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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramerica. All do . 1-800-743-CNBC. Tweet me @JimCramer. When you read about how we have such an extreme concentration of market capitalization in barely more than a handful of companies, there's a natural tendency to want to avoid them. Who wants to own stocks like the Magnificent Seven?
They've had such huge runs. You can probably get something cheaper, right? But today, like so many other days, you just feel like such a chump when you deviate from these seven stocks: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. And as we head toward the end of the year with the Dow dipping 226 points today, S&P advancing 0.17% and the Nasdaq gaining 0.46%, I think we may just have to accept that nothing's going to change between here and 2026.
Winners tend to keep winning in the last 2 months of the year because money managers want to show their investors that they own these smart things. They might sell the Mag Seven come January, but not before then. Otherwise, they'll look like morons. So, when these stocks come down, they will be bought by institutions that have lagged the averages.
They are the best investments and the best ways to play the next 2 months on any weakness. So, let's consider the case of Amazon. A week ago, despite tremendous derision, I defended owning Amazon on this show. A stock that had fallen behind the other six names in the Mag Seven. Amazon's Web Services division was widely seen as losing share and revenues to Microsoft's cloud business, growing at about a 17.5% clip versus almost 40% for Microsoft Azure.
Now, some of that alleged slowing was said to be happening because Amazon wasn't spending enough on Web Services. But then we got this one and then two-punch for the ages. First, Amazon reported an incredible quarter with a huge uptick in the Web Services business, where the growth rate jumped from 17.5% to 20% off a much larger base than Microsoft.
And for the second punch, if you were worried that Amazon wasn't investing enough in the in the Web Services biz, well, today we learned that's not the case at all. Amazon Web Services inked a multi-year strategic partnership with OpenAI. Yeah, the one that Microsoft does all the business with, to provide infrastructure for OpenAI's advanced artificial intelligence workloads.
Under this $38 billion agreement, OpenAI is, quote, accessing AWS compute comprising hundreds of thousands of state-of-the-art Nvidia GPUs. The result? In just a few days' time, the gigantic company, now $2.7 trillion, bolts from $222 to $254, and the stock goes from being unchanged for the year to nearly up 16%.
A loser? Nah. A winner. House of pleasure. That's monumental. Not only that, but Nvidia, which had stood still for a few days, rallies more than $4 and goes deeper into the $5 trillion zone. Now, I don't bring up this incredible Amazon gain to brag that I own the stock for the Charitable Trust, despite constant chiding and endless criticism uh from the bears who seem to be everywhere.
No, although I do love to say I told you so. Never gets old. But now, I bring this up to refute the worries about the dangers of concentration that I heard literally that this is what's going to cause the market to go down and hurt these stocks the most. It's all the usual arguments like I talked about this weekend in that CNBC Investing Club think piece that I put out every Sunday that I thought was really one of my best ever, and you should get it.
First, can we just accept that these stocks are not just not joined at the hip? I mean, really. They're joined together, but they're joined together not by the data center, they're joined by their growth. Despite their size, they're putting up some of the best growth out there. Growth. It's growth that matters to stock investors, not the data center, not accelerated computing, not even artificial intelligence.
Growth is what the Magnificent Seven have in common, and growth is what the market always loves. We just don't talk about it enough. In my new book, How to Make Money in Any Market, I write that you need to be in growth stocks, no matter what. That only growth stocks can measure up, regardless of what happens with the real economy.
These are the companies that simply aren't part of that Fed rate cut scrum. Growth stocks are the only safety stocks these days. These are the stocks that took off when the rest of the market got crushed in the mini banking crisis of 2023. They're the stocks that bounced right back after COVID, and they did that because growth is the ultimate protection in the stock business.
When you realize that these are seven companies tied together relative by relatively high growth rates, not by what they do for a living, you can see that there's no real worry about concentration of gains. You get their growth, you get their size. The reason why this market gravitated to Amazon last week is that it's the most valuable unit, Amazon Web Services, has accelerated growth.
It went from 17.5% growth, not too shabby, to 20% growth, which is rather remarkable given the law of large numbers. 20% growth off a $132 billion revenue run rate with a 34% gross operating margin, for heaven's sake. That's some of the most profitable growth the world has ever seen. Now, I want you to contrast that with Kimberly-Clark.
A great company saw its stock get clobbered today after the company announced it was buying Kenvue. That's the maker of Tylenol, Band-Aid, Nicorette, among other brands. We'll learn more in a second. At one time, like so many other household names, Kimberly-Clark went from being a largely domestic company to a worldwide colossus as Western Europe, then Eastern Europe, then South America, and Asia, China, they all discovered what we knew, that gold standard was Kleenex.
Kimberly-Clark's growth rate got better and better and better, and the stock was a juggernaut. But once Kimberly-Clark had expanded everywhere and began to face more competition from Procter & Gamble and Unilever all over the globe, as well as the local brands that caught up to their winning formula, well, the growth rate plummeted.
It got to the point that Kimberly had a 2.5% organic growth rate when reported last week, and believe it or not, that was actually a pretty good number. That's simply not enough growth though to attract the new buyers that are interested in the Mag Seven. No wonder the company felt compelled to buy Kenvue, even as it owns the very controversial Tylenol with all of its baggage strewn by the Secretary of Health and Human Services, RFK Jr.
A company with a good yield of 4.9% with Kimberly with staples that are the products that are staples, well, didn't that used to be the ultimate safety stock, right? But as I explained in How to Make Money in Any Market, that era is over. A safety stock does not go down 22% in 1 year. Of course, not all growth stocks are created equal.
The questionable stocks these days are the ones that are in the data storage business. Seagate, Western Digital, they're now shorted stocks, meaning not enough people saw the demand for data storage coming, so they have super growth because they've got these storage machines, and their stocks are roaring higher.
I like them, but I know you have to sell them at a certain point because eventually they'll pump out enough new supply to sate the demand. I am looking for stocks you don't have a buy and a sell. You just own them. I waffle on the build of data centers, too. I think they may have secular growth, meaning growth that doesn't depend upon the health of the broader economy.
That's the kind of growth I'm looking for. I just don't know if they have enough of it. I feel the same way about Nucor. Got a large data center steel business, even as other customers desperately need lower interest rates. So, that means Nucor's hostage to the Fed's next move, and we don't know if we're going to get a rate cut in their next meeting.
I don't want to be hostage to anything. No, my growth is pure. Bottom line, when you look at the Magnificent Seven, what they have in common is not artificial intelligence, the data center, accelerated computing. It's that they all have pure, fantastic, worldwide growth. And that's why professional money managers just can't quit these stocks.
At the end of the day, the executives who run the Mag Seven know what we want, and they just keep giving it to us. What more can we ask for? Let's go to Venus in Michigan. Venus. Hey, Mr. Cramer. This is Venus from Cramerica, Michigan. How you doing? I am doing great, Venus. How are you doing? I'm doing awesome.
Hey, I you're the goat, so I got to ask you about this stock. All right. had the bomb earnings report, and I want to know how far you think it can go. It is SoFi. Okay, SoFi I think is an amazing company. I think it is run terrifically by Anthony Noto, a very old friend of now more than 30 years. I think it's resting right here, and then it's going to go up again.
It and Affirm are my two favorite so-called fintechs because they do far more than what people think they do. The Magnificent Seven all have one thing in common, and that is that they have incredible growth. That's why money managers and retail investors can't quit these names. Not tech, but growth.
On Mad Money tonight, Kimberly-Clark announces its intention to acquire Tylenol maker Kenvue, almost $50 billion deal. But Wall Street didn't seem to care for it. I'm going straight to the source with Kimberly-Clark to learn more about what a combined company with brands like Huggies and Band-Aid would look like.
Then we learned a lot about the state of the hyperscalers in last week's earnings call, but I'm detailing my key takeaways. Then we thought, what if you wanted to invest in a company that isn't spending copious amounts of money on the AI buildout? I'll reveal the names I'm watching, so stay with Crame Cusic] Miss something? Head to madmoney.cnbc.com.
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