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Halftime Report
Altimeter Capital’s Brad Gerstner joins us Live 6/12/25
00:46:32
Scott Wapner and the Investment Committee are joined by Altimeter Capital’s Brad Gerstner to discuss everything from the markets, to AI, to the future of his “Invest America” plan. Plus, the Committee detail their latest portfolioe moves. And later, Chime Financial goes public in our hour, Leslie Picker joins us with the latest. Investment Committee Disclosures
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- [00:00]
Edward Jones
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Edward Jones
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Bank of America
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- [01:03]
Scott Wapner
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. Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour targeting new highs, the S and P closing a new milestone. We'll discuss and debate how to play the markets right now. Joining me for the hour today, Josh Brown, Malcolm Etheridge, Kevin Simpson, and Altimeter Capital's Brad Gerstner. He's with us for the duration today. It's his first interview since that big Invest America event at the White House on Monday. Show you the markets here. We still working to try and get something going today. You see, the Dow is negative. You obviously have the Boeing overhang given that horrible accident over in India today and that stock's down. S and P, NASDAQ are in the green watching all of it unfold. Josh, we do have geopolitical concerns around Iran. We have the dollar hitting its lowest level since March of 22. Yields are down. It's a bit of a risk off feel, I think you could say PPI cooler jobless claims though still sitting at the highs since October. How do you see things?
- [02:12]
Josh Brown
Yeah, I think that's exactly right, Scott. Look, the dollar is going to be this story that just exists in the background. And on some days, we won't pay any attention to it at all. And then on other days, they'll look, they'll see international stocks rally. They'll say, oh, look, lower dollar portfolio asset alloc is is working again and that'll be somewhat exciting for people. But I don't think that that's going to be the primary driver of what happens in the second half of this year. I still think we're stuck in this paradigm where the Fed feels it's, it's not obligated to act or should not act. And it's, it's exactly where it should be. And we have this thesis on interest rates maybe one cut, maybe two. But while that's taking place, we are looking at labor market softness and we're seeing deceleration in the real economy away from AI spend. That's the push and pull we've been in for a couple of months now since the market bottomed. I really don't think that's going away. So, yes, lowest level for the dollar since February of 2022 to drop of 11% versus the basket year to date. It's notable, we understand some of the reasons why. There's a lot of stuff happening with tariffs and, and with the tax bill that is possibly making people overseas rethink their allocation. I don't think that's going to be like this massive catalyst though. I think that's just like a background thing. The bigger catalysts are all going to be about the economic data and the earnings front.
- [03:39]
Scott Wapner
So, Brad Gerstner, it's good to have you back and it's great timing and no offense taken at the fact that you'll only wear a suit if you're going to the White House. I sort of figured that. And this is what I expected you to be in today and we'll get to all that of, of that a little bit later. But I do want your current market view because I know you did get more bullish on these markets towards the end of April and into early May. And here we are, as I said, at the very top. We're just a couple of percentage points from a new all time high on the S and P. So give us the lay of the land as you see it.
- [04:11]
Brad Gerstner
Well, you know, Scott, it's great to be here. Thanks for having me. And you know, when we talked in early May, what I said was the reason we had turned right. We were negative heading into Liberation Day because the administration had not made clear there were two doors they could follow on global tariffs. I described the first door as what nuclear Navarro 1 to $2 trillion in global tariffs return to a McKinley age, the late 1900s where we derive most of our revenue from tariffs. And the other one was what I described as fair Trade besant. Landing the plane closer to 300 billion in annual tariff revenue. And that was, you know, by May 2, that had become pretty clear that that's the direction the President was headed. Now it's even more certain that that's the case. Right. We're on the verge or it looks like we have a deal with China that will be one of the most important ones we're tracking ahead with Europe. And so I feel very comfortable where we're going to land the plane on tariffs. Secondly, it looks increasingly likely that the reconciliation bill, what the President describes as the big beautiful bill, will in fact get signed into law in early July. That will not only give certainty to the markets about the extension of the current tax regime that exists, but it also adds new stimulus in the form of no tax on tips, no tax on overtime, and the deductibility of Social Security, which is effectively a tax break for seniors on their Social Security income. So that's incremental stimulus. And then the third thing that I think is not yet being talked about is we have these rate cuts coming in the back half of the year. So I think that's the potential trifecta for this economy. An incredible pro growth administration that is landing the plane on tariffs, that is landing the plane on the reconciliation bill. And we have rate cuts ahead that caused us to get a lot more bullish at the beginning of May. We remain so today. In fact, we're in our top 25% in terms of our exposure limits that we have on as a firm. And then behind all of this, of course, is we have the AI super cycle. We've seen a reacceleration in both the top line and the earnings. You know, Oracle reported last night blockbuster numbers. 80% of the S and P that reported all beat the Mag 7, all beat and accelerated. And so I think that, you know, so long as the government does these things that I describe, I think the economy is ready to cook.
- [06:37]
Scott Wapner
Malcolm sounds like Brad's pretty pretty bullish almost as long as you could be in the long only part of his hedge fund and pretty darn long in the hedge fund too. And if that doesn't tell you the story, he just did as to why it's time to be pretty pretty bullish. These markets. You feel the same way.
- [06:55]
Bank of America
I think Brad just made a really great case for why long term investors should definitely stay long here and why you should be bullish looking down the road longer term. But I do think April, March and April wasn't that long ago. And I remember fielding phone calls from people who were concerned about where markets were headed I heard a lot of argument about this time feels different. And we're looking at a president who's proposing to reverse course once again on trade policy and potentially ratchet up tariffs once again. So I think anybody who was concerned back then and was seriously considering trading actually did trade to get out of the market. All of those considerations that existed back then could potentially exist still today. And so I think it's a good time because the markets have recovered so quickly for people in that position to at least be de risking parts of their portfolio as we go forward, just in case, like if you were seriously considering leaving this market, then a lot of the same factors that existed then still exist today. And I think you might at least do yourself some justice just de risking.
- [07:55]
Scott Wapner
Some or 1.8% Kev away from a new high on the S and P. We get in there and then beyond.
- [08:02]
Kevin Simpson
Shockingly, yes. I mean, I think that the risk is still to the upside and it's amazing how far we've come in such a short period of time. I love Malcolm's idea of hedging and it's something we always do. So we're expecting a little bit more of a range bound market, maybe a little bit more upside. And for us, it's about writing covered calls, being very careful about where we're putting risk on. But much like Brad, we're 90% long.
- [08:24]
Brad Gerstner
Scott?
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Scott Wapner
Yeah. Brad, do you think the market in some respects has desensitized itself from all of the trade war stuff? Just assuming, based on prior activity from the president, that the tariffs are going to be rolled back eventually, that China has a lot of leverage of their own, and that's how the Wall Street Journal editorial board plays it, that they say Trump has no China trade strategy. This gets to the larger problem with the tariff strategy. That is he doesn't have one. His latest walk back shows he can't bully China as he tried to do in his first term, that China has the leverage. Now you may think is that a good thing for the investment community because he's not going to he being the president is not going to get to the most extreme levels again on the tariffs. And therein means that you should stay bullish.
- [09:15]
Brad Gerstner
Well, I mean, you know, listen, let's separate strategy from tactics, right? What I think we talk a lot about on these show is tactics, right? And those are negotiating tactics. We where does he anchor his position? Does he anchor it way over here only to negotiate away from that? I actually think the art of negotiation, the art of the deal, lays out pretty clearly what this president's trading negotiating tactics are. But the strategy is what scared the market earlier in the year, Right? There was a question. Is the strategy Navarro, and truly replacing the Internal revenue service with $2 trillion of tariffs? If that had been the President's strategy, the market would still be down 20% today. But it became very clear to the market in the end of April and early May that in fact, the strategy was what I would. What I described as the Bessant consensus. And that's to get fairer deals, right, in order to reinsure critical national industries. You know, things like chip manufacturing. We just had this announcement out of Micron this morning. I think another $200 billion investment in the United States. So if you just step back and say objectively, it does appear to me that the President's got trillions of dollars of incremental investments in the United States. It does appear to me that we are reinshoring some critical industries. And now over the weekend, we traded, right, it looks like China visas for Chinese students and other things in order to get the ban on rare earths by China lifted. And so those I put in the bucket of tactics. If the market thought for a second that we were going back to this onerous Strategy, right, of $2 trillion in tariffs, we would not be where we. Where we are today. The market is only up 2% on the year. We have come a long way off of that bottom. But it's become very clear that we're headed in a different direction than the market thought we were on Liberation Day when the President showed that poster board of all the tariffs that frankly terrified the markets.
- [11:13]
Scott Wapner
Yeah. You know what's funny, Josh, is as Brad said, we're up on the year on the s and P 2.6%. It feels like it. It, it's like 20% because we're so far off the bottom that many people, when we went down to those depths, were like, what in the world is going on here? This is not what we. This is not what we bargained for. We totally didn't expect it. And now we've had this tremendous rally that we're trying to now make sense of. If you look at the year to date scorecard, it doesn't look impressive, but it is if you take these prior five and a half total, I think.
- [11:46]
Josh Brown
I think the revelation was that the only negative lingering out there for markets was the trade war. And so, like, once you dialed that back, it was like, oh, okay. It was almost like playing street hockey with your friends as A kid and there's a car coming and you got to move the goal, you got to move the nets onto the lawn. Wait for the car to. Everyone's a car. Okay, so once was the car passed and he's like, oh, you know what? Actually we're not doing 145%. Maybe it's 80. I don't know, maybe 30. Ask, ask Scott B. That tweet. That's what you needed to see. Oh, we're not going to do the numbers on that poster. That was just for, I don't know, the lulls. Okay, car is passed. Bring the hockey nets back on the street. That's literally what happened. It didn't hurt that simultaneously we got incredible earnings growth from the Mag seven names which dictate what the index does. But then also for this second tier of technology companies. And actually if you look, the software ETF is what's leading the market this year. If it has an ARR business, it's up double digits. That's like just period. Go look at where the winning stocks are. Netflix, Spotify, every cybersecurity name, which we can talk about later. Anything with ARR recovered really quickly. Here's why. Even if you had higher than expected tariffs or the trade war lingered for longer than you thought, people don't just start canceling contracts on their vendors. Things have to get really bad for these RR businesses to see the type of massive cancellations that would lead to them having to reduce their earnings guidance for the year. And quite frankly, the liberation day to the Taco didn't last that long. So all of these ARR stocks, whether it's ServiceNow or Workday or Cyber, any of them, they immediately rebounded. That went on to make new highs. The takeaway should be absent the trade stuff, we're in really good shape here in corporate America. Companies are very good at passing on higher costs and these ARR businesses are absolutely smoking. And that's the bottom line. It's all you really need to know about 2025.
- [14:00]
Brad Gerstner
Hey, Josh, as to that point, I'm sitting here looking at this chart of software multiples. We're still below the five year average on software multiples, right? It feels like we've come up a lot, but we came off up off a very low bottom. And let me just give you one example to make to reaffirm your point. You know, we're shareholders in an incredible startup database company called Clickhouse. It's competitive with databricks. We're also big shareholders of databricks. And that's competitive with Snowflake. We're also big shareholders in Snowflake. All three of them are simultaneously accelerating. Right, because they're all critical to AI. And that's the story. There is an AI supercycle going on here. I the AI supercycle is larger than the Internet itself. It is the biggest technology wave of my lifetime. I've been investing in Silicon Valley for 25 years. That is what's happening simultaneously. If that was not happening, if the fundamentals were not strong, then this backdrop wouldn't have such a ferocious force to it. But what I'm telling you is the second that the government made clear that it was pro growth, which is what we expected on January 1, we didn't expect high tariffs on January 1. The second they got back to that business low, lower regulations, lower, you know, tariffs that are reasonable, a pro growth reconciliation bill and now potential rate cuts against this backdrop of this massive AI super cycle. I have to disagree that we should not be hedging here. We're only up 2% for the year. With that level of clarity, I think you ought to be leaning in here and ignore the fact that we just bounced off of a very low bottom because the world has changed.
- [15:38]
Scott Wapner
The evidence of the super cycle, as you say, was banged on top of our head yet again this week, Brad. If you look at the the open air news of teaming with Alphabet for cloud compute, the core wave news to offer compute capacity in that deal between Google and OpenAI, the Metta taking a near 15 billion stake in Scale AI. What AWS continues to do in their tremendous and multibillion dollar investment in data center. 20 billion in Pennsylvania data center this week. 10 billion in North Carolina last week. If you wonder, well, is the super cycle slowing anytime soon? Is the capex spend going to start slowing down anytime soon? I asked AWS CEO Matt Garmin that very question during an exclusive interview on CNBC this week. Here's what he told me about why they continue to invest so heavily. It speaks so clearly to this point. Listen, every single enterprise out there is going to be using inference and they're going to be using these AI models to get more efficiency in their workplace. They're going to deliver new customer experiences. They're going to completely transform how they do work and uncover new innovations, right, Brad? I mean, they're looking to transform how we work, how we live, how we drive, how we interact, how we will do almost everything.
- [17:08]
Brad Gerstner
Everything. You know, I had Jensen huang on the BG2 podcast last year. It's when people were were saying, oh, this training is hitting an upper bound and all this AI is overblown. And remember Nvidia fell and all these AI stocks were falling in it. And Jensen Huangs Huang said on, on the podcast, he said, you know, we are now moving into inference time reasoning where the machines begin to recursively think for themselves. And he said at that moment, inference isn't going to 10x, it isn't going to 100x, it isn't going to millionx, it's going to 1 billionx. Everything in the world is going to be inference. And what has happened this year? Exactly what he said. The token production at Google has gone parabolic at Amazon. Parabolic, why? Because everybody in the world is using ChatGPT to get answers to their consumer questions. Every single search now on Google and is an inference search because they want to give an AI answer. The era of 10 blue links is dead and now every single person on the planet expects answers. And for enterprises, they expect the same. And I will tell you, we are in the first inning. It may be the first batter in the first inning. And so it feels like a lot. But what we're seeing this year, what we're hearing, these moves by the biggest companies on the planet, none of this is surprising. This is the beginning of a massive way Oracle reported last night, right? Incredible numbers, accelerating numbers in terms of the data center and compute build out. Jensen Huang said over in Paris this week. He estimates a trillion and a half of AI compute build out on the Middle east visit that I was on recently. We're going to build, you know, massive Stargate cluster in the uae, they're going to build in Saudi Arabia. We're going to diffuse AI technology from the United States critically around the world with the, with the repeal of the Biden diffusion rule, which was essential. And so we are in this phase of acceleration. It's not to say that there won't be companies, right? They get overvalued in that phase. But I just gave a talk this past weekend at my 25th business school reunion up in Boston, and I talked about Henry Blodgett's $400 call on Amazon back in 2000, right? What do you think Amazon is today relative to the $400 call that Henry Blodgett made in 2000? He got ridiculed and laughed off of Wall street for it. But Amazon is up 87 times today from where it was when he made that call. The reality is we all overestimate in the very short term what these things will do but we dramatically underestimate in the long term. And that's what I think you see in the market today. You see this acceleration because every one of the smartest players in Silicon Valley, whether you're running Amazon, whether you're running Metta, whether you're running Open Air, whether you're running Google, they all tell me the same thing, we have to do whatever it takes in order to capture and invest in that future. That's why their capex is going parabolic. That is great for the entire AI compute stack. Whether you're tsm, whether you're in video, whether you're core, we've where we're investors as well. All of these companies, ARM etc. Are going to benefit from that compute build out. And then now we're seeing it in the applications, right? The companies I mentioned, like Snowflake and Databricks, we're seeing it, you know, in the end user applications where we're seeing accelerating growth at places like ChatGPT. Right? ChatGPT got to a billion searches a day, right? Eight years faster than Google did. This is not Internet time. This is a hyperspeed. It is way faster. OpenAI today is four times the size that Google was when it went public in terms of revenue, in terms of searches, right? So I think for people, you know, now is a time where people could say the market bounced a lot off the bottom. Right? I don't, you know, I came on here when, you know, earlier this year and said we had taken our exposures way down because I wasn't sure whether government was going to be supportive or whether it was going to get in the way of this AI super cycle. Now it's very clear to me they are pushing it. They know in order for America to win in the balance of global power, we must win in AI.
- [21:28]
Scott Wapner
So Malcolm, don't look at from the bottom to today. Look at from today to as far as tomorrow, literally and figuratively can bring you in. Thinking about these stocks, everybody owns Amazon on the desk today. You own Oracle. So you understand what Brad's talking about. How do you see these stocks now?
- [21:51]
Bank of America
So let me first clarify. I don't own Oracle personally, but a number of our clients do. But I completely agree. I listen to the Oracle call, for example, and I hear Ellison talk about how he's getting phone calls from CEOs who are saying to him, I just need the capacity, regardless of where it has to come from, go get me capacity and I will pay you for it. Probably not in the history since the invention of the Internet has that kind of a conversation and that kind of a gold rush been the conversation. So you're talking to somebody whose own personal portfolio over indexes by a wide margin to software and a lot of the companies that we're talking about. So were you talking about about tomorrow and what does tomorrow look like? My one concern in this conversation we're having not looking the next two years, five years, 10 years, but just over the next couple of quarters. We don't know how much of the great earnings that Josh was talking about before from Q1 was the pull forward from folks worried about April 2nd. We won't know for another three or four weeks. And so this is the moment where the markets probably continue to chop sideways until we start to get into Q2 earnings and find out the answer to that. That's my one concern with relation to how hot the market feels like it's rolling right now. We could be about to get some pretty soft guidance from CEOs which changes a lot of people's attitudes and appetites.
- [23:04]
Scott Wapner
I thought the CEO Josh gave us a pretty good reality check is literally, you know, we're talking 30, $35 billion in a couple of days about Data center. Not to mention the billions that the company is investing around the globe. You own the stock. Stock too.
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Josh Brown
Yeah, it's I would say right at this moment it's my favorite of the MAG7 names and obviously AI and data center is a really big part of that story. I just think there's still a lot of money that that could come into the name as they start to pull the levers that they are able to pull. And we're starting to see like the real time results of all of this Capex and it's not just about we have to invest in now for three years. But it's like. No, no, no, no, you don't understand. We're investing now because right now the, the activity is happening. The land grab is, is in full effect. I think one of the things that we have to continue to remind ourselves is that the tariff related situations in the stock market, most of them are not Apple, most of them are just not terribly important to what the index does. So and those stocks that have a tariff issue have already been punished. We have just seen absolute whippings in the apparel sector. Look at Nike. Nike is as in addition to all its other problems is a, is a tariff problem. And so it's not as though we're not pricing in these issues. It's that until now they just haven't affected Nvidia haven't affected Microsoft and they may not. We don't know. So Nvidia took a massive write down on China related stuff and the stock rallied. So you know we are pricing in the impact of the trade war. We are pricing these things and it's happening on an individual company basis rather than a market wide basis. And the reason is the biggest market cap companies that are providing most of the earnings growth for the S&P 500 based on bottoms up outlooks are not going to be affected by tariffs until tariffs spill over and become like a an unemployment story. But that hasn't happened yet. So we're kind of in this stasis and what we have is effectively earnings growth coming from the most important and the largest market cap companies.
- [25:20]
Scott Wapner
Would you go ahead?
- [25:22]
Bank of America
Would you agree that the issue with Amazon share price though specifically as also a shareholder who thinks is probably the best Stock in the mag 7 the issue may be that investors are considering this an E commerce play and not paying enough attention to the underlying tech components that you just laid out.
- [25:36]
Josh Brown
All of the earnings growth is coming from us. So if you see the stock rally it's because people are bullish on you.
- [25:43]
Scott Wapner
Mention the fact that when I was having the conversation with with Matt Garmin and the way people are framing to your very question and to Josh's point is that AI as some have written, Amazon wants to be the market marketplace for AI. Forget about the marketplace that we all grew up knowing. Amazon as they see themselves as being just that. But for the revolution and the technological innovations that are happening, excuse me, for AI in and of itself. You guys hit another interesting point as well. As we speak about the arms race, it is not just Amazon versus Microsoft versus XYZ company and then the next ones that aren't even public yet. It's the United States States versus China. Nvidia plays a role in that. It plays a role into the trade war too. Jensen Huang telling CNBC that Huawei quote has got China covered if the US doesn't participate there. I thought we had a really interesting conversation with the Andreessen Horowitz general partner Ange Mitta, the angel investor in Anthropic who talked to me about that arms race and why we have to win it. Let's listen.
- [26:53]
Brad Gerstner
This race is happening with or without us, right? Look, it was an extraordinary piece of engineering that Deepsea put out right from China. What it also showed was that our adversaries aren't waiting around for us to get our act together. And so you know, one way or the other, we don't have a choice but to win.
- [27:08]
Scott Wapner
Brad, the trade war figures into this conversation heavily and why there is no choice. We need to come out. Number one.
- [27:18]
Brad Gerstner
This is a critical issue and I want to unpack two things here, Scott. The first one was, is about diffusion of American technology to the entire world, right? We call this American AI Diffusion. We need the world to run on the American air stack, okay? A week before the Biden administration left office, they passed a rule called the Biden Diffusion rule, which was 100 pages that tiered all the the world and said, here are all the rules and hoops you need to jump through if you want to sell chips or models to India, to the UAE, etc. It would have literally devastated our ability to distribute the American AI stack to the rest of the world. It would have been the equivalent of Google in 2002 having to come to Washington, get on bended knee and beg the FDA of search to allow them to distribute Google to another country and. And the world would have ended up running on Baidu, okay? We didn't do that in 2002, and we should not do it today. The good news is the Biden diffusion rule was repealed by Howard Lutnick and it needs to stay repealed. We should not run into the void and put a whole bunch of rules in place. We should do exactly what we did in the age of the Internet. We should allow our companies to compete. And in the future, a year from now, two years from now, we decide we need to have speed limits, safety belts, etc. There'll be plenty of time for that. But right now, we need to get the American technology out into the world. The reason for this is because when I was in Saudi Arabia, right, Huawei has gone from 0% market share in Saudi Arabia to 50% market share in Saudi Arabia. You can't tell our friends and allies around the world, like India, like Saudi Arabia, the AI is the most important thing in the world. But we're not going to give you our technology. It's crazy. The Chinese have a full stack. They have chips from Huawei that are only, you know, maybe a half a generation to a generation behind Nvidia. You just buy more of them. You link them all together and it's the equivalent. They have the deep seq model, they have the full stack. This is an arms race. The US Needs to accelerate and we need to get the decelerationists in Silicon Valley who are trying to use regulatory capture to slow all this down. We need to get them out of the way and we need to get cooking around the world. That's the rest of the world as it pertains to China. Real quick, Scott, there's this belief, you know, right now in video has, you know, it went from 80% market share in China where all the developers, second largest developer market in the world were, were developing in Cuda. Right. We had them in an American ecosystem and we were selling them chips. And Nvidia was paying the US treasury billions and billions of dollars of taxes and they were plowing those profits back into staying in the front. Now we've ceded China to Huawei by giving them monopoly profits and giving them that entire developer ecosystem, it's going to make it easier for them to win the global air arms race. We need to get in video back into China competing with the B30. We need to keep, you take the, the, the competition to Huawei in their home market, keep those developers in the Cuda ecosystem, keep that market share. That will make it easier for us to win around the world. So these are critical decisions that government is making right now that will determine the next decade as to whether or not we win in the global AI balance of power. And I think we have to win.
- [30:44]
Scott Wapner
All right, quick break. More with altimeters. Brad Gerstner coming up straight ahead. We have some new moves as well on this desk to let you know about too.
- [31:01]
Edward Jones
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- [32:00]
Brad Gerstner
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Scott Wapner
Thing Mint Mobile unlimited premium wireless 3030.
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Bank of America
Better to get 30. Better to get 20.
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Josh Brown
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Brad Gerstner
So give it a try. @mintmobile.com Switch upfront payment of $45 for.
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Edward Jones
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Brad Gerstner
Speed slow after 35 gigabytes of network's busy.
- [32:28]
Edward Jones
Taxes and fees extra see mintmobile.com.
- [32:32]
Brad Gerstner
All.
- [32:32]
Scott Wapner
Right, we are back. Moves to tell you about. All right, Malcolm on Monday we're at wwdc. You said Apple's starting to look a little interesting to me. Maybe I'll, I'll buy more. You did not. On Tuesday I said, hey, remember what you told me yesterday about Apple looking interesting? Did you buy more? You said I did not. Yesterday you bought more Apple.
- [32:53]
Bank of America
Tell me I did put my money where my mouth is. You can feel comfortable in that. And the reason all the things we talked about, all the negatives against Apple, them being behind on Apple intelligence and everything else are good reasons for folks to, to feel pessimistic. And it felt to me like we reached peak pessimism. But in the short term I think that all of the AI applications that are going to, all the applications that are going to be built using AI now by developers looking to build better, more powerful apps. Also non technical people like me being able to use AI to build apps is just going to add more traffic to the Apple App Store in the short term which obviously helps them because they take a toll of each of those transactions once a download happens. But an even bigger story, perhaps one that's more obvious after the Chinese IPO later on today is we still don't know a ton about what Apple's ambitions are in financials. Right? We know that they have plans to roll into that space. They've applied for banking licenses and everything else. But that could be a whole other frontier that we're not talking about that unlocks a lot of opportunity in that name.
- [33:54]
Scott Wapner
All right, that's a story to be continued. No question about that. Josh Brown has two new buyers. Number one, J O B Y Joby Aviation. Why did you add that?
- [34:04]
Josh Brown
Okay, so these are super speculative. Joby is so let me, let me.
- [34:10]
Scott Wapner
Talk about, talk about both because they fit together.
- [34:13]
Josh Brown
Yes, Joby. And the other one is Archer. I took starter positions in both of these names. They probably shouldn't even be public. These are pre revenue, obviously pre earnings situations, but they are working on something that I think has massive potential over the next 10 or 15 years. I don't know if this is the best possible timing, but it's my timing. So basically what's happening is this. There's something called the low altitude economy. And Adam Jonas and Morgan Stanley, who covers Tesla, put out a massive report on the low altitude economy, meaning sub 1 mile above the earth's surface. So delivery drones would probably be the first thing that we're seeing, or we will continue to see. But where that's going to go next is transportation. And these are two stocks that have a couple of billion dollars in market cap. And they, they came through this window of the 2020, 2021 bull market for experimental technologies. And that's the only reason why you can invest in them now in the public markets. There's a lot of risk here. These are highly speculated. We don't know if either of them will ever be able to commercialize a vehicle. But here's what's happening with them, and here's why I'm excited about it. Donald Trump just signed something that removes a lot of the red tape for testing these technologies out effectively. It's a combination of an airplane and a helicopter. They want to do what's called vertical takeoff and landing, VTOL as opposed to conventional takeoff and landing, which is with a Runway. If they can get certifications, which is the next catalyst, over the next six months to a year, I think there will be a revenue model. In the case of Joby, this one is 9% owned by Toyota. It's got a lot of other high profile investors. They're building out the Uber of the skies. They want to build a taxi network. In the case of Archer, they've got a prototype called Midnight. You can look on YouTube. They just managed to do a conventional takeoff and landing that works successfully for the Midnight vehicle. That one is not looking to launch a taxi service, but looking to actually sell these. I think the most obvious use case is highway traffic accidents getting people lifted up and to a hospital immediately. Eventually they'll take us to the Hamptons. But again, these are very speculative ideas. I don't recommend people with a low risk tolerance even consider them for their portfolio. I have a very high risk tolerance because I'm gully like that. And that's why I started the position in them this week.
- [36:41]
Scott Wapner
All right, let's get the headlines with Leslie Picker. Hey, Leslie.
- [36:43]
H
Hey, Scott. The Justice Department has filed a lawsuit against New York State for blocking immigration officials from arresting people at or near courthouses. The department said today. The suit challenges a law called Protect Our Courts act, which it alleges, quote, purposefully shields dangerous aliens from being lawfully detained. There's another departure at FEMA just after President Trump said yesterday that he plans to wind down the agency after this hurricane season. NBC News reporting the agency's top official overseeing the government's response to storms has resigned. Jeremy Greenberg's departure is the latest in a string of officials to leave FEMA. And Shaquille O' Neal has agreed to pay nearly $2 million to settle claims that he misled investors by promoting the now bankrupt crypto exchange ftx. The former NBA superstar who once urged fans to trust the platform will settle the case without admitting wrongdoing. This marks one of the first high profile settlements over FTX collapse. Halftime Report will be right back.
- [37:46]
Brad Gerstner
CNBC News Update is sponsored by Morgan Stanley where old school hard work work means bold new thinking.
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- [38:26]
Brad Gerstner
Ryan Reynolds here from Mint Mobile. With the price of just about everything going up, we thought we'd bring our prices down. So to help us we brought in a reverse auctioneer which is apparently a.
- [38:35]
Scott Wapner
Thing Mint Mobile Unlimited Premium wireless everybody.
- [38:38]
Bank of America
Get 3030 better get 30 better to.
- [38:40]
Josh Brown
Get 202020 everybody get 2020 every 151515 just 15 bucks next month.
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Brad Gerstner
So give it a try@mintmobile.com Switch upfront.
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Edward Jones
Payment of $45 for three month plan equivalent to 15 per month required new.
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Brad Gerstner
Customer offer for first three months only. Speed slow after 35 gigabytes of network's.
- [38:54]
Edward Jones
Busy taxes and fees extra.
- [38:55]
Brad Gerstner
See mintmobile.com this is more capitalism. This is aligning every child in America with the upside of free markets and the benefits. And that is your Main street agenda, Mr. President.
- [39:24]
Scott Wapner
Well, that was Brad Gerstner making his Invest America pitch at the White House earlier this week at that big event with some of America's biggest CEOs. So this is your first interview since you were there. Was, was it surreal for you after talking about this for so long and trying to get it part of legislation for so long? Actually being in the White House as this was unfolding?
- [39:49]
Brad Gerstner
It was an incredible moment. Scott I think it's an incredible moment for America. You know, it's only appropriate that I'm back here because I was with you. I'll never forget in October of 21 when I first mentioned this on air, this idea that we need to give every child at birth skin in the upside of America, a private investment account. And I said, you know, at the time, I was urging Biden to create this with $1,000 in every kid's account. Because what we had seen in Covid was the markets benefited. The few, the 20% that were in the markets did well, but Covid hit a lot of other people. They lost their jobs, etc. And it was critical that we rebalance America. We get everybody into the game from birth. You start with 1,000 bucks, you add $750 a year. That's worth $50,000 at 18, that's worth $175,000 at age 30. It's incredible. We're on the one inch line of getting this passed. It doesn't. It's in the big beautiful bill. It's in the reconciliation bill. It is the Main street agenda. Remember, you know, I'm from rural Indiana, from a poor town. I didn't have any skin in the game. Right. 70% of people don't benefit from all the conversation that we just had on your show today because they don't have skin in the game. This puts every kid, every county road in America, every rural street, every city block in New York to L. A, they all get an account from birth. They're all in the game of the upside of America. It's great to see the President so enthusiastically endorsing the Invest America Act. But I will tell you, I was moved by the words of Michael Dell, by the words of Dara Khashrowshahi, the CEO of Uber, David Solomon, the CEO of Goldman Sachs, Vlad Tenev from Robinhood, Renee Haas from ARM, Bill McDermott from ServiceNow, all of our friends who came to tell the President one thing. The most basic promise of America is the right to rise, the right to get up that economic ladder. We got to get all these folks on the first rung of the ladder. It's not doing it for them, but it's making sure that everybody is in the game. It makes America stronger. And particularly when we're going into this age of disruption with AI it's absolutely critical that everybody feels like they're on the same team on Team America. I think it's going to be the biggest evolution of our social contract since Social Security in the age of the Industrial revolution.
- [42:17]
Scott Wapner
You said it's on the one inch line. Of course, you know, in politics, the one inch line can feel like a mile. How optimistic are you that it actually makes it into the final bill in its current form?
- [42:32]
Brad Gerstner
Well, I will tell you, we have broad support, Senator Thune, Senator Crapo, led by, you know, Senator Cruz. But broad, remember, it's in the reconciliation bill. So although we have a lot of bipartisan support, all of the Democrats are likely to vote no against the reconciliation bill. That's the vehicle in which the Invest America act is attached. But we have broad support in the Senate. We saw the support at the White House this week. The president wants this to happen. I think it will remain in the reconciliation bill. I think it's a core part of his Main street agenda. And I'm highly confident the reconciliation bill is going to pass because it's an important step in the direction of cutting spending. It's not perfect. It's not perfect. But, you know, we can't let perfection be the enemy of the good. This is a very important and good first step and it's the only thing that we're going to get passed through Congress this year. So I think it's critical that it happens. And when it happens, right by the middle of July, this will be law. And in 2026, on the 250th anniversary of America, we're going to launch 40 million kids with this on their phone. They're going to own a little bit of Nvidia, a little bit of Microsoft, a little bit of all these companies that we're talking about. It's going to transform financial literacy. It's going to make it more likely for them to graduate, more likely for them to buy a home, more likely for them to start a business, more likely that they pay taxes. They will feel better about themselves. We're going to give hope to everybody that they're on this train. That is the economic engine of America. It's the best and most powerful economic engine in the world.
- [44:05]
Scott Wapner
All right. Well, congrats on getting it to the 1 inch line. We will stay tuned, obviously, and see what happens next. And we appreciate your time as always. Brad Gerstner, thanks for spending a good amount of time with us today. We appreciate it very much. We'll see you soon.
- [44:19]
Brad Gerstner
It's great to be here.
- [44:20]
Scott Wapner
All right. It's good to have you. Up next, one cyber name that just landed on Josh's Best Stocks in the Market list. It's coming up next. The IPO Chime open for business. Leslie Picker has that forest less.
- [44:53]
H
Hey Scott. Yes. Another IPO off to the races here. Chime opening at $43 per share. It's listed on the Nasdaq. You can see that's up about 62% or so from its IPO price which was $27 per share. And that already was above expectation. Above expectations. Pricing above the range. At that $27 per share level. That implied a valuation on a fully diluted basis of about 11 points billion. That was still roughly half of the value it received in a private funding round from 2021. But you can see here 62% gain for Chime on its debut today. This is an interesting business model, Scott. What they do is they run essentially a neobank that appeals to customers with $100,000 a year or less. That's what they make, $100,000 a year or less. And they basically make their money on interchange fees rather than a traditional loan making model that you see in a traditional banking situation. Revenue in Q1 was up about 32% for this company as it gets more debit and credit cards into the marketplace to get those interchange fees. I'll send it back to you.
- [46:06]
Scott Wapner
All right, Leslie, thank you. We'll follow it up. 62% is chime Josh Brown new stock in his best stocks in the market list. And it is.
- [46:13]
Josh Brown
I'll keep this really brief. We've talked about Zscaler on the show, We've talked about CrowdStrike. We talk about Cyber almost all the time. These are the best stocks in the market as a group and Palo Alto just hit the list. So this is the largest by market cap, slightly larger than CrowdStrike. I think it's about 130 billion ish market cap. And if you look at a longer term chart. Guys, help me out here please. What you'll see see is that the 200 level has been resistance for quite some time. There it is. If you're a pure technician, you're not just pulling the trigger and anticipating the breakout. You're actually waiting. But I think if you're an investor, this name belongs on the best stocks list. Nikesh Arora, who's the CEO is one of the most respected figures in Silicon Valley. This is actually a 20 year old business and they have been ahead of the curve now for decades on cyber. I think that will continue to be the case. So if you like the theme, this is sort of a blue chip in the space. Personally, I'm loan CrowdStrike. I don't want to own two, but this one looks like it's going to break out. This is a potential breakout in progress. And you know, fundamentally what a great earnings story. What a, what a great business. So just wanted to spotlight that for those who like it.
- [47:26]
Scott Wapner
Thank you. Two and a quarter percent. A bit, little bit better than that. Final trades are next. Kev, have some moves. You have some moves. Let's get to you sold Texas Specific lands and you bought Elf Beauty. Tell me about that.
- [47:52]
Kevin Simpson
TPL was a fun trade for us on our growth strategy. We made a lot of money on it early when we made the initial position at around 9950, ran to 1400, 1600. We sold a bunch of it then. Things have just rolled over. Scott. We basically got stopped out this week. Rotated into Elf Beauty. Maybe a little bit late on that name. I think it's up like 70% this month. 25 consecutive quarters of growth, 28% year over year revenues. We're really excited about the position.
- [48:20]
Scott Wapner
Bought more rtx. Rtx, yeah.
- [48:22]
Kevin Simpson
This, this was in our dividend strategy. We had a lot of money from dividends and option premiums through April. We wanted to add to the defense name. Hopefully it won't be pop because of geopolitical events over the week, we Crypto on the brain.
- [48:35]
Scott Wapner
What's your final trade?
- [48:36]
Kevin Simpson
I'm going to go with JBL. It's 52 week highs today. Riding the infrastructure wave.
- [48:41]
Bank of America
Malcolm, I'm going to go so far. You heard Josh talk. Annually recurring revenue. 40% of theirs is Josh Brown.
- [48:48]
Josh Brown
Kinsel Capital acting well for a small cap and one of my long term holds.
- [48:54]
Brad Gerstner
All right.
- [48:55]
Scott Wapner
Markets still looking for direction. As you know today Dow's only up point zero one percent. There's the S and P Nasdaq. I'll see you on the closing bell with Dubravka Lakos, Ellen Zentner and Sarah Nason Tarahano of Goldman Sachs. So see you at 3 o' clock. The exchange begins right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [49:25]
Edward Jones
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 an 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 Our state has changed a lot in the last 140 years. We know because MultiCare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org.