Mad Money w/ Jim Cramer 2/26/26

What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people are my friends. I'm just trying to make you a little bit of money. My job is not just to entertain, but to do some teaching. So call me at 1-800-743-CNBC. Tweet me, Jim Kramer. Today was an ambush. Pure and simple. The sellers, they were waiting. Sell, sell, sell, sell. They didn't care what NVIDIA said last night. They probably didn't even listen. They decided from the get-go that NVIDIA or any of the hardware tech stocks that have been up lately have now gotten too expensive. Instead, they want to swap into the left for dead software equities that they think represent good value. And that's how you end up with a session where the Dow gained 17 points. This would be lost 0.54%, but the tech-heavy Nasdaq tumbled 1.18%, and a lot of that was the $10 loss in the stock of NVIDIA, the world's biggest company. From the outside, today's action was just crazy. It was as if all the red-hot tech hardware companies, NVIDIA, AMD, Western Digital, Micron, Lamber Search, dozens of others suddenly lost their allure, while the horrendous enterprise software stocks had their fortunes resurrected, Lazarus-like, and now must be bought and bought in a hurry before the big liftoff. Does that make any sense? Of course not. But it's what's known as a program. And on any given day, the program can rule over the actual market. Today, the out-of-hardware into software program that I spotted ruled the day. Allow me to explain. When I got started at Goldman Sachs, I would put together baskets of stocks that represented different themes. Remember, that was long before we had ETFs. These baskets would let you make an immediate move on a host of, say, pharmaceuticals or dump the semis, maybe short the financials. You could move quick, fast, in a day, one session. No matter how much stock you had to accumulate, you could upend your whole portfolio and put it in a totally different position. Of course, my portfolio moves never impacted the market. They were never big enough. But the program I saw today was gigantic and unforgiving with a very simple logic. Sell the tech winners and buy the tech losers, no matter how well or poorly the actual individual companies may be doing. Most people don't understand how these kinds of programs work. They're not based on the specific fundamentals of individual companies. They're based on intuition. I believe that the market is paying too much for one kind of company and not, let's say, not enough for another. Now, in order for these huge programs to work, you need to wait for something that can hide what you're doing. The hedge funds that do these programs love camouflage. Last night, NVIDIA gave it to them by reporting a spectacular quarter with amazing growth and a roadmap to make trillions of dollars in a very short time frame. The gross margins were fantastic. The level of business extraordinary. The new clients fabulous. It was a tour de force quarter. NVIDIA made a terrific case for the next wave of artificial intelligence, where these machines will actually be able to reason. NVIDIA's new super chips are going to come out on time later this summer. We learn of a huge amount of business from Anthropic and OpenAI, two not-yet-public companies that are taking the world by storm. Oh, and let's not forget the self-driving cars and robots and digital twins that Jensen Wong, CEO, has told you are coming. They're here. Basically, NVIDIA gave you everything you could ever want, including terrific guidance for the current quarter. The buyers all knew, which is why the stock caught fire last night and was really climbing. But it was all for naught. Why? Because today, NVIDIA's stock became cannon fodder for the unannounced sell token that I detected from the moment the market opened. The stock started giving up points right at the opening bell, crushed by a torrent of sell orders. Boom, boom, boom, boom, boom, boom. It was just boom, boom, boom, boom, boom, boom. It was unbelievable. And you can see the footprints of the sub-program all the way down if you know how these things work. And I do. Telltale sign. It didn't matter how low NVIDIA shares went. Did you notice that? The decline was relentless. They never let up. They never let the bids build to let the stock stabilize. The client wanted out of all these AI hardware stocks in the same fashion. Just get it done. I don't care. 4 p.m. Off the sheets. Frankie, you know what? It was a bit of a joke how the whole thing went down. It really didn't matter how well or badly a hardware stock was doing. It had to get butchered. Broadcom, a huge multi-year semi-ductor winner, got crushed. along with KLA and Micron and Western Digital. As someone who always says own NVIDIA, don't trade it, I was appalled to hear all the lame justifications all day for the decline by people who've never executed a program and didn't realize that the program ruled. I heard NVIDIA's customers were running out of money. I heard NVIDIA didn't get enough sales in China, didn't get any. Even as they told us this was going to happen, I heard NVIDIA's gotten way ahead of itself. But it's actually a fairly inexpensive stock on earnings. I heard AMD is nipping at their heels. And while Google and Amazon's chips are taking share, they're, well, NVIDIA can be roadkill. Weird. AMD was actually still down 3.5% today. I'm telling you, it was the program. It's ridiculous. NVIDIA's customers are spending fortunes on equipment, and they can afford to cover the cost. These are companies with excellent cash flows, which means it's easy for them to borrow money. We all know the Chinese ship has probably sailed. No surprise there. At the end of the day, the amount of money NVIDIA's making is extraordinary. It's only going to get better. Second telltale sign that it was all just an artificial program and not the reality of business. The absurd, relentless buying of the enterprise software companies that have been written off for dead. Consider Workday. How many times did I hear in the last six months that Workday was going to be crushed by Anthropic, an AI company that can, let's say, mimic pretty much every software company out there? I never fully believe that story, but it's partially true, and it killed the entire cohort. The pessimism was so thick around Workday, the stock was practically untouchable. Sure enough, after reported Tuesday night, the stock dropped 12 points like that, 130, down to 170, 117 and change, ultimately, as the stock got two downgrades and a ton of price target cuts. But then midday, workday started to rally, and it actually finished yesterday up nearly three bucks. We're tackling another six today. This thing went up 22 points from yesterday's close. We saw the same thing with Salesforce. When it reported last night, it stopped. I'm going to get that workday. It rallied huge from the intraday low. I'm sorry. Its stock, it dropped a quick 10 points from 191. This is Salesforce. Then changed down to 182. It looked over the release and I saw it had a monster $50 billion buyback. I couldn't understand the selling, but I have no illusions. Eventually, Salesforce's stock turned around and rallied furiously, finishing the session up $7.82 to close all the way up at $199. I'm going to have more on this one later. But when you have a program trade taking over the market, the companies on the anointed buy list become winners. The fact that the quarter was excellent is almost beside the point. Workday's guidance was dismal and it's rally just as hard. We saw some huge rallies in ServiceNow, Atlassian, Datadog, many others in the same cohort that have just been horrendous, real dogs. Trust me, I tell you, it has nothing to do with the fundamentals and everything to do with the big switch I'm describing. This rebound was all artifice, people. We don't buy sectors, we buy companies. And I have no idea if the sub-program with NVIDIA is over. I'd use the program to buy the stocks you'd like at discounted prices to where they should be. That's because I've got to tell you, one gigantic account can create prices, and the prices you're getting are better than I thought. The bottom line, though, don't take today as a referendum on anything. Someone with a lot of money, and I'm talking about tens of billions, wanted out of one group and into another. The stocks were treated as playthings of that account, not companies. They were puppets on hedge fund strings, and it got jerked around all over the place. I prefer when stocks represent the fundamentals of the underlying companies. But on days like today, don't be fooled. The program is all that matters. Let's go to Bill of Massachusetts. Bill. Jimbo, I started buying this equity in May, and I've done very well. Last month, it came in and dropped about $25 a share. I scooped up more. What do you feel is going to happen with GE Aerospace? Well, there you got Larry Cole working for you. I think that it's just a long-term buy. There are going to be moments when it goes up and moments when it dips. And this is one of those stocks I say any dip that is any sizable sizable at all. Let's go to Thomas in Georgia, please. Thomas. Dr. Kramer, what an honor to be on your show, sir. Thank you for calling in. How can I help? Yeah, I'm calling about this stock. I purchased back in October of 2025 at $188 a share when it was going up. And it went up fast. hit a 52-week high of $207 per share. Year-to-date, however, it's down 24%. Good earnings, cash flow is good, revenue sales are good, the earnings per share, GAAP, is at 234%, and the price of earnings is at 212. Should I buy, sell, or hold? What say you? And the stock is? Oh, I'm sorry. Pelletier. P-A-L-T-R. Oh, look, I like Pelletier. But Pelletier is a very long-term hold. It's way ahead of itself. It got way ahead of itself, then it's pulled back down. But they have a great business model. They have really smart people. The clients I know who like them, just they can't say enough good things. So I'm going to tell you to hold Pelletier. Let's go to Nick in Maryland. Nick. Hi, Jim. It's Nick in Maryland. Booyah! Booyah, Nick. What's going on? Hey, I'm a first-time caller. I'm an investment club member, and I'm three-quarters of the way reading your fantastic book, How to Make Money in Any Market. Thank you. Thank you very much. This is a how-to book. I did not – this is not a page-turner about, you know, anything that's like my life other than picking stocks. Let's go to work. Thank you. I just like your current take on a company that you did a feature on your show back around July 10th of last year. Hinge Health. Oh, we like Hinge Health. We like Hinge Health. It's just kind of like Medline the other day. It's just going to quietly go higher. It's up three points today. That's a very big move. But when I see a stock like Hinge Health, I just say, OK, look, it's got a model for patient education to help the patients. They seem like level-headed people. And I just say buy that one and put it away. I think that one's going to do well for a long time. All right, look, I take today's action with a grain of salt. Stocks were treated as play things by hedge funds who wanted to get out of hardware tech and into software tech. I prefer when the market treats each company on its own set of fundamentals. An NVIDIA set is darn good I made money today Intuitive part of top and bottom might beat after the But will it be enough to steer the stock out of the software storm I got the company top brass to find out Then McDonald's has been one of the greatest growth stocks of all time. And tonight I'm going to tell you why. I'm still loving it. And shares of What's Water, which you brought me, are up nearly 55% over the past year. And tonight I'm sitting down with the CEO to find out what's been driving this industrial stock higher. So stay with Kramer. Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Cramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com. What made you confident that you could do something that hadn't been done before. I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Nearly two months into the year, the worst performing stock in the entire S&P 500 is Intuit, the software company behind TurboTax and QuickBooks, smaller businesses like Credit Karma MailChimp. This one's down more than 40% year-to-date, even after bouncing nicely today, along with that whole enterprise software cohort. Now, I always felt like Intuit had more protection against AI disruption than the typical software play. And tonight, Intuit reported a tremendous set of numbers with revenue growth in the high teens at a monster earnings beat. But management didn't raise their full-year forecast, and their guidance for the current quarter, that is the most important quarter of the year because of tax season, also came in a little light. I say this is standard practice. These guys never raise numbers going into tax season, but that's why the stock's trading lower after hours. Earlier today, we got to speak with Sasan Ghadarzi. He's the chairman and CEO of Intuit. Take a look. Mr. Ghadarzi, welcome back to Bad Money. Great to see you, Jim. Thanks for having me. Absolutely. Now, I saw the numbers tonight. I got to tell you, we got to start there because they're very good. Total revenue up 17 percent year over year. Margins better than expected. Big bottom line beat. So why don't you give us some of the top drivers of how you did this? Yeah, first of all, I'm very proud of the team, Jim. We performed in every part of the company. The business group grew 18 percent. Within that, mid-market grew 40%, which we're excited about. Our contracts are actually up 50% quarter over quarter. TurboTax grew 12% in a cycle right now where IRS returns are actually down five points. So our assisted segment is really on fire, doing very well. And this is, by the way, the segment that grew, $2 billion grew over 45% last year. And then Credit Karma grew 23%. And most importantly, it's actually creating a lot of tax demand because of the integrations across Credit Karma and TurboTax. So super proud of the team. All of our innovation across data, AI and H.I., human intelligence is fueling our growth. So excited about the quarter. More importantly, as I look ahead for the rest of the year and into the future. Now, but you did not raise guidance. Now, I know that last year this seems to be a quarter right ahead of a big one that you have not historically done that. I think this is just in keeping with the way you run into it. Yeah, it's a best practice, Jim. We are way ahead of where we want it to be the first half of the year. But for us, it's always important to get through the third quarter. And then we'll talk about our guidance after the third quarter. But it really positions us extremely well for the rest of the year. And more importantly, trajectory into the year after. So stay tuned after third quarter. I will. Now, I have long admired your company. I've been a customer on both sides. And what has concerned me lately is obviously the stock's a little weaker, but it's all theoretical. There's a belief out there that you are easily mimicked by AI-created software, that there's no real touch that matters, that a third party can disintermediate you. I have always felt you as mission critical to the company's eye views. Others seem to not think that. Could you explain to people why I think that if you use it, you'll know that it's mission critical? Yeah, you know, Jim, first, I would just start with we're all about results and all about execution. And we're going to disprove the theories based on just the trajectory of our growth, which is accelerating. But now let me get to your question. You know, we are really in a category of one. We're in a regulated environment, which means that accuracy and compliance matters a lot. And for our customers, consumers, businesses, and accountants, they make high stakes financial decisions. And there's a big liability if they get things wrong, because every consumer, every business at the end of the day has to do their taxes, right? Their books have to be right. Their accounting has to be right. And they demand a human expert to actually ensure that things are right on their end. Believe it or not, they demand a human more than they demand software, which is really where we come in. And the reason our growth has been accelerating is we now have an AI driven expert platform that has become a service in one place. We have a really married technology and human expertise in one place. It's why we're disrupting the assisted tax segment. It's why our business platform is growing 18 percent. It's why mid-market is growing 40 percent. And it's you know, you cannot replicate accuracy and compliance in a regulated environment through LLMs, which is, by the way, why we have amazing partners that have come to us. Entropic and OpenAI, because they see this liability that customers face and they want to partner with us to help deliver the experiences for customers. The deal that you just made with Entropic, now I don't know if there's money involved, but I think that actually you get the better of it. They need your imprimatur. Yeah, and the thing I would just say is it's why those partnerships are even in place is because both OpenAI and Entropic are great partners, But they also understand and see that this is a regulated environment where compliance and accuracy matters and you can't deliver it through LLMs. And we've built a data model and an AI model that's domain specific with human expertise. That's what our customers demand. How does it work? In terms of the deal with getting paid, are you getting money? Yeah, two aspects of this. One is what we've committed to. We have our Intuit financial large language models, but we also use open source. We use OpenAI. We use Gemini. We use Claude based on delivering the experiences for customers. And based on that trajectory, it's a multi-year agreement where we'll continue to have that spend with their LLMs. That's separate and distinct from the experiences for customers where we own the customer experience through APIs and MCPs. They're actually in our platform and they engage and we do not share in any of the economics. OK, now there's other things that are happening that are pretty exciting. You're going with the New York City flagship store. You're going brick and mortar. Why is brick and mortar necessary? I never thought that Intuit needed to do that. Yeah, so it goes back to the premise of where I started. You know, in our category, customers demand. They don't just expect. They demand human expertise. And when you look at our $300 billion in total addressable market, it's the experts. It's the bookkeepers, the accountants, the taxes pros that actually impact how the spend goes. And so now we've married technology with human expertise. And what we've learned is we need to be where customers are. So we now have 600 local service centers. And by the way, we've seen traffic go through the roof through early February. We had 5.2 million visitors to our stores and landing pages. That compares to 4.2 all of last year. And so we're in your neck of the woods in Soho. And and it's really it's the marriage of human intelligence and AI that's fueling growth. That's why we've we're we're local. But we're expanding our margins because it's all technology. OK, well, that's good. One last question. Can you give us a little kind of glimpse of how tax season is going? It's very strong. I'll start, first of all, with with the facts, which is through early February, IRS returns are down five points and TurboTax is up 12 percent. But as we're speaking today, right, we're almost in March. And so a couple of months in tax season has passed. We've got about six weeks left. And, Jim, the thing that we are seeing is, if you remember last year, our assisted offering is a $2 billion business that grew 45 percent. And that is what's on fire this year. And so we see very good performance through where we are in February. We got six weeks left in the tax season. We see the strength of our pipeline because of our assisted offering. And I'm super excited to talk to you next quarter. I'm super excited to talk to you, too. And you brought so much innovation to it and you just keep doing it. It's very exciting. Sassan Ghadarzi is the chairman CEO of Intuit after a very strong quarter. Sassan, thank you for coming on the show. Thank you for having me, Jeff. Everybody's back after the break. Coming up, is it order up for McDonald's after the company's earnings report? Kramer's revealing whether he's still loving it next. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC changemakers and power players. New episodes every Tuesday, wherever you get your podcasts. Other this month, McDonald's reported a terrific quarter. And at this point, with the stock at an all time high, I think it's pretty clear that the golden arch has really got its groove back for a couple of years. I mean, call it, say, mid-23 through the end of 25. Mickey D's basically traded sideways because the company was stuck in a rut. They had a bunch of small-time problems. Popularity of the GOP-1 weight loss drugs. They reduced your craving for everything, including this kind of delicious food. Then we also had problems with people wanting healthier, fast, casual chains. Margin pressure from steadily rising beef. There's no end to that. But really, this stock was weighed down by the fact that McDonald's, it simply got too expensive. From 2021, we had the high, say until 2025, really. We had the highest inflation in ages. And this company, like just about everybody else, realized they could get away with an endless parade of price increases. But eventually they pushed things too far, which is why their same store sales growth went negative in 2024, along with their earnings growth. Last year didn start out particularly well for McDonald either with U same store sales down 3 percent I am not used to seeing that kind of number from this fantastic company This is when the consumer really started pushing back on high prices and searching for value Fortunately, McDonald's got religion on pricing before most of its rivals. In June of 24, they rolled out their $5 meal deal. Remember that? I loved it. A little over a year ago, they introduced their McValue platform, which lets you mix and match items at a very low price. Last September, they brought back their extra-value meals. Think the five bucks for that sausage McMuffin with hash browns and coffee. That was like 12 bucks I felt in my one out in Long Island. Or eight bucks with Big Mac meal with medium fries and medium soda. Not bad. McDonald's realized the consumer simply wasn't going to accept high prices anymore. So they stopped trying to fight it. And it didn't take very long to work. In the second and third quarters of last year, they put up high 3% global same-store sales growth. But the real breakout came just over two weeks ago when the company reported a truly excellent quarter. McDonald's delivered a seven cent earnings beat off a 305 basis, which may not sound like much, but, you know, that represents 10 percent earnings growth. In the previous quarter, their earnings were basically flat. More importantly, this time they put up 10 percent revenue growth. Global same store sales jumped 5.7 percent. Wall Street was only looking for 3.9 percent uptick. Those are magnificent numbers. Just in the U.S. alone, their same-store sales were up 6.8 percent, which is a stellar number when we're still talking about such an enormous chain. The analysts only expected 5.4 percent domestic collapse. Their international business, oh, did great. Although some of that's because McDonald's caught a nice boost from the weaker dollar. But we all knew that was coming. Now, McDonald's doesn't give much in the way of forward guidance. This time, though, they offered a higher-than-expected capital expenditure outlook. We're talking about $3.7 to $3.9 billion expenditures. when the analysts were looking for $3.42 billion. But you know what? The stock didn't get punished. Most companies would. At the same time, management expected to get a 20 to 30 cent earnings per share boost from that weak dollar I mentioned. Meanwhile, McDonald's plans to open 2,600 gross restaurants this year. They had over 45,000 locations at the end of last year, and they're betting that grows to 50,000 by the end of 2027. Can you imagine? If you thought the company's best days were behind it, these guys have been doing their best to prove you wrong. Management says they can put up these strong numbers thanks to the focus on value, breakthrough marketing, and menu innovation. Why don't we start with value? Because I think that's the key here. McDonald's said their various value meal options are already helping them take back market share with lower income consumers after losing so many of them in recent years when they got too aggressive on pricing. Management gets it. Here's how CEO Chris Kempczynski put it. Quote, as I've said before, and I will say again, McDonald's is not going to get beat on value and affordability. He told me that once when I saw you. It was like I didn't even mention whether he was going to, but he told me. In terms of marketing, they still know how to reach their audience. Early last year, McDonald's had a very successful collaboration with Minecraft movie, which little kids love. Clubhouse also had a great ad campaign with The Grinch. In fact, with their Grinch-themed collectible socks, McDonald's became the largest seller of socks in the world for nearly a week. Here's a fun fact. Look, on a personal note, I've got to admit that I start to salivate whenever I get those emails from McDonald's reminding me about the free Fridays. Free Fridays on Friday. Do you get that? It comes, I don't know, it comes at like 2 o'clock. My wife is a Wendy's girl. For her, nothing beats the Baconator. But McDonald's has a tokes in me for life. like my late mom, whose last meal on this earth was a Big Mac fries and Diet Coke. If not now, when she said, I'm not going anywhere else. Next up, the company had a lot of success with its new menu items, despite what we've been hearing from the naysayers. Their snack wraps, you know what? They took off like crazy. Remember when the analysts were really negative on it? Now, it may be, look, you might think it's crazy to go to McDonald's for a wrap. No. And McWings did a lot of business in Australia, And they're making something called the Big Arch Burger Overseas. Look, this is a double cheese pounder with cheddar. They had to name it something else because the rest of the world uses the metric system. Like the Royale with cheese bit. Remember that in Pulp Fiction? Comes out in America next Tuesday. Look, this looks good, doesn't it? It's apparently New Year. This is a preview that we got because we were able to order a few here to the stock exchange. Twice the calorie content of a Big Mac. OK, this may not go over with the GOP-1 people. Put it all together, though, and you can understand why the stock's up more than 9% for the year. At a time when Wall Street's turning against complicated enterprise software plays, this one. McDonald's has a simple story that the money managers are eager to lap up. We know how McDonald's operates, and we know Claude can't spin up a network of 50,000 burger joints to compete, even if Claude knows how to write a press release better than anybody. Now, after its recent gains, the stock, it's not cheap, OK? at least not as cheap as it used to be. McDonald's sells roughly 25 times this year's earnings estimates, basically right in the middle of its historic valuation range over the past decade. Plus, the stock gives you a solid 2.2% dividend yield. That's not nothing. Of course, when the stock was lower, the yield was better. I like a stock that's up. Here's the bottom line. When it comes to McDonald's, I'm still loving it. It's the perfect type of stock for the market, where investors want real companies that make things and do stuff that can't be hurt by AI, and we can easily get our heads around and our mouths around. Now that Mickey D's is going back to its roots as the best source of value around, the customers are coming back. And so is the same for our sales growth. Even after rallying more than 9% year-to-date, IBO. Fire! Let's go to Ara in Ohio. Ara. Oh, yeah, Jimmy. I'm calling about Chipotle. I love the brand, but it feels like it's at a serious crossroads. Every time I talk to people, they say the experience is a hit or miss. The comp store sales has been sliding for a while. Instead of slowing down and fixing the basic, Boatwright is just entitled to the metal opening new stores. I mean, we've got to fix this. Let's look at the same objectively. You reported the last quarter, and it was right here, and I said, this stock's done going down. And I am sticking with that judgment. I think Scott Boatwright is turning the ship, and this is the level that you've got to pull the trigger and buys from Chipotle. All right, listen to me. I got to say, McDonald's, well, look, I'm still loving it. It's a perfect stock for this kind of market we have right now. Hey, this arch, double arch, golden arch, two arch, five arch, I love it. Now, much more mad money, Royale. All right, I'm going to sit down with What's Water Technology in a moment. The under-the-radar data center play has seen its stock rise nearly 20% already this year. I'm getting a fresh look at the company with the CEO. So then, are the fears over an AI-driven sespocalypse overblown? I'm reviewing my conversation with Salesforce CEO Mark Benioff and showing you where I come down. Of course, Oracle is rapid-fire in tonight's edition of The Lightning Round, so stay with Kramer. Even though Wall Street can't seem to make up its mind about the data center, there's still a lot of money to be made selling good old-fashioned industrial hardware to these warehouses full of servers. Take Watts Water Technologies, a more than 150-year-old company that designs and manufactures hardware to handle water flow with a rapidly growing data center business, especially as more of these facilities shift from air cooling systems to liquid cooling systems. Two weeks ago, Watts Water reported a terrific quarter, a significant top and bottom line beat with a very strong full year forecast. There's a reason the stock's up almost 55 percent over the past 12 months and nearly 20 percent year to date. So we have to ask, can it keep climbing? Let's check in with Bob Pagano. He's the chairman, president and CEO of Watts Water Technologies Learn More. Mr. Pagano, welcome to Man Money. Thanks. It's great to be here, Jim. Well, it's terrific to have you, and I know that we do want to talk a little data center. The analysts don't want to talk data center, but there is a blocking and tackling that you do that has produced remarkable turns over many, many years. So how do you stick to your knitting? Well, it's really easy. First of all, you have to have great employees, right? We've got 6,000 great employees around the world that care about our customers. That's the number one thing. And look, we've been around 151 years now, and 60 percent of our business is repair and replacement, which is a nice annuity for us to have. And we really look at the other 40 percent from a new construction point of view. So, you know, we've had an interesting market with the new construction market. As you know, residential has been soft. We've seen some positive in the institutional part of our business. And certainly data centers has been offsetting some of the weakness we've seen in residential. Well, do you think it was right on the on the comp school, the data center sub is so exciting that I can see how everyone. Jensen Wong last night in video was saying, look, we have to change the way we cool these systems. You have to be one of the bigger players in the business, even though it's not necessarily a big part of your company right now. Yeah, we we have the cooling valves that are inside of a data center and stuff. And we do other things like backflow preventers, drainage systems, strainers and some water quality stuff. that all is great inside of that part of the business. And, Jim, when you look at our key attributes, energy efficiency, water conservation, and safety and regulation, those are our key three themes, and that fits beautifully into the data center market. Oh, definitely. Now, you mentioned the kind of construction. I was trying to figure it out when I was looking at the mosaic of your business. It's very hard to be as consistent as you are, given the fact that you are attached to residential, multifamily too. I mean, how do you handle what has basically been a terrible downturn, a freezing of the market and of the housing market? Really, it goes back to that large install base, right? There's a shortage of plumbers. There's a shortage of building maintenance people. And they want reliable products that they can trust. They never want to go back to a job. So our plumbers and stuff request our products by name, which is pretty exciting. That is. Now, tell me about your, I think, very sound acquisition strategy. You don't seem to go in there and try to do the big deal. You are trying to hit singles, and you hit singles constantly. Yeah, that's one of the things. We're always looking for strategic acquisitions. We always say one plus one has to equal three at least, right? And when you look at some of the smaller acquisitions, there are reasonable multiples, and we have the ability to transform. So Watts has been a company that's done many, many acquisitions. I've done 22 since I've been here in 12 years. So we've been adding a lot of value to our shareholders and giving customers more solutions that they need. Now, you use something that I wish most people said you have an 80 20 solution. We do. And I went people may not have heard that. I know I once I learned it first when I was at Goldman Sachs, but also ITW. I mean, there are companies that do this and it makes so much sense. Yeah. I mean, look at, you know, when I first got with the company, we did a portfolio review. We exited $175 million of business of undifferentiated product that really was a me-too product that wasn't a commoditized product. And we really needed to focus our time and energy on solutions to our customers. We could charge a premium and add value to them. So that's a mantra we do. We do that with all our acquisitions. A lot of times they want to sell everything to everybody. And we relook at it, and it's about profitable growth, Jim. Now I was surprised considering thinking about proper growth that you have not been knocked from a loop by some of these incredible moves in the materials that you use in copper It doesn even seem to hit your bottom line when they're trading crazily. Well, we're not bashful of putting price increases in, Jim. So, you know, when we see copper move like it does, everybody understands that copper is in our product, steel is in our product. So we try to stay in front of it with forward contracts we have with suppliers and inventory, and then we're not bashful about passing a long price. Now, you've also, you've gone to Europe. You're doing a lot of stuff overseas. Those can be tough, volatile markets themselves, but they've been pretty good for you. Yeah, well, Europe has been tough in the construction market since the war, right? So it's more of a replacement type market. So, you know, we're down 5% this year, but we're starting to see, we think it's starting to bottom out and starting to come back. But we have a growing position in Asia, Pacific, Middle East, in Africa and in China. So those are great opportunities, along with 76 percent of our businesses in North America, which is terrific. One last thing on the data center. We keep hearing that the companies may run out of money before they can buy all their different put up all their data centers and that the balance sheets are too stretched. Are you ever really worried about an Amazon's balance sheet or a Meta or a Microsoft? Does that make any sense to you that people are really that nervous about things? Well, for now, you know, our contractors are busy. They're putting contracts in front of us. They see opportunity for the next three years. So three years in front of them right now. That's how busy they are. All right. That's the best thing I heard today. I've got to tell you, I've heard so much negativity. It's great that you came on the show because I think you're right. And the pessimists have been dead wrong. They win on a series of days. They won today. But that's about it. I want to thank Bob Pagano, CEO of What's Water Technologies. It's WTS. When you see a chart like that, what that means is it's a stock you own. You don't trade in that. You just own it. You can't ever forget it because we are buy and homework. But this is the kind of stock you need to own. We have money back in. Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast-fire lightning round next. It is time. It's time for the Lightning Round. I'm Chris. I'm Chris. I'm Chris. I'm Chris. I'm Chris. I'm Chris. And then the Lightning Round is over. Are you ready? Skied. I'm the Lightning Round. I'm Chris. I'm Chris. I'm Chris. I'm Chris. I'm Chris. I'm Chris. Who has to do, Jim? Okay. That's Brad Jacobson's company. I don't bet against Brad. That's roofing. Normally, it shouldn't be doing right now in the cycle. But Jacobson pulled off. You can buy it. Let's go to Mark in Colorado. Mark. Jim, ba-ba-ba-booyah from Boulder, Colorado. Excellent. What's happening? Oh, absolutely. Okay. Stock, I want to ask you about it. It had a great quarter, great guidance, initiated a $1 billion buyback, but the stock has been hammered this past month on growth fears. Talking about Reddit. Oh, I think you buy Reddit. In my book on How to Make Money in Any Market, I was struggling to make it one of my absolute top five stocks because I think it's worth so much more than what it's selling for. Let's buy that one. I want to go to Eugene, Connecticut. Eugene. Booyah. A hundred times, Jim. All right. What's happening? How are you doing? It's such a pleasure to speak with you. Oh, thank you, Eugene. Thank you. I'm a good time here. What's going on with you? I'm a modest investor and I watch your show every night and I've been doing so for years. Oh, thank you. Thank you so much. With that being said, I would love your opinion on Archer aviation? No, I'm not as into these stocks as others. I just think that Archer and Joby, they are kind of that remember that year of magical investing? That thing ended. So we don't want to participate in that anymore. Let's go to Jack in Ohio. Jack. Hi, Jim. How are you doing today? I'm doing well, Jack. How about you? I'm doing better if you can give me some advice on Ford Motor. Ford's coming back, man. Ford's been looking real good of late. People Don't forget, this thing is starting to really chug along. And I am so thrilled for Farley. I think he's a terrific guy. And this is going to pull it off. I'm not kidding. It's going hard. Let's go to Woody in Virginia. Woody. Booyah, Sir James. Oh, Sir James, I love it. Thank you. My honor. My question is about universal display. Its ticker is OLED. Oh, boy, I've got to tell you, I know this is going to come a time when we should recommend this stuff. But that time is not yet near. I'm going to Andrew in my homestead, New Jersey. Andrew. Hey, Jim. I'm one of the 1,366 outgoing members of the NYSC, and thus my interest in intercontinental exchange. My question pertains to what is the relationship with MSCI and SPGI? Is it just licensing fees? Oh, it's your PO. Well, yeah, well, one is Standard & Poor's, and the other is for the old Morgan Stanley Index, the international, and the one MSCI is the one I prefer. That's Henry Frianez. I admit he's a friend of mine, but I can tell you he's a great businessman. The stock was down on some sort of AI peers that were dead wrong. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, Salesforce CEO Mark Benioff has offered an impassioned defense of software stocks, including right here on Mad Money. So, should you believe it? Jim's revealing his take next. Hey, Jim, your mission has been very successful in our family. I listen to your show multiple times a week for investing knowledge. I just want to say thanks. I love your show. Thanks for always looking out for the little guy. A huge thank you for all you've done to make me a better investor. I got to call Kramer because I can't make a move without this guy. I want to make people better investors. If they make money, fantastic. Let's go to work. When Mark Benioff, the CEO of Salesforce, came on the show last night, he said he'd had it with the bearish rap about how his company was about to be run over by the SaaS-pocalypse. That's the software-as-a-service apocalypse supposedly orchestrated by artificial intelligence. The idea here is that the software-as-a-service companies are dead men walking. And Salesforce is pretty much the poster child for the entire industry. But great CEOs know how to handle these moments. And they have us among the best in the business. Last night, he came out swinging. Listen to this. Jim, the part that's ridiculous is that we are projecting $46.2 billion in revenue. Jim, the first time I was on your show, I think it was a billion in revenue. That, of course, was one of our first sasspocalypsees. You know, remember that? You said I had to come on the show because it was a sasspocalypse. And then, you know, we live through the 2020 Saspocalypse when you're like, oh, how are you going to survive through the pandemic? And here we are, Jim. We're in another Saspocalypse. It's a series of Saspocalypses. Every time the company managed to bounce back. But the prophets of doom say this time is different. They argue that much of what Salesforce does can be mimicked easily and for far less money by software created with Anthropics Claude Code. And even if Anthropic doesn't wipe them out, software-as-a-service companies tend to be charged by the seat, meaning per user. And AI can take the place of many of those seats, so Salesforce will make a lot less money per client. When Salesforce reported last night, the overall numbers were excellent, but the company did seem to take a couple of hits in its older products. At the same time, Salesforce has an AI platform of its own for agentics, agent force, digital agents that can do the work of people for much less than you pay a human. And that business is on fire. Small, but on fire. In a highly unusual move, Mark actually brought on two clients of Agent Force, the AI division that's generating $800 million in annual recurring revenue. Wyndham Hotels, that's the largest hotelier, and Shark Ninja. We had them on the show. Each talked about how Agent Force is saving the money by doing the easy stuff, saving the hard calls for humans. They describe an almost euphoric world where robots handle the drudgery so that the people can focus on the real work. A cornucopia merged with a utopia and higher earnings per share to boot. initially the stock sold off in after hours trading but it horribly managed to catch fire today rallying four percent i think one of the big reasons for that is that market announced a 50 billion dollar buyback now that's not bad for 187 billion company he said the cash flow can cover it as well as a small dividend boost basically if the stock market refuses to give salesforce the better than that then well they're just happy to repurchase their own shares at a big discount to what they think it's worth i think he's serious about snapping up all that stock because he's certain that the sellers are making a mistake and they do have a ton of cash flow. Overall, Mark was trying to communicate a very simple idea. Salesforce sees the damage that AI can do to enterprise software, which is why his companies invest so heavily in AI agents that are taking share and taking names. He said that his AI agentic initiative is grabbing business from Viva and pharmaceuticals, relations and service now. Whoa, in information technology. He's heard what the bears are saying, which is why he's mad as hell and he's not going to take it anymore. This is my favorite version of Mark Benny. I'm a fired up CEO with a new product that I think can take the world by storm. Agent Force's annual recurring revenue is up 169% year over year. They've already done 29,000 deals since it launched on our show at Dreamforce back in September 2024. Even though the enterprise software cohort rebounded today, things have grown dim for the group. I'm not in denial. Like Salesforce, most of them are still doing the numbers, but they're not blowing them away the way they used to. Salesforce is no different. and it's seen as slowly in its older channels, and it's bet huge on Agent Force to stay relevant. When Mark came on last night, I didn't want to see him go down swinging, but I never thought he'd be able to go up swinging, which is what happened. After that interview, I, too, questioned the SaaSpocalypse. Sure, it could be tough for a couple of quarters as Salesforce transitions to a much more agent-heavy model, but I'm now convinced that they can pull it off, if only because I've seen this company down before, and it's always been a mistake to count them out. And I'm betting this time it will be no different. I like to say this always, but I'm working somewhere. I promise I'll find it just for you to hear my money. I'm Jim Cramer. See you tomorrow. or 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 Mad Money Disclaimer. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.