Mad Money 04/09/26 | Audio Only
Speakers
Summary
- Market narrative ignores Iran war risks, focusing instead on a tech sector battle where hardware and AI stocks are decisively outperforming software stocks.
- Software ETF (IGV) components like Microsoft, Salesforce, CrowdStrike, and Adobe fell sharply, reflecting institutional selling or hedging as hardware triumphs.
- Hardware and AI-related companies (Nvidia, Intel, AMD, chip equipment makers) are thriving due to insatiable AI demand, with Nvidia cited as the new market leader.
- Levi Strauss (LEVI) delivered a strong quarter with 14% revenue growth, raised guidance, and benefits from easing tariff assumptions; stock has upside due to cheap valuation (15x P/E) versus peers.
- Vita Coco (COCO) has dominant market share in fast-growing coconut water categories globally, with robust financials (13% sales CAGR, 28% EBITDA CAGR); a 20% pullback offers a buying opportunity despite a high P/E.
- Amazon (AMZN) rallied after CEO Andy Jassy's letter emphasized massive AI investments ($200B capex by 2026) with customer commitments, assuring returns and highlighting a "on fire" chips business.
- Arou's AI agents simulate human behavior using real data, providing accurate predictions for clients like McDonald's and challenging traditional market research; insights suggest enterprise buyers still prefer traditional SaaS like Salesforce over new AI startups.
- Reddit (RDDT) stock is suffering in the hardware-software war, but the company itself remains solid with strong user communities, though monetization and Google feed disputes are headwinds.
- Contrarian niche: Software stocks like Salesforce may be undervalued as Arou's data shows enterprise buyers have twice the confidence in traditional SaaS versus new AI entrants.
- Uncertainty: The hardware-over-software trend may persist, but software could rebound if AI integration proves beneficial; geopolitical risks (Iran war) remain a wild card.
Trade Ideas
Cramer stated Levi's reported strong Q1 with revenue up 14%, raised full-year guidance, and has conservative tariff assumptions that could boost earnings by 7%. Under CEO Michelle Gass, Levi's streamlined its portfolio, focused on direct-to-consumer (DTC) growth and partnerships (e.g., Nike), leading to robust organic growth and margin improvement. Stock trades at ~15x earnings with a 2.5% yield, cheap versus peers (Ralph Lauren, Tapestry at 20x+), and has upside as execution continues. Apparel category remains challenging; consumer spending slowdown could impact growth.
Cramer said Vita Coco has dominant market share (42% in U.S.), 22-125% category growth in key regions, and a 20% pullback provides a buying opportunity despite a high P/E. Company has strong financials with 13% sales CAGR and 28% EBITDA CAGR, zero debt, and guides for 24-30% EBIT growth this year; valuation at 32x earnings is reasonable for 30% growth. Pullback is unrelated to fundamentals, offering a chance to own a long-term winner in the health and wellness trend. High P/E multiple could compress if growth slows or competition intensifies.
Cramer advised a caller to average down on Kimberly Clark despite a fire at a distribution center, citing a 5.25% yield and faith in CEO Mike Hsu. Stock trades at 13x earnings with a high yield, and the fire is a temporary operational setback unlikely to affect long-term prospects. Attractive for income and valuation, making it a buy for averaging down. Ongoing operational or supply chain issues; pressure in consumer staples sector.
Cramer stated he "doesn't care for" Plug Power, as it should have been profitable by now but hasn't, indicating fundamental issues. The company's prolonged lack of profitability despite years in operation suggests poor execution or business model flaws. Unattractive due to continued losses, making it an area to AVOID. If Plug Power achieves profitability or secures major contracts, the thesis could break.
Cramer said Regeneron is "breaking out here," with CEO Leonard Schleifer doing an unbelievable job, and he likes the stock for its pipeline and earnings growth. Company has rising earnings, a strong product pipeline, and positive momentum, making it appealing for investment. Technical breakout and fundamental strength support a LONG position. Pipeline setbacks or regulatory challenges could hinder growth.
Cramer cited Andy Jassy's letter highlighting AWS's $161B sales outlook, $200B AI capex by 2026 with customer commitments, and a "on fire" chips business. Amazon's massive AI investments are backed by demand, expected to yield high returns (similar to Nvidia's 4:1 ROI claim), and reassure concerns over spending on satellites/drones. Letter validates AI strategy and growth trajectory, making stock attractive; Cramer is tempted to buy more on dips. Execution risks in AI investments; competition from other cloud providers.
