Mad Money 05/04/26 | Audio Only

0:01 My mission is simple, to make you money.

0:04 I'm here to level the playing field for all investors.

0:08 There's always a market somewhere, and I promise to help you find it.

0:12 That money starts now.

0:23 Hey, I'm Kramer.

0:24 Welcome to a special Seattle edition of Bad Money.

0:27 I'll be with friends.

0:27 I'm just trying to make a little bit of money.

0:29 My job is not just to entertain but educate to teach.

0:31 Call me at 1800 743 CNBC.

0:33 Tweet me at Jim Kramer.

0:35 This morning my squawk on the street co-host Carl Contin

0:38 asked me at what point does the war actually matter.

0:41 I told him that our stocks are relatively insulated from the war

0:44 because so much of our economy is service-based and that means it's domestic.

0:48 You don't export service.

0:50 Aside from travel and leisure, I said I think we'll be okay.

0:53 But and this is a very big butt.

0:55 There's one case where things could go ary if

0:58 oil prices rise so relentlessly so high that they

1:02 impact our bond market because we can handle

1:04 higher oil but we can't handle higher interest rates.

1:07 Today we saw a glimpse of that future with the Dow

1:10 ultimately tumbling 557 points as be

1:13 losing point41% and the NASDAQ declining.19%.

1:17 The market was looking up this morning, 6:00 a.m.

1:20 ussual texts rallying.

1:21 You could imagine the mount month of May kind of turning out a lot like April.

1:26 Then a little after 6 Eastern, we got reports that Iran had launched

1:31 some missiles at two different US warships.

1:33 The futures plummeted.

1:34 The gains vanished.

1:35 And the worst of all, the Treasuries took a big hit.

1:37 Rates soared.

1:37 The 30-year Treasury voted right through five.

1:40 And the grand thesis,

1:41 the idea that peace might be breaking out in the Middle East just when we have

1:45 a new Fed chief coming in who wants to cut rates seem to vanish before our eyes.

1:51 Incredibly, the story about the missiles in the our navy turned out

1:55 to be false or at least exaggerated as no US ships were actually hit.

1:59 But stocks kept getting hammered because the Iranians were busy violating

2:03 the ceasefire and launching drones

2:05 and missiles at countries throughout the Gulf.

2:07 Yep.

2:08 This the war's back on.

2:09 And unless the president does something beyond talking

2:12 about shallow victories and gets that straight open,

2:16 we're going to see interest rates keep climbing.

2:18 At a certain point, the grand plan to get the domestic

2:21 economy growing faster will turn into an inflation addled grand illusion.

2:27 Sure, there were pockets that went higher.

2:28 Oils of course were rallied.

2:30 Every time something bad happens, they rally.

2:32 Some of the data center stocks crept higher and the bedraggled

2:35 enterprise software players had their day in the sun.

2:38 Although their day only seems to be like about

2:40 a half a day and it's the decline then resumes.

2:43 Overall it's plug ugly session.

2:48 Maybe that's a good reason to take a break from focusing on the war and head out

2:53 to Seattle to see the company that never sleeps

2:55 with its CEO who doesn't seem to sleep either.

2:58 I'm talking about Amazon and its CEO Andy Jasse.

3:01 Higher interest rates can fail many a company.

3:03 But if you want to guess who be the last man standing,

3:06 who could do a lot worse than betting

3:08 on Amazon with a stock that ra rallied $3.79 today.

3:13 If there were a couchy bet about

3:15 which company could thrive with a crimped consumer,

3:17 it will somewhat oddly be Amazon because their goal

3:20 is always to keep prices as low as possible,

3:23 making the ultimate trade down play.

3:28 There's a reason we own this one for the Chapel Trust.

3:30 I'm in awe of how Amazon's become all-encomp

3:32 encompassing in so many aspects of of our lives.

3:35 Today, literally today, while I'm here,

3:37 but not in honor of me because even I'm not narcissistic

3:41 enough to believe that, Amazon rolled out a whole new business line,

3:45 supply chain services where customers in all sorts of industries like

3:49 drugs and pharma and retail can

3:51 use Amazon's massive transportation logistics arm.

3:54 You've seen the trucks on the highway.

3:56 No one seems to be able to get anything to you as on time like Amazon does.

4:00 So, if you're a Ford dealer waiting for a Ford F-150 truck part for an angry

4:05 customer or you're a small pretzel maker who

4:07 might want to avoid the costly American distribution system,

4:10 you can call Amazon, get it to the customer on time and save a fortune.

4:14 When I hear things like that, I try to figure

4:15 out how much Amazon means to America means to you.

4:19 No one has ever been that big a factor to our growth since

4:22 Standard Oil got broken up for monopolizing the oil market over a century ago.

4:28 I bring this up because I'm never going to deviate

4:30 from the notion that all economies are based on credit, including ours.

4:34 We need rates to stop rising and I'm beginning

4:36 to believe that we're just a couple of wellexecuted

4:38 Iranian drone strikes away from $110 crude and five

4:42 and a quarter yield on the 30-year Treasury.

4:44 Maybe we're half a dozen successful missile strikes away from $120

4:48 oil and then we slouching towards 6% on the 30-year.

4:52 Something I don't even want to think about because it

4:54 would be like taking a machete of the S&P 500.

4:56 So why not sell and get out ahead of the potential pain?

5:00 Simple.

5:01 Because of places like where I am today.

5:04 What comes up occasionally comes down.

5:06 And if this war ever ends,

5:08 I can only imagine what will happen to interest rates and to travel and leisure.

5:13 uh the hardest hit segment of the economy.

5:15 What you really would need to own though are

5:18 the com companies that actually dominate the new economy.

5:21 It's good to say we're twothirds service and one-third industrial.

5:24 When I'm at Amazon, it feels like old hat.

5:27 Like I'm mouthing what I learned 50 years ago in ET 10.

5:30 I leave here thinking something different may be happening.

5:34 something that explains the strength of tech

5:36 and the all powerful nature of the hyperscalers,

5:39 the behemoths of Amazon and maybe the stock market in general.

5:44 This economy is a computerdriven economy.

5:48 We run on compute.

5:50 It's a big reason why our economy hasn't slowed as much as others.

5:54 We're just getting more and more computer oriented in a positive way

5:59 because a computer-driven economy uses AI

6:02 to make everything faster, better, cheaper.

6:04 And that's why we have some immunity from the world's troubles.

6:07 Which brings me to the bottom line.

6:09 The amazing thing about the computer-driven economy is

6:14 that it doesn't care much about oil or interest rates.

6:17 So before you get too glum,

6:19 remember that the drive of computers is going in one direction

6:23 higher and it's taking a huge number of stocks along with it.

6:28 Let's take calls.

6:29 Let's go to Gabriel in Maryland.

6:31 Gabriel,

6:33 hey Jamie, how are you?

6:37 I am doing well.

6:37 How about you partner?

6:40 I'm I'm all good.

6:41 I mean, tomorrow it's Cinco de Mayo as a Mexican American.

6:45 I'm very proud of all your support that you have

6:47 been giving to the U agave spirits coming from Mexico.

6:52 You're doing great.

6:54 Very proud of it.

6:57 Well, thank you.

6:58 Thank you.

6:59 We got a nice business coming out of Halisco and also out of Puebla.

7:03 So, thank you for noticing that.

7:05 I really appreciate it.

7:07 No, thank you.

7:08 And and I want to take your brain

7:09 and pick a little bit of your ideas on Blackstone.

7:12 have been uh accumulating Blackstone since mid-March.

7:20 Okay.

7:20 And I've got to tell you something, Gabriel.

7:22 I like Blackstone very much.

7:23 I just talked to and watch Jonathan Gray today.

7:25 Uh talking to David Faber.

7:26 I think it's a really good situation.

7:28 If anything, I'm interested in buying more Blackstone.

7:32 That's how good I think it is.

7:34 And Phosphoro thanks you tremendously.

7:36 Before you get too glum,

7:37 everybody remember that this computer-driven economy isn't impacted

7:40 by oil or interest rates as much as others.

7:43 We got a very special mad money head

7:45 started with my sitdown with the man himself,

7:47 Amazon CEO Andy Jasse.

7:49 From Amazon's investments in AI to its plans to take on Starlink.

7:53 You want do not want to miss anything from our wide-ranging conversation.

7:57 Then, as memory and CPU stocks keep setting new all-time highs,

8:00 I'm breaking down why Wall Street's been

8:02 caught so offguard by their move going higher.

8:06 And I'm getting a read on the real estate investment

8:08 trust industry with the bankable CEO of Federal Realy Trust.

8:11 Find out how the consumer is doing shopping

8:13 after the company beat and raised last week.

8:16 Stay with Kramer.

8:19 Don't miss a second of mad money.

8:20 Follow Jim Kramer on X.

8:23 Have a question?

8:24 Tweet Kramer #madmentions.

8:27 Send Jim an email to madmoney@cnbc.com or give us a call at 1800743 CNNBC.

8:34 Miss something?

8:35 Head to madmoney.cnbc.com.

8:48 To celebrate 250 years of American innovation,

8:51 we're on the ground with the companies pushing things forward,

8:53 highlighting the names helping build what comes next.

8:56 And that's why we're here at Amazon's headquarters.

8:58 The tech giant reported a really fabulous quarter last week,

9:01 driven by their booming Amazon Web

9:03 Services business for cloud infrastructure and AI.

9:06 While this is still one of the largest retailers in the world,

9:08 AWS alone has an annual revenue run rate of $150 billion.

9:14 And they keep adding more to the story on a pretty regular basis.

9:17 From setting up their own low Earth orbit satellites for internet

9:20 service to offering their supply chain services to anyone who wants them,

9:23 it's at the heart of the computer-driven economy.

9:26 So, let's check in with the man behind all these plants,

9:28 Andy Jasse, the president CEO of Amazon.

9:31 Andy, thank you so much for taking us here and welcome back to Mad Money.

9:34 It's great to be here with you.

9:35 All right.

9:35 So, you broke some news today and I

9:37 think it's kind of emblematic of what Amazon does.

9:39 You've come up with something that is better for people,

9:41 better for businesses, makes everything cheaper,

9:43 run faster, and it's about logistics.

9:46 Sounds like a little bit uh like Amazon Web Services when you were running that.

9:50 Well, it has some similarities.

9:51 I mean, the you know, today most companies don't think it's a good idea to run

9:56 their own infrastructure technology themselves when

9:58 they can put it in the cloud.

9:59 I think over time you might find that most companies don't feel like it's a good

10:03 idea to have to run their own logistics

10:05 when they can use our supply chain services.

10:07 And so if you think about what we had to do as a retail business,

10:11 we had to get really good at being able to move

10:13 products from manufacturers to upstream storage

10:16 warehouses to the actual fulfillment centers

10:19 where you actually do the fulfillment to allowing people to sell

10:23 in multiple marketplaces but have one inventory pool to the last mile delivery.

10:27 We had to get good at all those to scale our retail business.

10:30 We just said, you know,

10:32 it it makes so much sense to expose these services to companies of all sizes.

10:37 And you know, today we announced that 3M and Proctor

10:40 and Gamble and Lanzen and American Eagle were all using the services,

10:44 but it may end up being the case that so many companies small and midsize get

10:49 the most benefit because to not have to build

10:51 out their own logistics network is a big deal.

10:53 Well, when when I hear I just terrific about Proctor

10:56 and I know you want to send West East for American Eagle,

10:59 but I always think about the small businessman or the bit

11:02 or the middle who have normally go to a distributor.

11:04 Um maybe they can go direct and the distributor won't take the 30%.

11:08 It is just a a fantastic opportunity

11:11 for someone who is just starting a business.

11:13 Yeah.

11:13 you know, today to try and to try

11:16 and compile a supply chain for any size business,

11:19 but particularly a small business that doesn't want to have

11:22 to build out all those capabilities themselves is time consuming and expensive.

11:26 And so, if we can provide those components at a very

11:29 cost competitive rate like we do and at a very high quality,

11:32 it's very compelling.

11:33 All right.

11:33 Now, I want to go to your letter, which was look,

11:36 I've told you at times when I thought you were like too soulsearching.

11:38 This was the opposite.

11:39 This was pure offense.

11:41 And I know you're a sports fan and I'm a sports fan.

11:43 I want to win with defense, but offense is exciting.

11:46 Progression at Amazon is not exactly a straight line.

11:50 What does that mean?

11:52 Well, I I think I love this Beth's um uh the band, the Beths,

11:56 and they have a very clever uh um uh lyrics and album titles.

12:01 And this last album, Straight Line Was a Lie,

12:04 really spoke to me because most big

12:07 inflections don't follow this one linear line.

12:10 It would be so much easier if they

12:12 followed this straight linear line, but they don't.

12:14 And and it means that you you have to acknowledge that.

12:17 It means that you're going to go through there going to be disruption.

12:19 You're going to try ideas that don't work

12:21 and you have to go back to the starting line.

12:23 If there's something important enough, you're going to have to think about,

12:26 do I only want to take one shot at finding the answer

12:28 or am I going to take multiple parallel shots because it's so important.

12:32 I have to make sure I find a winning solution here.

12:34 And I think that when you believe that there

12:37 is a particular inflection that is disproportionately important,

12:41 like AI is as an example, you want to bet big.

12:44 Even if it means that you, you know, you may over rotate a little bit.

12:48 These inflections are so big and so impactful

12:51 on the future of what customer experiences are

12:53 and your company that you want to make sure that you've you've gone all in on

12:57 Well, this is important because by the way,

12:59 you use the term reinvent four times, reimagine three times, and I was thinking,

13:03 well, isn't that what you're doing uh right now when when

13:07 you spend $200 billion and you actually believe it's gonna pay off?

13:12 Yeah.

13:12 Well, I mean to me the really big capital expenditure bet that we're making

13:17 is because we believe that AI is

13:20 the biggest technology transformation in our lifetimes.

13:22 It's going to reinvent every single customer experience

13:25 we know and altogether new ones we never imagined.

13:28 And I, you know, if you look at the pace that that things are grow, I mean,

13:31 just I I used in the letter the example

13:33 of the first three after the first three years of AWS,

13:36 we thought we were growing really fast and we were about $56 million in revenue.

13:41 And after the first three years of this inflection

13:44 of of AI or this incarnation of AI, our run rate's over 15 billion,

13:49 $260 times what it was the first three years of AWS.

13:52 And we thought we were growing fast with AWS.

13:54 So when you have shifts that are this momentous uh

13:59 you you want to make sure that you invest in such

14:02 a way that you can pursue the opportunity as broadly

14:05 for your customers as possible as well as for I think I

14:08 think not just our customers will benefit but our shareholders

14:11 and the company as a whole will be a very different

14:13 company 5 to 10 years from now because we're betting big

14:16 like this than it would otherwise be if we were conservative.

14:19 I think there's so many people, pundits, whatever,

14:22 who say they're spending so much without any real hope of of regaining it.

14:27 Not only do you disagree with that, but you talk about a return

14:29 in a couple of years and then you're talking about 30 years,

14:32 the return will be unbelievable.

14:34 What are they missing?

14:36 Well, I think that it's um people sometimes forget

14:39 the way the cash cycle works in a business like AWS.

14:43 So the way it works is that we have to lay

14:45 out capital and cash in advance of when we can monetize it.

14:49 This is for land for the data centers, power,

14:52 the buildings themselves, the hardware, the chips, the networking gear.

14:56 You have to lay all that out in advance.

14:58 Some of it is about 6 months in advance

15:00 and a bunch of it is two years in advance.

15:02 And so that means that the faster we grow in AWS,

15:06 the more capital we have to lay out in the short term,

15:09 which will create challenges in your free cash flow in the short term.

15:13 But these assets are many year useful life assets.

15:17 You know, on the on the networking and the hardware side, it's about six years.

15:20 On the data center side, it's 30 plus year useful life assets.

15:24 And so you get to monetize those assets over a long period of time.

15:29 So that when your revenue growth starts

15:31 to catch up with the capital expenditure growth,

15:34 you actually end up really liking the operating margin,

15:36 the free cash flow, and the ROIC.

15:38 And so we've lived this movie once before in the first wave

15:42 of AWS where we had this same type of of curve where we

15:46 were spending so much capex in the short term and then we all

15:50 really like the free cash flow and the ROIC a few years later.

15:53 And I think this same story is going to play out

15:55 except with just much larger revenue and free cash flow downstream.

15:59 Okay.

15:59 Now, in terms of of uh inflections,

16:02 I saw two uh one was food uh and the other was

16:07 semis and and your description of these in the letter was just mind-blowing.

16:11 One of the reasons why I think the stock went up so much wasn't just a quarter,

16:14 but you explained how these could be big semiconductors.

16:18 Do people know how big that business is for you?

16:21 Well, we're trying to help people be more aware

16:23 of of of what that business looks like for us.

16:26 And uh you know, it's it's kind

16:27 of remarkable how fast our chips business is growing.

16:30 It's it's you know, uh last quarter we announced

16:32 it's over a 20 billion annual run rate business.

16:36 And that may understate really the size of it.

16:38 If you if if we actually took all the chips

16:41 that we're going to produce in 2026 and we sold

16:44 them to AWS and to third parties in the form

16:46 of racks like most of the leading chip companies do,

16:48 that business will look more like a $50 billion annual run rate business.

16:52 And you know, it's growing tripledigit percentages year-over-year.

16:55 The two largest AI labs in the world in in uh

16:59 Open AI and Anthropic have made multi-year multi-gawatt commitments to Tranium,

17:04 which is our AI silicon.

17:06 You probably saw the Meta just announced that um that they're

17:09 going to consume tens of millions of cores of Graviton, which is our CPU chip.

17:13 Um today, 98% of the top 10,000 EC2

17:17 customers use Graviton in a very expansive way.

17:20 And so we, you know, the business itself,

17:23 uh I think it's great for customers because it gives customers choice.

17:27 It gives them advantage price performance,

17:29 but it also is going to be good for us long term because at our scale,

17:32 like think about what we're investing in capital expenditure right now.

17:36 I expect that that there'll be investment opportunities for a long time.

17:40 At scale, it will save us tens of billions of dollars

17:43 of capex a year and hundreds of basis points in operating margin,

17:46 which is a big deal for us too.

17:47 When you say choice, it's important people to understand and I know

17:50 you could say I'm too close to it,

17:52 but that Nvidia is often the alternative and you

17:56 are remain an excellent customer of Nvidia too.

17:59 Yeah, we have a deep partnership with Nvidia.

18:01 Uh we will for as long as I can foresee.

18:03 We have an immense amount of respect for them and uh you know we're

18:07 going to always have customers that want to run Nvidia on AWS and we will

18:11 continue to make AWS the best place to run Nvidia and that's true and we'll

18:15 also have you know a very good

18:18 chips business and that's because customers want choice.

18:20 It's true in every technology.

18:22 It was true in databases.

18:23 It's true in analytics.

18:24 It's true in in uh frontier models and it's true in chips.

18:28 And so we we'll be able to do both successfully top five chip company.

18:32 I I I think we're we're well on our way.

18:34 Yeah.

18:35 Okay.

18:35 Well, we're going to take a break here and we're going to come back,

18:37 but uh there's a lot to talk about.

18:39 Also, I'll get a little philosophical, you know, when we come back.

18:51 Before the break, I spoke with Andy Jasse, the president CEO of Amazon.

18:54 Because this is one of the most important companies in the world.

18:58 There was more than we could cover in a single segment.

19:00 So, let's get right back into it.

19:01 Andy, I want people to understand the ethos of of Amazon,

19:05 maybe the best way to do it is to say something that you said in your letter.

19:09 While other companies have been backing away from rural customers,

19:12 we've been running to them.

19:14 I think this is very much of what's going on in terms of lowering price,

19:18 in terms of getting it so everybody can have stuff as fast as possible.

19:22 And I I just want you to speak to it because

19:24 it's it's not what every it's no one's doing what you're doing.

19:27 How about that?

19:28 Well, it's more expensive to try to service

19:31 rural customers because uh it's your investments aren't able

19:35 to be advertised across as dense a population

19:38 and so it's harder um sometimes to serve rural customers.

19:42 The reality is um you know there is a digital divide

19:46 in this country and in the world right now and and if

19:49 you look at to me like if you live in a rural

19:52 area the fact that you can't get items via the you

19:55 know e-commerce in less than 3 days you know I I

19:59 think it's un unfair and I think it's a bad um customer

20:03 experience and so you know we we've decided we invested $4 billion

20:07 to build out a last mile delivery network uh for rural customers.

20:13 Um if you look at the amount of items that we're getting to them now,

20:16 same day, it's it's more than double already

20:18 this year year to date versus last year.

20:20 Um and we're we're still in the process

20:22 of building out all the delivery stations.

20:24 And so we're going to be able to get items to customers

20:26 in rural areas so much faster inside a day or two.

20:30 Um which is a very different customer experience than what you could do before.

20:34 I think the same is true around just the connectivity

20:37 they have where uh there is a real digital divide.

20:41 The things that you and I are used to doing every day that we

20:44 take for granted doing business online

20:45 or education online or shopping or entertainment.

20:49 Those things you can't do in a lot of rural communities.

20:51 They're without broadband connectivity.

20:53 There's billions of people around

20:54 the world who don't have broadband connectivity.

20:56 And so if we're able to make that um if

20:59 we're able to give them that connectivity with you know

21:02 we're building this low earth orbit satellite called Amazon Leo

21:06 um that completely changes what's possible for people in rural areas.

21:10 So we, you know, yes, it's a meaningful investment,

21:12 but the way we think about investments is we're

21:15 trying to make customers lives better and easier every day.

21:18 And then we try to have a long time horizon how we think about it.

21:22 And we believe over a long period of time.

21:24 If we do right by rural customers,

21:26 we make it much fast them for them to get their items.

21:29 They will shop with us much more frequently.

21:31 And if we make it easy for them to get connectivity, it's going to be,

21:35 you know, their lives will change and what they're able to do.

21:38 Um, where they live will change and and that will benefit us, too.

21:41 Well, there's an the ethos includes democratization.

21:44 I think it's really important.

21:45 It also includes something that we can talk about

21:47 when you're the second largest grosser and I it bothers

21:51 me tremendously when I see the CPI number and it's

21:54 up and I hear that the place I shop, Amazon, the prices are down.

21:59 How do you reconcile this?

22:01 And how do you keep prices?

22:02 Your prices overall are down versus last year.

22:06 We have a bout of inflation.

22:07 Everyone tells me he's going to be send interest rates skyrocket.

22:10 How do you do it?

22:12 Well, we have an expression that we've used for uh for almost

22:15 a couple decades at Amazon that it's pretty easy to lower prices,

22:19 but it's much harder to be able to afford to lower prices.

22:22 And it's really true.

22:23 And so we spend if if you were in our meetings,

22:26 we spend a disproportionate amount of time a inventing

22:30 and then b trying to figure out how we can

22:33 lower our cost to serve inside our fulfillment network so

22:36 that we can continue to keep prices low for customers.

22:39 So, you know, that takes the form of things like

22:41 we've completely rearchitected our our regional network in the US,

22:45 so we get items to we're able to store

22:47 items closer to end users so they travel shorter distances.

22:51 They get there quicker and it's less expensive to serve customers that way.

22:54 We've completely rearchitected our inbound network again to to try and get

22:59 items to more uh fulfillment centers closer to the end customer.

23:04 We spent a lot of time trying to figure

23:06 out how to allow customers to add to their orders.

23:09 We have a lot of customers who have items coming almost every day to them.

23:12 And so we have this feature um add to order where you can

23:15 just add an item to an existing outstanding order which seems easy enough

23:19 from a UI perspective but think about the logistics of an order that you're

23:23 already processing and then being able to get that item in the same order.

23:27 And so the work we do to get more units in each box,

23:30 it's better for customers because they don't have to open

23:32 as as many packages and have um environmental waste.

23:35 And it it's just a much better faster experience.

23:38 and it happens to be more cost effective for us, too.

23:41 Now, you're also doing some great things in medical,

23:43 uh, including prescription, same day, one medical.

23:45 I've used that.

23:46 It's great.

23:47 I think that the thing that is that really tripped

23:49 up most Americans and has caused most bankruptcies is healthcare.

23:52 Uh, is there any chance that one day

23:53 I can buy a healthcare insurance policy with you?

23:57 Well, we're not, you know, we're not focused on that part of it right now,

24:00 Jim, but I I happen to agree with you.

24:02 We spend a lot of energy here thinking about

24:04 just the health care experience around the world but particularly

24:07 in the US is um it's very challenged and it's

24:11 very frustrating and so we really started with with the area

24:14 that was closest to what we do which is really

24:17 pharmacy and I think if you look at that pharmacy

24:20 experience over the last couple years it's such

24:23 a good experience for people to be able to get

24:26 um your your pharmaceutical items same day

24:29 in you know in thousands of cities like

24:31 you can that it is it is a gamecher to be able to um to get

24:36 your your your drugs that you need to use that way and you know and then

24:40 I think if you look at primary care

24:43 I think our grandkids are not going to believe

24:45 that the way we used to do it was we'd make an appointment a month

24:48 in advance drive 20 minutes to the doctor

24:50 park wait in the reception for 20 minutes they'd

24:53 show you into a room you'd wait for the doctor for 20 minutes and then they'd

24:56 see you for five and then you drive

24:58 20 more minutes to the pharmacy like that experience is really um it's broken.

25:02 It's not going to be the case.

25:04 And One Medical has an really an amazing um uh digital interface where you

25:09 can do virtual chats or you can do video interviews uh or or or meetings.

25:14 And if you need to see somebody in a physical location,

25:17 we have them in a lots of cities.

25:19 I think the other thing that's really interesting is that over time,

25:23 I do believe that there are a lot

25:25 of questions that people have that they either don't

25:28 ask or they wait too long because it takes

25:31 it's it's hard to get into a medical practitioner.

25:33 and the fact that you're going to be able to do that through AI.

25:36 If you look at our health AI offering, which is really an amazing AI offering,

25:40 which you can connect all your medical records to it, um,

25:44 and you can ask questions of your own health with your health history in mind,

25:48 people are taking advantage of that and using

25:50 it so much more than we even imagine.

25:52 And it's and it's still early.

25:53 And so, you can't you can't make money on that.

25:56 Over time, what's going to happen is what I believe is um first of all,

26:02 we can decide downstream whether or not

26:04 there's there's subscriptions that come along with that.

26:06 But I do think it will make people want to be

26:09 part of one medical over a longer period of time.

26:11 I do think people will come in for visits.

26:13 You can either have a subscription or come in for an individual visit.

26:16 I do think people will will probably do their pharmacy shopping with us over

26:19 time if we're being useful to them

26:21 generally in their medical questions they have.

26:23 So I I I think it's very early in the model,

26:25 but I again we're just trying to make customers lives easier and better every

26:29 day and we we have found business models out of that as we've done so.

26:33 In the meantime, I know that in the news we're

26:35 constantly hearing about what Anthropic's doing and what OpenAI is doing.

26:39 You have close relations with both.

26:41 Now some of your deals are upfront, but then you have to hope things work out

26:45 in the back before you get the rest is paid by you.

26:47 It sounds like you're more hard money and they're more soft money.

26:51 Are you confident that they can pay you for what can they can hold up their end?

26:57 I think that uh those two companies,

26:59 Anthropic and Open AAI, are unbelievable stories.

27:04 I mean, the fact that they're both reportedly over $30 billion

27:09 in revenue at this stage of their evolution is it's mind-blowing.

27:12 I mean, it just it just we were talking

27:14 about earlier about how fast some of these businesses grow.

27:17 30 billion annual run rate in a few years

27:20 is is unbelievable and I still think that so

27:24 many people are are thinking small with respect

27:28 to what's going to be the case in AI.

27:30 we are so early in this and so I think

27:33 look I mean every company uh you know we we

27:36 have a a lot of confidence that we're you know

27:38 we we've built a pretty large AI business and we're

27:41 still early days so we we believe we're building

27:43 a very very large AI business that's transformational but I also

27:47 think they're going to be multiple successful companies and I

27:49 think those two are going to be two of them now I if you didn't spend this money

27:53 the likelihood of failures increased dramatically don't you think

27:58 if we didn't spend the money in investing in our own AI.

28:01 I just think you would um you you would if you don't find

28:05 ways to help customers take advantage of the technology that's going to change,

28:09 you know, their customers experiences and their businesses.

28:12 You may not fail on your own at least quickly,

28:15 but you will be failing every day and you don't you may not realize it.

28:18 I mean, if you don't find ways to be relevant

28:22 um and to help people get to that next wave,

28:24 you're just not as relevant to customers.

28:26 And so, you know, every conversation we have

28:29 with with with any company starts with AI.

28:32 People are so excited about what's possible there.

28:35 And it's, you know, even there, as we've talked about,

28:38 I I can't believe how fast AI is growing,

28:40 but it's still relatively early days in AI,

28:44 but I I do think the fact that we are um in the middle of so many companies

28:49 transformations and being able to use AI is it's

28:51 great for them and it's good for us, too.

28:53 Now, uh, I think a lot of people think that there

28:55 has to be winner take all you that loser has nothing.

29:00 I I hear you on AI.

29:02 It sounds like it's big enough for everybody.

29:03 I wonder whether it's whether satellites big enough for everybody.

29:06 You've got Starlink, you've got you.

29:09 Uh, why wouldn't that be a situation where,

29:12 oh, gez, we we didn't have the horses.

29:14 They sent up more satellites than us.

29:16 There's no room.

29:18 Well, if you accept for a second that there are billions

29:21 of people around the world with no broadband connectivity and there

29:24 are um many many thousands of companies and government entities

29:28 that want visibility into those assets where they can't get them,

29:31 uh there's going to be more than one successful company.

29:34 I mean, they're going to be multiple.

29:36 Now, I think when we get our our constellation up and we have, you know,

29:39 about 300 uh um satellites that we've launched with 20 more

29:44 launches coming this year and 30 more launches coming next year.

29:48 when we have our constellation up, they're really going to only be two

29:51 companies with this leading edge technology up there.

29:53 And I think we have some advantages that we can bring to bear.

29:57 I you know, I think first the performance of LEO will be advantaged.

30:01 Um you know, it'll be about two times better down link,

30:04 which is you know um taking them

30:06 the data down and about six times better uplink,

30:09 which is uploading the data than than the other um option out there.

30:12 uh I think will will be lower priced which you know

30:15 obviously matters to to the customers that we're serving and then

30:18 if you're a company or or a government entity you

30:22 want to take that data off the low earth orbit satellite

30:25 and you want to store it in the cloud you

30:27 want to do analytics on it you want to do AI

30:28 and then the fact that our LEO works seamlessly with the leading

30:32 cloud provider in the world is very compelling to commercial entities

30:35 people forget that's the AI using the data

30:38 absolutely now you love sports entertainment too you're trying

30:42 to reinvent that, whether it be what you're doing

30:44 with the mass with with uh with with golf,

30:47 what you're doing obviously with football.

30:49 Uh I think it's interesting in terms of reinventing.

30:51 You had this wondery.

30:52 I thought it was pretty good.

30:53 And I'm a big uh uh Eagle Kelsey fan.

30:56 Not as much of a Chief Kelsey fan,

30:57 but you're reinventing you're reinventing that too, right?

31:00 It just felt like it's not the right format.

31:02 Let's have a new format.

31:03 Yeah.

31:03 I you know, every single one of these areas that we

31:07 all that seem stable to people are really not stable.

31:11 I mean, they they they change all the time

31:13 and and if you're if you're not learning and you're not inventing,

31:16 you're starting to unwind, whether you realize it or not.

31:19 And and that's, you know,

31:20 we we saw that in media that streaming would be a medium that was,

31:24 you know, very different from what linear was.

31:26 And we started investing it, you know, many many years ago.

31:29 And uh it's it's pretty we're we're we're

31:33 kind of amazed at how fast it's growing.

31:35 You know, the business has be the economics of the business

31:37 has gotten much better over the last several years.

31:40 And you know, I think the combination

31:42 of producing um increasingly better content, Hary,

31:47 Project Hail Mary, over $615 million at the box office.

31:51 It's really Have you seen the movie yet, by the way?

31:53 No.

31:53 No.

31:54 Work on this interview.

31:55 So, well, I don't I would advise you

31:58 as soon as the interview's over to go see it.

32:00 It's really one of the best movies I've seen in many years.

32:02 Really good.

32:03 And you know, shows like Fallout and The Boys

32:06 and um Reacher and Cross and um Young Sherlock.

32:11 I mean, we I think the shows continue to get better and better.

32:14 And live sports has been a big deal for us.

32:16 And you know, the NFL, NBA, NASCAR, Champions League, UEFA, the Masters,

32:22 and and if you look at what we do in live sports,

32:25 we're not just trying to roll out the same playbook

32:27 that they've been running in linear for a long time.

32:29 We're trying to leverage the medium and then we're trying to use analytics

32:33 and AI to tell a different story and give fans a different perspective.

32:36 And I I think that's been really successful.

32:39 And you know, the last thing I'd say is that we've

32:41 also taken an approach where it's not just our content.

32:44 We think we have amazing content in Prime Video,

32:46 but we have really deep partnerships with HBO and Max and Paramount and Peacock

32:52 and Fox and Apple where people can come and find all the content they want.

32:58 And that's also very compelling when you sit down with your family

33:01 and you think about what you're gonna watch that night.

33:03 Well, I need like seven hours with just

33:04 the initiatives that you yourself have brought to this company,

33:07 but they're telling me to rap.

33:09 I wish they didn't.

33:10 That's Andy Jassis, president CEO of Amazon.

33:13 Andy, thank you so much.

33:14 Thanks for having me.

33:15 I appreciate.

33:26 We used to call it galloping.

33:28 That's when a stock races higher because something major has changed.

33:31 It makes the underlying company much

33:33 more valuable almost instantaneously than anyone thought.

33:37 Right now, there are two sets of stocks that are galloping.

33:39 Companies that make data storage and companies that make CPUs.

33:43 Both are driven by the astonishing growth of the AI data center buildout.

33:47 Something that keeps catching people by surprise.

33:49 The storage stocks, Sandis, Western Digital,

33:52 and Seagate being the big three just don't know when to quit.

33:55 They've been on insane runs because historically we used

33:58 to that industry putting up okay growth with fairly inconsistent earnings.

34:02 Their stocks always had very low price journeys, multiples,

34:06 because nobody pays up for that kind of business.

34:08 Too boom, too bust.

34:09 Suddenly though, we're building data centers all over the place.

34:13 And these are warehouses full of servers

34:16 that need colossal amounts of memory and data storage.

34:20 That's changed the game.

34:22 Let me give it just one example.

34:23 Segate had episodic earnings for years.

34:26 In fiscal 2023, the 12-month period that ended in June 2023,

34:30 they were barely profitable,

34:32 making just 19 cents in non-GAAP earnings per share.

34:36 With uh in fiscal 2024, which ended in June 2024, they made 129 per share.

34:43 In fiscal 2025, they made $810 per share.

34:47 Now, Seagate's projected to make nearly $15 this year.

34:50 fiscal 2026.

34:52 Then around $26 next year and $38 in fiscal 2028, which ends in June 2028.

34:59 They're practically printing money because there's

35:01 not enough storage to go around.

35:03 So, they can raise prices with impunity.

35:05 Western Digital and Sanders have similar trajectories.

35:08 That's why their stocks can keep charging

35:10 higher even though the moves seem just crazy.

35:14 In reality, they're just catching up

35:15 to the skyhigh but incredibly realistic estimates.

35:18 Consider the price of Sandis.

35:19 Right now, the stock trades at $1,255.

35:23 It's supposed to run around $63 per share in fiscal 2026,

35:27 which ends in June, and then nearly $170 per share next year,

35:31 which I think is actually a lowable estimate,

35:33 even though it's up a staggering 3, 500%.

35:38 How's your S&P fund doing over the past 12 months?

35:41 It's still selling for less than 10 times that year's earnings.

35:43 That's extremely cheap for a growth stock.

35:45 And make no mistake about it, SanDisk has become a gross stock.

35:49 The CPU companies are similar.

35:50 For a long time, we had a CPU glut that constantly waited on Intel and AMD,

35:54 the two main players here.

35:56 Plenty of capacity, not enough of uses.

35:58 Then the data center comes along and there's no longer a glut.

36:01 There's a shortage because the data center produces

36:03 agents and agents need an insane amount of CPUs.

36:07 When you have a shortage,

36:08 the company that makes the product pretty much becomes a growth stock overnight.

36:12 The problem is growth stocks get much higher valuations than value

36:15 stocks and the market can't handle the transition transition all that quickly.

36:19 These stocks have to blow through all sorts

36:21 of levels to get to where they're never really going.

36:24 And that's the gallop that I'm seeing.

36:26 That's the gallop that you're hearing.

36:27 That's the galop I'm talking about.

36:28 Periodically some analysts will try to call a high.

36:31 We had one today saying that AMD had hit its peak.

36:33 I come back and say why?

36:35 How do you know?

36:36 Did the CPU shortage end?

36:38 Do we not have any more agents?

36:39 If it hasn't ended, then the estimates are still too low.

36:43 If the estimates are still too low,

36:44 the stock's going to go up when we find out the real numbers.

36:47 So, you use these downgrades to buy.

36:50 Now, it's always possible that one of the hyperscalers

36:52 comes up with a new way to store data.

36:54 Or maybe the semiconductor equipment companies could

36:56 make enough machinery to pump out more product,

36:59 which would then solve the shortage,

37:00 causing much lower prices and huge shortfalls.

37:04 But so far, that's not happening.

37:06 Those semiconductor capital equipment makers are maxed out

37:08 too because they didn't see this coming either.

37:11 And that's why there's no tipping point on the horizon.

37:15 So the stocks run and run and run until they

37:17 get to a level where they're trading like growth plays, no longer value plays.

37:21 Seeing these moves gives me vertigo.

37:24 But I know we're still pretty far from that end point,

37:26 which means the gallping will continue until supply meets demand.

37:31 And demand keeps growing while supply it

37:33 seems almost static compared to what is needed.

37:37 Money's back after the break.

37:49 It is time.

37:50 It's time for a very special Seattle edition of the lightning round money.

37:54 That's right.

37:54 Take your calls.

37:54 Rapid fire.

37:55 His name is Dr.

37:55 said bye-bye soldiers be our don and then the lightning round is over.

38:03 Are you ready?

38:04 Ski d Sam in Pennsylvania.

38:06 Sam Jim I got an interesting one.

38:09 So this stock is up 500% the last year.

38:11 It's got a lot of momentum and a lot

38:13 of that is to do with the printed circuit boards they make.

38:15 They're partnering with Google.

38:16 Everyone knows about the capex coming from Google.

38:18 So curious what you think of TTM here at 150.

38:24 That's another one of these stocks that is part

38:26 of the great change in compute and you're absolutely right.

38:30 It's a good one.

38:30 I want to go to Cordell in Ohio.

38:32 Cordell, hey Jim, I'm calling in upon Bill's Aman news IPO.

38:39 What do you think about PS?

38:43 Too early for me to tell.

38:44 I mean, obviously the IPO itself did not price well.

38:48 Uh, but we have to see.

38:49 I want to see a couple quarters and then get a sense of what's really going on.

38:52 And that, ladies and gentlemen, conclusion of THE LIGHTNING ROUND.

38:57 THE LIGHTNING round is sponsored by Charles Schwab.

39:09 Last week, we got a terrific quarter from Federal Realy,

39:12 the real estate investment trust

39:13 that owns high-end retail and mixeduse properties, mainly in rich suburbs.

39:18 Well, there are parts of the economy that are feeling some stress right now.

39:22 If if well look if you're lever to affluent

39:24 c consumers I mean I you are just doing great.

39:26 So let's take a closer look with Don Wood.

39:28 He's the president of Federal Realy Investment Trust to learn more.

39:32 Mr.

39:33 Wood, welcome back to Man Money.

39:34 Jim, thanks for having me again.

39:36 Great to be here, man.

39:39 Hey, it's great to see you and Don.

39:40 Uh 52- week high but still yield about 4%.

39:44 A lot of people would say, "Wait a second.

39:45 A shopping center economy is slowing down.

39:48 It can't be uh doing all that well." Well, you're proving them wrong.

39:51 As a matter of fact, this year's been pretty incredible so far, hasn't it?

39:55 It has, Jim.

39:55 You know, and and we've been doing this together uh you know, a very long time.

40:00 And it is economies like this that we thrive in.

40:04 uh you know when you talk about uh and it's

40:05 an overused term to some extent the K-shaped economy but but we

40:10 serve the you know the upper part of that K

40:13 and in in times that are a little bit more uh uncertain.

40:16 I mean the affluent customer and it's not

40:19 only what they make it's their it's their net

40:21 worth and their wealth buildup that that allows them

40:24 to to continue to to buy what they want.

40:27 Um, we're not the retailer.

40:28 We're just we're the real estate company,

40:30 but it's great real estate and we've got a great selection of tenants.

40:34 So, it's a good time to be it's a good time to be us.

40:39 Well, I'll tell you, we spent a lot of time today with Andy Jasse from Amazon,

40:43 and you would think that people don't like

40:44 to go out anymore because they love the convenience,

40:47 but what you say in your call and what you've

40:49 told me over and over again is that it's actually different.

40:52 and people would actually like to live next to where they shop

40:56 and that that's breeds the some of the greatest success you've had.

41:01 Yeah.

41:01 You know there is something co did us a big favor.

41:05 G frankly I mean there's so many impacts of it

41:07 but it did the country such a big favor

41:10 from the standpoint of getting outside understanding socialization enjoying

41:16 both eating out shopping out being part of the community.

41:19 The community is really important.

41:21 So our real estate is all centered around places that are fully

41:25 amenitized so that you do have choices of not one or two places

41:29 to eat but 10 or 11 places to eat of 20 or 30

41:33 uh places to to uh buy by by clothing and and be entertained.

41:39 So it is that mix of tendency in the right places

41:43 with the right affluence that at times like this in particular thrives.

41:49 Now, I mean, the best example I think of how special your places are,

41:52 when you talk about San Jose, 35% occupancy at downtown,

41:57 but your numbers are just amazing just a few miles away.

42:00 What is so special about what your places are

42:02 that you could have that kind of of dichotomy?

42:06 It's it's it's the place to be.

42:08 I don't I don't know how to say it in a in a better way

42:11 other other than if I could get you there and I know you're in Seattle today,

42:15 but one of these days I'm going to get you

42:17 to Santana Row in in down in in San Jose, California.

42:22 It it feels great.

42:24 It's where the community comes together.

42:26 It's got hotel.

42:27 It's got office.

42:28 It's got residential.

42:29 It is your total community.

42:31 Um it's a great place to to to spend time and to spend money.

42:35 and it's now over 20 years old from us

42:38 and continues to get better and better each year.

42:41 And we've got a lot more going on and in in there,

42:44 including a residential project that is under development,

42:47 under construction right now for another 200 and some odd uh units there.

42:52 It's it's a great place to live in addition to shop and eat.

42:59 Well, I got to tell you,

43:00 you keep getting better and better and the stock is still very cheap.

43:03 And Don, but during the TAR times, did Don cut the dividend?

43:07 No.

43:07 He kept raising the dividend even though the analyst said he shouldn't.

43:10 Congratulations, Don, on all your success, Jen.

43:14 1967 was a long time ago and 1967 was the first year that we

43:19 raised the dividend and haven't stopped since.

43:21 So, I love it.

43:24 Well, a remarkable record.

43:26 Don Wooden, president CEO of Federal Realy Trust FRT.

43:30 I like to say there's always a bull market somewhere.

43:32 I promise I'd find it just for you right here on Metoney.

43:34 I'm Jim Kramer.

43:35 See you tomorrow.

43:39 All opinions expressed by Jim Kramer on this podcast

43:42 are solely Kramer's opinions and do not reflect the opinions

43:44 of CNBC or its parent company or affiliates

43:46 and may have been previously disseminated by Kramer on television,

43:48 radio, internet, or another medium.

43:50 You should not treat any opinion expressed by Kramer as a specific

43:53 inducement to make a particular investment or follow a particular strategy,

43:56 but only as an expression of his opinion.

43:58 Kramer's opinions are based upon information he considers reliable,

44:01 but neither CNBC nor its affiliates

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