. In late April, SpaceX and Cursor announced a deal to work together with Cursor giving SpaceX the right to acquire them for sixty billion dollars in stock.

Or they could simply pay ten billion dollars in case SpaceX decides not to pull the trigger. The main part of the agreement is that SpaceX will quote provide cursor with certain GPU cluster compute capacity and collaborate to improve existing models, including ROC. And potentially jointly develop AI models and rel related model specific deliverables or products. Basically, SpaceX gives Cursor compute.

And in return, it gets to use cursors technology to improve Grok and doesn't create all other AI products together. We'll probably know whether SpaceX wants to go ahead with the acquisition in the next month or two. Now, how would that change the story? Well, Cursor is a very well-regarded company, and in addition of Cursor would boost XAI status amongst the leading AI labs, which really matters. Of course,$60 billion is nice out the small chunk of change.

It would be an all stock deal, though, meaning it wouldn't hurt SpaceX's cash balances, but existing shareers would indeed be diluted. And then the AI business would absorb whatever Cursor's financials look like. As with the Anthropic deal, that should help the AI segment's revenue, but we have to assume that Cursor's also a long way from profitability.

Honestly, there is much, much more in SpaceX's IPO perspectives than I've been able to cover, even in two segments. There are more details on ambitious projects that the company has in the works, like a couple projects that SpaceX is doing with Elon Musk's other company, Tesla.

There are key details about things like the lockup on insider selling, which could significantly impact how the stock trades in its first several months, and critical details about control of the company. Long story short, Musk's grip on SpaceX is ironclad. Thanks to its 94% ownership position in the company's Class B shares, which have 10 votes per share. But we'll have plenty of time to dig into the rest of the story as we get closer to the IPO and learn more about the deal's pricing.

For now, I just hope that you have a much better understanding of what the SpaceX business looks like and what some of the top near-term growth opportunities might be. Look, overall I think the SpaceX prospectus is a bit of a rorshark test. There will be some stayed value investors who put their pencils down after going through the current numbers and decide, uh-uh, this business just isn't for them.

There will be other more optimistic, less detail-oriented investors who don't need to look at anything more than the total addressable market chart. And hear things like quote data centers in space and quote and asteroid mining to know that they're buying this stock no matter what the price looks like.

I don't know much about asteroid mining, but I do think Musk will be eventually be able to send da data centers into space if he wants to. I just don't know what happens if something goes wrong. Very expensive to do repairs in orbit, right?

At the same time, I bet there's a whole contingent of Musk's most fervent believers who swap uh out of Tesla into the Superior SpaceX once they have the chance. Most investors are gonna fall somewhere between these two camps, which is a reasonable place to be, frankly. Uh here's the bottom line.

Historically, it's rarely paid the bet against Elon Musk. But at the same time, SpaceX is far from perfect, and the stock's almost certainly going to be expensive. Even if you want to own it, you might not want to buy it right away. But then again, that depends on where they price the deal. Either way, it'll have a huge impact on the rest of the market, which is why I'll keep following SpaceX so closely. And if you do decide to try to get some stock,

It might pay to put a limit order on your or uh no matter what, okay? Whatever price equates to two trillion dollars market cap, as I simply can't justify paying any more than that without new information that changes the company's near-term prospects. Let's take calls. Let's go to Pete and Georgia. Pete.

To get the stock price up, but that's certainly not their goal. It's to get the business strong, and they're doing a great job. Alright, look, SpaceX will definitely be an expensive stock when it comes public next month, but it's really paid the bet against Elon Musk. Now there's much more man money in it, including my sit-down with a company called Um Bridge.

Private players using AI to empower health care providers. I'm finding out more about the company's mission and its prospects from the CEO. And it might be easy to cast aspersions on the data center build out. Is there more to this story than just the headlines that all seem so negative? I'll break it all down, you doomers. And all your calls rapid fire in tonight's dish of the lightning round. So stay with Chris.

Basically the goal is to make it so doctors and nurses are wasting less time on clerical work, more time on you, the patient. It's a good pitch, which is why Abridges managed to raise$830 million and reach a private market value of$5.3 billion right now. It's also clocked in at number thirty on CMBC's annual disruptor fifty list, which you know we like to talk about a lot here.

So, what does the future of this industry look like? Let's take a closer look with Dr. Shiv Rao. He's the co-founder and CEO of A Bridge. To learn more, Dr. Rao, welcome to Mad Money.

And what we want to do is use technology, use AI to bring those people closer together. There are so many different distractions, so much clerical work that gets in the way. And if we can bring them closer together by unburdening clinicians like me, I'm a practicing cardiologist from all the

clerical work that crushes my soul at night, so that I can just fully focus on the person in front of me to deliver the best possible experience, to deliver the best possible outcome. It's a win for everyone.

Then I'd walk in the room and we'd have all kinds of chit-chat. I think that's what you're referring to. Maybe we talk about the sports games over the weekend, maybe we talk about our families. And maybe, you know, in those in-between moments, we're talking about chronic diseases. We're talking about, you know, all the really important medical stuff.

And then afterwards what I would have to do as the doctor, I'd have to write the notes, I'd have to place the orders, I'd have to do billing and what they call coding, medical coding, it's like accounting. I'd have to do all kinds of work that I never went to medical school to to learn how to do.

And so what a bridge allows clinicians to do is walk in the room and already feel like a superhero and what questions they need to ask, because we can kind of give them this cheat sheet, this digest about who this patient is. Then during the conversation, we don't interrupt them. We don't have any flashing lights or beeping sounds. You can be fully present. You can make eye contact.

And you can have that chit chat, resting assured that at the end of the visit, we're going to create all of those artifacts. We're going to do all of that clerical work for you. We're even going to help you make better decisions by. helping you understand the latest evidence related to, you know, the specific diagnostic or therapeutic treatment you were thinking about.

I think all of us want to make more eye contact. We wanna be more present with each other. And this technology, when you point it at the right problems, can actually f help help Help industries like healthcare feel more human. You know, we have a mantra in our company that we want to save time, we want to save money, and we want to save lives. Okay. And if you reflect on yeah.

But when you think about the impact also on the professional side of the room, there was a there was an article that was published a few years ago in the American Journal of General Internal Medicine. And it suggested that doctors need 30 hours a day to get all of their work done. But they also pars all the tasks, all the jobs that sort of took into you know made up that thirty hours. And for us that's a lot of our roadmap right now. What can we do to help clinicians?

really operate at the the top of license, as they say in our industry, so that they can be delivering not just the best experiences, but also the best clinical and financial output.

And we need to be able to push data back in. And we absolutely have that ability and it's it's not going anywhere anytime soon. I would say in general, across a lot of the different vertical industries, there's so much opportunity with this technology. And what's been wildly exciting over these last years, especially in healthcare, is that we're seeing a lot of different entities see this as a positive sum sort of opportunity to connect dots.

that they might not have thought to connect before. So for example, we're partnering not just with health systems, not just with systems of record and electronic medical records. We're also partnering with systems of record on the insurance company side.

systems of record on the life sciences and pharmaceutical company side. But for us, it's all about at the end of the day, what kind of value are we creating? And if we're improving the experience, if we're improving the outcome over the long term, we know, you know, we're on the side that Ultimately, absolutely gonna have to win.

Right now, if I were on the city desk, I'd be writing negative things about the data center. The focus, they rip us off by using our resources, pushing up our electric rates, and they don't even hire many people after they're done being built. I'd get a quote from whoever was building it, Amazon or Google Quarry. It would be perfunctory, just the way I wanted it. Just enough to say, eh, I tried the other side.

I'd start the piece with a family or a person typically lower middle class who's most aggrieved. Find someone with a sympathetic case to frame the story. No sense to start with the facts. That doesn't grab anyone. Then I would throw a real parade of negatives right down to the obligatory quote from the offending company.

Then I handed into the desk to General Claim, which led to the story running on the fabled upper left corner of the front page, next to a picture of the family, of course, perhaps standing in front of the construction site. If I had to do a story about the data center for, say, the business action, well that's easy, fire up some bubble talk.

First I go to billionaire Ray Dalio. He's always good for something negative, with a few qualifiers, of course. Perhaps we're early stage, maybe we're mid stage. Either way, it never seems to be a good stage.

I don't mean to pick on Dalio Dalio. I mean what are they gonna say about that he's a kind man, that he's a wise man? Probably in the end anyone who will consistently give you bearish quotes makes great copy. Then we need a story from someone who wasn't old enough to trade in the dot-com Europe but has made a ton of money.

And is saying that all these stocks are over value. The zoom.com, street.com's webbans of the present moment. I wonder if you use Gemini or ChatGPT or the fast rising claw to look this stuff up. I don't even know if I need anything else to write that hatchet job and get it published on page one of the business section.

Get a lot of lot of praise. Now here's the truth. Yes, data centers can be a mess. They're not automatically good for the places where they get built, but the builders of the data center are rich. They're really rich. And if there were any politicians or regulators worth their soul. They negotiate for hundreds of millions of dollars of aid for their communities, as well as stringent environmental rules like the smartest towns already get.

They'd make the data centers pay up for new power generation too. Every single one of these negotiation points has been won by savvy communities. The builders will roll over if necessary, assuming someone asked them to. The POLs don't get it. The POLs are the villains!

As for the bubble, first, let's recognize that nobody's stopping you from ringing the darn register. There was a period between the third week of February and the second week of March in 2000 when you could cash out near the peak. Then it was over. There were no real bids. Any hedge fund would knock anything down.

Now there are bids galore. The companies may be borrowing a lot of money to build out their sites, but they're also beginning to make a really good return. Did anyone bother to listen to the NVIDIA call? They have almost 50% non-hyperscalers as business. They're on allocation for everything. It doesn't matter right now. It will someday.

What matters is that the companies involved in the data center build out are getting paid enormous sums to lay down structures that will be used for decades. The electric use will probably go down as we get chips that are more efficient. We can't get enough of these things. I just wish the companies building them would have gets smarter PR. The Dunderheads who do the data center build out shouldn't surrender before the war begins.

They should be building schools and hospitals ahead of the companies. They should shame the journalists for trying to stop the building of homeless shelters that they want to do, but they don't. So the cycle's endless. The politicians, rather than working with the data center builders, just gang up on them and get more good ink. It is all fragile. It doesn't need to be.

In the meantime, there's some young Jim Kramer out there trying to please city editors and business editors and the podcasters and the streaming sites and, of course, the linear business. And he does that by being as negative and corrosive as possible. Alex said there's always a bull market somewhere. I popped it up and just for you right here, man. Money, I'm Duke Waimer.

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 C N B C nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com forward slash madmoney disclaimer.