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Halftime Report
Can Stocks Rally to Year-End? 12/3/25
00:44:27
Dominic Chu and the Investment Committee debate the Cyber sector after Bryn sells Salesforce. Plus, the rest of the Committee share their latest portfolio moves. And later, the desk shares their Holiday Shopping List for stocks heading into 2026. Investment Committee Disclosures
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I'm Scott Wapner and you're listening to.
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CNBC's Halftime Report, the podcast the most.
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Profitable hour of the trading day.
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All right, thanks very much, Carl. Thank you, Carl. Thank you, Sarah. Welcome to the Halftime Report. I am Dominic Chewing for Scott Wapner. Today, front and center this hour, the setup for stocks into the year end. The investment committee is standing by with their playbooks. So joining me for the hour are Joe Terranova, Stephanie Link, Jim Lebenthal and Bryn Talkington. So let's get a quick check on the markets right now. As things stand, it's a relatively calm one. The Dow is up about 1/2 of 1% to 47,686. The S&P 500 holding onto that 6800 level, 6836, the last trade there, just about 1.10of 1% gain there. And the NASDAQ composite just about flat drifting between marginal gains and losses at this point. The Russell 2000 small cap index up a blistering 1% in this market here. We're going to have more on that in just a moment. But first, we're going to kick things off with a big committee move. This is Brin throwing in the towel, so to speak, on Salesforce ahead of the earnings report after the closing bell today. You're not even going to wait to see what happens. Bren, why are you getting out?
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E
Yeah, well, so I mentioned this on Monday. I've been in this stock for a minute, probably a quarter and a half, and I feel like when the market goes up, it doesn't go up. When the market goes down, it goes down slightly. I feel they're going to have very solid numbers, good free cash flow. We'll hear about some of their new customers. But ultimately, what makes a stock go higher, there's more buyers than sellers. And I feel that Salesforce right now from a stock perspective is stuck in the mud. And so I just don't think that we're going to hear tonight anything revelatory that's happening. I just feel like it's a moment in time and people are not wanting to put more capital in this name. So I don't want to sit through earnings in case the market has a negative feedback, which it's done on a bunch of stocks that actually had good numbers. So I just, I wanted to sell, sell before the earnings call tonight.
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D
All right, Britain, So an interesting move here to not wait for any kind of validation one way or the other. I mean, you could be right about this or you could be wrong about it. But Jim labenthal, maybe I'll go to you about this first. If you were an investor like Brin, Brin, we just heard got the sales call in there for Salesforce. What exactly would make you as an investor want to get out ahead of understanding? Maybe what could be a catalyzing factor to the upside for a stock like Salesforce, even though it has underperformed? Maybe it gets a pop because something does get said that reinforces that positive narrative.
- [03:42]
B
Well, Dom, first off, let me say I completely understand Brin's point of view. I really do. I mean, it's like why fight this hard for a stock? And as much as I'm asking that rhetorically, I'm asking it myself with a very similar stock, Adobe, which we'll report next week. But whatever Salesforce does in the after hours and tomorrow will probably be echoed by Adobe as well. And basically what we have here, and I'm staying with it for now, and the reason that I'm doing it is because there is a strong disconnect between the operational results at Adobe and how the share price responds. Now, I think Bryn phrased it excellently. You know, more sellers than buyers. That's been the case with both of these stocks and many in the software space. But what I have found, just being a long term investor over periods of time, there are periods of times where the fundamentals disconnect from the share price. And if you believe the fundamentals are going to stay intact, which I do, then you'd want to be there for the rebound. I don't have a strong opinion on what Salesforce is going to do. Tonight, because I don't know the name as well as Adobe, but they're both facing the same seemingly existential threat from artificial intelligence, both in terms of usurping the business and reducing the number of seats that actually use those products. But to date, it just hasn't happened. It shows up that the results are better than expected. It's what I expect will be in both names.
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D
For in. What do you mean? How do you respond? You just heard Jim's thought about this. Exactly. Does he have it right? I guess is the point.
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E
Yeah, Wayne, I think, I think we're both right here. I think he's frustrated with Adobe for similar reasons. But I will say one thing. On Salesforce, what I thought was peculiar, so I could be wrong, But I believe OpenAI powers Einstein. And so I thought that was very peculiar that Marc Benioff goes and tweets about Gemini when I believe Salesforce works with OpenAI. So to me I felt like that was bizarre and maybe they shifted that. But I know originally Einstein, I believe was powered by like the ChatGPT version. And so to me that was also peculiar. And another sign of like, well, aren't you supporting the underlying technology that's supposed to be working using all these agents? I just think at the end of the day, what's giving me direction is the stock price. I don't need to wait to get confirmation. The market is telling me it's not doing anything. By the way, I hope they have great numbers and it's up 20%. That's great. But I mean, to me the stock price is telling me what's happening.
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B
I agree with you. We both may be right and you haven't been in it for long, so I actually applaud you for getting out and not being stuck with it. I will say for somebody like me with Adobe, who is in it and staying in it, you're reminded of what happened to Salesforce in 2022 and then the rebound into 2023, which was pretty gigantic. And this isn't at Brin. This is just for everybody who's watching that sometimes we stick with these stocks where the fundamentals are better than the share price would otherwise say, because the rebound is imminent.
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D
All right, Joe, what do you think?
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A
Based on the strategy that I utilize to take positions in the market, I'm on Team Brin for this one. While I'm speaking, if you could show up a 52 week chart of the IGV, which is software, you're going to see it's basically flat, it's unchanged over the last 52 weeks. The other side of that, pull up the SMH. That's up probably somewhere, if I'm correct, around 45 to 46%. So yes, we own software names in the ETF. We've been reducing our holdings throughout 2025. The remaining names that we have, they don't look good except maybe a Palantir, which is pulled back. We have workday, we have ServiceNow, we have Fortinet, we have DocuSign. They're all underperforming. You could cite a variety of different reasons. There was clearly coming into the second half of the year, questions surrounding software valuations. Did software valuations reach an extreme? And secondarily, there is the constant chatter from the Trump administration surrounding restrictions on exports of products, technology products that are using U.S. software. And that has had a negative effect on all of these software names in particular in the current quarter.
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D
It's interesting as well because you can use Momentum as a proxy for sentiment and that kind of makes the point that you guys, you and Bryn are both making about this. Speaking of one of those names, that's Momentum Tide, it's another cloud name. And Stephanie, I'm going to go to you for this one because Snowflake is also on deck coming up here. So let's talk a little bit about the setup here. We're up 1 1/2% on the shares going into this particular print so far today. What is there to like or not like or anticipate from Snowflake?
- [08:14]
C
Yeah, and I would just start by saying this company has growth, real growth, product revenue growth of 29 to 30%. They probably have to beat it for the stock to do well because the stock's up 70% on the year. But they're in the right part of, of software. Whereas I would say that Salesforce and Adobe are expensive for the growth that you're getting. So Snowflake is expensive, don't get me wrong and I'm nervous about it. However, as I mentioned, they not only have the growth, but they also have the operating margin opportunity. Last year at this time it was low single digits operating margins. They could do 9, 10% operating margins. This quarter I think the whisper might even be a little bit higher. But I see a trajectory of them getting to mid teens. And so I think you're going to, if you have the top line and you got the margin, you're going to get the operating leverage on the bottom line. All of this being said, they actually Pre announced on October 27th, so I really don't think they're going to have that much in terms of new news. But to the extent that they could surprise us on the margin side or surprise us on the product revenue side, I'll feel good about it. But this is one name that I think is a very big beneficiary from all of the data that has been created and needs to be cleaned for the companies in data centers and in AI to work.
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B
You've done a great job with Snowflake, hands down.
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C
Not easy.
- [09:31]
B
Well, that's exactly what I wanted to say is because there was a point in time, basically a three year period where it was just stuck and you stuck with it because you had the conviction, you did the work, you did the analysis. Frankly, that's what I see in Adobe. I may well be wrong. Everybody listening. I'm not right all the time. We all know that this business of predicting the future has error in it. All that said, you know, Adobe at 15 times earnings, it's got a 14% projected growth rate which has exceeded over the past few years. Buying back shares, very clean balance sheet. I'm comfortable with the value.
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C
It's cheaper than Salesforce and it has a little bit better growth. But I mean, I just think that there's other technology names in general that are more attractive, that have better growth.
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D
So speaking of another one of those attractive technology names that has seen its fair share of, of lumps, bumps and even rallies has been in cyber in particular. We're talking about CrowdStrike. CrowdStrike, all right. And on CrowdStrike I want to show the shares right now because what we are seeing, at least in reaction to the report, is what happened with earnings and its projections. This is a stock that's down fractionally. When I was on Worldwide Exchange earlier this morning, it was down maybe 1 to 2%. This was a trifecta. Beat on earnings, beat on revenue. Guidance is better than expected and raised.
- [10:48]
F
Why?
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D
Because it was already up 25% in three months. Again, what exactly is it about CrowdStrike, Stephanie? Maybe that makes this particular stock one that is worth either maintaining or initiating any kind of a position. If it pulls back even more markedly.
- [11:03]
C
I don't think I would initiate a position down. With the stock up 50%, the expectations are very high. It trades at about 30 times price to sales. If you want to be in cybersecurity, you could certainly own this one. They're the best. They are absolutely the best. But I think they're priced to be the best, as they should. They have been delivering after that horrible snafu that they had with Microsoft a year and a half ago, they've really fixed, they've great management. The guidance for fiscal 27 is for net new annualized recurring revenue to be 20%, operating margins to be about 24% free cash flow margins to be 30. That is best in show, best in class. The one I own bigger and the one I have been buying and I recommend to buy here is Palo Alto because that Stock is only up 3% year to date. And I think a lot of that has to do with Joe and I've talked about it because we both own it because they've done two acquisitions almost valued at $30 billion in four months time. And I think people are nervous about the integration risk. If there's any management that can get this thing done, it's this management team. And in the meantime they, they have a whole slew of products. And the reason why we're seeing M and A and what I think we're going to do and we're going to see over the next several years the M and A is going to Happen. We have 4,000 companies in cybersecurity, both public and private. And I think the bigger companies are going to get bigger and bigger. This is what Palo Alto is doing. They're doing it because they don't offer everything for their clients and their clients want them to. So you talk to CTOs and they'll say we want to use 4, 5, 6 vendors, not 20 vendors. Well, if that's the case, you're going to see the big five continuing to make acquisitions and I think that's positive for the long term.
- [12:41]
D
All right Joe, you either personally and or the Jyoti etf. Yes. Own both of those names in Palo Alto Networks and in CrowdStrike. So take us through what your thesis is for both of them and why you want to stay long.
- [12:55]
A
The investments thesis surrounding cybersecurity has been a very strong one one for the last several years. And I'll also mention that we own Okta and Fortinet and I'm not happy owning either. And I think that in the case of Octo, which is actually recovering today, I still don't think that it is establishing itself in terms of technical and fundamental momentum and capturing market share. To me it's about Palo Alto and it's about CrowdStrike. And Steph is spot on the street is concerned that Palo Alto is becoming a serial of acquirer. I'm not necessarily sure in cybersecurity that's such a bad thing because the deals that they have done with Cyber Rock and Chronosphere are actually good deals. I think CrowdStrike pulled back already because of that. This quarter that they reported was fantastic. Staff already cited that annual recurring revenue was up 23% in this quarter and new net annual recurring revenue was up 73% in the quarter. So they beat on revenue by 20 million. I think CrowdStrike is well positioned. They have diversified products and I think it really is now narrowing the opportunity in cybersecurity to these two specific names.
- [14:05]
D
Brin There are people who pick the stocks like Crowdstrike, like Palo Alto, Octa and others. And then there are those who use the ETFs and some of the kind of thematic elements for this. You are one of those people who takes a thematic approach to cyber. So we know kind of what the macro secular tailwinds are. Why do you want to stay long? Cyber.
- [14:27]
E
Well, I think you just said it. The Matt, the secular tailwinds, the growth. When you think about I when we think about as technology continues to innovate, cybersecurity is just going to continue to get a bigger and bigger spend. I like the bug, the ETF specifically versus the other cybersecurity because it's fully focused on cybersecurity. Like the top holdings are 6, 5 and 6%. So I get Palo Alto, I get, I get all of those companies. I also get the losers as well. But I think that longer term this is just an area that I will continue to add to. So I just think it's one of those areas. We talk about software, we talk about all sorts of different sectors. Cybersecurity will continue to grow, I think well above, well above earnings of the S and P just because corporations across sectors are just going to continue to have to spend more and more.
- [15:17]
D
All right, we've talked about a lot of big names, but there are not that many that are bigger than our next one. So let's talk a little. Microsoft struggling to rebound following a report by the Information that brought the shares lower. Our Steve Kovac has all the details of the back and forth and responses and whatnot. Steve, what can you tell us?
- [15:34]
F
Yeah, it's a lot of whiplash going on here. So let me try to break it down as simply as I can. So that Don, that information report you alluded to, it originally published this morning, saying that Microsoft had cut quotas for some for its one AI product called Foundry. That's something that lets companies build their own AI agents. Then Microsoft came Back about an hour or an hour and a half later. And they told me, whoa, whoa, whoa, we did not cut quotas for this product. The information got it wrong. I'll just read you their statement here saying the information story and accurately combines the concepts of growth and sales quota, which shows their lack of understanding of the way a sales organization works and is compensated. And they reiterate aggregate sales quotas for AI products have not been lowered. And so that is basically their position here is there's no maybe some of the growth targets aren't really meeting where they want to go. But as far as the quotas go, which is a very different thing, those were not cut. So we saw shares down as much as 2 1/2% on this. They've eased back down now about 1.8%. And just some things to think about this though, Dom, you know, yes, they're pushing back on this one story. But we do hear so often in my reporting over the last 18 months or so since Microsoft started selling these AI products, CTOs and customers tell me all the time that they would often prefer to build their own instead of go buy off the shelf from a Salesforce or from a Microsoft and things like that. So anecdotally we, we see some of the stuff in that information report actually happening. But as far as the nugget or the meat of that, the protein of that report, Microsoft is pushing back on that in a very specific way. I would also note that this really translates to what you guys were talking about earlier in Salesforce and we're going to hear that after the bell today, that this idea that they're having trouble getting agent force out there. This is where Microsoft benefits though guys, because they have the whole cloud system with running everything behind it. So even if customers aren't necessarily buying these off the shelf shelf AI products, they have the cloud business that's growing quite strongly. I'm showing you here on the back of open air activity and the back of all this other activity happening within their cloud business. You can't say that Salesforce has the same thing done.
- [17:49]
D
Okay, Steve Kovac, thank you for laying out exactly kind of what happened with the back and forth with Microsoft and those sales quotas versus AI products and everything else. Stephanie, I'm going to go to you with this one first. Steve makes an interesting point. Microsoft, there probably is no better, I guess example of a hyperscaler that has combined a portfolio of products that gives it the scale to be able to compete effectively in just about every product category. Microsoft though will take a hit when it sees headlines like this because investor sentiment is focused to your point on growth.
- [18:24]
C
Sure.
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D
So where exactly is that kind of line of demarcation where you say scale is good to a certain point, but I want small growth versus that big hyperscale portfolio.
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E
Yeah.
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C
And I think you have to dig a little bit into Microsoft to see some of the growth that's not appreciated because I recently added this position. I hadn't been involved. It Is now down 11% since they reported earnings. They had commercial bookings. Dom up 111%. They had RPO is up 51%. Azure 39%. People were all upset that they grew 39% because the West Whisper was 40 or 41. And that is ridiculous for a company of this size. There's the growth and then not only that, they had operating margin expansion of 240 basis points year over year and beat expectations by 240 basis points year over year. So to me, all of that added up with the stock down. I know it's a crowded name, but I just think that that's the opportunity. I'm kind of not paying attention to the 12% total revenue growth.
- [19:23]
D
This is an easy one to talk about because everyone has owns it. I mean if you're benchmarking against the S and P, you own it.
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A
So yeah, you do. But I guess the question I would have for you, Steph, is are you paying attention to the reaction of Both Microsoft and SoftBank since Gemini 3 really has taken control of the the headlines because Both Microsoft and SoftBank are trading lower as that proxy for what we believe the public valuation of Open Air might be?
- [19:49]
C
Well, I mean, I think that there are certainly questions for sure, but I think any given point the Mag 7 take a pause on a lot of various different concerns, but I care more about the ecosystem at large at this company and they are participating in the fast growth of AI and I don't think it's really appreciated. I mean the Multiple is contracted 5 multiple points from its average.
- [20:10]
D
You know, this is the same conversation we could have had nine to 18 months ago for Alphabet in terms of underperforming and not showing the same kinds of growth. Yet now Alphabet has assumed that mantle, the standard bearer of that kind of a trade. We heard all about the code red comments from Sam Altman at OpenAI. Jim? Yeah, Alphabet, the mean reversion has played out. Microsoft, some would argue. Is there a mean reversion at play in the initial stages?
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B
I mean, I want to agree with what you're saying, but there's a, there's a degree of difference here, right? Microsoft Is at roughly 28 times forward earnings. Alphabet, when it got down to the bottom was what, 16 times? Something like that. I mean, Alphabet and Metta. Steph, I know it's a name of yours, were at this really kind of cheaper than the market multiple, whereas Microsoft is still more expensive than the market overall. Now I own it. I'm fine with it. It's a slightly lower than than market average position. But I will tell you, at this multiple, I'm not inclined to add to it. I'm not inclined to get big in it. If this Stock goes below 25, say as a forward multiple, then I get more interested in Microsoft. It's not just the AI, obviously, there's the whole operating system business that underlies most of the global corporations. So there are reasons to own it. But I'm not, I'm not just rushing out to purchase.
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C
Is it the point? I'm only 3% weighted in Microsoft and it's 6% of the hard to get excited, but you can get more excited lagging down because I don't know what the bottom is going to be.
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B
But right now it looks like it's going down. I mean, this chart doesn't look good.
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C
I tend to do that. Right. I buy as the stocks go down. That's what I'm doing.
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D
I want to point it out because let's, let's start with this right now because I want to talk about another stock that is a brand name, household name in technology that has been legging lower since recent highs and I mean pretty recent. We're talking about Oracle. I want to highlight this right now because Oracle this morning was initiated at an overweight or buy rating over at Wells Fargo with a $280 target price. AI LED reacceleration presents room TO Run we see Oracle emerging as a leader in the AI supercycle. Right. Super cycle. I've heard that term before. So Oracle is one name. Jim, I'm going to go to you with this one first. You are an owner of Oracle, a name that is now trading at a discount from the highs that we saw just a couple months ago. Is this a name that you want to add to on weakness?
- [22:30]
B
Well, I made it my final trade yesterday, so hopefully that action answers the question. It is, however, a battleground stock, Dom. I mean, we all know that today there is. Who upgraded it today? Wells Fargo sheeted overweight yesterday somebody downgraded it. And it's all about the same question. Are they spending too much on hard assets? And this goes to the question of whether the Multiple roughly around 27 times forward earnings is too high or too cheap. It's certainly cheap relative to some of the other hyperscalers but they've got all of these data centers that they're building and the debt that they're using to financing is a concern. So here's the thing they're reporting next week. I am looking to see if management has heard what the market is telling them and maybe slows down the spending just a little bit. Maybe make sure that the free cash flow conversion is higher than expectations. I think that in particular could put a floor to the stock if management shows. Listen, don't worry we're converting this to free cash flow. We know what we're doing. It's Larry Ellison's company, he knows what he's doing.
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D
Joe, does it bother you? Jim mentioned the debt that's being undertaken to kind of finance a lot of the expansion and capex here. We know that credit defaults, swaps, the insurance on corporate debt is rising to higher levels for Oracle in particular. Is that a worrisome sign or something that you're willing to overlook given the massive amount of tailwinds that I could produce in the coming years?
- [23:50]
A
Well I think what it does mechanically is it introduces a process of hedging into the market. So those that participated in the September debt offering which was I think $18 billion investment grade paper for Oracle, they're on the other side hedging that out through the CDS market. Now Oracle has talked about a private structure deal that's going to be probably twice as large as that investment grade debt offering in September. So you know, with a debt to equity ratio of 500 plus percent for what we do and we respect and value debt to equity and our formula for quality I'm not sure that the, the expiration date for Oracle in the ETF is going to be extended very long. We'll see what happens in the next rebalance but I think it's a rightful concern. I will say this though, if you are not long Oracle and you are looking for a place to get in. Jimmy, you and I talked about this last week. It looks like last Tuesday, November 25th was a kind of a seminal moment for the market and for Oracle. You've got a low that day somewhere around 185. You could probably, if you're not in, establish a load a position there with a low risk point of reference at 185.
- [25:04]
D
All right, Brin you have not been really active in the Oracle kind of trade so far. Is this something that you feel attracted to given the fact that we've seen this leg lower over the course of the past couple of months?
- [25:18]
E
No, I mean I think we're in this stage where I mean we all say, well this is Larry Ellison's company so that's probably worth, that's a huge amount of currency and credibility that he has. But I think like they just don't have the money. And so this is the one company when you talk about a super cycle, well, yeah, they're going to win the race because they've gone negative free cash flow. And if you listen to everybody, everyone says we're early innings. Well, I think to Satya Nadella's term about a lot of these companies are going to suffer from the winners, the winner's dilemma. They spend all this money to try to be first mover advantage. But guess what, some other person comes in later, doesn't have to spend all the money. You don't have a moat. And so I'm just, I'm very unclear about how Oracle is going to pull this off. And so I think the earnings call, I think it's next Wednesday is going to be a must. Listen, I think especially in the Q and A, they're obviously going to try to, you know, massage the analyst to not be concerned. But I just think how do you actually pull this off and not just destroy the balance sheet in the meantime because you can't just do SPV all for the next five years. And so, so to me still it's a very dicey name.
- [26:28]
D
There are those out there who for sure, Brent, your point? Are waiting for a possible hypothetical revaluation of that trade to see how those things shake out. All right, big conversation. We're going to leave it there for right now because up next the retail roundup is coming. With the holiday shopping season in full swing, the committee's ready with their playbooks. Halftime is back in two minutes.
- [26:57]
C
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All right. Welcome back to the Halftime Report. Retail stocks are higher today after strong guidance from American Eagle, Macy's dollar tree. But new data suggests the holiday shopping season may be off to a more tepid start. So let's take a little bit of a pause here and talk about the season, the all important one for the retailers. Maybe I'll start with you, Jim. On the retail roundup that we are seeing, there are some very volatile names and there are ones that are performing not as we would expect post earnings report. What exactly is your take on all of that?
- [28:58]
B
Well, let me start with the macro. There are questions that are as yet unanswered as to the health of the consumer. We know the consumer got hit hard during the shutdown and some of the statistics at a macro level that we're seeing may reflect that. But there are some macro statistics like Redbook for instance, dom, that are showing the consumers in pretty good shape. And certainly if you listen to the commentary from, you know, the only retail stock that I own is on holdings a couple of weeks ago they gave commentary that said, you know, all systems go, they are just firing on all cylinders. And so I'm not surprised to also see some other retailers like American Eagle are saying the same thing. Is this a rising tide that lifts all boats? I'm not sure, but it probably lifts a lot of boats. Bottom line, I think the consumer is in better shape than it's being given credit for.
- [29:42]
D
You know, Stephanie, a lot of commentary has been about the specialty retailers maybe doing a little bit of outperformance based upon just what their target demographics are their customers are. You own Dick's, you own Target as well. What exactly is going to be the differentiator for you this season with regard to how you would want to stay in a stock versus say maybe this season wasn't what we thought it was going to be.
- [30:02]
C
So I've been adding to Dick's, it's fairly new position for me. I added recently to Starbucks, It's a fairly new position for me. Target, I've been trimming. I needed the cash to buy these others and I think it's the opportunity cost and I think Target is a problem child. It's going to take a while to figure out but it's too cheap for me to sell out completely. Now when you look at the names today, they're very company specific. I mean American Eagle got the product story right. Then they got the comps accelerating and they also have very strong management as well. And then margins and then the guide, right. So, so that, that stock is up. It's a very high beta name. Top that expensive though at 18 times for the growth that you're getting. Kohl's is, was, was the problem child for five years. Years. And now they have new management and they too are, are getting their act together. The strategy is working. I would not be chasing Kohl's here up 70%, 71% for the year. It's not expensive, but I think that's space. I think department stores are not the winners. I think we have the haves and the have nots. The Costco's, Wal Marts and Amazons. Maybe someday Target, I don't think, I'm not going to count that in right now but those are the haves. Everybody else, it's going to be very company specific on, on, on Dick's. I love this management team and their core business is doing phenomenal. Their same store sales last week came in at 5.7% versus 6.4% a year ago. They're comping the comp. I mean they're doing amazing. They have, they have the products, people are going to the stores, they have the traffic and the transactions. The one problem is Foot Locker. That is going to be a turnaround part of the story and that's what I like because I don't want everything to be working perfectly. I want to have some turn and see some operating leverage.
- [31:39]
D
Joe, can we talk thematically quickly about some of the holdings that you have that are tilted towards the off price side of things. I mean you do own Burlington, Ross stores, TJX amongst others. What do you, what do you think?
- [31:50]
A
So the names that, that are not working, first of all, Burlington, they're blaming warm weather for traffic declining. But yet to your point, TJX and Ross stores is working well. Williams Sonoma, not working well. Garmin not working well. Costco not working well. Wal Mart, another new all time high today. The name that I would really watch is Ulta. They're going to report Thursday after the bell. And this is with a forward looking P at 21 for Jimmy. It's reasonably valued. It's attractive from a valuation standpoint, but the growth is also there. They have limited online promotions and I'll say this about the younger generation. They are doing two things. They might be doing more, but two things that I know of related to the market that our generation didn't do. They invest early and they spend way more on beauty than we did at their age. Ulta has taken advantage of that. They have a college tour where they're going out and visiting campuses and engaging that younger generation. And that really is their evolving client base.
- [32:53]
D
I can't even believe how much my 8 year old daughter spends on skincare, fragrance, beauty products.
- [32:59]
C
Just you wait.
- [33:00]
D
It's just, I can't, it's crazy. I can't even fathom just what it's going to be like when the teenage years come around. All right, coming up next on the show, we're tracking the trades here. Stephanie Link is ready to tell you about her newest buy. Stick around for that name. Halftime is back after this.
- [33:16]
C
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C
I'm Mackenzie Segalos with your CNBC news update. Hamas says it handed over the body of one of the last two deceased hostages in the Gaza Strip. It came as Israel said it would reopen the Rafah boarding border crossing between Gaza and Egypt within days, but only in one direction. Israel says people can leave Gaza but won't be able to come back in until all hostages have been revolutionized returned. Ukraine's foreign minister says U.S. special envoy Steve Wykoff told the Ukrainian delegation that peace talks with Russian President Vladimir Putin yesterday had a positive outcome. He also said Ukrainian officials were invited to the US in the near future to continue negotiations. Meanwhile, the Kremlin says Russia is ready to meet US Negotiators as many times as it takes to reach a deal. And Mexican President Claudia Sheinbaum says she will attend Friday's World cup draw at the Kennedy center in Washington, D.C. it will mark her first face to face meeting with President Trump. Canadian Prime Minister Mark Carney will also be there. The 2026 tournament will be held in the U.S. mexico and Canada. Dom, back to you.
- [35:47]
D
All right, Mackenzie, thank you very much for the news update there. Now to one more committee move here. Stephanie, you've got a new buy and this one is in oil and gas.
- [35:57]
C
Up until I bought slb, I didn't know any, any names. I, I'm not a huge fan of the energy sector, but I do like SLB a lot. The valuation is very compelling. At 13.8 times earnings, you get a 3% yield. The stock's still down 3% on the year, but they're the number one oilfield services company in the world and they're going to benefit from their, their customer spending. And the capex for their top 10 customers is going to be $208 billion this year. That is a nice tailwind for them. In addition, they are the technology leader in the sport space. They've seen margin expansion as a result, very strong retention with their customers. And they've just done a deal that is going to be very synergistic, accretive to earnings as well as to revenue. So it's kind of a special situation. But I kind of like getting these number one players in any given industry on sale. And I think that's what I'm doing.
- [36:46]
D
You know who I'm going to go to next for this, right? The person who talks a lot of oil and gas for us here. Brin, how do you react? Do you like the SLB buy for Stephanie and where Else do you like? You think money can be put to worth in oil and gas?
- [37:00]
E
I love it. So I'm glad to have Stephanie in the space. It's hard space. A lot of people want to rent the space, not to own it. I do think if we can get oil to stabilize, I think a lot of the EMP players are cheap. But once again, we need, we need oil to stabilize, let's say in the 60s so we can get some more production. And so I think it's a good area to dollar cost average. We own Viper Energy, Energy transfer. So the pipelines, the mineral rights that have a dividend yield, a really high distribution yield. So that's the majority the way I've been playing it.
- [37:32]
D
All right, Jim, what do you think?
- [37:33]
B
Well, I've been bullish on the energy sector of the stock market for quite some time and I've done that in the face of crude oil, which is down, I'm looking right now 16% year to date. Why has energy given a positive response even though below the market? The reason is because of the natural gas. Natural gas two years ago was below $2. Now it's at $5. We got a cold winter. We've got demand across the world for liquefied natural gas coming out of the United States. And it just shows that why I like to be in a major diversified company like Exxon Mobil that does more than just crude oil production, does natural gas, does refining. Joe, you've talked a lot about the refiners recently. Chemicals, transportation, distribution. Energy is a good product place to be right now.
- [38:14]
D
All right, there's the energy trade for you, everybody. Coming up on the show, we're going to debate our top calls of the day. Plus why Uber shares are getting a boost today. Halftime is back after this.
- [38:42]
All right, welcome back to the Halftime Report. As you just saw there, the Dow is at session highs right now. Let's get to some stocks on the move. Uber is rolling out Robo taxi service in Dallas as part of its latest expansion. Joe and Stephanie both own it, so maybe. Stephanie, we'll start with you first on this.
- [38:57]
C
Yeah, I mean, this is great news. I've been kind of perplexed as to how the stock has traded they after earnings, which they beat on earnings on, on revenues. Bookings grew 25%. Trips grew double digits, usage grew 17%. All of this was good. And the stock is down 8% from its, its highs. So I think it's just biding time. I think the fundamentals are very much, very strong. I'm a big believer. So I like this for the long term. And I think the news today is obviously very positive.
- [39:25]
D
Joe, what do you think?
- [39:25]
A
10 cities autonomous by the end of 2026. They already, already are in Austin and Atlanta. I think this is obviously, as Steph has said, it's good news. I think also technically you have to like that the stock went down and it challenged the $80 level. That was a key swing area for this stock. It was resistance. Earlier in the year, 8151 was the low. On November 21st, it held there. It's back to 91. The stock seems to be trading between 80 and 100. Think 10199 is the high. Ultimately, I think it breaks out above there. This is a company that has grown into its valuation and it's maturing. And this is the way these types of companies that mature trade. They don't take the elevator up. They go up the stairs once they mature.
- [40:13]
C
But still it's 17 times forward estimates for decent growth.
- [40:16]
D
Absolutely. All right, so let's go to another sector that has gotten a lot of headlines as of late, and that's health care. After being an underperformer for such a long time, it's now really turned the tables. It's been a momentum machine so far. One of the names out there is Vertex Pharmaceutical, which is being upgraded to overweight today. The target price is being upped to $516 a share from $438 at Morgan Stanley. You can kind of see there. Jim labenthal, Vertex is a name that you own.
- [40:44]
B
I very strongly believe in it. I agree with the upgrade. When we talk about Vertex, most often what we talk about is the cystic fibrosis franchise, which is their bread and butter. And then on top of that, the new pain medication Journavax that they just got approved about a year ago. What we don't talk about is what's to come next. And as my analyst Ralph Coutin, who covers this often, says, Vertex has a huge number of shots on goal. The next one to come is the kidney franchise that is up and coming. They're building it right now. There should be some good data coming out in the 2026. That's what the Morgan Stanley analyst is pointing to. And it just points out that there are multiple shots on goal for this company.
- [41:20]
D
All right. And Stephanie, I'm going to go to you with this last one here. G.E. vernova is being reiterated as an overweight slash buy rating at JP Morgan. You own it. What do you think?
- [41:29]
C
Yeah, I mean I own this, I own Quanta Services, I own Rockwell Eaton Electrification. It's a decade long theme. This company though has margin upside and frank free cash flow upside that I think is underappreciated. So yeah, I would use the 8% pullback from the highs to be adding to it.
- [41:45]
D
All right, coming up next on the show here, Mike Santoli is going to join us with his midday word. Keep it right here. We're back after this.
- [42:09]
The dow is up 370 point session highs right now. We are back on the halftime report and it's that time of the day. Senior markets commentator Mike Santoli with the midday word. We've been building up some momentum throughout the course of the last couple of hours.
- [42:21]
A
Yes, definitely firming up below the surface. And I think what's interesting is the very cyclical character of what the leadership is today. So you get a weak jobs number to start the day. You know, ism services not particularly great. And yet the market is really locked into this idea that growth, growth is kind of troughing and we're going to reaccelerate. You look at transports. One thing I've been focused on is the consumer lenders, Capital One synchrony, financial card issuers making new highs. They're not cooperating with this idea that you have this constrained consumer. Whether the market's right about this or not. That's kind of the way money is migrated grading at the moment. Then I think it's just kind of the seasonal upside drift that we get here. You might end up with a 15 handle on the Vix today or tomorrow if this continues because you're kind of bleeding volatility out of it. I do wonder though if we really get kind of released to the upside before the Fed, it feels like you're going to be capped in there by some of the big catalysts.
- [43:16]
D
So how much of this is, you know, we've made it a cliche in the past is good news. Good news is bad news. Bad news as good news. Bad news, bad news, good news.
- [43:24]
A
Really interesting because I don't know if bad news is explicitly good news because the market hasn't really embraced when bond yields have gone down on a day to day basis. In other words, it's not really looking for that because we're already expecting the cut in December. I think it's much more about everyone's year ahead outlook incorporates some kind of tailwinds kicking in the tax benefits and for now looking at those groups that have not really participated as Much something like of transports that maybe you can just make a bet on.
- [43:50]
F
All right.
- [43:50]
D
And those seasonal trends do tend to help maybe a little bit as well there. All right, Mike Santoli, thank you very much. We'll see you later on this afternoon. Coming up next on the show, the committee's top picks for 2026, what's on their value shopping list. Halftime is back after this.
- [44:11]
All right, welcome back. Let's get the committee's top picks, their holiday shopping list for the year 2026. We asked East Member to give us one stock they own that's underperforming the broader market but that they think is due for a bounce. Brin, we're going to start with you.
- [44:26]
Apollo.
- [44:27]
E
I think Apollo could easily trade up to 160 just on technicals alone. I think for 2026 we've got positive macro background with GDP, you know, having tailwinds from the fiscal stimulus as well as datacenter growth. They have fee related earnings that are supposed to grow at 20% percent. And with their insurance annuity business a theme, they have a long duration capital base. And so I just think there's, there's been an overreaction because of the private credit, the private credit concerns. And so I think stock could easily trade once again 160 next year.
- [44:59]
F
All right.
- [44:59]
D
On the holiday list, Apollo. Jim, what do you think?
- [45:01]
B
Lockheed Martin. It has been an annus horrible list for Lockheed Martin. That is Latin for a horrible year. It started actually a year ago when Elon Musk Musk punked the F35 in a tweet. Stock started going down then, then they had a huge first quarter charge for a classified program. They lost the F47 to Boeing. But in the meantime the F35 is the best airplane in the air right now. Other countries want it, our armed forces want it. The missiles are a hot seller. I hate to say that but it is and it's treating at a very forgiving valuation. Right.
- [45:33]
D
All right. Stephanie, what do you think?
- [45:35]
C
Starbucks, the stock is down 6% year to date and they have a great management team. New CEO Brian Niccol. The turnaround is happening faster than expected and I think 2026, they will make progress throughout the year. They had the first positive comp in two years last quarter and what they're doing to the stores is working. They're getting people in again and they're spending. So like that story.
- [45:56]
D
All right, what's your value pick?
- [45:57]
A
Cadence Design Systems underperform the S&P 500 but yet outperforming its industry peers that is telling you something about a company that designs software for chips in an environment where robust chip spending will continue.
- [46:12]
D
All right, the holiday shopping list. Thank you very much to all of our committee members for those. Stay with us because final trades are coming right up right after this break.
- [46:26]
All right. It's that time of the day. We're back with final trades. Bryn, talking to you first.
- [46:33]
C
Yeah.
- [46:33]
E
The iShares Etherium Trust, it's 33% off its off its high that it reached the summer buy low, sell high.
- [46:40]
D
All right, what do we think there, Jim?
- [46:42]
B
Citigroup, it's had one heck of a year and yet it's still the cheapest of its big bank brethren.
- [46:47]
C
All right, Stephanie, bank of America, the net interest income is poised to go higher given the steep yield curve, strong capital markets and cost cutting, better profitability ahead.
- [46:58]
A
And Joe, so Jimmy talked about natural gas before. Equity is a great trade. And I can't wait for Scott to get back into town. I'm going to have an answer for him. Where we go. Looks like we're breaking out higher.
- [47:09]
D
All right, two money center banks as part of that discussion. Thank you guys very much for having me here today. Good luck to everybody here. That does it for us on the halftime the exchange with Kelly Evans starts right now.
- [47:21]
A
You've been listening to CNBC's Halftime Report, the podcast.
- [47:24]
D
You can always catch us live weekdays.
- [47:27]
A
At 12 Eastern only on CNBC.
- [47:32]
C
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 and 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.
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A
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