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[ne America. Other people want to make money. I'm just trying to save you a little. My job is not just entertainment. It's to teach you to deal with days like today. So call me at 1800743 CBC. You can tweet me at Jim Kramer. Somebody has to pay the bad guy. Might as well be me. In the last two months, regular viewers of this show know I've gotten cautious on the more speculative stocks connected to the data center and AI.
I've said repeatedly that when I say insider selling and secondary offerings, borrowings and operations with no revenue, I'd have to take a step back. I had proclaimed 2025 is the year of magical investing where if you bought anything, anything at all that's involved in the data center, you made money earlier this week though in what I admit is a very big change for me.
I pulled the plug on the year of magical investing. I pronounced it over dead. Well, you know, that's only good call. Dow tumbling 798 points, S&P plunging 1.66%, NASDAQ plummeting 2.29%. Nothing magical about those figures. Today was a hideous day, but particularly for tech, most especially the data center and I AI stocks.
See, the money's headed to the sidelines or headed to high growth away from tech. I don't want to abandon the truly profitable companies involved in AI and my trust hasn't, but I know a mania when I see one, and this one feels like it's starting to unwind. What am I scared of? simple. A year I lived through the year 2000.
Back in 1999, I brought a company public that was losing tens of millions of dollars. It opened at $63. It went to 6 $61 and went to 63 same day. But before long, it had fallen to two bucks. I was told my hedge went back then. So I liquidated almost my entire portfolio, went short because of what I saw from others.
Hundreds of dotcoms were coming public and they were all trying to raise more money while the insiders were selling their own stock. It was also obvious. I swear if I ever saw it happen again, I'd flag it to you. So, I'm flagging it to you. Back in April of 2000, became clear that the rug had been pulled from underneath the owners of these.com stocks.
So, the institutional money fled into food and drug names. Does that sound familiar? Healthcare stocks have now been up for nine straight days. Now, the comparisons are by no means perfect. Last night, Cisco, the networking company, reported a terrific quarter. There was some great irony here. Cisco was the largest company in the market at the top of 2000.
On last night's conference call, CEO Chuck Robbins was asked directly whether this period could be considered similar to the '90s. Here's what he said. Quote, "This is a common question that we get, particularly since we live through it. I think there are a few differences. I think that the speed at which this transition is moving is even faster than it was." End quote.
On the other hand, Chuck also pointed out that quote companies that are investing in this are massive, strong balance sheet, strong cash flow, profitable companies, end quote, and that a lot of the spends coming from companies that are quote incredibly strong who view this as existential end quote. He said that unlike the do era, there aren't as many companies that are making bets that don't have business models, even as there will certainly be both winners and losers.
[groaning] I think that's almost all true. And I I just kind of argen exactly perfect because well let me give you the two cases that I'm worried about. Now some of the peripheral companies particularly in quantum computing and alternative power which have a long history of losing money uh they are uh losing money and there's one huge company with what looks like a terrible balance sheet that's losing fortunes even as it spends like crazy.
And here I'm talking about OpenAI the the creator of chat GBT. Now, this company spending so much money and making so many promises that even though it's growing incredibly fast, no doubt about it. 800 million users, $20 billion exit run rate, it's still nowhere near what they need. Now, I don't know a soul in this business who thinks that Open AI is a clown show.
I mean, pretty much everyone agrees it's the best of the bunch. But because it's the best, Open AAI has been able to make hundreds of billions of dollars in promises to the point where it CFO mentioned the other day that it might need to be backs stopped by the federal government. In fact, she said it twice.
Now, she immediately walked it back and and she probably really regrets it. I know regrets it, but it but you know what? Here's what it did. It made you feel like anyone who's on the hook to open AI might have a big problem down the road. Yes, open AI has indeed, I think, become too big to fail. It's just that nobody's willing to say it.
And it seems like everyone in the business is looking for an open AI handout, too. I regard that as worrisome. The second most insidious level of behavior has to do with insider selling, which I'm seeing all over the place. and secondary offerings in the alternative power companies, quantum computing plays, and perhaps the worst AI related crypto companies.
It's very reminiscent of the dotcom era. Very sobering. Let me give you a story that's right out of the year 2000. There's this company called Bit Deer Technologies Group, which calls itself, quote, a worldleading technology company for Bitcoin mining and AI cloud. End quote. It just priced $400 million of a 4% convertible senior note.
It also priced more than 10.6 6 million class A ordinary shares for certain holders of its 5.25% convertible senior notes. Bit dear intends to use a big chunk of the proceeds to pay down about 30 300 million in convertible debt from a previous transaction. Though the actual proceeds really weren't that clear.
Whatever's left they plan to spend on yes data center expansion. No, I don't mean to pick on Bitier. It's probably fine company. It's lost a lot ton of money though. I mean financing knocked the stock down 20%. That's like 2000. It was at 2780 on October 15th. It's now at 11 again like 2000. What happened uh [clears throat] with this bit tier financing is exactly what kept happening in 2000.
Companies that were big money losers kept selling stock or bonds, convertible bonds to raise money at any price they could get. Maybe this is the kind of offering that works out. Maybe Bit Deer turns out to be the next core scientific or maybe the next core wave which did do well off that IPO, but I doubt it'll ever be the next Cisco.
Put it all together and I think it's obvious we're now in shakeout mode because of days like today, investors will grow skittish about funding money losers. Many of the money losers will then have problems paying their bills. In 2000, these kinds of companies ended up bringing down the whole darn edifice.
Now, I don't think that's going to repeat like that. Why? Because the big hyperscalers that we talk about all have more money than they know what to do with uh unless they continue to spend like crazy and then who knows? But until OpenAI comes public and raises tens of billions of dollars, until we start seeing some real results from the quantum and nuclear and Bitcoin related companies, I have to say that the year of magical investing isn't going to restart anytime soon.
It's over. Days like today remind me so much of the spring of the turn of the century where the money flew out of everything tech and then piled into Merc and Bristol Myers just like we saw today. As I said at our noon CBC Investing Club meeting, which you might want to just subscribe just to hear the darn talk that Jeff Mars and I gave, we run a diversified portfolio of growth stocks to avoid having all our eggs in one biter-l like basket.
It hurts less. We won't make as much money if those stocks keep going up, but well, we'll bounce back a lot faster. Now, the data center stocks we own for the travel trust are incredibly well capitalized. The Magnificent 7 had the wherewithal to keep spending, but OpenAI, at least on paper, simply doesn't have that kind of cash.
So, it would behoove them to get it, especially now that everyone's worried about the need for a possible government backs stop courtesy of those excessively honest comments or ill- fated comments or inappropriate comments by the CFO. If they get it, these the you know what will happen? The stocks will get a huge second win.
If they don't, the year 2000 compare comparisons will continue to be made on mad money. The bottom line at this point, there's more than one nail in the coffin of the year of magical investing. A few more of these and you know what? It's gonna be like that Stephen King book which I absolutely love. He can do a sequel to a pet cemetery and you can fill it with this time with bit deers and all sorts of other crypto or AI animals.
I I definitely would read it but I I please don't ask me to live through it again. Johnny in Connecticut. John, hello Jim. Thank you for for to you and your staff and your co-workers. My question is regarding on semiconductor. They make highly efficient uh silicon carbide chips for automobiles and industrial.
And your buddy Jensen Wang says they're going to build a 100 acre acre data center. That's a lot of chips. So, but you see the you just mentioned the end markets and those are two end markets that I think are the most challenged end markets. So, I can't be there. I mean, even analog devices, a company I like very much, kind of similar end markets.
I don't want to be there. Same thing with Texas Instruments. Let's go to Dave in Illinois. Dave Dr. Kramer, how are you my good man friend? I am fine Dave. Good to hear from you. What's happening? Jim, this 37 billion company applies advanced technology connectivity and cloud solutions to streamline their customers supply chain operations.
In July, you said this stock belongs in the elite camp of contract manufacturers. Since then, the stock has appreciated 50% but they did get clobbered today. So, Jim, please bring us up to date and give us your thoughts on Celestica Inc. You know what? I thought that the Celelesa decline was part I thought it was almost like a targeted decline.
I did not see anything specifically that merited why it went down like this, Dave. But I do think that you when you see a stock that falls as much today, you get another uh down day tomorrow until we find out what's going on. But Celelesco is a really good company. Someone targeted that company today.
All right. Today's actually reminds me so much of 2000. And until we start getting some real results from the speculative companies out there, I as I said, the year of magical investing, done. Just done Money Tonight. TKO, the company behind WWE and UFC reported its third consecutive beat and race quarter.
So, what's driving the strength? And could the stock continue to be a knockout? I'm checking in with the company's top brass. Then, has the experiential economy theme finally run its course? I'm surveying the landscape of one of my absolute favorite ideas and coach reporter roasting forecast to send his shares higher after earnings.
So, could the natural gas and oil players still have more room to run? I'm talking to the CEO. usic] #.
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