Mad Money w/ Jim Cramer 10/19/26

CoreWeave

Across the shows: 20 speakers in other episodes, 5 bullish and 14 bearish calls, past 30 days

• Jim Cramer · CNBCBearish

  CoreWeave's heavy debt and rising borrowing costs make it a sword hanging over the AI data center group.

  CoreWeave builds data centers and rents out computing power. Cramer calls it a great growth story, but it has taken on a mountain of debt to pay for the server-filled warehouses. Investors grew concerned after some of its recently issued bonds yielded close to 15%, and Musk responded with a 'yikes' post. Cramer says that at a 15% cost of capital, building a data center costs an arm and a leg. A co-founder's comment that the company wanted to tap insurers' pools of capital also spooked investors, which Cramer calls poorly timed and unacceptable. The stock fell more than 15% on Wednesday, and by Friday CoreWeave was down 25% from recent levels, with the neoclouds crushed. Cramer says the name hangs over the group, which will struggle to find its footing.

  “[CoreWeave]... A company that builds data centers that rents out their computing power. This thing has been a great growth story, but they've had to accumulate a mountain of debt to pay for these warehouses full of servers.”at 14:34

• Jim Cramer · CNBCUncertain

  CoreWeave's debt at 15% is too costly to fund its GPU buildout, making it vulnerable to rising rates.

  Cramer says some of CoreWeave's publicly traded debt yields about 15%, which is too expensive for it to raise more capital. He argues that returns on the GPUs CoreWeave buys with borrowed money are not big enough to make money at that borrowing cost. Bond buyers are skittish about its debt load. He still calls CoreWeave the premier data center builder and says its real risk is interest rates, not debt alone. A rate spike is what would make its cost of capital unworkable and could drag down the whole AI data center complex, but he doesn't think that happens unless rates blow out on inflation.

  “Right now, some of their publicly traded debt is going for 15%, and that's just too expensive for them to raise more capital.”at 45:23

• Jim Cramer · CNBCBullish

  GPUs CoreWeave owns will hold their value, since the world is desperate for high-end chips.

  The market doubts CoreWeave because it borrows against its GPUs and worries they will lose value. Cramer disagrees and thinks the chips will more than hold their value because the whole world is desperate for high-end GPUs. If that holds, CoreWeave owns the chips free and clear once the borrowing ends, which is when the real money is made.

  “But I actually think that the chips they buy will more than hold their value. The whole world's desperate for high end GPUs.”at 45:43

Paychex

• Jim Cramer · CNBCBullish

  Paychex's PEO business is taking share faster than ever, which explains the stock's rebound.

  Cramer says Paychex's PEO business is taking share like it has never happened before, and this is the quickest growth he has seen. He thinks this explains why the stock came right back after a 9% drop on a revenue miss and a light management solutions segment. He says two firms that had been downbeat on the stock had no choice but to upgrade it because growth was so extraordinary. He points to the CEO's account of first-quarter beats and client migration into HR advisory and outsourcing as support.

  “I would have said your PEO portion of your business is taking share like it's never really happened before. This is the quickest growth I've seen.”at 33:39

• Jim Cramer · CNBCBullish

  Paychex's AI error-catching makes it a stronger franchise; analysts upgrading are finally recognizing this.

  Cramer agrees with Paychex CEO Gibson that the company is better positioned than ever. He says the AI-driven error catching matters because compliance errors, invoices and state letters are what set small businesses back, so removing that stress makes Paychex a real franchise. He also points to recent analyst upgrades as evidence that the Street is finally recognizing this.

  “Like I said, we're better positioned than we've ever been... Those guys are finally starting to get it, John. They realize the kind of franchise you really have.”at 39:48

SoFi Technologies

• Jim Cramer · CNBCBearish

  SoFi will not rally until the other bank stocks rally, since it trades with them.

  Cramer says SoFi trades with the other bank stocks because it is a bank. It sells for much more than most other bank stocks, so it gets pushed down as they fall. SoFi is down 45%, and Cramer says it will not go up until the other bank stocks go up, since that is what it trades with. He says bank stocks are not trading well right now, so he would not expect a big rally in SoFi unless the big banks move sharply higher, which he does not see coming.

  “It's not gonna go up until we see the other bank stocks go up because that's what it's trading with.”at 8:32

Micron Technology

Across the shows: 9 speakers in other episodes, 3 bullish and 5 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Micron's business is great, and the stock's weakness is a buying opportunity for the trust.

  Cramer's charitable trust owns Micron. He bought it after visiting the company's Boise headquarters. He says the stock is not acting as well as he would like, but the business is great. Micron fell 15-20% in last week's memory selloff, and it is still down more than 25% from its highs even after today's bounce. Cramer calls the highest-quality memory names, including Micron and SK Hynix, the group that sold off hardest. He concedes the group's charts are bad, which weighs on the outlook for the memory group.

  “We bought it after spending some time at their Boise headquarters. We're situationally aware that the stocks not acting as well as we would like, but the business is great.”at 19:39

Apple

Across the shows: 5 speakers in other episodes, 0 bullish and 3 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Apple is the tech titan without major data center exposure, so Cramer says buy it.

  Cramer notes Apple is the only tech titan without major exposure to the AI data center theme, and that Gemini is essentially its partner and Alphabet pays Apple. Apple was up 2% last week while the data center names fell. He argues that the 'own it, don't trade it' approach has worked well for Apple, and he thinks the duo is going to be terrific. He says people criticizing the duo only emboldened him to say buy Apple.

  “Apple, the only tech titan without major exposure to the AI data center theme... was actually up 2% last week.”at 21:10

Space Exploration Technologies

Across the shows: 5 speakers in other episodes, 2 bullish and 2 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  SpaceX's model of leasing data center compute shows how much money AI compute can make.

  Cramer says SpaceX has shown the payoff from data centers because it builds them and then leases computing power to others for significant sums. He calls it the best example yet of how much money one can make by creating what he calls compute. He cites this as a sign that hyperscalers can earn returns from their data centers. He says Meta has been less clear because it has no cloud business, and SpaceX reports results soon, which he expects to be important.

  “SpaceX has shown it because it can build data centers, then [lease] computing power to others for significant sums of money. It's the best example yet of exactly how much money you can make when you... create what we call compute.”at 26:45

Anthropic

Across the shows: 24 speakers in other episodes, 15 bullish and 35 bearish calls, past 30 days

• Jim Cramer · CNBCUncertain

  Anthropic's IPO should be a sign of AI profits, but Cramer only wants the deal to happen.

  Anthropic is planning an IPO, now said to be targeting November or possibly December. Its pre-roadshow update showed the lab still growing well, but not as fast as bulls hoped, which contributed to last week's tech selloff. Cramer says that if the IPO is well received, it will give investors more confidence that the AI data center theme has legs. He argues the spending chain must end in profitable businesses, and Anthropic and OpenAI account for a huge share of cloud revenue at Microsoft, Amazon and Google. He adds that a huge Anthropic listing could also pull money away from the rest of the AI data center group. His expectations are modest: he would be happy to see the deal happen, rather than trade well afterward.

  “Finally, there's the looming IPO of Anthropic, one of the leading privately held AI labs. Ideally, we see Anthropic come public and trade well after it's open, but I don't even want to get that greedy at this point.”at 29:37

MFA Financial

• Jim Cramer · CNBCBearish

  Avoid MFA Financial; residential mortgage-backed REITs have performed horribly and holdings are opaque.

  Cramer says he has no idea what MFA owns, which he treats as a reason to avoid it. He adds that residential mortgage-backed securities have been absolutely horrendous as an investment, and he recommends against owning the stock regardless of how low its price falls.

  “MFA is one of those real estate investment that we have no idea what they own. These residential mortgage backed stocks have just been absolutely horrendous... and I'm gonna just say unequivocally, do not own that stock.”at 41:54

AI infrastructure & data centers

• Jim Cramer · CNBC

  Hyperscalers must keep huge capex; cutting it would hurt the data center group, with 2027 a bountiful year.

  Cramer says a resurgence in the AI data center group needs hyperscalers to maintain their huge capital spending. If they signal cuts, they will be preparing to dial back investment and the group will get hit again. He wants to hear that they have line of sight to hundreds of billions of dollars in revenue, so cutting back would be foolish, and 2027 will be the year of the bountiful AI harvest. He points to strong cloud infrastructure growth at Alphabet, Microsoft and Amazon as evidence that data centers are making money. He says the hyperscalers' earnings reports are the next big test of the theme.

  “What do we need to hear from the hyperscalers? Well, if you're hoping for resurgence in the AI data center cohort, these companies need to maintain their gigantic capital spending. That's right. Need to maintain, not cut.”at 26:45

• Jim Cramer · CNBC

  AI data center stocks cannot find a sustainable bottom until after the midterm election.

  Cramer says the AI data center group cannot put in a sustainable bottom until after the midterms, so investors are in limbo until voters go to the polls. He argues data centers have become politically toxic, even in states that were previously supportive. Democrats have emerged as the party more opposed to data centers, and polls suggest they will likely do well, with high odds of taking the House and a decent chance of the Senate. He sees the main issue as optics: no politician wants to endorse data centers before the election. After November 4 that pressure eases, and investors mainly want certainty about Washington. He expects one last washout after results come out, then local officials who want lower taxes will bargain hard with hyperscalers.

  “I don't think the AI data center cohort can put in a sustainable bottom until after the midterm election.”at 28:18

• Jim Cramer · CNBC

  Data centers are politically toxic, and Democrats are likely to win the House in the midterms.

  Cramer says data centers have become politically toxic even in states that previously supported them. He says Democrats have emerged as the party more opposed to data centers, and that polls suggest they will likely do well, with very high odds of taking the House and a decent chance of the Senate. He thinks the problem is mostly optics before the election, not Washington policy. He adds that elected local officials who want lower taxes can use hard bargaining with hyperscalers, since voters like lower taxes more than they worry about data centers that might cut jobs years later.

  “We know that data centers have become politically toxic, even in states that have been previously supportive of these things. So far, the Democrats have [emerged] as the party that's more opposed to data centers”at 28:30

• Jim Cramer · CNBC

  Not safe to get aggressively bullish on data center stocks until charts, hyperscalers, midterms, and Anthropic IPO clear.

  The AI data center group sold off hard last week. Neocloud names fell more than 20%, memory and storage stocks dropped 15-20%, and fiber and semiconductor equipment names were hit too. Financing worries about CoreWeave's debt spread to the whole group. Charts show double tops and head-and-shoulders patterns, so Cramer wants a rally that breaks the double top and shows higher highs and higher lows. He also wants the Nasdaq to get back above its 50-day moving average. Hyperscaler earnings are the next test: these companies must keep their capital spending high and show cloud growth. Cramer says the group cannot put in a sustainable bottom until after the midterms, and he wants Anthropic's IPO to succeed as proof that the spending chain ends in profits. He notes the IPO could also pull money away from the rest of the group. Bottom line: today's bounce is too early to call the coast clear.

  “I just don't think it's safe to be aggressively bullish on [the] group until the charts improve, the [hyperscalers] report, and the elections [are] in the [rearview] mirror.”at 31:10

Market sentiment, positioning & volatility

• Jim Cramer · CNBC

  Big stock moves now reflect leveraged fund unwinds, not company fundamentals.

  Cramer argues that last Friday had the hallmarks of a hedge fund blowing up, similar to the situational awareness fund collapse in July. He compares the current AI data center selloff to the 1987 crash, when portfolio insurance selling overwhelmed stocks in a way that had little to do with company fundamentals. He says data center stocks now move in bunches, even when they should not, and drop very quickly with nothing happening at the companies. These stocks are vulnerable to hedge fund blowouts because the funds are now immense and use insane amounts of borrowed money. He warns that investors may see huge moves driven by money managers who are overextended, all divorced from the fundamentals.

  “remember on this Green Monday that you may be seeing huge moves based on the machinations of money managers who are out over their skis... all totally divorced from the fundamentals”at 7:47

Cybersecurity

• Jim Cramer · CNBC

  Cybersecurity stocks' sell-off over Perplexity's agent tool is overdone; it won't hurt their businesses.

  Cramer's favorite cybersecurity stocks got slammed after Perplexity released an open-source project to help combat rogue AI agents. He says it won't hurt their businesses. The selloff happened because stocks had run up a lot, so people sold first. He also says owners reflexively sell whenever a generative AI company talks about providing its own cybersecurity, even though those cybersecurity companies are believed no matter what. He sees the sell-off as a reaction to AI displacement worries rather than a change in the businesses.

  “It won't hurt their businesses, but people have to go about selling first because the stocks were up a lot. ... These companies are believed no matter what.”at 17:38

US Treasuries & yields

• Jim Cramer · CNBC

  A 30-year Treasury yield above 6% would be a serious threat to AI data center financing; it is at 5.47%.

  Cramer says the 30-year Treasury yield is currently 5.47%. Above 6% he would be worried, because higher long-term yields raise everyone's cost of capital, not just CoreWeave's. He points to the sudden jump in yields after the last quarter-point rate hike as evidence of how quickly this happens. He argues that treasury yields matter more to financing data center buildouts than the intrinsic cost of capital of the builders.

  “CoreWeave may seem significant when it comes to the growth of AI, but it's a little boat in the sea of interest rates. If the yield on the thirty year treasury goes north of 6%, it's currently at 5.47, then look out.”at 47:42

US rates & the Fed

• Jim Cramer · CNBC

  Another Fed rate hike against inflation would make CoreWeave's financing hard and could topple the AI buildout.

  Cramer says Fed Chair Kevin Walsh is determined to bring inflation down to a level that doesn't hurt working people, and there is a lot of inflation to crush. A quarter-point hike already produced a sudden surge in yields across the board, which he believes hurt CoreWeave's cost of capital more than anything else. If the Fed hikes again soon, he believes CoreWeave would struggle to raise money and the dominoes would fall. He argues that rates matter more than whether the GPUs hold their value, and that if rates come down, CoreWeave should be fine.

  “If we get another rate hike soon, then I believe [CoreWeave] will have a difficult time raising money, and the dominoes will indeed fall.”at 47:52