Cramer's Morning Take: Capital One 3/25/25

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Jim Cramer (0:46)

I'm Jim Cramer, and you're about to hear a sample taken directly from today's CNBC Investing Club morning meeting. Jeff, that this is a day that is very distorted. I'm gonna point it out, because we follow these groups very closely, by some comments by Joe Tsai out of China, saying that maybe there's a gigantic overbuild, a bubble in AI. And I am having just come back from GCC, from the world of Jensen, could not disagree more. And so I bring it out first, because we're involved with the cloud, and that's broad comments gonna go down, and that's obviously Nvidia's gonna go down, and that's what's occurring. And I think that people should recognize, I think this is a wrong call by Joe Tsai.

Jeff Marks (1:25)

It's also the industrial companies as well that are so important to the build out, whether it's E-In, that would be one in the portfolio. His comment is interesting because what I hear more often is that not necessarily that we're building too fast to meet up to meet the demand for services. It's more that there's going to be electricity capacity straits that won't be able to power all of these AI factories. So it is interesting comments. It's one comment, something to be mindful of.

Jim Cramer (1:57)

We'll take the stock.

Jeff Marks (1:57)

But you didn't get that impression.

Jim Cramer (1:59)

No, no, if anything, Jensen Wong told me, listen, there were a hundred times more compute that we need than we have. Now, I want people to understand, when I say compute, that means they need data centers. I mean, you need data centers, that means CoreWeave, which is coming public. Now, I think the CoreWeave is going to be a good deal.

Jeff Marks (2:15)

Yeah, certainly one to watch. Hopefully we get a good deal, too. That might inspire more companies to go public.

Jim Cramer (2:21)

Exactly, we sure want that.

Jeff Marks (2:22)

Which is certainly what we're missing.

Jim Cramer (2:23)

No, we're not. With our Goldman Sachs. Now, we have a stock that, frankly, I'm blown away by, because we brought it all the way down, believing in Capital One. And this morning, BTIG upgraded it. And I've got to tell you, they use, if they get to deal with them, David said they may not at this point, with Discover, $427 per share.

Jeff Marks (2:44)

Yeah, the price target's certainly out there. They're using a 13 times multiple in 2027 earnings estimates for Capital One. But interestingly enough, they think that even without the Discover deal, the stock is worth $208. And that is a reason why they do upgrade to buy.

Jim Cramer (3:03)

So we tell people to hold on on this one.

Jeff Marks (3:05)

Well, certainly. So the key reason why they think this stock is certainly worth a lot more here, even if the deal doesn't happen, is that they've built up all this excess capital waiting for the deal to close. So if it does break, yes, they think the stock could initially fall on the news, but they think it would recover because they could buy back what they think would be worth $25 billion worth of stock. That's 12% of the company. So just a huge uplift to earnings.

Jim Cramer (3:34)

Yeah, and David Faber was saying this morning that look, the Justice Department might try to block it. Then what they can do is they can offload some stuff and not to, they're not taking all the subprime share.

Jeff Marks (3:44)

That was the story last Monday that hit the stock.

Jim Cramer (3:46)

Yeah, they crushed us on that.

Jeff Marks (3:47)

There was concern about subprime concentration. A lot of analysts pointing out that they could sell a piece of that business. And because the deal is still so accretive, it just makes sense to do what you can to get the deal to get through.