Feb 4, 2026 · 44 min
AI rotation tests software, chips and industrial growth
Mad Money w/ Jim Cramer 2/3/26
The episode connects AI’s shift into physical industries with the investment risks facing software, technology spending, restaurants and pharmaceuticals.
- 1AI is pushing investors toward hardware and industrial companies as automation reaches professional services and physical-world operations.
- 2NVIDIA and Dassault Systèmes argue digital twins and accelerated computing can reshape factories, product design, drug development and robotics.
- 3Chipotle and Merck present distinct growth cases, while OpenAI’s spending commitments raise questions about the durability of the broader AI trade.
Don't miss
Jensen Huang and Pascal Dalloz explain how digital twins could let companies simulate factories, production and physical machines before building them.
The brief
Jim Cramer opens with a sharp market rotation: investors are moving away from software and toward hardware and industrial companies as AI threatens professional services.
Jensen Huang and Pascal Dalloz make the industrial case for AI, describing digital twins, virtual factories and accelerated computing that can improve design, manufacturing and drug development.
The OpenAI discussion adds a financial tension to the technology story: NVIDIA remains committed to future financing, while Cramer questions whether OpenAI’s obligations can sustain the trade.
Chipotle CEO Scott Boatwright outlines a growth plan built on operations, menu innovation, digital commerce and sharper value, including the return of chicken al pastor.
Merck CEO Rob Davis argues the company can move beyond Keytruda through new launches and a late-stage pipeline, while defending its valuation and government-pricing agreement.
The episode’s central question is whether AI-driven industrial growth can outrun the market’s concerns about valuation, execution and the capital required to fund it.
What was said on this episode
46 statements · 37 positive · 6 negative · 3 mixed
Hardware companies are outperforming while software companies are deteriorating.
“Hardware companies triumph. Software companies shrivel up and die.”
Listen at 0:47
AI may replace enterprise software or reduce its user base.
“These companies either produce software that can be replaced by something that's made by AI, or at the very least, AI can cut into their user base”
Listen at 1:56
Anthropic’s legal-automation product could cause major law-firm layoffs.
“Anthropic's work was the first truly convincing product that some thought would cause the big layoffs that make bringing in the product worthwhile.”
Listen at 2:55
Cramer recommends buying CrowdStrike for the Travel Trust.
“We bought CrowdStrike for the Travel Trust.”
Listen at 4:40
AI will not create a software company capable of stopping cybercriminals.
“The idea that somehow someone is going to use AI to create a software company that identifies and stops bad guys from North Korea and Albania just ain't going to happen.”
Listen at 4:50
Investors should own companies with large software spending that can save substantial money.
“Far better to just own the stocks of companies with big software spending that can presumably save fortunes.”
Listen at 5:20
Software-stock weakness will not spread beyond the software cohort.
“Logic says the pain will not spread beyond this cohort.”
Listen at 6:56
Broadcom is a strong company but currently unattractive to enter.
“It's not a good time to get into it, but it's a great company.”
Listen at 7:25
Broadcom may benefit if Hock Tan initiates a buyback.
“We're going to hope that Hawk Tan does a buyback.”
Listen at 7:31
Broadcom is positioned to benefit from the current environment.
“this company is a winner in this environment, not a loser.”
Listen at 7:38
Artificial intelligence has genuine practical uses beyond financial speculation.
“AI is genuine uses. It's not just about moving money around.”
Listen at 9:39
Physical AI is the next major frontier of artificial intelligence.
“the next frontier of artificial intelligence is physical AI.”
Listen at 10:50
NVIDIA-Dassault tools could accelerate and improve industrial design processes.
“we could uplift them and give the ability to squeeze the time to be much more efficient. productive and much more accurate the first time.”
Listen at 12:35
Digital twins will enable fully digital product design and testing, saving time and money.
“This idea of a virtual digital twin so that we could basically do all product design and testing completely digitally is going to save enormous amounts of time, enormous amounts of money.”
Listen at 13:11
Virtual clinical trials could reduce drug-development costs by about 50%.
“we could probably gain something like 50% of the cost.”
Listen at 14:22
Virtual wet labs could make drug discovery and engineering more effective.
“we could discover and engineer new drugs much, much more effectively as a result.”
Listen at 14:32
OpenAI is among the most consequential technology companies in history.
“This is one. one of the most consequential technology companies in history.”
Listen at 15:52
NVIDIA will invest in OpenAI’s next funding round.
“We are going to invest in their next round.”
Listen at 16:04
More computing capacity will directly increase OpenAI’s revenue.
“When they have compute, it will directly translate to revenues for them.”
Listen at 17:35
OpenAI’s revenue growth will be unprecedented.
“their trajectory, their revenue growth trajectory is going to be unlike anything the world's ever seen.”
Listen at 17:56
OpenAI’s current funding round will close, be historically largest, and be oversubscribed.
“This round is going to get done. It's going to be the largest round in history. It's going to be oversubscribed.”
Listen at 18:12
NVIDIA wants to participate in a future OpenAI IPO.
“we'd love to be participating in that as well.”
Listen at 19:13
NVIDIA’s relationship and transactions with OpenAI remain on track.
“Everything's on track.”
Listen at 19:41
Virtual factory processes can save substantial time and money.
“everything usually you do physically, you can anticipate it and to do virtually. This is saving a lot of time and a lot of money”
Listen at 20:32
Future machines and factories will be designed and operated through virtual twins.
“this is the way it's going to be done going forward.”
Listen at 22:32
Chipotle stock is becoming attractive despite Wall Street’s negative reaction.
“I think that Wall Street's going to be wrong here. I think this is getting mighty attractive.”
Listen at 23:25
Chipotle expects its strategy to succeed in 2026.
“2026 will be no different. We will win. We have a winning strategy in front of us”
Listen at 24:24
Chipotle will expand consumer access globally.
“We'll continue to expand access around the globe for Chipotle consumers”
Listen at 25:19
Chipotle will launch four new protein limited-time offerings in 2026.
“Menu innovation this year will be nothing like you've seen historically. We're going to launch four new protein LTOs”
Listen at 26:25
Customers trying Chipotle LTOs spend and visit more frequently.
“their annual spend and frequency goes up exponentially as compared to a consumer that doesn't try an LTO.”
Listen at 26:41
Chipotle’s 2026 menu innovation will drive meaningful transaction growth.
“that will drive meaningful transaction growth in 2026.”
Listen at 27:55
Chipotle has few restaurants underperforming on margins or margin growth.
“Chipotle really doesn't have restaurants that are underperforming as it relates to margin impact or margin growth.”
Listen at 30:22
Chipotle will continue opportunistic share repurchases.
“We will continue to buy back opportunistically and continue to return value to the shareholders.”
Listen at 31:28
Merck sees over $70 billion in potential commercial opportunity.
“we now see line of sight to over $70 billion of potential commercial opportunity”
Listen at 33:14
Merck’s ten key growth drivers represent 70% of its potential opportunity.
“Those alone account for 70% of the $70 billion I was referring to.”
Listen at 34:12
Merck’s enlicitide pill could match Repatha efficacy at lower cost.
“we have in the form of a simple to take, easy to use pill that brings like. efficacy that you would get with a drug like Repatha, but at affordable cost”
Listen at 34:46
Only 6% of eligible patients currently use these cholesterol drugs.
“only 6% of people who could be on these drugs are.”
Listen at 35:56
Winrevair’s potential pulmonary-hypertension expansion could double its market.
“That could double the size of the month.”
Listen at 36:53
Merck’s long-acting antiviral reduced flu risk 76% in a phase-two study.
“We showed 76% reduction in the risk of getting the flu for patients who are on that in our phase two study.”
Listen at 37:29
Merck’s pipeline will meaningfully benefit patients for years.
“our ability to have a real impact for patients, I think, is going to have a meaningful impact for years into the future”
Listen at 38:32
Merck’s most-favored-nation agreement has a manageable financial impact.
“It does have impact, but it's manageable.”
Listen at 39:18
Cramer recommends selling Gladstone Land.
“I think you should ka-ching, ka-ching that one.”
Listen at 40:41
Solstice Advanced Materials is an excellent stock and Honeywell spinoff.
“Solstice is terrific. It's a spin-off of Honeywell. It's been just a horse.”
Listen at 40:53
OpenAI will be able to raise the money needed for its commitments.
“I think they will be able to raise the money.”
Listen at 42:00
An OpenAI IPO would be the fastest way to raise substantial capital.
“the best way for them to raise a lot of money very quickly.”
Listen at 43:02
NVIDIA and OpenAI leaders currently remain aligned.
“These companies have CEOs. And for now, Jensen Wong and Sam Altman are on the same page.”
Listen at 43:31
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Weekly email
State of the Pod, every Monday
The week's most-discussed names and stories from podcasts, with the moments behind them. Free, five minutes, unsubscribe in one click.