Companies need to go digital or they risk going out of business, Jim Cramer told his Mad Money viewers Thursday night.
For investors, it’s easy to spot technology — it’s what we use everyday. Whether that’s an iPhone from Apple (AAPL) – Get Report or our online order at Starbucks (SBUX) – Get Report and Chipotle (CMG) – Get Report, we see this tech first hand because we use it.
But don’t forget about the companies that make this digitalization possible. These companies that operate behind the scenes are generating monstrous growth because of this rising demand.
Cramer is referring to the companies like CrowdStrike (CRWD) – Get Report, which just hit new all-time highs on earnings as demand for cybersecurity continues to climb. Or Snowflake (SNOW) – Get Report, which rallied 16.1% on earnings as demand for data analytics continues to climb.
And don’t forget about a company like Salesforce.com (CRM) – Get Report, which reported a tremendous quarter earlier this week and announced its acquisition of Slack Technologies (WORK) – Get Report.
Of course, the flip side to these stocks is the valuation and the risk of a big decline, like Splunk (SPLK) – Get Report experienced Thursday. However, these higher-risk, higher-reward stocks can be game-changers for investors if they pick the winners.
Here’s the bottom line: It’s OK to own the companies that are using the technology to help pivot their businesses, but it’s also a good idea to own some of the companies that make it possible in the first place.
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Executive Decision: Snowflake
Speaking of Snowflake, Cramer spoke with Frank Slootman, chairman and CEO of Snowflake, on the show’s Executive Decision segment.
Big data is becoming more important by the day. But the processes within that data parsing needs to drive outcomes for enterprises and needs to help drive an understanding of people’s behavior, Slootman said.
The beauty of Snowflake is that it allows for massive scale, is incredibly efficient and is very precise, he said. The problem with anecdotal observations is that they aren’t not precise and often flat out wrong, he added.
Only a fraction of big data has really been tapped into and there’s a lot of potential from where it can go from here. With Snowflake, the company is helping to address that, too.
Its platform does not hit customers with a huge bill right at the start. Instead, customers can sign up and will only be charged for what they use. Further, the platform is very approachable. You don’t need to be a rocket scientist to use it, Slootman said.
The stock jumped to new all-time highs on earnings, but the initial reaction wasn’t as bullish until investors were able to digest just how good of a quarter it was. If investors want to own some high-octane growth, they can have a position in Snowflake, Cramer said.
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At the time of publication, Cramer’s Action Alerts PLUS had a position in SBUX, AAPL, CRM.