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Halftime Report
Big Tech's Concentration Situation 2/18/26
00:43:11
Scott Wapner and the Investment Committee debate whether Big Tech stocks are turning around and how you should trade them. Plus, the Committee shares their latest portfolio moves. And later, we hit the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
Scott Wapner
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones Member, SIPC before we had.
- [00:31]
Jason Snipe
AT&T business Wireless coverage, our delivery GPS.
- [00:35]
Joe Terranovic
Wasn'T the most reliable.
- [00:36]
Jason Snipe
Once our driver had to do a.
- [00:38]
Joe Terranovic
14 point turn to get back on route.
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Jason Snipe
A 14 point turn, an influencer even.
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Joe Terranovic
Livestream the whole thing.
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Scott Wapner
Not good for business.
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Jason Snipe
Now with AT&T business wireless, routes are.
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Joe Terranovic
Updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though. AT&T business Wireless connecting changes everything.
- [01:01]
Kerry Firestone
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, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the tech turnaround, Nasdaq pacing for another solid day today, we'll discuss and debate when that space might stabilize. Joining me for the hour, Joe Terranovic, Kerry Firestone, Liz Thomas, Jason Snipe. Let's check the markets. I'll show you what I'm talking about. The NASDAQ is up more than 1%. Haven't been able to say that all that much lately, but Joe, we are today. I'm wondering if maybe this is the start of a turn. Nvidia is up 2 1/2 percent. The IGV was up 2% last I checked. Looks a little different.
- [01:51]
Joe Terranovic
So I think every, every turn begins with stabilization. I think that's what happened. I think you had some stabilization yesterday in a lot of the software names. We saw some of the private software companies releasing their earnings to give some comfort. Then you have some follow through today. Excellent earnings from Cadence Design. That gives you a little bit of insight as it relates to how the AI disruption is actually affecting some of these software companies in real earnings. And it's broad. It's, it's not just software that's powering us higher today. Obviously, industrial production, housing starts really strong. So that lent itself to some of the energy names performing well, some of the economy names. But back to technology, you still have names in the technology technology space that are working well. Analog Devices, Micron, Sienna Keys Keys and ON Semi all 52 week highs today.
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Kerry Firestone
What you're making in part by not saying it is outside the mega caps, you're seeing some stories develop outside the mega caps. The question is Jason Snipe, whether one week from today is the whole key.
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Joe Terranovic
Yeah.
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Kerry Firestone
Especially for the mega caps. And that's Nvidia, right. Reporting its earnings one week from today. Barclays today with masters of the obvious statement, Nvidia, sorry, but it's true. I mean Nvidia, here's what they say. This is deep, so pay attention. Nvidia could make or break big tech so far mediocre season.
- [03:17]
Joe Terranovic
Never heard of.
- [03:18]
Kerry Firestone
You guys go Barclays, you go.
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Jason Snipe
So a couple of things with Nvidia obviously today was the announcement of the metadeal $50 billion deal, multi year deal. You know, I think Nvidia obviously hasn't done much over the last six months, only up 4%, up 2% roughly year to date. But it's bouncing today and I think part of it is obviously this metadata. But I think a lot of the talk for me or kind of the digest and I have kind of with, with our analysis is, you know, there's a lot of talk early on about these TPU TPU chips and what's going on with Gemini and, and other LLMs. And I think the GPU chip still is the most important beltway chip for, for many of the, many of the technology and innovation that is continuing to come. So clearly, like many other shareholders, I'm very much looking forward to the print. I think it will be of course very important for the IT space and the entire ecosystem as we've seen that going in.
- [04:19]
Kerry Firestone
Right. We know it's important obviously. Do you feel confident about it and do you feel as, as Barclays suggest that this is the key now to turning this group around? Year to date every stock's down except for Nvidia which is only up one and a half percent.
- [04:38]
Jason Snipe
You got it. No, I do, I do feel confident coming into this print because I think the other thing I will say that I think has been important for me to see is all the circular spending, all the capex that we've been talking about for months and months and months and looking at the ROI and what that story and that's what obviously the market has kind of grabbed hold of. That's the narrative, right? What is the ROI story? But if I look at this deal with open air, the $100 billion deal a few months ago, they actually pulled back that spend to $20 billion. So I think there's been prudence with their spending and I think that's important with the whole CapEx narrative.
- [05:14]
Kerry Firestone
Carrie, Wells Fargo says buy it into the print. Cantor today says stay calm and trust in Wong as in Jensen Wong as we remain at the cusp of a rack scale supercycle. Yeah, well, they reflect what many others say. Is it time to buy this stock into the print?
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Liz Thomas
Yeah, I think it is. And we've seen people buying the stock's up 11% in the last couple of weeks. And remember we had $1 trillion trillion dollars worth of selling that came primarily out of software companies over the last few months. That is enough to buy 3/4 of all small cap stocks that are listed in this country. And all of those small cap stock did not go up 65%. There's a lot of money that was on the sideline. It has to go somewhere and much of it is now coming right back into what was sold. So I think it makes sense that you start to see Microsoft move higher booking holdings. That's one of the stocks we had owned move higher across the software spectrum and in video, which is the powerhouse and they are powering AI. I mean, if everyone's getting disrupted because of AI and software is going down because they won't exist because of AI, which isn't true, it's Nvidia that's selling those chips. So yes, it makes sense.
- [06:37]
Kerry Firestone
So Liz, you know, let's see if the stock and these other names start to ramp into that print in anticipation of something good. I'm not necessarily sure the sector is going to wait around to see what they deliver because I think everybody assumes how could they not deliver a good quarter in guidance if the spending ramp from these other names continues to escalate the way it does?
- [07:00]
Scott Wapner
Yeah, I don't think the sector will wait around and I think software probably does gain into that print. Look, over the last month or so software has been at various levels of oversold. So we're at a place where I think it's, it's well into the bottoming process and there's an opportunity, especially from a technical standpoint for upside here. And we all know that Nvidia is the bellwether for sentiment, particularly in the trade. If things go well. It's just further justification that this AI spending bender, the CapEx spending bender that companies are on and still surprising to the upside on, is going to continue and should continue. And I think that's what investors need right now, to feel calmer. That being said, I don't think this will end up being rising tide lifts all ships and that we've got somehow, you know, everything goes up from here for the rest of the year. I still think that the rotation that's been in place will stay in place. And we need some signals from sectors like financials for that cyclicality to really take shape again.
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Kerry Firestone
So Joe, Morgan Stanley today says Nvidia is still the most under owned mega cap tech stock versus the S&P 500 exiting Q4.25 then at any point in the last 17 years. You want to explain to people who hear that and say that doesn't sound like it could possibly be true. Yeah, everybody owns in video. Tell me why that's true.
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Joe Terranovic
It doesn't sound logical to me. Especially because if I look at the rankings for our holdings in the etf, it's the number one stock on every metric, whether it's debt to equity, return on equity, revenue growth and pure momentum itself. So I don't understand.
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Kerry Firestone
No, but the waiting. Right, that's what I was getting to. Kerry, why don't you, why don't you explain it? Because.
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Joe Terranovic
Let me finish my thought.
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Kerry Firestone
That's kind of where I was going with that. So we talk about that. Go ahead, Joe.
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Joe Terranovic
Let me finish my thought.
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Kerry Firestone
Okay. I thought you were finished.
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Joe Terranovic
So the challenge has been in the fourth quarter that the financial services industry is focused on concentration risk and portfolios. If you extract that and you have an equally weighted strategy, you don't have that concern. So that is what we're running. We don't have that at the end of the fourth quarter with literally nothing to do with Apple, with Microsoft, with Nvidia, you saw a large component of the financial services industry reduce the holdings in a lot of these passive ETFs specifically related to the concentration risk. And if you believe the concentration risk is real, then you are going to carry names like in video at an underweight and you're going to carry them at an underweight beyond the earnings of next week. Because you're not focused on the fundamentals of Nvidia. You're focused on the concentration with risk rather and the massive market cap size.
- [09:46]
Liz Thomas
Yeah. Okay, so pass the ball. Thank you.
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Kerry Firestone
To carry. Boom. Carry. You take the ball, go to the hoop.
- [09:56]
Liz Thomas
So if you look at Apple in people's portfolios, okay, similar case, number one stock in the S and P, everybody was always underweight Apple because they wanted to fill in the portfolio with more names. When you're an active manager, you don't want to say, oh, we only own 12 stocks because you know, we're buying 9% in video, 8% Google. And you really want to have diversity because you have explained your clients that that's what matters. In fact, there is a big study, and it was discussed in the Wall Street Journal last week, that if you had followed a policy of just owning the weight, the index, or even more concentrated over the last 15 years, you would have done better because those concentrations really paid off with technology stocks and communication services. However, it does apply. It is true that if you have 10 stocks that are 40 to 50% of your portfolio, then they do swing the value of your holdings and therefore people own less than the weight that is represented in the S and P. But does it deserve the weight? Yes, you can make the case that it does. You know, we shouldn't argue that right now, but there are people who could argue that all these stocks deserve a higher weight than the stocks of the past in those top 10 positions because they earn more, their profit margins are, their revenues are higher, and they dominate to an extent that no one ever has.
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Joe Terranovic
And that's looking at the idiosyncratic fundamentals. The second debate really surrounds to your point. You're told all the time, diversification, you want to be diversified. Well, if you talk to Warren Buffett, if you talk to Stanley Druckenmiller, no, they'll tell you concentration is the way to go in a portfolio. And concentration the last five years has actually outperformed being diversified for sure.
- [11:47]
Scott Wapner
That's what I just said so many investors can't stomach right there. Even over the last five years, there have been periods where in a drawdown, you've got some of Those stocks down 50, 60, 70%. Most people don't hold on through that, even though, yes, over the long term it works. But long term to many people is a year.
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Kerry Firestone
Right.
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Scott Wapner
They can't wait the two or three years for it to recover from scaling drug Warren Buffett.
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Liz Thomas
They can wait, right? They don't need that cash.
- [12:11]
Kerry Firestone
All right, so S and p takes back 6900. We'll watch that again. Tech's having a pretty good day. Let's talk about Amazon because it snapped its nine day losing streak. We were going for 10 yesterday. We didn't want to get that. So we got 9,450 billion dollars in market valuation.
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Joe Terranovic
Poof.
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Kerry Firestone
Over that stretch, Berkshire Hathaway, since you guys are talking about Mr. Buffett, they slashed their steak. They also trimmed their apple steak. Morgan Stanley reiterates, Amazon today is their top pick. AWS and agentic catalysts are Ahead, Jason Snipe.
- [12:49]
Jason Snipe
Yeah, finally, right Scott? Finally. Nine days is a long time. But I think the story is obviously, you know, what we were talking about earlier in terms of, of the CapEx, $200 billion worth of CapEx. You know, what is the ROI meaningfully? I mean this is up 60% from last year's number. So it's obviously a big number. Free cash flow declining. But you know, when I, when I look to the print that we had, you know, US reacceleration 24% return there, the expectation was 21%. So those are very positive numbers. They laid off 16,000 people again, you know, over hire through the pandemic. So they're kind of right sizing the labor force which I think is important, air driving 20, 22% of AWS growth. So I think they are leaning in in the right ways. Time will tell how these numbers play out in terms of the capex and the spending but I think that's what's been the overhang on the stock operation. Margins were also pretty good.
- [13:48]
Kerry Firestone
Kerry gets this stock going again.
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Liz Thomas
Yeah, I think that they're going to have a good quarter one of these quarters. Something is going to really ignite the market. It's huge. It's a consumer discretionary stock. They dominate and so many of the verticals in which they now exist, the.
- [14:05]
Kerry Firestone
Market just can't get, it's, can't get past the idea of how much you're spending. You could say that they of course their marketplaces, you know, whatever, every other part of their business.
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Jason Snipe
Great.
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Kerry Firestone
The market can't get its mind past the astronomical numbers that are coming.
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Liz Thomas
Company Two things will happen. One is they are going to cut costs around the rest of the company. If they're, if they're laying off 20,000, 30,000 people, those numbers add up and number, and number two is the, the multiple has come down to a point where it's starting to be a reasonably priced stock despite formerly people thinking oh, it's selling at 100 times, 120 times when it's selling for, you know, 30 times, people say, you know, maybe this is interesting. So I don't think it's that far off.
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Kerry Firestone
All right, Meta, because it's a big day. CEO Mark Zuckerberg, he's taking the stand this hour in a high profile court case questioning the dangers of Meta's algorithms to teens and kids. Julia Boorstin at the courthouse for us I believe in Los Angeles with those details. Hi Julia.
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Liz Thomas
Yeah, that's right. We're here at the L A courthouse and we just saw Mark Zuckerberg walk in behind us. We heard that just moments ago he started facing questions about whether Meta designed features to be addictive and what media knew about the negative impact on kids and teens of their products. We also saw entering the courthouse to watch the trial bereaved parents whose children died after they say social media led them to encounters with predators or led them to becoming depressed and suicidal. Now this case is considered a bellwether because Meta and YouTube, which is also part of this case, have historically been shielded from legal liability for the content that's been shared on their platforms. But this suit is not focused on the content, but on the product design, which could impact the way many more cases play out. Now, Meta denies the allegations, saying they are confident the evidence will show our long standing commitment to supporting young people. But the stakes in this and the following cases are high, both in terms of potential monetary damages and also judges and juries potentially mandating changes to the apps.
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Scott Wapner
Back over to you.
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Kerry Firestone
Okay, Julia, thanks. You'll let us know any updates that come out of that courtroom. Kerry Smatter to you as a shareholder of Metta.
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Liz Thomas
Well, of course, all of these types of inquiries are important. Is anything going to come of this? Probably not in the near term. Zuckerberg seems to want to come to some agreement with his critics that he's monitoring and cares about social media and its influence on young people. And yeah, this definitely matters. Does it matter to the stock price? I would say not particularly. The stock has been hit. This stock is one of the stocks that has come down significantly over the last few months.
- [16:55]
Kerry Firestone
It's always hard to. It's hard to talk about sort of societal issues and then try and turn to the shareholder perspective and think one impacts the other. And in many cases it just doesn't.
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Liz Thomas
It's just a disconnect because the investing public is not the same as the public that is at outside side that courthouse. Will it change anything for matter? I would say incrementally, but not much.
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Kerry Firestone
Let's talk about Palo Alto. Can we take a look at that stock, guys? Because it's going to be one of the worst off performers today in a market that, as we said, technology's actually been doing okay. Morgan Stanley cuts the target to 23. They had 245. Their guidance fell short. Jason, I'll send it over to you. You know, cyber stocks have been hit pretty, pretty hard along with the broader software sell off. This name's down 16 and a half percent year to date. You know, I had a big back and forth on closing bell yesterday with Dan Ives who was, you know, defending it from here to eternity into the number.
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Jason Snipe
Yeah.
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Kerry Firestone
And you know, here's the stock reaction. What do I do with that?
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Jason Snipe
Yeah, I mean it's significant. It's off 6%. Obviously. The stock is down 16% year to date, hasn't traded great over the last year, you know, is beat on the top and the bottom. RPO is up 23%. RR was up 33%. I think the story for me as it relates to a lot of the cybers and particularly Palo Alto, you know, they just closed acquisition of Cyberark. Chronosphere obviously is now in the camp as well, you know, so last year was a little bit of the M and A activity, you know, the spending that they were doing. And this year it's kind of the story and cannibalizing software names. And I think what the CEO did very well in explaining AI is going to serve as a catalyst for these names. As you look at the, the, the difficulty and the terrible cyber attacks that firms are going to be potentially dealing with in the future, you're going to need a player like Palo Alto and many of the others as well. CrowdStrike, Zscalers, a lot of great names in the space. So I completely agree with the CEO here in saying that AI is going to serve as a catalyst for a lot of these things. I think the market is kind of misunderstanding what's going on here.
- [19:13]
Kerry Firestone
This cyber sell off more broadly overdone.
- [19:15]
Joe Terranovic
I'm not sure about that. And I think sometimes there's a dislocation between what the fundamental story is, which can be perceived to be excellent. In reality, it might be excellent. And then measuring where people are in terms of sentiment positioning. I don't know. I haven't heard anyone really come on the network universally and say we want to sell cybersecurity. It seems as though it has the enduring theme.
- [19:39]
Kerry Firestone
I hear from everybody, including everybody on.
- [19:42]
Joe Terranovic
This desk, that's where I'm going with it. So if you think about the factor of sentiment positioning, take a look at Palo Alto. The Stock currently trades $150 $54. The 12 month price target is to 10,77% of the analyst community still have a buy rating on it. So I just think there is this degree of bullishness that exists both in sentiment and positioning. And unfortunately people are staying anchored to that when price is actually telling a much different story.
- [20:12]
Kerry Firestone
What about cadence? You mentioned it earlier. We haven't hit it. Let's take a Look at that one. Because they beat. And the stock was performing well as it still is up 9%. Rosenblatt upgrades it to a buy. 360 is the number they take it to Morgan Stanley comes down a little bit on their target to 370. So it was 385. So they just temper their enthusiasm. Just slightly B of A reiterates it. A buy today protected against a disruption. Is that the biggest takeaway of all? It is what they say, the narrative protected against AI disruption. Because that is what we're trying as an investor class to figure out who is has some level of immunity to being disintermediated to a large degree.
- [20:54]
Joe Terranovic
I also think it's about can I be additive to your business model? In the case of Cadence, in fact it is. I think they spoke eloquently with confidence about an environment in which that in fact can ultimately happen. If you think of the complexity as it relates to software and the production of semiconductor chips and the relationship there, the disruption element is probably not as strong as it is in other areas like an Adobe or potentially a Salesforce. So it was an excellent quarter. EPS came in 199 versus 191. Revenue came in 1.44 billion. The guidance was higher. But I think it was the elegance of the conference call and the way they spoke about the environment and how disruption really, yes, could happen, but also look at how it could be additive.
- [21:48]
Kerry Firestone
All right, so a big earnings mover is. Is Cadence. Here's a question for you, Liz. Are we, are we appreciating enough how good earnings season has been? Tony Pescarello, Goldman has a note out today. Talks about profit margins hitting all time highs while obscured, he says, by quote, iffy price action and a ton of local noise. The Q4 reporting period has been very impressive at its highest level. A fifth consecutive quarter of double digit earnings growth is set to be recorded. To my eye, what stood out the most was an upward shift in S and P corporate profit margins which rose to a fresh all time high. Yes, it's backward looking and the stock market is busy processing what the future may or may not look like. I'd argue that margin expansion is an important signpost for equities over the longer horizon. I think it's a good note to jump off and talk about how strong earnings season has been.
- [22:43]
Scott Wapner
Yes, and even to follow up on some of the software stuff. Revisions for Software are up 10% since fall, yet the prices are getting hit. So that's another mismatch between what the Fundamental expectations are and what's going on in the market itself. But broadly as investors, are we underappreciating how good earnings have been? Absolutely we are. And double digit earnings growth, not to mention revenue growth at 9%. And then if you look ahead calendar year 2026, the expectation is 14% earnings growth and revenue of 7 and a half percent. So I think that if the market can get its arms around the idea that earnings have come, continue to stay stable as profit margins are rising, you rarely see the stock market really stay in correction or even bear market territory. So with profit margins expanding the way they are expected still to be led by technology and then by materials, which is doing well this year, I think the cyclical story remains intact, I think the technology story remains intact, but maybe isn't as much of a shining star return wise as it has been.
- [23:43]
Kerry Firestone
Makes sense. Then why Joe, according to bank of America's equity client flow trends, do you have near record outflows in this stock market? Net sellers of US equities last week near historic single stock outflows, the third highest in their data's history, which goes back to 2008. So it's not forever, but 2008 is what it is. Clients sold stocks in nine of 11 sectors led by financials. Sixth consecutive week of outflows. Staples, second largest ever. Industrials Tech Discretionary also saw large outflows. Earnings are so good. Liz paints a picture that many would totally agree with.
- [24:23]
Joe Terranovic
Yes.
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Kerry Firestone
Why are people selling stocks?
- [24:25]
Joe Terranovic
And in fact if profit margins are strong, it, it helps the narrative surrounding tariffs not being inflationary because those corporations are going to absorb the corporate cost of the tariff in the actual profit margin. I'm surprised by that report. Quite candidly, I think more, I would say the selling that I've witnessed is more institutional in its nature. We spoke.
- [24:49]
Kerry Firestone
They are talking about institutionals. It's B of a client. So I mean they're talking about.
- [24:52]
Joe Terranovic
Well, they're clients.
- [24:53]
Kerry Firestone
They're talking about institutional flows, not retail.
- [24:55]
Joe Terranovic
Okay, because let's make that clear because yes, we talked yesterday about the fact that retail was actually buying.
- [25:01]
Kerry Firestone
That's true. That's why I said tell.
- [25:03]
Joe Terranovic
I think, I think that you're seeing more institutional engagements on a faster. Well, BBA has retail clients.
- [25:11]
Kerry Firestone
I know, but I think we know we're talking about. So carry on please.
- [25:14]
Joe Terranovic
No, we don't.
- [25:14]
Kerry Firestone
Let's go.
- [25:15]
Joe Terranovic
Anyway, the institutional holding, as I said yesterday, is becoming smaller and smaller. Smaller. The volatility in the market this year on an individual basis is far more extreme than than it's been the last couple of years. So I think that's something that can remain a constant theme for 2026 where you see a lot of these reports, where institutions are selling and retail is buying the dip.
- [25:40]
Kerry Firestone
That's why we'll make the distinction. Nicely done. All right, speaking of buying and selling, we are going to take a break and now we're going to come back and Carrie's got 1, 2, 3, 4, 5, 5, 4 or 5 moves. Bryn's joining next with a move. We'll do all of it next.
- [26:08]
Scott Wapner
Hey there. I'm Kat. I'm a college athlete. I was diagnosed with ankylosing spondylitis which.
- [26:14]
Kerry Firestone
Caused back pain and stiffness.
- [26:16]
Scott Wapner
Every day with Cosentyx I'm able to stay active.
- [26:21]
Joe Terranovic
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- [27:03]
Kerry Firestone
Ask a rheumatologist about Cosentyx.
- [27:06]
Joe Terranovic
Before we had AT and T Business Wireless coverage, our delivery GPS wasn't the most reliable.
- [27:12]
Jason Snipe
Once our driver had to do a 14 point turn to get back on route. A 14 point turn.
- [27:18]
Joe Terranovic
An influencer even live streamed the whole thing.
- [27:21]
Scott Wapner
Not good for business.
- [27:22]
Jason Snipe
Now with AT&T business Wireless, routes are.
- [27:25]
Joe Terranovic
Updating on the fly and deliveries are on time. And the Influencer did get us 53 new followers though. AT&T business Wireless Connecting changes everything.
- [27:37]
Scott Wapner
What do the steam engine, electricity and AI have in common? They don't just change how we work, they transform entire economies. Where the Internet Lives is an award winning podcast from Google about the unseen world of data centers. This season we're going inside the AI revolution. From farmers using AI to analyze soil data to researchers discovering new medicines, a new era of AI innovation is here. Listen to where the Internet lives wherever you get your podcasts.
- [28:21]
Kerry Firestone
All right, we have a Lot to move, a lot of moves. Excuse me, to get to. I want to start with one from Bryn Talkington who joins us now. So we have talked nice to see you repeatedly about the from sector to sector to sector to sector that these AI fears have, you know, taken down. Real estate brokers, etc. Are caught up in that some degree. You bought CBRE, which Josh Brown did the same. In the midst of all of that upset, real estate hit a 52 week high today. Tell me more about this name and why for you.
- [28:58]
Scott Wapner
For last week. So dumb. And these single stock moves are so extreme and, and we see what's happening. The CTAs are coming in shorting these names. It's so ridiculous. And what's ironic is CBRE had earnings last week and they crushed it. It's like all time earnings. They were pretty aggressive on their earnings for 2026 up mid teens. And actually the CEO talked about Scott, how great they are already getting about 25% cost savings from research from AI. And over the next two, two years their professionals are going to be able to do things they never could have done before, all because of AI. And so if you think about a company that's just embedded in the economy, this is the exact type of company that will benefit from being able to get research so much faster, so much cheaper. So I just took the opportunity to go against the algorithmic traders who should not have shorted the stock. And I just think this is a good example for investors. Listen to these earnings reports because there's a lot of opportunity to be found when these CTAs short these stocks for really dumb reasons.
- [30:02]
Kerry Firestone
Are you, are you looking at other things that you deem to be down for quote unquote dumb reasons in this whole software upset?
- [30:10]
Scott Wapner
I mean I've talked about Blue Owls ETF many times. I think that also makes no sense. You're issuing debt to billion dollar revenue, 300 EBITDA per year companies and you're not looking at the terminal value. These companies don't need to go public. And so I just think I like the debt side. On the software side I think you know, service now we're seeing obviously all of those insiders buying their shares. I think software as those companies are more complicated. But to me I think the otf, the CBRE just continue to take advantage and be on the other side of those, those CTAs when they're shorting these single stock names because it does get just so extreme and they're very overdone.
- [30:51]
Kerry Firestone
Let me Ask you real quick before I let you go, since you're an Nvidia shareholder. And we discussed as our lead today whether, in fact, this report, one week from today, just holds the key to this, this market right now, especially what's been a very fragile tech space.
- [31:07]
Scott Wapner
I don't think it does. I mean, Jensen has been out and about. He's, you know, so talkative. You had him on your show, what, just two weeks ago? So I think we know what he's going to say. I think the market right now has just moved on to the memory space, and that's where you're seeing this big energy in this big flow of funds. I mean, ultimately, what we know, Scott, is Nvidia gets cheaper and cheaper every quarter because they continue to be at the epicenter. But the market right now does not want this stock to give over 200. I don't think this earnings report is going to get it there.
- [31:37]
Kerry Firestone
I don't know. I mean, yes, we know what he's going to say, and we likely know what he's going to guide to, but sometimes we just need our security blanket. I mean, you know, we get a little upset every now and again. We need the market security blanket. And in some respects, maybe he and it being in video are just that. Bryn, thank you. Appreciate you coming on. We'll see you soon. Brent, talking to. Let's carry. Get to your moves because you have several. Let's start with American Express. Why did you trim some of that?
- [32:03]
Liz Thomas
It was a big position. We've owned it for years. The stock has gone from 11 times earnings where we bought it, bought the large position to 19 times now, and we just decided to move some of that into other names, that's all.
- [32:17]
Kerry Firestone
Okay, you bought more S and P Global. Is that one of the names? You take some of the profits, you buy some more of that.
- [32:23]
Liz Thomas
Yes, exactly. I mean, S and P down 25% with this wave of hitting software companies. And this can't be totally disruptive. They. They are the rating giant, particularly in fixed income, and that's where we're having a lot of debt selling right now. So their business is good and will improve. And we thought it was really an attractive price here.
- [32:44]
Kerry Firestone
Same as, like, theory behind what, Brenda?
- [32:46]
Liz Thomas
Yeah, exactly.
- [32:47]
Kerry Firestone
Right. I mean, you look, you look at opportunities.
- [32:50]
Joe Terranovic
Okay, well, you feel good about Moody's today because Moody's reported and they confirmed exactly what you're talking.
- [32:55]
Liz Thomas
Exactly right.
- [32:56]
Kerry Firestone
So you bought American Waterworks. That's a new position.
- [32:59]
Liz Thomas
Yes, yes, it's new, but it's A name we've owned in the past. And it's a utility, it's a water utility. It went as high as 40 times earnings on the wave of, of sustainability. And as a water utility, it's the largest publicly traded water utility. And they've been expanding and we believe that they can grow their earnings 11% roughly per year. They've and a half percent dividend yield and the stocks come down. So we thought it was an attractive entry.
- [33:26]
Kerry Firestone
Again, a new name for you and I think for the show for that matter. Flow, Serve.
- [33:31]
Liz Thomas
Yes.
- [33:31]
Kerry Firestone
New buy.
- [33:31]
Liz Thomas
Yes.
- [33:32]
Kerry Firestone
So, so record high today, by the way, as you look at the chart.
- [33:35]
Liz Thomas
Exactly. Well, we think there's a lot more opportunity. They're in the business of pumps, valves and seals. They're an engineering company. Aftermarket, they provide to the chemical industry, oil and gas, power generation. I think it fits with the whole theme of moving outside of just technology, although they serve tech businesses. And in fact, while it's up high, it sells for under a market multiple.
- [34:00]
Kerry Firestone
Okay, thank you. Let's get the headlines with Pippa Stevens. Hi, Pippa.
- [34:03]
Scott Wapner
Hey, Scott. Billionaire Les Wexner is denying any wrongdoing in his relationship with a late convicted sex offender, Jeffrey Epstein. In a statement released this morning before a deposition with the House Oversight Committee, the former owner of Victoria's Secret and other brands said he is eager to set the record straight. He claims he was conned by Epstein and never witnessed nor had knowledge of his criminal activity. Epstein victim Virginia Giuffre previously claimed Wexner is one of the men Epstein trafficked her to. Crews in California are searching for nine backcountry skiers who remain missing a day after an avalanche near Lake Tahoe. Six others have already been rescued. The group was on the last day of a three day trip in a popular skiing area in the Sierra Nevada mountains as a massive winter storm hit the West Coast. And Ukraine officials will boycott the Milano Cortina Paralympics next month in protest of a decision allowing a handful of Russian and Belarusian athletes to compete under their flags. Ukraine's athletes will still take part. Scott, back deal.
- [35:05]
Kerry Firestone
All right, Pippa, thank you for that. Pippa Stevens. Coming up, ETF Edge how you can keep the income flowing during market pullbacks. Don Chu has some answers in today's ETF Edge, which is next.
- [35:23]
Joe Terranovic
Comcast business helps retailers become seamlessly restocking frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning data, managing healthcare facilities that we all depend on.
- [35:40]
Kerry Firestone
With leading networking and connectivity, advanced cybersecurity and expert partnership.
- [35:44]
Joe Terranovic
Comcast Business is powering the engine of modern business powering possibilities Restriction Supply Psoriatic.
- [35:52]
Scott Wapner
Arthritis Symptoms can be unpredictable.
- [35:55]
Joe Terranovic
I had joint pain and I couldn't move like I used to. I needed relief.
- [36:01]
Liz Thomas
I got Cosentyx.
- [36:03]
Joe Terranovic
It helped me move better. Cosentyx Secukinumab is prescribed for people 2 years of age and older with active psoriatic arthritis. Don't use if you're allergic to Cosentyx before starting. Get checked for tuberculosis. An increased risk of infections and lowered ability to fight them may occur like tuberculosis or other serious bacterial, fungal or viral infections. Some were fatal. Tell your doctor if you have an infection or symptoms like fevers, sweatshirts, chills, muscle aches or cough, had a vaccine or planned to, or if inflammatory bowel disease symptoms develop or worsen, serious allergic reactions and severe eczema like skin reactions may occur. Learn more at 1-844-COSENTIX or cosentyx.com. Ask your dermatologist about Cosentyx.
- [36:52]
Kerry Firestone
Shipping, Billing, admin, Payroll, marketing.
- [36:55]
Scott Wapner
You're managing all the things, so why waste time sending important documents the old fashioned way? Mail and ship when you want how you want with stamps.com print postage on demand 24. 7 and schedule pickups from your office or home. Save up to 90% with automated rate shopping. That's why over 1 million small businesses trust stamps.com go to stamps.com and use code podcast to try stamps.com risk free for 60 days.
- [37:26]
Kerry Firestone
And welcome back to the Halftime Report.
- [37:27]
Scott Wapner
I'm Dominic Hsu with your ETF edge today.
- [37:30]
Kerry Firestone
For many ETF investors, consistent income sometimes outweighs chasing swing for the fence gains. But what are the best tools to keep income coming in, especially during times.
- [37:40]
Scott Wapner
Of volatility like we're seeing right now.
- [37:43]
Kerry Firestone
Joining me now is Christian Magoon, the CEO at Amplify ETFs, which runs one.
- [37:47]
Scott Wapner
Of the largest of these types of income funds.
- [37:50]
Kerry Firestone
Christian, thanks for being here with us. Let's talk about what types of income instruments we are looking at for ETFs these days.
- [37:56]
Scott Wapner
It used to just be about owning.
- [37:58]
Kerry Firestone
Consumer staples stocks and utility stocks for those income streams, but it's gotten a lot more sophisticated in recent years.
- [38:05]
Joe Terranovic
That's right Dom. Really a mix of high quality US equities we believe makes a lot of sense that are paying dividends. And then you can have an active managed covered call approach where you're tactically writing covered calls so you have two sources of income Dividend income as well as option income. The great news about that is when you have two engines, you have more versatility during tough markets. Also, there's some preferential tax treatment oftentimes on option income because that usually comes in as return of capital which can reduce your upfront tax basis by reducing your long term cost basis in the etf.
- [38:46]
Kerry Firestone
Now dividends are part of that story, as are the income streams from options. Where exactly are you seeing more interest these days? We talk a lot about international and global equities.
- [38:55]
Scott Wapner
Are there still dividend and income opportunities via options with those international stocks like.
- [39:00]
Kerry Firestone
There are here in the U.S. yeah, there sure are.
- [39:03]
Joe Terranovic
But you have to take a close look at those international stocks. We have a IDVO ETF that looks at high quality international stocks that are dividend payers and then tactically writes covered calls for a 6% yield and that allows you to still participate in the upside. Last year that fund was up 41%. This year it's up 12% year to.
- [39:26]
Kerry Firestone
Date, five star rated. So you have to have I think.
- [39:29]
Joe Terranovic
A very close security selection process and a tactical approach to writing covered calls. There's and that's what we do with idevo, part of our yield Smart ETF lineup.
- [39:41]
Kerry Firestone
All right, Christian Magoon, thank you very much. We are going to continue this conversation over at ETF edge.cnbc.com Christian is going.
- [39:49]
Scott Wapner
To be joined by Nick Ryder, the.
- [39:50]
Kerry Firestone
Chief investment officer over at Cashmere Capital.
- [39:53]
Scott Wapner
We'll have a bigger conversation about income.
- [39:55]
Kerry Firestone
And its role, Scott, in a portfolio these days. I'll send things back over to you. All right, good stuff, Dom. Thank you for that. That is Dom Chu. Coming up next up, our top calls of the day. A retailer on a record run just got added to a best ideas list. Joe owns it. We reveal it next. All right, let's do some calls of the day. Interesting1 on First Solar. Joe. So it's reiterated outperform at Baird though they're cautious into earnings. So reconcile that.
- [40:31]
Joe Terranovic
I agree with the cautiousness more than I agree with the outperform Stock is down 10% since December. They're up against a really tough comp here. In the upcoming quarter you're probably going to see single digit at best revenue growth. And I think the supply disruptions in 26 actually can be a challenge.
- [40:50]
Kerry Firestone
All right, Jason. Abbvie Piper likes it a little bit more or after the recent results they bumped the target by 10 more dollars to 99 from 289.
- [41:01]
Jason Snipe
Yeah, no, I continue to like this stock Obviously it's roughly flat this year up around 15 over the last year. Skyrizi and Rimbo continue to be the stalwarts in terms of outpacing the growth from Humira. And I think they got some stuff cooking in terms of their pipeline. So I continue to like this stock and stay longer.
- [41:18]
Kerry Firestone
They also make a call, Joe Piper does on Amgen. They bumped the target to 432 from 381. Let's look at the chart.
- [41:28]
Joe Terranovic
378 right now. Last couple of days I think it went to a new all time high. Right Carrie?
- [41:32]
Kerry Firestone
Yep.
- [41:33]
Joe Terranovic
So this is one of the leaders. We've had a little bit of a rotation in the biotech trade. At the end of last year it was about small caps, it was the xpi. Now it is about large cap biotech and Amgen get you directly the exposure.
- [41:46]
Kerry Firestone
You need that you loved this trade. Speaking of the broader biotech trade. And then if I recall within the last, I don't know, handful of weeks you sold out of the ibb, right?
- [41:54]
Joe Terranovic
No, it didn't sell. XPI didn't sell out of the XBI completely. I did cut the position series of incremental buys over the course of last several months.
- [42:02]
Kerry Firestone
Thank you for, for correcting me on that. Absolutely. Ulta, which made your day. Look at a big smile on his face. Look at him, ladies and gentlemen.
- [42:09]
Joe Terranovic
I mean security blanket.
- [42:10]
Kerry Firestone
Let's get a shot of him. Look at that. Pearly whites.
- [42:15]
Jason Snipe
All right.
- [42:16]
Kerry Firestone
Ulta, API top ideas list record high today. You take that one too.
- [42:20]
Joe Terranovic
Can that be disrupted? I don't think so by AI. I have a 17 year old daughter. I know what's going on in this country right now. The younger generation is focused on beauty in a way that none of us ever were. Playing to the bottom line.
- [42:35]
Kerry Firestone
Definitely. Speak for yourself.
- [42:37]
Joe Terranovic
There's playing to the bottom line. I gave this as a final trade yesterday and on a valuation basis you're not talking about an unreasonable P for this company.
- [42:49]
Kerry Firestone
Okay. Costco gets off of Oppie's top idea list. Jason snipe.
- [42:55]
Jason Snipe
Yeah, listen. Costco had a rough year last year in terms of trading is down around 4% for the over the last year, but up 16% this year as I think it kind of runs into a little bit of what's been going on with the Staples trade which has been very solid. So they've managed inflationary calls. I love the Runway with the, with the membership business. So I continue to like this one long term.
- [43:15]
Kerry Firestone
All right, we, we'll Take a quick break. Mike Santos on the other side. All right, senior markets commentator, overtime co anchor Michael Santoli just joins us now. It's good to see you. You think it's too soon to ask whether this is in fact the beginning of tech's turnaround?
- [43:36]
Joe Terranovic
I don't know if it's too soon to ask. I think it obviously has plenty to prove to actually have that be the case. Makes sense though, that the market would be ready for the heavyweights of tech, which now have had their valuations compressed, have been out of favor for a few months to do a little bit of the work here in keeping the asset S and P in this range. I do think, you know, 26 hours ago, buyers came in and defended the lower end of this 3% range we've been in for months. And I think that emboldened some of the action today. Clearly the hardware side of tech is working. Amazon went down enough. You know, you sort of see the makings of a little bit of a counter trend trade, if nothing else with software firming. But I also think even though this unsettled period in the market is not really, really been about the macro, it was helped by the fact that you had across the board positive economic data points this morning from industrial production, durable goods, some of the housing numbers. So I think that's all working the same direction. We're still kind of stuck here. Even with the majority of stocks up for the year. This is the like 40% of all days this year. We've crossed 6900 on the S and P. We did it again this morning. We're sitting right there.
- [44:44]
Kerry Firestone
We get unstuck with Nvidia in a week and one.
- [44:47]
Joe Terranovic
You know, it's possible, you know, I'd love to say yes, that that's kind of the clearing event historically. Sometimes it has been, sometimes it hasn't. If Nvidia vaults above 195 and all of a sudden reasserts an uptrend, obviously that's going to help. I don't know that it's the all market bellwether that we might hope that it is. But certainly everyone's fixated on it.
- [45:09]
Kerry Firestone
That's for sure. That's for sure. All right, I'll see. See you at three. Michael, thank you. It's Mike Zentoli. We'll do finals after this break.
- [45:20]
Joe Terranovic
Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast now.
- [45:34]
Kerry Firestone
All right, welcome back. We'd love to bring you all Some notes that drop either during the show, maybe right before the show. We got one today from Jonathan Krinsky I thought was pretty interesting and why maybe it is hard as Liz was pointing out some of the, you know, all the good things happening, you know, behind the scenes that it's hard to get really negative on this market when as Jonathan points out consumer facing groups are remaining resilient. Discretionary nearing a breakout. He suggests restaurants continuing to work higher, casinos breaking a multi month downtrend and airlines taking flight as well. He's going to join me on three o' clock on the closing bell today to suss this out a little bit more. But, but it's interesting. What, what do you make of that?
- [46:14]
Joe Terranovic
Pulte Group, Darden Restaurants, Williams Sonoma, Ulta Beauty, Royal Caribbean, Yum China. Our top holdings, consumer discretionary all up 15% or more for the year.
- [46:23]
Kerry Firestone
What do you think?
- [46:24]
Scott Wapner
Consumer confidence has taken a hit over recent months and I think it probably does bounce soon, especially if labor data kind of stabilizes out here and discretionary stocks could really benefit from that.
- [46:34]
Kerry Firestone
Yeah, he says, I mean as long as as we're saying as long as these groups sort of remain in this mode, it's difficult to get too bearish on the medium term. That again, Jonathan Krinski BTIG joins me three o' clock closing bell along with Tom Lee, Cameron Dawson, Stephanie Link. So we got a lot to kick around. Jason Snipe, give me a final trade like Chevron here.
- [46:51]
Jason Snipe
They're committed to shareholder value, dividends and buybacks. I like this one.
- [46:54]
Kerry Firestone
Okay.
- [46:55]
Scott Wapner
Liz Thomas Financials I think they are ready to come back. They have had a disappointing year so far but cyclical, cyclicality will come back into the fore.
- [47:04]
Kerry Firestone
All right.
- [47:05]
Liz Thomas
Care Amazon talked about it. Stocks trading at 22 times next year's earnings below the market. It's got a lot of growth.
- [47:12]
Kerry Firestone
Thank you.
- [47:13]
Joe Terranovic
The Joe T. Baker Hughes crude oil above $65.
- [47:18]
Kerry Firestone
You threatened to pick the Joe T. But you did. You did.
- [47:20]
Joe Terranovic
BAKER Hughes in three.
- [47:24]
Kerry Firestone
You've been listening to listen to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [47:36]
Scott Wapner
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 halftimereportdisclaimer.
- [48:11]
Joe Terranovic
Taxes was feeling.
- [48:13]
Jason Snipe
Unwelcome.
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Joe Terranovic
And now Taxes is an open door, literally, to new TurboTax stores. Meet our experts in person.
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Scott Wapner
Hi, welcome in.
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Joe Terranovic
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