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AI's Next Test: Alphabet Earnings 7/22/26
00:46:49
Leslie Picker and the Investment Committee debate Alphabet's earnings tonight and what it means for the AI trade. Plus, the desk share their latest portfolio moves. And later, we hit some Committee stocks that are on the move today. Investment Committee Disclosures
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- [00:01]
Steve Weiss
At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, Member, SIPC Are you as
- [00:31]
Leslie Picker
confident as you should be when it comes to growing your business? Is your strategy ready to execute today? If cash flows aren't where they need to be, growth could be at risk, especially in the eyes of your investors, board members and the business press. But when your business is operating in top shape, you've earned the right to grow. EY Parthenon can help you reimagine your business and execute a game plan for long term growth. EY Parthenon solutions that work in practice, not just on paper.
- [01:01]
Joe Taranova
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
- [01:16]
Leslie Picker
Thank you, Carl and Sarah. Welcome to the Halftime Report. I'm Leslie Picker in for Scott Wapner. Today, front and center this hour, the ABCs of earnings season with Alphabet kicking off the big tech earnings gauntlet after the Bell to date, the investment committee here to break down what is at stake. Joining me for the hour, Joe Taranova, Liz Thomas, Jenny Harrington and Steve Weiss. Let's get a check on the markets which have bounced a bit off session lows. You could see the NASDAQ trying to get into positive territory, essentially flat at this hour. The S and P up 0.2%. The Dow up about 0.4%. The Russell slightly in the negative. But we begin with Alphabet and whether tonight's report will set the tone for second quarter earnings season. Let's get right to Mackenzie Sagalos with the key things to watch from tonight's report back.
- [01:59]
Mackenzie Sagalos
So Leslie Outback kicks off hyperscaler earnings after the bell, giving investors their first real test of how much more spending they are willing to stomach. The setup is already fragile. The Max 7 lost a record 2.3 trillion last month as investors rotated away from the companies funding this AI buildout. Alphabet is the clearest stress test. Capex more than doubled last quarter. It's raised more than 140 billion in debt and equity and free cash flow could flip negative next year. The street needs proof that demand is catching up. Cloud growth expectations are north of 60% backlog is 460 billion as of last quarter. And investors need to see capacity coming online without margins buckling under higher component costs. Google also playing from behind at the cutting edge of Frontier AI, but it's undercutting Chinese open source rivals on price. The question is whether that can pull more enterprise workloads into Google Cloud and what the economics of powering Apple Siri ultimately look like. Another capex increase is expected. How the stock reacts could either reinforce confidence in the hyperscaler buildout or undermine it. And of course search still accounts for the lion's share of revenue, so we'll be looking to see if it hits that street target of 63 billion. Leslie?
- [03:13]
Leslie Picker
Yeah, Mac, really critical report. Thanks for staying all over at Mackenzie Sagalos for us. Joe, I want to turn to you. You're a shareholder. What's the key thing you're looking for from tonight's report?
- [03:22]
Joe Taranova
Oh, it's clearly. Are we monetizing the spend via cloud growth? And can that cloud growth come in much higher than the consensus Experts expectation of 63%? Can we touch the whisper number at 70%? And then what's the impact of the internal usage for TPU's, the tensor processing units? Does that mean that CAPEX is a little bit lower than some of the hyperscalers? That could certainly ignite further gains for Alphabet. Collectively though, as it relates to the universe, memory, names, semi equipment and the momentum factor itself, we want to see a continuation of the hyperscaler spend. The offset of that ultimately is that hits the restart button on the pause and it allows the momentum factor to refresh.
- [04:11]
Leslie Picker
So Weiss, the whole construct of Alphabet's earnings seem to be show your ROI and then tell us what you're going to do on CapEx. Because without that ROI, CapEx, you know, it could go either way. Right?
- [04:25]
Steve Weiss
Right. You're suggesting the ROI on the capex.
- [04:28]
Leslie Picker
Yes. Prove the ROI and then we'll give you a pass for higher capex because
- [04:33]
Steve Weiss
they do have a great ROI and their other investments. Look, right now the base case is that spending will increase more moderately than we've seen on AI. More moderately we've seen in other quarters. And that's true across the hyperscale. Hopefully it won't be what Open Air said they're going to increase their spending BY which is 25% in that announcement today. However, look, there are multiple levers in their earnings report. There's YouTube, there's search. Right. Which is ad. So, so they have the. And cloud. So they really have the Ability to show ROI continuing in those other areas.
- [05:13]
Mike Santoli
Right.
- [05:14]
Steve Weiss
And any one of them being offer up outside as I'm talking about will, will basically neutralize somewhat of the roi, specifically on cloud, on AI spending. At this point the market has to believe, right, that you're going to get a return your spending and I think they become more patient and the narrative, which I think was really a stupid narrative, which is that where's the return on it? Where's the return on you just start spending. You don't get a capex return, return capex until you spend for a while and build what you need to build. So I'm not as worked up about it. I think it's a great company with an attractive valuation. So I can't tell you that if they increase capex markedly or if they don't specifically say here's our return investment capex that the stock won't go down. But I'm just not worried about it. Right. Because you can't manage this cycle where you're seeing the biggest uptake in a technology ever, including the Internet, which is free. And just say, hey, I'm impatient because it hasn't happened yet.
- [06:17]
Leslie Picker
Yeah. The question is how long the patience will last. Liz, how important is the read through from Alphabet into everything else, Semiconductors, the rest of the hyperscalers. Are there parts of this report that could be idiosyncratic and the rest of the market ignore, or do you think this is so critical that it just, it will impact kind of the broader, at least momentum names that we've been following.
- [06:38]
Liz Thomas
I think it's critical. I don't think it's necessarily the one that the entire market hinges on. And there are a lot of different, as Steve mentioned, a lot of different revenue lines and a lot of different idiosyncras, idiosyncrasies in that particular stock. However, when you look at just the theme in general and the momentum of the theme, the fact that the market right now is showing the most dispersion that we've seen in a long, long time, maybe even decades, it's really difficult to choose which stocks are going to do well, which stocks are going to do poorly. And I actually respectfully disagree with Steve's point a little bit that when you look at the ROI of what's coming out of AI spend, I think that is the most important. Even if there is ROI from other business lines, it might help the numbers come in. Okay, broadly, but I think it's most important important where the ROI is on AI and to your point. How patient will investors be when you look at the fundamentals of these hyperscalers and free cash flow that we're expecting? The story had been for such a long time, well, they've got the free cash flow to spend, they don't have to go and borrow. That story has obviously changed. And in 2027, broadly free cash flow is expected to turn negative actually for the hyperscalers. So the patience actually needs to happen until 2028. That's what expectations are when free, free cash flow finally picks back up again. That's a long time to wait for a lot of people.
- [07:54]
Steve Weiss
Can I just clarify my answer? I don't think we disagree, actually.
- [07:56]
Liz Thomas
Okay.
- [07:57]
Steve Weiss
There will be an ROI on the spending. I don't think you see a ROI in the correlation to the spending they've done that could be all that meaningful. So they do have to show roi, but it's too, it's too way too early to know what the significance of that ultimate ROI is going to be. If they don't show any ROI at all, then obviously that's going to be an issue. But it doesn't have to be a lot. As my point.
- [08:23]
Leslie Picker
How likely is it that, that, that, you know, is that something that you think is on the table, Jenny? That especially as we look at the competition from the Chinese open source models, this construct of kind of revaluing these companies as Liz was talking about, to ones where, you know, they are capital intensive and they do have, have a lot of debt now that's not necessarily borrowed against their free cash flow. It's, you know, is that something that need to be considering?
- [08:50]
Jenny Harrington
I think you need to. And it's interesting for me because if you think about the kinds of stocks that I invest in, they're old school, they're high free cash flow. Every single one of my stocks, every single company that I'm invested in, if they say we're going to spend $10 billion on this project, they need to tell you in that moment what they expect the ROI to be. They don't get a hall pass, right? And so they don't need to say, hey, we're making that our roi, but they need to tell you what they expect. And so all these hyperscalers have really gotten a hall pass where it's just like, okay, leap of faith, great, you're going to make money. You've done it before. We don't need to hear the exact numbers. So I think it's interesting thinking about like how different that is versus what I invest in and Then with respect to Google setting, or I know we call that, sorry, with respect to Alphabet, at setting the tone, I've really thought about the whole, the whole mag seven or the whole top 10, and it's tough to think about the tone when you see how much divergence there is even in the top 10 where you've got an Apple up 20 and a Microsoft down 17. So I think there's like, it's so company specific that when you were asking that question, Leslie, I was wondering to myself, you know, who precisely do they set the tone for? Because we're used to over the past five years, the top 10, setting the tone for the top 10.
- [10:05]
Leslie Picker
Right.
- [10:05]
Jenny Harrington
And now it's like Google, Google's reach for where they're setting the tone would be so. It would be so different than it's been in the past. Like, do they set it for Micron, do they set it for Cerebras? I don't really know right now, but it would be much more nuanced and that's hard for investors to deal with. So I think, you know, I think it's a kind of, it's kind of tough environment where a lot of things thinking needs to come in and a lot of really deep work on individual names versus just saying, hey, they reported great numbers. Great for the Mag 7, great for big tech, great for the hyperscalers. No, it's not. It can't be that. That broad brushed when you're thinking about it.
- [10:41]
Leslie Picker
Well, we've seen this.
- [10:41]
Joe Taranova
So the return on investment has been there for the last three quarters.
- [10:45]
Jenny Harrington
What are the number?
- [10:46]
Joe Taranova
Cloud growth has accelerated three consecutive quarters. You're up to 63% now. As we've said, the whisper number we're looking for tonight is 70%. And that's the distinction between Metta, that has got a great business model. I believe in Matt, his business model. We're long in the ETF matter, but it's difficult to have the proof point that you actually have with Alphabet. Very quietly, the AI universe is relying on the spend. This evening, I would keep your eye on Broadcom. Watch Broadcom, because if there is an impact effect from these tensor processing units internally with Alphabet, that might restart the momentum. In Broadcom, which has had a little bit of a pullback, your risk is somewhere around 350. I think the stock as we speak, 393, we see it there. But if you hear something really positive because of that relationship surrounding TPUs with Broadcom and Alphabet, that restarts the momentum at Broadcom. It's an example of what we're looking for for the AI universe and the derivative trades.
- [11:44]
Leslie Picker
Well, that's what I was going to. Oh, sorry. I was going to ask you about the inverse correlation between the hyperscalers and what we've seen in chips. And I know you bought some Nvidia,
- [11:54]
Joe Taranova
so I made a second. Yeah, so I made an initial purchase on July 7th at 198 for Nvidia. It wasn't based on anything fundamental. Everyone on the desk understands the strong fundamental surrounding this company. What it was was a recognition that, as I've been advocating for the last several years, market structure is changing so dynamically in front of us right now. We are moving more and more towards this quant algorithm dominance in the market and that means that price is priority and the momentum factor becomes elevated. Steve does a great job talking about this. You went through a sideways consolidation period last year in Apple, then you had the breakout. The breakout really was predicated on the momentum building. And I've seen the same thing happening for Nvidia over the last several weeks. It's literally tracing out a very similar pattern to what we witnessed where Apple went from 250 up to 330. So the breakout is unfolding right, right in front of us. I purchased again a second purchase at 207. As it moves higher, I will continue to buy it because I believe this stock is in the midst of a momentum breakout back towards 240 and it's nothing more than technically oriented twice.
- [13:14]
Mackenzie Sagalos
What were you going to say?
- [13:14]
Steve Weiss
Yeah, I would say let's just reset the narrative a little bit. There's not going to be an income line that says return on investment from a high capital capex, what it's going to be and what we've seen, I do improves productivity, it improves engagement. So when you see additional growth in a YouTube or in search right from Gemini, that's going to be a function of the spending. So, so the idea, the concept that, well, you got to show the ROI on, on, on AI spending, it's just flawed. It's, it's going to be embedded in the other businesses. Now you can believe that they're sophisticated companies, some of the most sophisticated financial companies in the world that they did price that to your point in terms of, okay, what do we do from this? What are we going to earn from this? However, what's most important is when you have new technology like this and we've seen so many cycles, if you don't, if you're not one of the first movers you can lose your position and the rest of your, your business can sort of waste away, not go to zero, but won't grow. So part of its offensive, the other parts, defensive spending, we used to give that plexity all the time. Right. That, that's the new one. That's a new one. Well, guess what, they don't have the pocketbook to spend what Google has to spend, so we don't hear about them anymore. Not that it's bad products, good product, but the point is, is that you have to spend. So you keep the proposal complexities at bay.
- [14:42]
Jenny Harrington
And here's the challenge, which is not all of the first movers are going to end up viable in the long run. So there's going to be a few first movers who win and a bunch of first movers who end up like losing all that money, where the capital is going to be wildly going to, in retrospect, have been wildly misallocated towards them. So it's really tricky, right? Like, I don't know how you play it exactly. Do you buy all the first movers and say, okay, three of them are going to be zeros and two of them are going to be 10 baggers? Maybe. But we need to remember that just because you're a first mover, certainly Netscape, well, like, certainly doesn't mean that you are, that you're going to be a long term winner.
- [15:17]
Leslie Picker
Yeah. And to your point, there just aren't the metrics in place at this point for investors to sit and say, okay, they're making progress on how this spend is, is translating into returns. We are getting some news out of Capitol Hill. Let's get to Emily Wilkins with those details. I am.
- [15:33]
Emily Wilkins
Hey, Leslie. Well, we have just seen some brand new build techs drop around that major rules of the road crypto package that we have been following closely that the industry has really been pushing for. And this one actually includes a new section of text that would ban all federal elected officials, including the president and the Vice president, from issuing or being able to profit from crypto. And this is language that's actually got signed off. Republicans proposed it to President Donald Trump, who did say that he was going to go ahead and prove that of course he and his family made $1.2 billion in crypto last year. It's unclear exactly what the nuances are. This is a 106 page bill. So it's unclear exactly what the nuances of this text text are and how it might directly impact Trump. But it's certainly a step forward for what a lot of Democrats have been asking for, for to be able to vote on this bill. Now, we don't know exactly where Democrats stand because the bill text just got dropped only a few minutes ago. But we do know that Senate Majority Leader John Thune is hoping to have a vote on this bill within the next couple of weeks. And again, this is something that the digital asset community groups like Coinbase and Ripple, they've been up here lobbying for and pushing for because they want that regulatory clarity in their industry. They believe that will ultimately help crypto and we'll have to see. This is yet another big step forward, forward to a potential agreement, but still plenty left to go. Leslie?
- [17:03]
Leslie Picker
Emily, do we know where things landed with know your customer and anti money laundering?
- [17:09]
Emily Wilkins
So there definitely is an updated section in this bill on trying to make sure that crypto cannot be used for illicit activities. Again, we're still combing through exactly what the details are, but that's another area that Democrats will be taking a very close look at because there are concerns from senators like Mark Warren Corner who want to support this overall package, but say the only way to get them to yes on that is to make sure that there are really strong safeguards in place and that this isn't going to be something where the US Gives some regulatory cover to groups that might want to be using crypto for illicit purposes.
- [17:42]
Leslie Picker
All right, Emily, thank you so much. Emily Wilkins Press in D.C. guys, I want to turn back to just the momentum factor and what's been happening with that lately. There are some, some pretty wild statistics. Obviously, a significant bounce in momentum yesterday over the last three months. According to Goldman, it's recorded the highest volume in the past 45 years outside of a recession. TMT momentum pair just suffered the worst drawdown in the past five years before bouncing yesterday. And Goldman calls momentum a bucking bronco. And I think a lot of that speaks to what we were just discussing with regard to dispersion, with regard to concentration, with regard to levered ETFs and market structure. And I just am curious to get your thoughts. Maybe we'll start with you, Joe, because I know this is your, your space. You know, where does it go from here? Do you expect the bucking Bronco analogy to continue to hold?
- [18:33]
Joe Taranova
I think it only intensifies in the next several years. Unfortunately. The market dynamic has just changed. It's moved away from pure fundamental analysis. Do I think fundamental analysis matters? Of course it does. But it is moving more to this dominance where if you think about going to Work on Wall street as a college graduate. One of the major requirements right now is that you have a degree in physics or data analytics. It requires that you have some form of mathematical understanding because of all of the quantitative funds that are being employed right now. Look at the most recent quarter from Goldman Sachs. A lot that's not overwhelmingly fundamentally driven. So I think it only intensifies. And 2026 has been a year about significant rotation within the market. And momentum seems to be going to multiple places at multiple times. It went, if you think about overseas, it went temporarily into Israel and moved quickly out. Obviously, Korea has been very popular. Japan has been very popular. Where we are today on July 22, it's in the refiners, in energy, it's finding a place in the financials related to exchanges and trading and insurance. It's now finding a home in agriculture and commodities. I know Josh talked about Archer Daniels Midland was one of his best stocks in the market. Cortiva, if you could show that chart, is another name that has significant momentum. Corn, wheat, soybeans, all up double digits this month. So momentum is kind of moving to all these different places in 2026 and trying to find the opportunity. And if that happens, you're going to have continued volatility for sure.
- [20:20]
Jenny Harrington
You want to go, I'll go.
- [20:21]
Liz Thomas
So I think there's been a tone shift in the market, and a lot of it is what Joe just said. But right now there are way too many investors doing what I'll call whale hunting, trying to find the next hot thing, the next hot stock that's going to have blowout returns. Even the next hot industry group. Right? The next. The next group that's like memory chips. And I think this environment with such heightened volatility, particularly in the momentum factor, is going to be very unforgiving to those types of investors unless you're doing deep technical analysis, deep fundamental analysis, and you're ready to hang on to that stock until it actually comes to fruition. But I think what people really need to do in this environment, because I agree it's going to persist and maybe even intensify, is step back. The safest thing to do here is to own things a little bit more broadly, because on an index level, it's been pretty tame. It's just the churn that's happening under the surface that you're not seeing every single day. So owning the index, owning puts on the index to protect yourself, because trying to chase some of these single stocks and single industry groups around is. It's going to be a losing battle in a lot of ways.
- [21:26]
Jenny Harrington
Okay, so there's a huge problem right here if, if Liz and Joe are right, that it's going to persist and intensify and the problem isn't in the total return of the fund. So like MTM, it's up 26% this year. It could have another great year next year. The problem is, is, is that those intensified roller coasters unnerve the individual investors who are in them. And when, when you're unnerved, you behave badly. And what's the biggest source of terrible investment returns? Bad behavior. So what happens is people get freaked out at the wrong times, which are the bottoms and overly zealous at the top and think they've missed out and have FOMO and buy at the top. So I think, I think, well, the funds themselves might delay, deliver excellent returns, right? Because underneath that surface, to your point, the portfolio managers are going to the right spots and dealing with momentum in the right way. But the individual investors, particularly with the ease of waking up at 2am in the morning freaking out and thinking like, oh geez, I need to sell this. You can enter the order right then and it's just traded out of your account. Pre market or before the market even opens or at the open is so bad for returns. So I think the warning to individual investors needs to be listen to these guys, understand what you're getting into, stiffen your spine. Like put the steel rods in your spine and wait and just wait out that roller coaster. Because otherwise you're going to be a loser where you should be a winner. If you can just say, hey, I'll be in this for three years or five years or 10 years. But you need to really know what you're getting into and listen, you know, if you actually want to enjoy those returns. But behavior and emotions are the downside of that, of the increase volatility on them.
- [23:01]
Steve Weiss
What it really comes down to is how do you view volatility? To view it as risk or to view it as opportunity? I view as opportunity. I will tell you that that's how Dave Tucker views it. That's how Steve Cohen the great traders and investors volatility doesn't worry them. Sure. In terms of their matrix of technical signs, maybe it's an input and sometimes it's more of an important than others. If you're a technical trader, you're looking at higher, lower highs when it bounces back. So. But you know, I do think that, that, that it's not as bad as it used to be in terms of retail selling at every downtick because mostly they're in indexes. And frankly you've been weaned off this new psychology since 2008 that every declines of V shaped recovery seeing that. So I don't think it's as big an issue as perhaps you do. Well, and, and the people I talk to that aren't professionals, they don't seem bothered by it at all. They want to know what's going on.
- [24:00]
Jenny Harrington
But here's the thing. You're a professional. So A you're trained this way and
- [24:03]
Steve Weiss
B, no, I just said the people I talked to that aren't in business.
- [24:06]
Jenny Harrington
But, but even the people that you're talking to that aren't in the business, I'm going to bet you are disproportionately educated. You know, they're probably semi professionals even if they aren't. And so I think there's a lot of retail people out there who are sitting home alone, right. And they don't have what we all have. When we get spooked, what do we do? We talk to each other and we bring each other down. And I find that there's a lot of individuals out there who rely only on themselves. Right. And sometimes people even email me because they're like so desperate to just have a conversation and ground themselves so philosophically.
- [24:37]
Joe Taranova
Look, I agree with you and you're standing up for the retail investor based on behavioral patterns. But the statistics suggest otherwise. If you listen to Charles Schwab, if you listen to interactive brokers and hear about retail engagement, they are participating because they're profiting. There's something about the environment that's beneficial to them. Now Steve makes a great point. Volatility, absolutely.
- [25:04]
Jenny Harrington
Opportunity is an opportunity.
- [25:06]
Joe Taranova
We agree on that. And the only offset of institutional opportunity as it relates to volatility is that there is an effect on the retail community that benefits as well from that volatility. So I think the retail community is as smart as they ever have been. I think if you talk to a younger generation like I do, they are far more financially literate than I was at their age, technologically proficient. And I think the environment, because of the access of information, what we do here, I think it's bettering overall the opportunity.
- [25:40]
Jenny Harrington
I agree.
- [25:41]
Joe Taranova
And there's two trouble spot. Let me just. If there's one trouble spot, let's go after market structure. Because if you look right now at options, the majority of options that are traded on a daily basis have an expiration of four o' clock this afternoon.
- [25:57]
Liz Thomas
Right.
- [25:57]
Joe Taranova
I don't agree with that. I think inheritance currently that's wrong. That's what companies like Jane street are benefiting from. What companies like Hudson River Trading, which most people don't even know who Hudson River Trading are. They're making more money than JP Morgan and Goldman Sachs. And Jenny, none of us could get hired today based on our qualifications at Jane street or Hudson River Trading. Think about that.
- [26:21]
Steve Weiss
You know these. Let me give you an example and fast forward to a move and talk about. Because we too often equate volatility with downside, right. We don't really talk about upside. So here's what I'm talking about. So FTAI Aviation, which I reentered a few weeks ago, they announced today their first ever order for data centers. Right. So they're taking their engines and they're putting power in data centers. Testing is pretty much complete and the orders will be for 2728. The stock traded up 12% and it was pre market. Now there wasn't a ton of volume but there was enough volume there for me to sell a good part of my position and then it's traded back. That's upside volatility to take advantage of now when it trades. I'm not saying I do this with every position. I don't. But if you have that kind of outside move, you should take advantage of it and don't worry about taxes. Right. And then when you come back, when the stock settles back, then you can buy it back. So it's not for everybody because you really got to know what you're doing. It's not for retail investors. But upside volatility is a benefit. So volatility is not all bad at all.
- [27:29]
Oliver Renick
All works.
- [27:30]
Leslie Picker
Both we all agree and if anyone, it's benefiting the capital market sensitive firms, the trading firms. As Joe mentioned, Barclays expects multi year trading revenues this year to be the best while for investment banking outside of 2021 and a multi year record for trading revenue. So we're already seeing that the big banks and some others. Coming up, Weiss has another move to tell you about. Plus our calls of the day. Halftime is back in two minutes.
- [27:56]
Julia Boorstin
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [28:03]
Trailblazing women, changing the game.
- [28:05]
Liz Thomas
One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms.
- [28:13]
Leslie Picker
It really does come down to just trusting yourself.
- [28:15]
Liz Thomas
Life is short and you just gotta think big to accomplish big things.
- [28:19]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday. Wherever you get your podcast,
- [28:39]
We're back on Halftime Report. I'm Julia Boorstin with a CNBC News update. A group of New York City landlords is suing the city over its new rent freeze, according to the Wall Street Journal. The lawsuit alleges Mayor Zoran Mamdani stacked the board that approved the freeze with loyalists who manipulated data before approving the freezes on rent stabilized apartments with one and two year leases. It's the first lawsuit to challenge the legal basis for the the freeze. Apple is planning to overhaul its line of Macs to meet AI demand. According to a report from Bloomberg. The tech giant is preparing to debut new versions of every Mac it sells, including its desktop and a revamped MacBook Pro model which will be among the first devices to use Apple's new M6 chip for on device AI performance. And the Louvre has reopened the Apollo Gallery which has been closed since the brazen October rob of crown jewels valued at more than $100 million. Visitors can still see the 17th century interiors, but the collections and precious jewels once displayed in the gallery have been removed to a more secure part of the museum. The stolen jewels still have not been recovered. Back over to you Leslie.
- [29:48]
Leslie Picker
Incredible. Julia, thank you. We have got another committee move today. Weiss, you bought more unh. It's down point 8% today. What's behind the move?
- [29:58]
Steve Weiss
Yeah, so look when the company reported earnings and it said I think it's going to be good because Hemsley is really shortened to his tenure since coming back. He's long term was a chairman and CEO, stepped back from CEO chairman and now has come back as CEO. So I thought it was going to be a good quarter. It was. When the quarter was announced Stock hit a 52 week high of 461. I said I'm not buying it on this spike but I will buy it and add to my position when it comes back down. Came back down. You know I bought it yesterday. It's down a little from yesterday. That's fine. But look, I think the stock is reasserting its growth, reasserting position as number one health care company in the world on the payer side and at 20 times earnings roughly with good growth going forward in the back. Bad news, the V28 and all that other, you know, regulations behind them. I think it's going to be a winner going forward and return to being a permanent compounder.
- [30:54]
Leslie Picker
You already talked about FT Aviation. So let's get to we talk about it again.
- [30:59]
Jenny Harrington
I'm good.
- [31:00]
Leslie Picker
Check that box. Let's get to some other committee. Stocks on the move today. Shares of GE for Nova are lower after reporting earnings. This is a pretty big drop, down 7%. Joe, this is one you own.
- [31:13]
Oliver Renick
Yeah.
- [31:13]
Joe Taranova
This was disappointing guidance. The EBITDA margins were basically unchanged. And given where the business is with natural gas turbines and the participation and AI power equipment, they needed to exceed lofty expectations and really come out with a very aggressive and generous guidance. And in fact they didn't do that. That's why I think you see the pullback here of 7%. I think it speaks towards the, the personality of what the momentum factor has been the last several weeks.
- [31:41]
Leslie Picker
Yeah, so much about that.
- [31:42]
Steve Weiss
Yeah. I also was disappointing. What was equally disappointing was the messaging in not having the earnings per share in their table. Like how do you do that? So it's so to me that's sort of like, let's change the metric. And that's what in fact they did in the conference call. Let's look at the gigahertz, you know, let's look at the backlog. Let's do all that now. This is what happens. The stock's actually only down modestly considering it's selling it nearly 80 times EBITDA this year and earnings is, you know, ridiculous in terms of that multiple. So. So look, it's a small position for me, regrettably. I say regrettably because where I entered it, it's up significantly. So I don't really care about being downstate. But I'm not adding here because this is part of the whole AI complex and as you go out, it's a power company and margins are just aren't that robust in a very capital intensive company, particularly with competition coming on eventually. Not now. Nuclear is a decade away. But fta, look at that. So. So the question is, will their backlog ever turn into actual cash flow? I believe it will and it's to going got really good free cash flow, but it's enough for me right now. So it should be down. I think it's down modestly relative to what it could be down worth holding
- [33:03]
Leslie Picker
on to at this at these levels,
- [33:05]
Steve Weiss
you think as long as the dialogue continues.
- [33:08]
Leslie Picker
Well, speaking of AI dialogue, cyber names giving back earlier gains after OpenAI said its AI models went rogue and targeted open source platform known as Hugging Faces systems. Joe, you own CrowdStrike. This is such a wild story. The fact that they were just testing these models, they leapfrogged out of the sandbox. And intruded into the internal systems of Hugging Face, a company that, you know, most of us have never heard of.
- [33:37]
Joe Taranova
Yeah. So let's take up the conversation of just kind of, how do you think about where they are, all of the cybersecurity names relative to price and the recent highs. You're anticipating earnings in a couple of weeks. So I don't think you're going to see an aggressive nature in terms of adding to risk for positions that have been clear winners in the software space. Fundamentally, overall, nothing has changed surrounding the fact that you want to own cybersecurity in the software industry. CTOs are going to look universally at software and say, okay, for a lot of the SaaS programs over the last several years, we almost feel as though we've been ripped off on price based on now what the disruption is for AI. But as it relates to cybersecurity and price itself, we are going to pay that price because we are moving more and more into an environment where you need to have as an enterprise that security. So it's benefiting CrowdStrike, it's benefiting Datadog, which is monitoring cloud infrastructure as well. Nothing is changing there. And Jenny mentioned Microsoft before just touching on software. I actually see Microsoft having some relative outperformance in the month of July to the overall software industry itself. So if you are a Microsoft shareholder, as I am, maybe that's a signal that it's bottoming based on the nature of its force, of its overwhelming balance sheet.
- [35:06]
Leslie Picker
Liz, do you think that the cyber incumbents are the ones that are going to be best positioned to prevent these types of threats?
- [35:13]
Liz Thomas
Yes, but I think cyber as a, on a whole is just full of opportunity. I mean, if we've learned anything through this cycle, it's that security is paramount and everybody is so nervous about it. From a business perspective, from a personal perspective, the demand for cybersecurity is only going to grow. Now, to Joe's point, they don't have to change their business models as much as SaaS companies likely have to change their business models. I don't think all of those die either. But cybersecurity likely has to grow up a little bit, has to keep up with the pace of how everything is innovating. But I think, I mean, cyber, just broadly, even the etf, cibr buy.
- [35:52]
Jenny Harrington
Yeah, just one thing on this. I think a bigger societal perspective. We should all be paying really close attention to this and we should be very wary about this. If this could jump and connect to the Internet when it wasn't connected. Like, why wouldn't it be able to hack the cyber stocks, too? I think we'll reflect back on this one day and say that was a warning shot. We all should have been paying a lot more attention to it.
- [36:11]
Leslie Picker
Well, we're paying attention here. Up next, Mike Santoli joins us with his MIDDAY work.
- [36:23]
Julia Boorstin
What made you confident that you could do something that hadn't been done before? I have no fear of failure.
- [36:29]
Trailblazing women, changing the game.
- [36:31]
Liz Thomas
One of my favorite pieces of advice, think about what your boss's boss needs.
- [36:36]
Leslie Picker
Leadership can look in many, many different forms. It really does come down to just trusting yourself.
- [36:41]
Liz Thomas
Life is short and you just gotta think big to accomplish big things.
- [36:45]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.
- [36:55]
Leslie Picker
We are back on halftime. Senior markets commentator and overtime co anchor Mike Santoli joins us with his MIDDAY word. Feels like the calm before the earnings storm right now, Mike.
- [37:04]
Mike Santoli
It it definitely is, Leslie, and with a very familiar feel in a few ways. So there's 2800 stocks up and 2800 stocks down down on the New York Stock Exchange and NASDAQ right now. The margin of victory for The S&P 500 is strictly a little bit of a continuing bounce in semis. It's Nvidia and Broadcom effectively account for every bit of it. And so you have this constant let's trade one thing against another semis. I think the big question is if they've proven anything yet with this bounce. I'd say not yet. They're kind of coming up on some levels that will matter a little bit more in the way of upside hurdles. And you know, the big question going into those numbers tonight, starting with Alphabet, is did the hyperscaler trade get de risked enough? Is it cheap enough to actually leave room for further upside evaluation, cushion all the rest of it? I don't think it's hard. It's easy to say one way or the other. You know, at Alphabet at 24 times, which looks kind of cheap to where it was recently, but also looks expensive to Microsoft and Meta. So I think the reaction there is going to be pretty key. Final point, we're at 7,500 yet again on the S&P 500. It's where we were at the start of the month when oil was under 70 on WTI and the 10 year yield was under 440. And now we're much higher on both those measures. Unclear how long we could continue to kind of keep that insulated from The s and P500 if those trends continue.
- [38:25]
Leslie Picker
Yeah, it's remarkable. The market's basically shrugging off oil at a five week high and 30 year yield trading above 5% for the longest stretch since I think it's 2009. So market taking it in stride and
- [38:36]
Mike Santoli
focus mostly on at least the indexes are.
- [38:38]
Leslie Picker
Yes, exactly.
- [38:39]
Mike Santoli
Parts of the market that are feeling.
- [38:41]
Leslie Picker
Exactly. Mike, thank you. Up next, we are trading financials with a number of committee moves, kind of committee names on the move after earnings. Halftime is back after this. Welcome back. A number of financials on the move today after earnings including Capital One Interactive Brokers and CME Group. Joe, we were just talking about all of this volatility in the market and there are some pretty clear beneficiaries of this. Schwab earlier in the week is another one. And we saw the banks last week. You know, is there a way to play just the market structure dynamics we were discussing earlier in the hour in terms of the publicly traded financials that you see on your screen there?
- [39:20]
Joe Taranova
There isn't. And let's get the negative out of the way first. And to me that's Capital One. I was very disappointed in this quarter. This is of all the financial holdings in the Jyoti etf, this is the worst performer. The expenses remain too high. The reserve release was really the positive news as it relates to earnings. Turning the attention back to the environment of how do I invest around the growth of trading. The activity, the engagement that we're seeing in M And a, the IPOs, it's as Steve is talking about it, your Goldman Sachs at your Morgan Stanley. But the trickle down effect is into some of the asset managers. It's in your Charles Schwab, it's in rjf, it's in T. Rowe Price, it's in the exchanges. The CME reporting a really strong quarter today. Not unsurprising. CBOE CIBO as it's known. I took a personal position in that just one a month ago. I would stay anchored with that position with the growth of options. So it's about engagement, it's about asset managers. Look at amg. You could pull up a chart there. And I think the question you ask yourself as you begin to reposition the financial sector surrounding trading, does this actually lift the spirit in private equity? Does it lift the spirits for names like Blackstone and kkr? Does it do to some of those names what has already been done? The greatest example of the growth of trading and engagement in 2026 is a name I've Mentioned often and that's Virtu Financial. They report earnings, I believe next week they are up 78%. If we could show that chart so far, year to date.
- [41:01]
Leslie Picker
Do you think that traditional asset managers, whether they be liquid like a T Rowe Price or illiquid like a KKR or private equity firms, are they actually beneficiaries of this or do they find this disruptive to their ability to beat their indexes and outperform and kind of do what they're supposed to do? And you know, in the case of alternative asset managers are they're kind of locked in. So that whole idea of the zero options and leverage, all the trading and fun that goes with it, that's brought this engagement to the forefront. You know, you don't really get that as much.
- [41:33]
Joe Taranova
I think it lifts the mood, I think it lifts the, the spirit. Interactive Brokers has been executing better than anyone else. It's a name that I've had a position in for quite some time. State street as well, that's another great example of it. So I just think it lifts the spirits if you want to be negative on something surrounding what we're seeing in this new paradigm, this new market structure, maybe it's in terms of some of the research firms, S and P Global moody movies, they are struggling right now for sure.
- [42:03]
Leslie Picker
Yeah, part of that's AI too and kind of bringing that component to the research. And we've seen some activism on that front. Jenny, going back to Capital One, you also own American Express. The reserve release, a good sign potentially for the consumer. But do you see any read through from those results on to Amex?
- [42:20]
Jenny Harrington
No, generally, you know, generally I just look at the consumer for Amex. I think one thing though, just going back to it, what Joe is saying, I personally don't think it's about lifting the spirits of these. I think it's about show me the money. And in the SaaS, in the post SaaS apocalypse world, like it's not something that that's about emotions and people feeling better. People are going to need to really see. Okay. It goes back to our ROI conversation. I think the bigger conversation around the private equity. Right around the private equity.
- [42:47]
Emily Wilkins
Yeah.
- [42:47]
Jenny Harrington
So sorry, sorry to diverge from Amex. Like to me Amex is like it is what it is, you know that the K shaped the upper K of the consumer is doing well. We know that that's Amex's customer. We know that at least for now and probably the next 12 to 18 months that should be just fine. But I think that I think there's trouble for the private stocks until they can show that, that their portfolio holdings are actually paying their debt and increasing their valuations. And I think that's really hard and there's not a lot of transparency there. So. So Joe, you know, I don't think it's just about lifting spirits. I think it's literally about show me the numbers, show me that you're making money, you know, show me that you're making as much money now as you were pre Sass Pocket.
- [43:28]
Leslie Picker
Well, you've got Blackstone reporting tomorrow and the two key components that investors are watching for there are monetizations. Are you exiting these, you know, geriatric portfolio companies as they call them. And then also have you seen the private wealth flows bottom at this point in time?
- [43:42]
Jenny Harrington
Even so, though, it's too short term to really get a read through on those. It's going to be two years and three years out where there could be real carnage because of clock code replacing smaller software companies that those that the private guys are invested in.
- [43:55]
Leslie Picker
All right, up next, options action. Oliver Renick is standing by with a triple play of earnings on deck. Halftime is back into. Welcome back. Let's get to today's option action. Our Oliver Renick is live at CBOE Global Markets in Chicago with more. Hey, Oliver.
- [44:27]
Oliver Renick
Three earnings I'm watching after the bell. Leslie. Two underperformers, Tesla and ServiceNow. And one big winner on the year, Texas Instruments. Options trading is very thin in Texas instruments despite a 65% gain on a year under 20,000 contracts traded in TXN today. 14,000 of them were calls and options pricing implies an almost 9% move. Texas has a track record of swinging even more than expected, so I'm surprised traders aren't more interested in that one. Tesla, of course, has the biggest volume of the three without rather a lot of clear directional bias around its 5.5% implied move. The options trading has been pretty even today between puts and calls. But the most popular contract is the 380 strike call expiring Friday bullish trade that needs about 3.5% to pay off. And finally, ServiceNow actually might offer the most excitement. The Stock is down 5% already today and doubling its daily options volume. Pricing points to an 11% move after earnings which is huge even by the very volatile standards of this stock the past year.
- [45:37]
Leslie Picker
Yeah, that is huge indeed. Oliver, thank you. Stay with us. The setup and final trades coming up after this. We're back with the setup on some key names reporting in the next 24 hours. United Rentals today after the bell. Jenny, you own that one?
- [45:58]
Jenny Harrington
We do. So the problem with United Rentals is that it's up another 28% this year. It's starting at 19.9 times forward earnings. It's kind of getting expensive, but it's one of these companies that we've had in the disciplined growth strategy for 13 years. It's up like a thousand percent, you know, since then. So you don't really want to sell it. It's one of Steve's permanent compounders. But there's a lot of expectations. So it may not be a great quarter. Even if it's not, we're still holding it.
- [46:24]
Leslie Picker
Next up, Las Vegas Sands, also today after the Bell. It's in your portfolio, Joe.
- [46:29]
Joe Taranova
Unfortunately it is. It has been a tremendous disappointment. The casino names have fallen off after experiencing strong momentum early in the year. Las Vegas Sands with a pretty good balance sheet. But we're going to have to hear something really positive tonight to inject some positive momentum into the name. And the consumer environment really has some left of clarity with oil prices and yields rising.
- [46:51]
Leslie Picker
What you call quicksand. Thermo Fisher is reporting tomorrow before the bell. Jenny, you own that one, too.
- [46:56]
Jenny Harrington
So Thermo is tricky, too, because in theory they should have the same kind of stuff that we saw with Danaher yesterday. So we're a little nervous here. That being said, it's a great company. It's down 10% year to date, so at least there's not a lot of expectation already in the share price. So on this one, hoping for the best, too, but worried because of Danaher.
- [47:13]
Leslie Picker
Now, on to final trades. Weiss, we'll start with you.
- [47:16]
Steve Weiss
Well, UnitedHealthcare don't have a lot of time to know. Jenny wants to talk about her name, so I'm going to reiterate.
- [47:22]
Jenny Harrington
All I want to do is talk.
- [47:24]
Leslie Picker
Jenny.
- [47:25]
Jenny Harrington
Oh, sorry. For real.
- [47:27]
Leslie Picker
For your.
- [47:27]
Jenny Harrington
Oh, which one do you want me to talk about? Oh, sorry. Rdot medals crown reported yesterday. All the same things should be at Arda's back. Eight and a half percent yield.
- [47:39]
Liz Thomas
Liz, the equal weight, S and P. I know it's not sexy, but it's. It's attractive right now. Cut through the dispersion, cut through the momentum volatility, get that equal weight and just have a slug in your portfolio.
- [47:52]
Leslie Picker
And Joe.
- [47:52]
Joe Taranova
Yeah, A lot of fun.
- [47:53]
Leslie Picker
This show we had, we had a
- [47:55]
Joe Taranova
lot of fun in video. Pushing towards 240. That's my target.
- [47:58]
Leslie Picker
Went by super fast. Thank you guys so much. That does it for halftime. The exchange starts right now.
- [48:04]
Joe Taranova
You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [48:16]
Julia Boorstin
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer what made
- [48:51]
you confident that you could do something that hadn't been done before? I have no fear of failure.
- [48:57]
Trailblazing women, changing the game One of
- [48:59]
Liz Thomas
my favorite pieces of adventure. Think about what your boss's boss needs. Leadership can look in many, many different forms.
- [49:07]
Leslie Picker
It really does come down to just trusting yourself.
- [49:09]
Liz Thomas
Life is short and you just gotta think big to accomplish big things.
- [49:12]
Julia Boorstin
Julia Boorstin hosts CNBC Changemakers and Power Players New episodes every Tuesday. Wherever you get your podcasts.