Mad Money w/ Jim Cramer 2/25/26

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 than my friends, I'm just trying to make you a little bit of money here. My job is not just to entertain, but to explain, to put all this stuff in context. Call me 1-800-743-CNBC. Tweet me at Jim Cramer. Wall Street can overreact better than anyone. Earlier this week, an outfit called Cetrini Research put out a paper titled The 2028 Global Intelligence Crisis. It presented our country as a vast wasteland of white-collar unemployables thrown out of pretty much anywhere they previously worked because of what we talk about all the time, AI. This piece of science fiction caused a huge downturn in the market, although we've now spent the last couple of days bouncing right back down, gaining 308 points today. S&P advancing 0.81%, and then NASDAQ, which was really hard hit the other day, up 1.26%. All right, but let's deal with this thing, though. Citrine's research thesis was pretty much as simple as it was wrong. Anthropic, the lovable business-to-business AI disruptor, has such a powerful hand, Satrini says, they don't pretty much be able to eliminate all white-collar office jobs, effectively take out a huge chunk of America's middle class. It doesn't matter whether it's real estate. It could be travel. It could be bank. It could be credit. Lose those jobs, and you lose all the businesses that cater to them. You lose the economy. Recession. Depression. Massive bankruptcies. Sell, sell, sell, sell, sell, sell, sell, sell, sell, sell. The Great Recession, too. Now, the Great Recession, too, will include the downfall of a ton of software companies that get their funding from private credit firms. The private equity and debt mongers love the steady flow of cash coming from those cloud software business models that are going to be obliterated. And, of course, here you're thinking about Salesforce, which reported tonight at the close, delivering, by the way, a robust top and bottom line beat. But their full year earnings forecast came in a little light. I thought it was conservatively made. And that was enough to send that stock down in after hours trading as if it fit the Citrini model of Monday. On the other hand, though, they talked about spending $50 billion in buybacks, which is equal to more than a quarter of the share count. They're sick and tired of the sell off and they're not going to take it anymore. I don't blame them. I saw a company called Workday report a really horrible number, opened down 12 and ended up finishing almost three bucks. And now Salesforce trades at 15 times earnings. Weird dichotomy. And that's why I'm very glad you'll hear from Salesforce CEO Mark Benioff later in the show. I bet he comes out fighting. Today, the Citrini worries were viewed as being way overblown. I say you got to take them with a box of Horton's salt. But you know what? I like to hear contrary views to my own. By the way, contrary views that include the idea that maybe NVIDIA won't be any good. We're going to talk about that in a second, but I wouldn't describe it as being bad. As the Bears see it, Monday's meltdown gave us a glimpse of the future. But two days later, we've been brought back to reality after what's looking like one of the biggest overreaches of all time, which is right. The enterprise software domino theory or the idea that the global intelligence crisis is all smoke and mirrors. Wait a second. Will an AI tsunami really wipe out the entire white collar class? Oh, come on. That's just not right. This is a case where Wall Street took a tiny kernel of truth and extrapolated it into a financial tragedy of ridiculous proportions that caused many people to completely freak out. And, you know, panic is not a strategy. Now, it's a case where Nvidia seems to be the only winner. And even that goes away in a depression. I'm going to tell you one thing. It sure isn't going away tonight, not after that blowout quarter. Of course, I am concerned about most enterprise software companies. They are in the crosshairs of the bears because they may not be able to reinvent themselves fast enough, but not because they're threatened with extinction. I don't see this anthropic great firm wiping them out. I just think they maybe won't be able to make as much money as they used to, which is why they're now getting lower and lower price earnings multiples. Salesforce 15 times earnings. I do believe that some of the private equity and private credit firms that we're so worried about will have to take real hits. Maybe some of these funds can bring in money from individual investors because these companies are campaigning for the uninformed to come in to get those high yields. I don't like that. I agree with my old friend Lloyd Blankfein, former CEO of Goldman Sachs, author of Streetwise, comes out today, a great new book, where he questions the gall of these private equity firms that are so desperate to get liquidity. They want to hit up regular people. They want to hit up you for cash in order to make their more sophisticated investors whole. Don't be fooled. But in the end, I think most of the private equity and private credit firms will simply make less money. That's my theme. No apocalypse, just less money. They're going to have to be more realistic. They're going to have to do a little bit worse and accept that. Maybe some of the funds may disappear, but the overall industry, I do not think, is truly about to blow up. At the same time, I don't believe in the white-collar job apocalypse. Maybe AI can eventually replace most of the positions, and that's very bearish. But it's going to take many, many years for that to happen. And many new jobs will be created in the process. So tons of stocks that's told off on Monday, retailers, credit cards, banks, travel, they should all come back. And which ones in particular? You know, I like names. I like dimension companies. I like TJX, which had a terrific quarter. HomeGoods was amazing. Marshalls, TJ Maxx. But its stock got hit anyway because it had been straight up. Management's always cautious in the conference call. I like the credit card companies. American Express got killed. That's a great company. Capital One, so good. I like booking holdings. I like Marriott for travel. I think the travel bull market lives. They won't be brought down by Anthropic. My favorite, the banks, Wells Fargo, Goldman Sachs. The former, because it's doing the best job of integrating AI. Just hired a whiz from Amazon Web Services. The latter, because it's the closest we have to a pure play of investment banking at a time an investment banking is on fire. These are entrenched companies. They're not going to blow up. Many of these will use AI to cut costs. Perhaps better than a Salesforce or ServiceNow or Workday could. Maybe not, though. Maybe these software companies can do it cheaper to stay competitive and just make less money in the process. You see my theme? Make less money. Price earnings multiple goes down, but no apocalypse, no extinction. OK, there will be some earnings degradation, but I accept that. And you have to, too. Look, the software companies are survivors. They can merge. They can adapt. They can do whatever's really necessary to get it so they stay in business. They're priced for perfection, though, and they do seem to have, let's say, kind of a rugby scrum feel about them. And we don't pay up for scrum. Fifteen times earnings for Salesforce. Something's wrong there. I'm talking real earnings here when you include the impact of stock based compensation. So am I worried? Well, look, you have to be worried. But I am not worried about the impact on the broader economy. I think AI helps the broader economy. And for that, we have to look no further than the most important company in the universe, which is NVIDIA, which just reported a healthy top and bottom line beat. Seventy five percent growth in their data center. Also gave better than expected guidance for the current quarter, enough to send the stock higher. Although, remember, there'll be people who will say it's the end. They always say it's the end. You know me. I say you own NVIDIA. Don't trade it. Even better. It doesn't seem like they're feeling much of a pinch from the memory shortage because their margin guidance was strong. We know NVIDIA has been cleaning up with these hyperscalers and once again demand is off the charts. So for all the hand-wringing about how AI will be an engine of wealth destruction, it's hard to deny that it's also an incredible vehicle of wealth creation. And that's where I come down. Of course, regardless of where NVIDIA trades tomorrow, what matters is that NVIDIA has created the entire AI boom with its ultra-fast chips that can reason and accomplish time-consuming tasks for a fraction of what you pay a human, which means a plentiful amount of new businesses are coming. NVIDIA is the bedrock of the fourth industrial revolution that will create more jobs than it destroys. I can't promise you that, but I'm sure optimistic that that's going to occur. And that's certainly at odds with Monday's doomsday paper and doomsday stock market. I know. Those who just started, you may think maybe I'm just a Pollyanna, an older Pollyanna. But I'm old enough to remember what happened when the PC wiped out most of the big iron in tech, except for IBM. The cheap PC was ascendant. Seemed like nothing would take its place. And then this was born. The iPhone. This was a total revolution in itself. It was it was creating an app store that only employs millions upon millions of people from the apps themselves to hardware, to software, to phones, to PCs, to all of the let's say the accoutrements. And I say this to all of you naysayers out there. Did the iPhone destroy more jobs than it created? Did the PC? I don't think so. Don't think that this is either. Don't get pessimistic. Don't get sucked in. Here's the bottom line to all you naysayers. Tonight, NVIDIA reported a picture-perfect quarter. It shows me that AI is alive and well and actually making a ton of money for more than just NVIDIA. Oh, we're going to have speed bumps. We're going to be fooled periodically. But let me tell you something. My optimism, which is including this moment, it has put me on the right side of 49,000 Dow points since I first walked down this street. And I got to tell you, I'm not changing sides anytime soon. Let's go to David in Louisiana. David. Greetings, Jim, and Semper Paratus from the Big Easy. Got a question for you. Got a question concerning Yum! Brands. They recently announced they might spin off their pizza business. What's your opinion on a stock after seeing Domino's decent results in that? OK, I'm so glad you asked about this. I was doing a piece about fast food. I will tell you, I think Yum! Brands, the stock has been a horse lately, something 9 percent. I want you to hold it. I would buy any Yum! Brands if it dropped, because that plan to shed Pizza Hut, spin it off, whatever, is going to give you amazing numbers because of how well Taco Bell is doing. Taco Bell will shine. We'll know how great it is. Own Yum! Brands. Kurt in Tennessee. Kurt. Mr. Kramer, how are you doing? I am doing well, Kurt. How about you? I'm good. My question is, I bought a lot of this when it was $68 a share, and it ran all the way up to $350 or $360. The stock today, and it's had a pullback. I want to know what your opinion is on Visa. Okay right now there are people who are actually there was a piece that came out on Monday talking about how Visa is going to be in huge trouble Visa All right here the way I feel I like both Visa I like MasterCard a little bit more These are terrific growth companies Periodically they sell off Periodically they are cyclical companies Not cyclical in their business, but cyclical in whether they're loved by the stock market. Whenever they're not loved, like right now, I got a solution for you. What can I say? To all the naysayers out there, look at the quarter NVIDIA just reported. The AI trade is alive, and it's not wiping out anybody anytime soon. You may have to pay a little less for some companies, but you'll be paying a lot more for others. Homemade money tonight. Shares of Arista Networks, one you're going to pay a lot more for. Stalled out so far in 2026. So what's going to get the AI networking player that has been one of the best performers in my lifetime moving again? Let's just check in with the company's top brass. And Salesforce has been in the eye of the software store, and the stock's trading down. Why don't we do this? Why don't we do this? I think it's a good idea. Let's listen to CEO Mark Benioff. Maybe he sets the record straight. After the company reported a great number, I know people want to sell. They wanted to sell Workday this morning, and how long were they? And Snowflake is also on the move after reporting earnings. I'm going to sit down with the CEO to see what's next for the company. I suggest you 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 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. Two weeks ago, we got this really fantastic quarter from Arista Networks. Networking equipment company has become one of the big winners of the data center here. They're the default Ethernet backbone for most of the hyperscalers, connecting massive clusters of chips and servers. When Arista reported, these guys delivered a healthy top and bottom line beat, with management raising their full-year forecast. Yet even though the stock initially popped in response to these numbers, it's given up all those gains. In other words, you're getting a terrific quarter for free. Only way I can look at it. Don't take it from me, though. Let's dig in deeper with Jay Shree Yalal. She's the chairperson and CEO of Arista Networks. To learn more, Ms. Yalal, welcome back to Mad Money. Great to be back, Jim. I was just looking. It was a year ago we were here again. And your stock has done terrifically since then. One thing I want to start with is I want people to understand exactly how good you are. In your conference call, you talk about how three years ago you had no AI. Now you're going to do north of $3 billion this year. How are you able to scale up like that? Oh, wow. Yeah, you know, three years ago, to the point you just said, we were literally outside looking in at a technology called InfiniBand, where majority of the AI connections were made through a proprietary network. We went to work really hard. The engineering team developed standards for Ethernet, and today Arista is the forefront of building that all Ethernet, scale up, scale out, and scale across network. But I couldn't have told you it would happen this fast and I'd really sign up to 3 billion. It's like a little startup or maybe a large startup inside of Arista. Our customers really pushed us there. Our technology is naturally suited for that, And it's a natural progression from where we are with the data center to the now new AI center. Did the customers push you also toward getting more memory than everyone else had? I know there's a question where you basically say, look, we didn't really have enough memory like everybody else. But the fact is you bought a lot more memory than anybody else. How did you know to do that? Well, I wish I could tell you I was clairvoyant. But late last year, we did see all the memory pressures. And earlier in the year, we had worked with our chip vendors to get a lot of the high bandwidth memory, often called HPM. And so, frankly, I had, you know, not so much bought early, but understood there was a memory pressure that was first affecting the server vendors and naturally made itself to us as well on memory intensive SKUs on networking. So we did get ahead of the problem. But I have to tell you, Jim, the problem is more acute than just one company or my getting ahead of it. it's going to go on for two years and memory is the new goal. Yeah, but it's going to go on for two years. But sometimes you're guiding up. You're obviously not destroyed by it. You're able to either pass it on or you still have more surplus. And you're less worried than others. I could have done better with more memory. Well, let's just say I think you're humble. But that's all right. We like humility. Now, let's go to something that's bothering me about your stock. So Meta, good customer. They suddenly partner with NVIDIA, and your stock goes down because people feel, well, maybe there's something that's bad for you. Then AMD partners with Meta, and your stock goes down. People think it must be something bad for you. Do they not realize you have, like, a software layer that you're not as easy to disrupt and that no one really wants to disrupt you anyway because you're really good at what you do? It's kind of—the stock has a mind of its own, But we look at both those announcements that NVIDIA made with the GPU and AMD made with their MI series as natural goodness for Arista, because where there's lots of AI accelerators, you've got to connect them. And guess that's where we come in, right? So I don't think people are putting two and two together. They're just looking at the isolated news. But we're living in a world of multiple AI accelerators, whether it's GPUs, TPUs, homebrewed AI accelerators from inference companies like Meta. and Microsoft. And we love that because in a world with lots of GPUs and lots of model makers, guess what? We have to connect to that and make them better, more resilient, higher throughput, greater radix, greater scale and better latency. So all of this is good opportunity for us. Of course, NVIDIA is the gold standard in GPUs and they were majority of the market, but more and more of them are coming to bear. Okay. Now your operating margin, 47%, your next closest competitor, 34.6%. Why is your operating marketing so much bigger? Well, I think we do more with less, quite honestly. My engineers are just top of the line, exceptionally good. And in this world of new agentic AI, not only do we do more with less and we have excellent engineering, we have to be more efficient. We think we can be with the use of AI tools 30% more efficient than even how we are today. So the days of just hiring people or having more employees is replaced with more and more automation and analytics tools combined with intelligent employees. And I think that's where our secret sauce really comes in. Your secret sauce also allows you to have, I think, a better view of almost everybody in your industry. So I want to know, why is it that someone, every single conference call says, you know what, is someone going to pull back? Is someone going to pullback why don't people realize you can't afford to pull back it's too dangerous to pull back these companies that are your clients if they pull back they could be um obsolete so there are two schools of thoughts and things like this if you went through the dot-com industry like you and i probably did we were born then and there's enough people pattern matching to what can go wrong right and in the dot-com industry what people don't understand is the the Pets.com or the Webban or the Selex who have now disappeared, were not real customers. They were kind of in this build it and it will happen. But today we have a much more important sector of responsible customers. Our cloud titans, our hyperscalers, our neocloud providers, our model providers, our content providers. These are very real and responsible customers who see that Arista can improve the utilization of their AI models by using a better network and therefore get more out of their GPUs. This is the big difference. But you can't help the analysts from saying, what if something can go wrong? That's always in the people's minds. But I think lots can go right because of the responsible customer suite we serve. Your customers, why can't they take down some debt? Why do they have to have, it doesn't mean they have no longer pristine balance sheets. If it's producing revenue do you think this is going to produce revenue on mass in the next two three years are you talking about our customers taking debt or me just saying when i hear i mean amazon takes down debt for the first time everyone says oh my god i don't want to be in amazon anymore they're back being they're not now going to go back to selling books or something the fact is is that these companies are uniquely able to pay you at take down debt and pay you because they actually have generated a huge amount of cash flow like i said these are the most responsible companies generating, like you said, tremendous billions of dollars of cash flow. Debt is just another vehicle for them to pay because their investments in CapEx are so monumental. So absolutely, they'll pay well. But again, part of their responsibility is to look at various avenues of cash flow. I think they're doing a tremendous job of that. All right. That's good. I'm glad to hear some sanity. I'm tired of hearing everyone say what a big mistake it is to be able to do what they're doing. They're obviously smarter at this stuff, as are you, Jay Shree Yulal, CEO and chairperson of Arisa Networks. You are getting this great quarter for free. Thank you, Jay Shree. Thank you, Jim. Great to be here. Man Money's back. Coming up, with Salesforce on the move after its latest revenue guidance, Kramer is getting the latest from the company's CEO. 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 Borsten hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. I'll tell you one thing. Salesforce just can't seem to catch a break. The cloud software Kingpin reported a better than expected quarter after the close with this Asian Ford business up 169% year over year annual recurring revenue growth. But the full year revenue and non-adjusted earnings forecast were a tad light. So the stock is getting slammed in after hours trading Wall Street just not willing to give these enterprise software companies the benefit of the doubt as I said at the top of the show even though they come down huge from their highs and are now actually inexpensive on an earnings per share basis Plus Salesforce just announced a billion buyback equal to more than a quarter of the company market capitalization Clearly management believes the stock gotten way too cheap Earlier today, we got to check in with Mark Benioff. He's the CEO of Salesforce to get a better read on the quarter and the future. Take a look. Mark, welcome back to Mad Money. Oh, thanks, Jim, for having me. I am delighted to be here with you today. Hello from San Francisco. Well, look, I want to get right a couple of things just right now. I'm seeing accelerated revenue, 12 percent. I am seeing a 50 billion dollar buyback. And yet I am seeing a stock that sells at 15 times earnings. Something's ridiculous here. It has to be the P.E. multiple, if you ask me. Oh, 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. We're talking 46.2 billion. And it's just the 46th times since 2008 when I was first, 2009, I think I was first on the show. Amazing. And Jim. Yes. Jim, 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 lived through the 2020 sasspocalypse when you're like, oh, how are you going to survive through the pandemic? And here we are, Jim. We're in another sasspocalypse. It's a series of sasspocalypsees. Well, everyone told me that your older business, what would happen is that there would be fewer seats, the customers would pay you less, and you wouldn't be able to transition to age and force and time. I don't see a drop off in the number of seats from the older business. Oh, Jim, not only do we have more seats, we're also introducing incredible new products. You know that we have our incredible new ITSM product. That's a seat-based product going after our friends at ServiceNow. Now, we have five amazing conversions now from ServiceNow to Salesforce, including companies like Sunrun, Cornerstone, CoolSys, Mystone, Thames Valley Police, and others. So more seats, seats. But Jim, in every case, it's apps and agents. You know, we are selling not just apps. We're also selling agents, too. And you know, because the first time I ever used the word, I think, agentic was on your show. I think you had to stop the show and go, what word did you use? I've never heard this word before. But now, Jim, everyone knows what an agentic is. And also everyone knows what agent force is. But agent force is now an $800 million business up, 169% year over year. And our customers are deploying apps to seats with humans. You know, there's still humans in the world where at least there's two, I think, me and you. I don't know how many other humans there are. How many are there in the Army? How many are in the Army, which is a customer? How many are there at Wyndham, which people don't realize is 8,200 units? You're talking about probably the most, let's say, place that you need agents to be able to handle around-the-clock calls of any other customer. Jim, the Army deal is a $5.6 billion deal. Unbelievable. And here's another one. We have this other brand-new Life Sciences product, you know, that's also about apps and agents going after Viva. We closed AstraZeneca, AbbVie, Novartis, Pfizer, Takeda. It turns out there's still some humans in those companies, too, and they want apps and agents. All right. Now, you know, Jim, I'm case number one. You know that because like on my service this year, we've talked about it. I'm running a huge call center, contact center service operation, but I'm also extended it with agents. You can see it at help.salesforce.com. So that's been amazing. This week, I qualified 50,000 leads for my sales force that's now 15,000 reps all over the world using agents. And, Jim, I am deploying apps and agents. So our opportunity is bigger and more exciting than ever before. But you must think that people don't recognize that because you're talking about a $50 billion buyback. Right now, you're a $170 billion firm. You'd be buying a gigantic amount if you're in the marketplace. Jim, that is because of one thing. You keep telling me how cheap our company is because we're going to do over 16 billion dollars in cash flow this year. Now, I know cash flow isn't real anymore. I read that also on these social media feeds. You know, Jim, revenue is not real anymore. Margins aren't real. Cash flow is not real. RPO is not real. Nothing is real anymore. So, therefore, I'm saying, well, I am. Thank you for clarifying that. Because, Jim, here's the funny part. You've got to look at companies, not just ours, but so many others, and go, this is at very low prices. Right. And so, yeah, we're going to buy back because we are convinced. And, yeah, when I looked at our price yesterday, I'm like, buy it all back. Look at the prices. I mean, that's just as much as I can get right now. You raised your – the $60 billion is now more. You raised what you think you can do. A lot of people felt that you'd never make that. They're right. You're going to make more than that, correct? Jim, you see our margin numbers? Do you see we're delivering more than 34 percent margins? The cash flow numbers? We already delivered 15 billion in cash flow for the year. When you have 50, we're doing more cash flow, Jim, than Walmart. I know Walmart's got a trillion dollar market cap. We're envious. They have a 50 times earner. They have a 50 PE. You have a 15 PE. Something is wrong. Our growth rate is more than twice theirs, Jim. You know that. And by the way, I love Walmart. They're a huge customer of mine. Huge fan of Doug. He's a huge role model of mine. But, Jim, I'm envious of that market cap because how can they have a higher market cap? And we got twice the growth rate and we have more cash flow. You explained it to me. You're the expert on the market. Well, the market's wrong. Now, I'm going to let you do your call. I'm thrilled you came on the show. Everything that you promised, you delivered him more. That's all you can do. Thank you, Mark Benioff. Jim, it's not my first S-pocalypse. You know that. No, it's not. We've lived through them before. I always have to come on the show. You've been on the show more than anybody else. The Sasquatch is going to eat the Sasquapolis. And I'm thrilled that you came on. And I think that it is, if you're buying back $50 billion, maybe people should think about buying too. Thank you so much, Mark. Good to see you. Jim, great to see you. Bye-bye. Come to visit us in San Francisco. We love you so much. I can't wait. Thank you. That's Mark Benioff, Salesforce chairman and CEO. Everybody's back after the break. Coming up, software stocks have been getting hammered by AI fears. But Kramer thinks one could actually be the way to go. He's digging in with the CEO of Snowflake next. OK, can any enterprise software company catch a break in this environment where Wall Street's terrified AI will destroy the profit margins, even if it hasn't even started yet? Look at Snowflake. Now, this is a cloud based data management analytics platform. This is more of an infrastructure play, and they have a consumption-based pricing model rather than charging per seat, which should make the stock a lot less vulnerable to AI. In fact, their platform is borderline essential for building AI tools. They've recently announced major partnerships with both Anthropic and OpenAI. Yet the stock's down nearly 40% from its highs in early November. And when Snowflake reported after the close, even though the results were much better than expected, terrific annual product revenue forecast, it wasn't enough to change the narrative. Initially, the stock jumped higher in after-hours trading, but then it gave back all those gains and then some. What's going on here? Let's take a closer look with Sridhar Ramaswamy. He's the CEO of Snowflake to find out. Mr. Ramaswamy, welcome back to Mad Money. Hey, Jim. Always great to talk to you. Okay, so Sridhar, there is a sense that maybe all of AI is slowing or the enterprise software companies. You are not slowing at all. Your growth is fantastic. We had a great quarter, Jim. Q4 was 30% year-on-year. We guided to 27% for fiscal 27, two percentage points above consensus. You had a monstrous RPO quarter. RPO for Snowflake now sits at $9.8 billion. In the quarter, it grew 42% year-on-year. But I think the bigger question is really around AI and software. And we actually feel really good that Snowflake is right at the center of this enterprise AI revolution. We think that, yeah. Well, I just want to say that don't forget you have 125% revenue retention, which to me says your customers know that you are indispensable. Well, they are investing in us because they believe in our future, but we have to will that into existence because AI is so disruptive. We think the platform that's going to win is the one that is a single source of truth for the enterprise that has built in security, auditability, and trust that has governance for things like access built in. Of course, we have the partnerships, as you were saying, with the best model makers there are, and we combine all of these with our trademark line of having really easy-to-use products. So products like Snowflake Intelligence, 2,500 customers less than a quarter after GA are on fire. Similarly, CortexCode has hit 4,400 customers less than one month after going to GA, and we're seeing this effect on our customers. United Rentals recently talked about how 1,600 branches have access to all of their business metrics in natural language because of Snowflake intelligence. And you know the funny thing? Our partners are telling us that Cortex-Code is giving them a bulldozer to get work done with where previously they were shoveling with their hands. I think it's product innovation that is going to create durable value for Snowflake. And that's why I feel confident about the role that we are going to play in this enterprise AI revolution. Well, in this way, I feel that not only are you immune from so-called AI competition, but any new company that starts up is probably either going to go to one. There is a competitor of yours, a database, or go to you. And that's pretty much it. There's just two of you, and you're getting more than your fair share of business. And we are accelerating our pace of innovation. or 430 launches. And this other competitor that you mentioned does not have the equivalent of a snowflake intelligence or a cortex code. Innovation at a time like this really matters. And with a great set of partnerships and product innovation, we feel very good about racing ahead. Well, should we be concerned? I know that one of the reasons why the stock's trading down after the closes, some people feel that there's margin pressure. Specifically, free cash flow margin was 25%. and they're expected to fall to 23% this year. Is that something I should be concerned about? You should not be because in that 23% is a one-time bump from the Observe acquisition. That is going to contribute to 150 basis points of that. We run an exceptionally disciplined business. In fact, our headcount was pretty much flat between Q4 and Q1 because we are now beginning to use AI to drive efficiencies, whether it's our support team or our services team or even our AI SRE team, we're getting more bang for the buck from the folks that we have because we are the biggest deployers on top of Snowflake Intelligence and of Cortex-Code. And you should expect to see that accelerate where we are able to have a lot more impact for every employee that we have at Snowflake This is a great time to be running a progressive company like Snowflake because you get all of the benefits of the eye as long as you keep reading great products and i think they have shown that we can create great products and take them to market very quickly you certainly have then you mentioned you are i i think it'd be important to mention the u.s figure skating team everybody watch you're involved you it's one of the clients that's correct. The U.S. figure skating team, the bobsled team, they're all our customers. Why? Because those are data-driven activities. You want to know every little nuance of what contributes to a great outcome and having access to the data right at your fingertips, on your phone, as it comes out is part of what makes those teams successful. We are proud to partner with them. We are proud to also lead the way in what can be done with data in real life. Now, you also have a big auto company. So we go, you know, at Rental Construction, we've got the Olympics. But Toyota Motor Europe uses you. What do they get from working with Snowflake? Toyota Motor is a big, Europe is a big customer of Snowflakes. It all comes down to data and what you can do with it. Everything from things like supply chain optimization, knowing where things are, how do you quickly optimize, all of that information now is at their fingertips because of Snowflake intelligence. It is that rapid access to information that really ends up making the difference. We keep hearing Anthropics out to destroy everyone. Anthropics just made a big partnership with you. They're obviously not out to destroy you. Anthropics is a huge partner, as is OpenAI. They create incredibly capable models, but the people that are going to succeed are the ones that harness the power of these models and put them into great products. That's what we have done with Cortex-Code. And just internally, you're seeing massive reductions in everything from how much time it takes to resolve a support case or how quickly you can generate a new proposal for a customer. Or, funnily enough, how much my finance team can analyze travel information to drive efficiencies there, for example. It's all across the board. Well, let's leave it there. CEO Sridhar Ramaswamy, Snowflake with an excellent quarter. Sridhar, it's so great that you came on the show. Thank you. Thank you, Jim. Always great to chat with you. That's Sridhar Ramaswamy, Snowflake CEO. Stock's a little down, but it was up very big earlier today and may have money. We'll be back after the break. Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast-fire lightning round next. Before we start the lightning round, don't forget about our President's Day deal for the CNBC Investing Club. This special offer ends real soon. So if you want to see all my market moves and get an inside look at our monthly meetings with the next meeting coming just this Friday and look at the charitable trust portfolio, I want you to scan the QR code or visit CNBC.com slash Kramer Club. And now it is time to talk about the lightning round. Kramer, everybody, that's where you're going. We're on front of the same list. Talk to you. Bye-bye. Sell the cell. Just because I don't know. Of course, ahead of time, my staff prepares the Kramer. So if I can play the sound. And then the lightning round is over. Are you ready, Steve? That's a lawyer. I'm Kramer. Let's go to Joe. And let's get it. Joe. Hey, how are you doing today, Mr. Kramer? I'm doing well, Joe. How about you? I can't complain. I had a question for you. It's about Quartona Mining. I'm sorry, Quartona Mining. Yeah, look, it's a mining stock and they all go up and they all do well. And then when things get tougher, you say, why didn't I own Agnico Eagle? Swap into that one. Next is Matthew in Utah. Matthew. Booyah, Jim. My daughter's bought shares of Banco Santander after you mentioned it last year. What should they do after the acquisition of Webster Financial? So I think they should hold it. And if it goes back to 10, 11, I would even buy more. Your daughters are very, very smart. Let's go to Hutch in New Jersey. Hutch. Hey, Jim, get your thoughts on PayPal. What are you thinking about it? Well, I mean, if people keep saying that it's ready for a takeover bid, I think it's not doing that well. And I don't like to recommend stocks on the basis of takeovers. It always seems to be the wrong thing for me to do. Let's go to Brian in Minnesota. to Brian. Jim, booyah. How you doing? I'm doing fine. How about you? I'm doing pretty good. Calling in about Klarna. Yeah, people Klarna was just kind of not great. It was just fine. That's why I keep recommending Affirm. And I'll put in SoFi as a twofer right there. Let's go to Gordon in Virginia. Gordon. Hey Jim, it's an honor to speak with you. Oh, thank you, Gordon. Love your show. Love you and a brand new member of your investment club. Oh, great. Don't forget Friday's 12 o'clock meeting. Yes. Yes, sir. Certainly will. Hey, I wanted to get your take on Applied Digital. I think Applied Digital is going to have a breakout quarter, and therefore you should own the stock. I know it seems like it's expensive because it has generated a lot of losses. I think those are going to come to a conclusion very, very soon. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, could it actually be last call for alcohol stocks? Kramer is poring over what's going wrong for the industry and letting shareholders know if they should close out their tab. Next. When I got into this game, I knew there was one industry that would never be disrupted by anything. A business where you could build a brand, raise prices regularly, and it always stick. That indestructible category? No, it wasn't enterprise software. It was liquor. Whether it was sold at a bar or liquor store, you could bet the return would be amazing because we are a society of drinkers. and we are willing to pay a little more each year for the magic elixir. But that's no longer the case. We now know that literally nothing is immune from competition in this market. The value destruction in the alcohol category has been appalling in the last couple of years. Whether we're talking about Constellation brands, that's... The big daddy, Diageo. Think of all those Johnny Walkers as well as Morgan, Tanker. ...magical drop-offs and an overall sense of doom. Yes, doom. The endless spiral of the stock of brown form is already well known. But last night, Diageo reported the results were so horrible that they had to cut a dividend in half. I always thought the dividend was sacrosanct. The stock of this king of all alcohol fell 15% one session. As is so often the case when you get this sort of decline, management, new managers like the team at Diageo, They're hopeful they can stand the decline. We want that optimism, but they always seem to underestimate the changes in the marketplace. They did list some of the causes of the decline. The consumer's feeling the pinch. Younger people are drinking less. The GOP-1 drugs eliminate your craving for alcohol. And there's legal competition from cannabis in half the country. But then these guys dismiss those problems as having kind of a relative, maybe even transient impact. That's wrong. They admit that the economic pressure has meaningfully impacted disposable income, Despite the sanguine tone of our president last night, over the past five years, Americans are spending 25 percent more on consumer packaged goods that are not alcoholic, but they're receiving 8 percent fewer items. Even though the rate of inflation has come down, people are still feeling the pinch from high prices. They don't have enough left for the liquor or mixed drinks that they used to crave. Worse, the moderation in drinking is a huge problem for the liquor business, especially among younger people. The members of this cohort seem almost repulsed by the whole concept of alcohol and what it does to your body, instead opting for alcohol-free mocktails in record numbers. Perhaps Diageo doesn't want to talk about it, but the aging, alcohol-loving baby boomers just seem to obscure how much the kids hate to drink. When the boomers age out, oh boy, I think we'll see the numbers and they'll be appalling. How about this GOP-1 issue? If it's transitional, why are the drug companies doing so many studies about how these drugs cut alcohol use pretty substantially? And if the GOP-1s end up being approved to treat alcoholism, keep in mind that heavy drinkers are responsible for a huge amount of consumption. Now, some of Diageo's weaknesses seem self-inflicted. The astounding drop-off in the Agave Spiritile had to be extra painful. Agave's been one of the bright spots for the company. But Diageo's agave sales fell 23 percent, a stunning 30.9 percent decline in Casa Amigos, 20.9 full in Don Julio. These are fantastic brands. I think they've been hurt by a lawsuit filed in the Eastern District of New York by a trio of relative unknowns, including Sushi Tokyo, alleging that while these two brands claim to be 100 percent agave, they have non-agave elements in them. I never thought this lawsuit would ever hurt these brands so, so hard. But it's definitely weighing on these two Diageo properties that had been stars. Now, what could change things? Maybe radical price cuts, rekindled love affair with what we call the Browns and the Clears. Well, a nascent turn in beer in January means something. Alcohol sales of 0.8 percent. Call me skeptical, though. My point here is simple. We may marvel at the value destruction of the software as a service stocks. They keep being kneecapped by Anthropic or OpenAI. But we've got to remember that disruption is nothing new on Wall Street. and it includes the ones unassailable liquor giants that now find themselves being pushed off by mocktails and assailed by a new generation of consumers who view their bodies as a temple. The kind of temple where Johnny Walker's no longer allowed in. I say it's time to roll back price and accept, like so many other industries I talk about, you just can't make as much money in the business as you used to. I like to say this always in World Market Summer, and I promise you I'll find it just for you right here on Mad Money. I'm Jim Cramer. I'll see you tomorrow. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Cramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as 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? 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