NVIDIA Risk, Anthropic IPO Test, and Texas Roadhouse Rally

NVIDIA

Across the shows: 92 speakers in other episodes, 72 bullish and 47 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Nvidia still a buy on its product roadmap despite Huang scandal, but less attractive than a week ago.

  Jensen Huang's undisclosed affair with an alleged Chinese spy and ties to a possible shell company could cost him the CEO role, and the board was initially misled. Cramer still thinks Nvidia can move forward on the strength of its multi-year product roadmap, which is already developed, and says the business remains strong. He says there is a real bench at the company and the firm is not anxious to dump the stock, citing the Apple/Steve Jobs precedent. But he also says Nvidia is less attractive than it was a week ago, that AMD is becoming a more capable competitor, and that a distracted or compromised CEO may not be forceful enough to fend off rivals and design new chips.

  “Again, our interest is to figure out if the company's stock is still a buy, both right now and in the future... I still think Nvidia is a buy, that we must be prepared for a change. I think NVIDIA can go forward just on the strength of its multi year product roadmap that's already developed.”at 4:14

• Jim Cramer · CNBCBearish

  Election results and likely future federal regulation cut Nvidia's data center growth; it is worth less now.

  Cramer says voters rejected data centers in 40 of 41 ballot measures and many elected politicians campaigned against them. He fears a Democratic presidency in 2028 could bring federal regulation, possibly through a FERC-like regulator, that would end the rapid build-out. He says there is still a window to permit some projects now, but the era of an endless build-out is over, so the sector can no longer be aggressive. Nvidia needs tremendous growth at home and abroad to keep beating estimates, so he concludes the company is worth less after the election than before.

  “But I am concerned that the blue wave will limit the data center's growth, and NVIDIA needs tremendous growth here and abroad to keep beating estimates. Put simply, the company is worth less post election than it was pre election.”at 4:19

Texas Roadhouse

• Jim Cramer · CNBCBullish

  Texas Roadhouse's Q3 miss was a hoax-driven blip; comparable sales momentum makes it worth owning.

  Q3 comparable sales rose 4.3% against 5.3% expected, and the stock fell 4% after a 10-cent EPS miss. Cramer says the company attributed September's weakness to a social media hoax that a forensic investigation found to be false, and CEO Gerry Morgan said restaurants affected are seeing momentum. Cramer takes the company at its word and sees a lot to like: positive comps across all three brands, strong unit growth visibility including international franchising, menu innovations that appear to work, and value deals such as $5 beers. He notes four analyst upgrades in October and a potential gross margin expansion if beef costs are past their peak. He still wants caution before adding, given how the stock has round-tripped.

  “Now hopefully, you can put that blip behind us. And if that's the case, then there is a whole lot to like here. Management told an excellent tale of positive comparable same store sales for for all three of its brands.”at 35:42

• Jim Cramer · CNBCBullish

  Texas Roadhouse is one of the best restaurant stocks, with good value, growth room and management.

  Cramer treats last week's report setback as a one-time issue that should be put behind investors. Management reported positive comparable same-store sales for all three brands, and the company has strong visibility into unit growth over the next year, including international growth through franchise partners. Menu innovations appear to be working, and value drinks such as $5 beers and cheap margaritas suit a consumer hunting for value. Technology investments are improving throughput in stores, and live cattle prices have eased. He concludes that Texas Roadhouse is among the best restaurant stocks now, with good value, plenty of room to grow and great management. He hedges that he needs more time to look into the story before giving a full opinion.

  “This one should be considered one of the very best. Good value, plenty of room to grow, and great management.”at 37:28

Merck & Co.

Across the shows: 2 speakers in other episodes, 1 bullish and 1 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Merck is a terrific company; its strong run is due for consolidation, not a reason to sell.

  A caller who has held Merck for about twenty-one years, now 7% of the portfolio, asked whether to keep holding after volatility. Cramer says it is 100% a good hold and that CEO Rob Davis is doing a fantastic job. He says the stock rising from about $85 a year earlier to $148 should be expected to consolidate after such a climb, and he sees the company as a strong long-term holding.

  “I think Merck is a terrific stock and a great company.”at 10:28

Anthropic

Across the shows: 105 speakers in other episodes, 139 bullish and 89 bearish calls, past 30 days

• Jim Cramer · CNBCUncertain

  Anthropic's IPO is the make-or-break test for AI stocks; valuation has fallen and demand is uncertain.

  Anthropic is one of the few companies at the end of the AI investment chain that must make money from the hundreds of billions spent on data centers. Its IPO could affect about 25% of the S&P 500, so Cramer calls it potentially one of the most consequential IPOs in history and says AI stocks cannot sustain a recovery without it. He notes that the reported target valuation has fallen from about $2 trillion to a range of roughly $1.0 to $1.5 trillion after a slowdown in growth and the sell-off, and questions whether there will be enough demand even at those levels. A successful deal is needed, but the valuation and demand picture has weakened.

  “it is crucial that this deal happens. Without it, I just don't see how the AI related stocks can make a real sustained recovery.”at 13:29

Space Exploration Technologies

Across the shows: 52 speakers in other episodes, 68 bullish and 24 bearish calls, past 30 days

• Jim Cramer · CNBCUncertain

  SpaceX's explosive growth comes from renting compute, so its Nvidia spending depends on Anthropic.

  Cramer says SpaceX's recent revenue growth comes mainly from its AI segment renting out computing capacity, not from more Grok users or higher prices. Alphabet's Google and Anthropic are its two known large buyers. Anthropic's disclosed contract, now over $3 billion a month starting in December, is the main reason SpaceX can feel comfortable making huge purchases of Nvidia equipment. If the Anthropic deal fails and Anthropic lacks cash to honor its contracts, estimates for SpaceX and Nvidia would need to come down, along with other compute providers.

  “SpaceX has started to get lots of revenue from renting out its computing capacity to others... That contract is the main reason that SpaceX can feel comfortable making gigantic purchases of NVIDIA equipment.”at 15:25

OpenAI

Across the shows: 42 speakers in other episodes, 22 bullish and 34 bearish calls, past 30 days

• Jim Cramer · CNBCBearish

  OpenAI's shortfall in its private round signals weak demand for frontier AI labs.

  OpenAI closed a round at a $1.25 trillion valuation, below the $1.4 trillion it sought. More importantly, it reportedly raised only about $11 billion, with the rest possibly reaching $20 billion in coming weeks, well below its $30 billion target. Cramer compares this with the roughly $122 billion it raised earlier this year with relative ease. He calls this a damning indication of where demand for AI labs may be, and says investors are not paying attention to it.

  “OpenAI reportedly only raised $11,000,000,000 ... Well, that's well below the target of 30,000,000,000. That's a damning indication of where demand for these AI labs may be standing.”at 19:11

Proto Labs

• Jim Cramer · CNBCBullish

  Proto Labs is a speculative small-position buy at lower prices, given reshoring and defense and drone demand.

  Proto Labs has no debt, about $175 million in cash investments, and profitability, and it serves aerospace, defense and drone customers such as Blue Origin, Raytheon and Agility Robotics. Cramer likes its exposure to US reindustrialization, digital manufacturing, and demand from aerospace, defense, drones, data centers and robotics. He says the roughly 33 times forward earnings is still expensive, and gross margin fell due to in-house factory mix and contract labor. He therefore suggests only a small speculative position, or a larger one at a lower price. For himself, he finds the stock too volatile.

  “I think Proto Labs can be the one speculative stock I suggest in how to make money in any market in an otherwise diversified portfolio only... I recommend a small position here... Maybe a larger one, a few points lower.”at 26:49

Caterpillar

Across the shows: 7 speakers in other episodes, 5 bullish and 6 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Caterpillar's earnings are better than its 22x P/E implies; the stock has about 150 points more upside.

  Cramer thinks the company communicated its quarter poorly, failing to raise numbers and only saying things were good, which investors missed. He argues that at about 22 times earnings, the business is much better than that multiple suggests, so he would normally wait until the stock reaches 25 times earnings before selling. He tells the caller to hold and not exit until the shares gain about another 150 points, because it is going higher.

  “I think that the company did not communicate the quarter very well. They did not choose to raise numbers. They said things were good. I think that the 22 times earnings, things are much better than that price earnings ratio would indicate.”at 29:21

Churchill Downs

• Jim Cramer · CNBCBullish

  Churchill Downs is a well-run gaming company, cheap versus peers, with room to rise.

  Cramer calls Churchill Downs a very well-run gaming company that investors often overlook. It sells at a much lower valuation than its peers. Although the stock has already had a run, he thinks it can go higher.

  “This is a very well run gaming company. People often overlook it. It sells very inexpensive versus the others. I know it's had a little bit of run here, but I think you can go hard.”at 38:29

Valero Energy

Across the shows: 4 speakers in other episodes, 1 bullish and 1 bearish calls, past 30 days

• Jim Cramer · CNBCBearish

  Valero's run has played out; he would take profits on the refiner now.

  Asked whether Valero still has room to rise with an Iran war possibly resuming, Cramer says the stock's time has passed. He calls it a terrific trade that has already paid off, and advises selling it the next day rather than letting the gain turn into a loss.

  “I think its day has come and gone. I think it's been a terrific trade. I would ring the register tomorrow.”at 38:51

Marvell Technology

Across the shows: 7 speakers in other episodes, 6 bullish and 3 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Marvell is a broken stock but not a broken company; buy some now, not a lot.

  Marvell has fallen more than 50% after the merger deal and the broader market selloff, and the stock is widely seen as broken. Cramer says he likes CEO Matt Murphy and thinks the company is sound even though its segment and stock are broken. He would buy only a small starting position, roughly a quarter of a planned 100-share stake, and wait to add the rest at lower prices. He says the wide scaling is needed because the stock is still broken and not at these prices.

  “It's not though a broken company which is why I would say buy some but not a lot. Not at these prices.”at 40:45

Cloudflare

Across the shows: 4 speakers in other episodes, 4 bullish and 0 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Cloudflare is the most expensive stock in the market, yet he likes it more than Akamai.

  Akamai's large convertible bond offering has driven investors away from it. Cramer prefers Cloudflare over Akamai even though Cloudflare is the most expensive stock in the market. He credits CEO Matthew Prince as the real deal and says he owns Cloudflare himself.

  “I think that Cloudflare, even though it's the most expensive stock in the market, I like more than I like Akamai.”at 41:38

Best Buy Co.

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Best Buy's rally signals consumer spending will improve as falling pump prices free up cash.

  Best Buy rallied about 20 points to above its August 24 high with no news or earnings behind the move. Cramer reads this as a signal from the market. Best Buy sells expensive products such as computers, televisions and Apple products. If pump prices fall and consumers spend again, those products become much more attainable, so the rally points to better retail demand.

  “These are all expensive products. But if the price of the pump is coming down and the consumers unleash, well then they become that much more attainable.”at 44:24

AI infrastructure & data centers

• Jim Cramer · CNBC

  Political risk could choke data center financing, leaving neoclouds and Nvidia's marginal buyers unable to fund builds.

  Data centers cost fortunes and cannot be built from existing funds or typically from cash flow, so they depend on outside capital. If investors believe an elected official can end a project, they will not commit capital to it, especially to speculative neocloud builders such as CoreWeave and Nebius. Cramer thinks marginal buyers of Nvidia chips may not be able to get the financing they need. Nvidia had also been a lead investor in many data center projects, and a new CEO might not want to continue that financing approach. Without neoclouds as a source of gigawatts, the industry is left dependent on hyperscaler build-outs.

  “Data centers cost fortunes. They can't be built with existing funds or in most cases funding with cash flow. If an investor knows that an elected official can put an end to a project, why would she possibly commit capital to it?”at 5:42

• Jim Cramer · CNBC

  Data center stocks' bounce is only a technical recovery after forced selling, and the theme is damaged.

  The data center theme was damaged again by the possible sidelining of Nvidia CEO Jensen Huang. Data center names bounced hard, but Cramer says that is only a recovery after a round of forced hedge fund selling the previous week. He says the charts look terrible and that this is a chart-driven momentum group, so investors should not believe the rally signals a real turnaround.

  “We know the data center theme just got damaged again, this time by the potential sidelining of NVIDIA's Jensen Huang.”at 43:32

Market sentiment, positioning & volatility

• Jim Cramer · CNBC

  Last week's tech sell-off was a hedge fund liquidation of oversized data center bets, not a broader break.

  Cramer explains that the sell-off at the end of last week was not a fundamental break but a liquidation by several hedge funds that had bet too heavily on data center stocks and guessed wrong, or ignored the election's impact. The selling finished late last week and the market has since returned to its Wednesday rally. He still warns that the market is in a period of heightened volatility and could be down tomorrow as much as it was up.

  “It looks like what happened at the end of last week was nothing more than a liquidation by several hedge funds who had bet too big on data center stocks and guessed wrong or didn't think the election mattered.”at 7:22

Oil & fuels

• Jim Cramer · CNBC

  Falling oil prices lift consumer-facing stocks because two-thirds of the economy touches the consumer.

  Oil fell sharply after the president's comments seemed to take aggressive action against Iran off the table. Cramer argues that when oil falls big, everything that touches the consumer does well, and two-thirds of the economy touches the consumer. He uses this to explain why the broad market rallied that day, with consumer names among the winners.

  “I think that away from among the president's comments that seemed to take aggressive action against Iran off the table allowed oil to fall big... When oil falls big, everything does well that touches the consumer. And two thirds of our economy touches the consumer.”at 7:47

Agriculture & food commodities

• Jim Cramer · CNBC

  Live cattle prices have passed their peak and a head-and-shoulders pattern suggests further declines.

  Live cattle peaked above $2.50 a pound in late April and have since retreated about 15%. Cramer says the chart shows a definitive head-and-shoulders pattern, which he calls one of the most reliably negative chart patterns. He argues that if beef prices are past their peak, restaurant operators such as Texas Roadhouse should see gross margins expand, making the stock easier to own.

  “Live cattle prices peaked at north of $2.50 per pound in late April, but have since retreated about 15% from their highs... A definitive head and shoulders pattern.”at 33:34

Tariffs & trade policy

• Jim Cramer · CNBC

  Congress will likely repeal tariffs after the Supreme Court ruling, lowering prices substantially.

  The Supreme Court has already helped on tariffs, and authority now reverts to Congress, which Cramer expects will most likely repeal them. He says repeal will bring prices lower, though by less than falling oil prices, and in some cases substantially.

  “And now they will revert to the original province, which is congress, which will most likely repeal them. That will bring prices lower, not as much as oil, but in some cases, pretty substantially.”at 42:45

Banks

• Jim Cramer · CNBC

  Bank stock gains suggest better credit ahead as consumers have more spare cash.

  Cramer calls the bank rally a tough read. He cites JPMorgan Chase and Citi, which had been a drag on the averages and have rallied strongly. He thinks the move points to better consumer credit, because people have more spare cash and are less likely to default. He also suggests two more years of deal-making before the administration changes may be part of the story.

  “To me, this says better credit is coming because people have more spare change and are less likely to fall.”at 44:56

Consumer & retail

• Jim Cramer · CNBC

  Consumer packaged goods stocks are rallying strongly after long stagnation, helped by lower input costs.

  Stocks such as Clorox, Procter & Gamble and Kimberly-Clark had done almost nothing for years and have now rallied strongly. Cramer says these stocks do well when the economy slows, and they also do well when transport costs and raw materials fall, which widens gross margins. Falling oil prices can support that margin benefit.

  “Finally, there's the incredibly strong move in the consumer packaged good stocks, which have done next to nothing for ages.”at 45:21

US consumer

• Jim Cramer · CNBC

  Falling oil prices will give the working consumer a major price break and boost the economy.

  Cramer reads the market's strength in retail, home-improvement, bank and packaged-goods stocks as a signal. He says the market expects the beaten-down working person to get a broad price break as oil falls. He calls lower oil a huge spur for the economy, since cheaper fuel eases household budgets across many goods.

  “Put it all together and the market is saying that the beaten bedraggled working person is about to get a really good break, a price break on pretty much everything. Oil coming down is a huge spur for this economy.”at 45:40

US stock market outlook

• Jim Cramer · CNBC

  Recent big up and down days are one-day moves, not a sustained bull or bear market.

  Cramer argues the market has swung between one-day bear and bull moves, including a sharp bear day last Thursday, a bull day the day before and another bull day today. He calls the current move a one-day wonder bull market, with no sustained trend behind it. He sees the rally as sentiment-driven rather than a durable change in the market's direction.

  “Again, to me, this is the kind of a one day wonder bull market, just like the one day bear market last Thursday and the one day bull market of last Wednesday.”at 45:55