Mad Money w/ Jim Cramer 6/9/26

Something they can do. Why? Because they're spewing cash and have beautiful balance sheets. As recently as a few months ago, that described pretty much all the megacap tech stocks. But now we're searching for new leadership because tech can no longer be trusted. That's how you get a day like today where the Nasdaq spent most of the session deep in the red for a late afternoon rebound. Dow finished up 86 points. SP declined 0.26%. But even after the rebound, the Nasdaq sunk 0.97%.

Just think about it. Tech stocks have been the key leaders of this market ever since the mini bank crisis in the spring of 2023. Ever since. We tend to forget. But that's when the Magnificent Seventy emerged. That's when we began to see the semiconductors roar. It's when the enterprise software soared. Everything tech save the commodity chipmakers just took off.

They had perfect leadership qualities, good growth, fantastic balance sheets, steady buyback, scarcity value. The rest of the market seemed sluggish and suspect, with uncertain, inconsistent, episodic growth. Sell, sell, sell, sell, sell, sell, sell, sell, sell.

But now we're in a very different moment, aren't we? There's there there's no longer a scarcity of tech. We have some of the biggest IPOs of all time coming first space extendanthropic open AI heading up through. The only consistent tax are the ones that were the worst back then, the commodity semis. As usual, they bounce back hard today because they are acute shortage, but hot money loves a shortage.

Back in the heydays of Magnificent Seven, everybody loved that these tech titans were immensely profitable. But the new big three that we revere, SpaceX, Anthropic, and OpenAI, they're losing bazillions of dollars. SpaceX will have to do multiple rounds of fundraising if the company's going to keep paying for its great ambitions of space. That's fine.

But it's not what we liked about tech back in twenty twenty three. The other two, who knows? They don't have time for profits. The hallmark of the Magnificent Seven bulletproof balance sheets. That's what allowed them to have these robust buybacks. They were tight, they tended not to cascade.

These were huge companies, but there wasn't ever a lot of stock for sale. Secondary s are you kidding me? Now, with the exception of Apple and NVIDIA, we have stretch balance sheets calor. Alphabet, a few years of buying back stock, issued stock.

They might not be the only one of the seven that needs to raise money. I c look I can make a case that Amazon, Meta, Microsoft all might want to sell some equity. If I were running the show, I don't know. I don't want to show up in a hyperscaler gunfight with a pen knife.

Is there still scarcity value than big tech? And not after SpaceX then anthropic and opening I one after another after another. We don't really know when the latter two will come public, but I think those deals could happen sooner than we think. They need the money. Bloomberg says there's a$3.6 trillion AI pipeline. That's just no good. No good at all. No scarcity value here whatsoever.

I've said over and over and over again that uh that higher interest rates can can cur certainly hurt a bull market, but nothing kills a bull market like oversupply of stock. We're about to have supply coming out of our ears. It's so weird that today I found myself wondering if the SpaceX deal is even gonna work as well as I thought. Maybe they open it too high, as high as NVIDIA, five trillion dollar valuation, because a market orders and then it goes to Hades in a handbag.

Just a gusher of stocks sold by losers who use market orders and are furiously dumping it because they didn't know what they were doing to begin with. The only saving great spending are the people who are uh buying it, who who intend to buy SpaceX, well they're used to losing money because they're in Bitcoin and levered ETFs. Yes, it's the hot money that wants in on the SpaceX deal. The worst kind. Meanwhile, all the crypto charts.

I gotta tell you, they are maybe among the worst I have ever seen in my career. Whole areas are overwhelmed today, especially the enterprise software space. Once again, all that had to happen was for one of their number to disappoint and it was Sailpoint again. A cybersecurity company nobody ever heard of. But we know that they have debt. We know they went to Toma Bravo. We know that things are bad in that area. And then you know what?

They didn't raise their four kicks. That's what really happened. The kiss of death that was extrapolated to the rest of the group. Sale point plunged over eleven percent, ServiceNow down six percent, Adobe down three percent, and then I mean the same business. Salesforce all the way back down. Let's see. Too much supply, tattered balance sheets, gunner shearholders, no scarcity failure. Exact opposite of when the Mag Seven were anointed. And what led us today? Well that's pretty simple.

With a name like this, it's gotta be up ten percent. That's right, jam smugger. Okay, this is a little bit of a metaphor here. It's a pastice of pet food, coffee, uncustables, peanut butter, fruit sprays, toast is Twinkies, by the way, the Twinkies did well.

This company and others that have been left for dead, right? Victims of rampant inflation, health concerns, GLP dash one. But when you think about it, the food stocks do have scarcity value and decent balance sheets, although not a lot of growth, okay?

And that it makes them a little less attractive, obviously. The other leadership groups are a little more palatable to me, financials and healthier. The former have limited growth, but their stocks are cheap, having been beaten down by credit worries and lower rates. Credit can still be an issue, but rates will be going stable or higher, and that's good for the bank. Healthcare.

Eureka, I found it. This is the leadership group that we've been looking for. Take Johnson and Johnson has been shedding slower growing divisions like Kenview, his consumer products business as well as its commodity orthopedic operations. Focusing on fast growing drugs. I like that. It's got a ton of them. It's got a triple A bouncy better than the US government. I like the drug stocks here. I like the United Health here. I like all the companies that I think would just be even just

Not flying at biotech, but a lot of biotech. We also saw buying in housing related stocks because we got a strong existing home sales number, best of the year. I discount this group, but it's nice to see it as a pulse, even if it goes like this in the end.

Markets impact more than just housing. But terrific, two thumbs up. Today's buyers are clearly anticipating multiple good housing numbers. Good luck. I wish I could be that bullish. This weekend I penned a piece from members of the investing club, we'll talk about more of that later, saying that I'd grown increasingly negative about the market. I've said over and over and over again that we'd have to cut back buying rather dramatically, and we did some serious selling.

Because I'm so worried about this flood of stock supply. The only cure for too much supply is lower prices. So low that companies don't want to sell stock anymore and everything else seems attractive to you and me. We are not there yet. We're only on day two of the period of oversupply. But there's not much that can be done until these deals get through the Python. One last oddity. Many of these tech companies are coming public because they need money to build out their data center network.

It's telling you that the one company with a buyback that's cheap that will actually benefit from all these IPOs is NVIDIA and it is being slaughtered like everything else. That's the one to buy. That's the one that snaps back first out of this morass. And then the next one is Apple. Still has a balance sheet that's fantastic. Still has the buyback. It still has products we all love. Oh, Wall Street, stop complaining. You can't wait to get your hands on the new series. Shut up.

The bottom line, let's get off margin, let's stop the gunning and the speculating, let's raise some cash into strength. You won't regret it.

Shelley in West Virginia, Shelley.

And uh West Virginia's clearly for lovers. Let's go to Vish in California, please. Vish. Hi, this is Vish from California, first time caller. Excellent. Jim Jim, what did you think about Broadcom's earnings? Uh okay. Uh Broadcom's earnings were were not good.

And uh my trust lost a huge amount of money and I feel really badly about it. Uh it can make a comeback. I hope there's some insider buying. They did miss the numbers, but if you want to ask what Broadcom was like for me, Broadcom was like a week at a I got home and I just said I screwed up on Broadcom. It was just like 1982 when I got something wrong in the market. Nothing changed. I don't like that.

Well, Mad Money Tonight, Meta is launching a new initiative to address the of skilled workers in the US and I'm learning more about the plan from the

But honestly, the real problem is they're causing a shortage in skilled labor. We're simply not gonna be able to complete all these projects without hundreds of thousands more fiber technicians, welders, plumbers, electricians, I bring this up because Meta Platform has just announced a new initiative teaming up with legendary TV host Mike Rowe.

to launch America's Workforce Academy, the largest private sector commitment to the skilled trades in American history. It's basically a paid job pr training program and starting with$115 million in funding for Meta. That will help people get the certificate they need to do these jobs. This is new. It is different, and in a really cynical time in this country.

I'm calling it refreshingly constructive. Earlier today I got the chance to learn more about America's Workforce Academy from Dina Pal McCormick, met as president and vice chairman, and Mike Rowe, CEO of Micro Works Foundation. Take a look.

DNA and Mike, welcome to Mad Money.

to welders, to fiber technicians, and there are also hundreds of thousands of Americans who would love to be in those jobs. But they are often working paycheck to paycheck. Uber drivers, grocery clerks, waitresses. I waitressed my way through college. I know what that's like to pay to be focused on just making sure you get the paycheck that week. And that means you can't afford to take time off work.

You can't afford the training to get into these fields, and you can't afford to do it if you don't have a job at the end of it. And so America's Workforce Academy is really meant to address those barriers. When you graduate from this five-week very intensive program, you become job site ready. You can actually go on a construction and infrastructure site and of course after that. You've got to specialize in electricity, in fiber tr uh laying, in pipe laying, in w in weldership.

But what we saw is that if you can just get them on the job site and give them that credential with a guaranteed job, you really solve an enormous problem. And you have people that right now are not part of what is going to make America lead in AI.

We deal with stigmas, stereotypes, myths, and misperceptions that, in my estimation, have conspired to keep a whole generation of kids from giving the trades an honest look. So I've spent most of the last twenty years trying to debunk some of those misperceptions and make a more persuasive case. for the jobs that actually exist. What Meta's doing is dealing with that cohort of people who are ready to be persuaded but have run into some kind of financial impediment. There is zero

to what she's proposing. They pay for transportation, they pay for food, they pay for your training. When you leave you have your credential and a guaranteed job within the metaverse, but if you want to leave the metaverse you go and you take your accreditation with you. So uh they've literally eliminated all of those roadblocks that have existed up until today. So what this means for the workforce is anybody's guess. I can't wait to see how the needle moves, but what it also means

for a lot of the guests that you're about to have on your program is that the bar has been set. The gauntlet has been thrown down. And I think the biggest, most consequential companies In the Fortune 500 are going to be looked at and people are gonna wonder, what are you guys doing to close the skills gap? Right. And the answer better be persuaded.

Well today those frontline American heroes on these job sites are building the infrastructure that's gonna help America win in this critical race for our country's national and economic security. And so I think that dignity piece is important. It also is very real. We're not gonna win and American AI is not gonna lead if we don't actually build these sites.

with these women and men who are getting uh into these fields. And I think the thing that's really inspiring to us is that you do not have to have not just a college diploma, you don't have to have a high school diploma. You can actually get through this certification, become job site ready. And I think it's really important in this time when there's a lot of questions about what's happening in AI that these are individuals that are not being left behind.

They are saying and I think we're hoping that they believe that the future is for everyone.

You know, we were talking earlier. I I can draw a pretty straight line to a number of existential dramas right now that are plaguing us, including$1.79 trillion in outstanding student debt. Seven and a half million open jobs right now and nearly seven million able bodied men who are not engaged in the workforce. They're not working and they're not looking for work. That's never happened in our country, not not in peacetime anyway.

So there's a lot of stuff going on that's gonna require a solution, and it's not gonna be a cookie-cutter broad-based. It's gonna involve companies like Meta, it's gonna involve the feds, more on that later, and it's gonna involve uh school districts. It's You're talking about redefining the definition of a good job and reimagining the way you train the labor for which

We're in such desperate need. It's a it it it it's not hyperbolic to uh invoke the Manhattan Project and no, I don't remember it, but I read all about it.

Stocks sold off hard, down over 27% in a three-day losing streak every quarter. Then it snapped right back. I would argue it should never have been down. By last week, Cloud 4 was setting uh fresh all-time highs. With the uh but with the tech let's hell off that started last Friday, it's now getting hit again, down almost 15% from its size. This stuff is very hard to keep track of.

Today, Cloudflare held a very successful investor day event here at the New York Stock Exchange. And while it wasn't enough to save the stock on a very tough day for tech, I want you to hear the story straight from the source. So let's check in with Matthew Prince. the co-founder and CEO of Cloud Third, who just rang the closing bell today. Mr. Prince, welcome back and congratulations on ringing the closing bell.

If I'm shopping for a digital camera online, I might visit five websites and then pick one. If I have an agent that's doing it, it might visit five thousand different websites in order to make a much more informed decision. Someone has to power the infrastructure to power those bots, and that company is Clefler.

force. We have to change what we do at our company. I think you took a very forward approach to this and it was not a sign of weakness when you uh laid people off. But you also talked about are people are builders, sellers or measures Can you lay out the investment case for why we should all be expecting that b uh these forced multipliers may mean that we don't need as many people at the company?

But measuring all of that work, turns out that's what AI is extremely good at. And what we've seen at Cloudflare is that we can replace a lot of those functions that aren't generating revenue, aren't generating products, with actual tools that do this. And I think this is going to be the future of business.

More builders, more sellers, fewer measure.

Because I think the kindest thing that you can do to an employee that you're going to lay off is do make the decision as early as possible. Because those team members, we're finding

They just are not the people that we needed for the next stage of Cloudflare's growth. And what we're doing is not eliminating workforce. We're gonna have more people going forward, but those people are gonna be different. They're gonna be people building products, they're gonna be people selling those products, and that's gonna mean that we're gonna be able to actually just drive more and more growth across club.

that it's helping us build better software. I'll give you an example. At Cloudflare, we took models and we trained them on all the incidents we've ever had, the big public ones, but also the little quiet ones that happen behind the scenes.

And we showed a graph to our team where the incidents were kind of bouncing along what they normally were, and then they fell off a cliff. What happened was we actually built systems that measured how good our code was, that looked for vulnerabilities, that found that, and the instant that we turned those on.

our reliability went up massively. And so I think for the next two years, every cybersecurity ph company's phones can be ringing off the off the f off the hook. But two years from now, I think actually if you're doing something like

like application security, it's actually gonna get a lot harder for that to be a real business because we're gonna just write better software. And that's where the platform like Cloudflare that can build that better software, that can make sure that's deployed, that can make sure it's available everywhere in the world and can scale. I think that's a real future for our business.

If we can build a system where they pay, you know, maybe a small amount to access a piece of content, but at huge scale, that that's something that they're all willing to do. And so there's a new business model of the internet that's going to emerge over the next five years, and Cloudflare is going to be at the center of creative.

So we have to come up with something different. In the same way that Google invented the business model that's powered the last 27 years of the internet, Cloudflare's going to invent the business model that powers the next 27 years.

Thirty two percent over the past twelve months. Proud that we've been recommending it ever since my daughter went to Tulane. The company held its investor day today where management laid out some bullish long term financial targets. Thanks in part to Meta's big data center project in northeast Louisiana, but also some other big projects.

Energy even came up with a plan for data centers to pay more for electricity in order to offer a fair deal to ratepayers. Thanks to their electric service agreements with the heavy hitters, they should be able to deliver seven billion dollars worth of savings to their customers over the next two decades. So let's take a closer look with Drew Marsh, the chair and CEO of Energy, to learn more. Mr. Marsh, welcome back to Man Money.

Well, but the plus part is that they are also covering some of the fixed costs. Um so that means overhead costs and storm costs that our existing customers would have already been paying. That's where the seven billion dollars of that.

You already have an existing nuke footprint. Wouldn't it be uh behoove you not to just be saying, listen, we're gonna start putting some up right next to other nukes? Because I imagine that you have an easier time getting them through the regulatory process. That's what I was thinking.

So that you do the best for ratepayers and you do the best for the customers. That's how that should be. That's Andrew Marsh, Chair and CEO of Energy. Guys, if you want a utility, you can do a lot worse than ETR. It's one that we've liked.

There we go. Your money's back here for me.

E R F. I know because it's injectables. Okay, because I happen to be involved in some other stuff that I would realize about and I don't talk about, but I will tell you this. That's precisely what I want you to do. That's precisely what I want to do. Just one. Jones and you're doing speculation. X and the leverage and stuff. Just one spec will do it for you, and I like that attitude. Let's go to JJ in New York. JJ. Oh my god, this is a sir, this is a

This is a meme stock. You mean a meme stock could rip your lungs out. I'm not gonna let that happen to me. Let's go to Julian in New York. Hey chance booyah. I'm a free shop caller and I want to thank you for having me on the show. I want to know your thoughts on Nebius Group. Okay, until this market turned ugly, Nebius is one of my favorite stocks. Now I gotta pull back because the facts of this entire

Market has changed. It's no longer got the right coloration to be able to speculate on Anebius. Let that buddy come down and then we'll take a look. That let it come down.

This weekend though, oh I was just ornery. Focused on this market as if the word open the whole time and believe me my wife Lisa knew it. She tried to stay away from me Sunday when I wrote that think piece I do for the CNBC Investing Club. I did four drafts, each time trying to be a little less caustic, a little more hedge I I dropped less scathing. For example, in the first draft I talked about how SpaceX uh will be a deal for the ages.

But I don't have time for the ages. I want to return within the expected lifetime of my generation. I wonder which sci-fi movie best talked about colonizing on Mars, digging up the minerals, so I could make more sense of the perspective.

Then again I figure why bother? I I'm a huge user of Starlink, it's fantastic, best value, best product. I like Elon Musk. He's made it clear there's nothing near term that could make the company profit well, so I was decided fine. Hey you know what? Live and let live. It's gonna be okay. So then why am I feeling bearish? What bothers me a combination of things, then they're like a mosquito bite square between my shoulder blades. No matter what I do, I can't seem to get to it.

First, I'm watching this relentless decline in Bitcoin and I'm saying to myself, holy cow, we gotta focus on this. Is there ever a lot of speculation in this market? More than I realized. The charts for Bitcoin are so bad, so ugly. I can see this thing coming down big. Especially since some highly levered Bitcoin stockpile like Strategy might not be able to keep it propped up as effectively as it's done over the last few years.

The leverage extends to all these two and three times ETF bets in the market. Why the heck do people have to use this stuff? It's so dangerous. Should never have been allowed to begin with. Get off a leverage, people. Get off a margin. Then there's all these IPOs and second-and-door offerings. That's real poison.

I i i it hasn't dawned on you. There's a smell of desperation here that's truly rank. SpaceX might be the least of our problems. The fact that must invited a lot of retail in, that's terrific. But I'm beginning to think that a lot of that money is coming in too hot, like the money furiously being dumped out of Bitcoin.

We all assume this SpaceX deal will be fabulous, but what if the stock opens at say five trillion dollars first because of over enthusiasm and all those market orders coming in, and then the stock is just cut in half? Similar to the ill-fated Cerebrus uh deal that everyone knows was a bomb. People who bought at the opening with market orders, they lost fortunes on that one. Promise me you won't do the same thing with SpaceX. Promise.

How will all these other deals go if SpaceX doesn't go perfectly? I know Musk has a great track record, but there are an awful lot of moving parts here. Third issue of the war.

The president's fine is saying that things will be winding down just a few days, whatever. The only thing that's been certain though is that the Iranians seem pretty eager to keep fighting. You need two sides for peace. Finally, I'm wondering how did OpenAI and Anthropic get up to these incredibly vaunted levels in the private fundraising rounds to begin with?

Anthropic is real enterprise revenue that's growing like a weed, but OpenAI feels a lot more speculative to me. They've both been going up so much on nothing in the private market and they lose fortunes. Just the same rich people and companies and their minions bidding up their own positions along with other fellow travelers up and up and up.

The one thing they never thought of though is that the private markets could be different from the public markets. And the public markets may not have enough money left to p to let these people get out of their shares. Maybe too much money will have been lost by the time we get there. Maybe there's too much.

Invest in many other speculative stocks and coins and options and ill-leveraged ETFs and the edifice can't handle any more deals of this size. These are the scenarios that interrupted my ability to cast to the middle of the canal. They made me miserable despite the beauty of a well-weeded garden. I hope next week's better, but after a crazy day like today, I can't bet on it. Like I said, there's always a more market somewhere.

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 and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as well. To view the full Mad Money Disclaimer, please visit CNBC.com forward slash madmoney disclaimer.