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Has the Tech Corrected Enough? The Committee Debates the Sector's Next Move 6/11/26
00:43:37
Scott Wapner and the Investment Committee debate where the tech sector is headed after hitting a rough patch this week. Plus, the desk shares their latest portfolio moves. And later, Josh Brown spotlights Travelers in his "Best Stocks in the Market." Investment Committee Disclosures
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- [00:00]
Shannon Maldonado
At Edward Jones, we believe rich isn't about having life all figured out. It's opening yourself to all the possibilities. That's why your dedicated financial advisor provides long term planning built around you, meeting you where you are and helping you get closer to where you want to be. So no matter where you're starting from, you can move forward with confidence. The key to being rich is knowing what counts. Let's find your rich Edward Jones. Member SIPC My name is Shannon Maldonado.
- [00:32]
Jenny Harrington
I'm the founder of Yaoi, a gift shop from the lens of artists and handmade objects. I chose Shopify because when I was
- [00:38]
Shannon Maldonado
testing other platforms, it was definitely one
- [00:40]
Jenny Harrington
of the most user friendly. It was important to me to think about where we would be in the future. All of the tools for reading your sales, like planning inventory, they're just right there on your dashboard. For anyone starting a small business, the biggest thing I can tell you is it doesn't have to be perfect.
- [00:54]
Leslie Picker
Shopify can help you build upon it.
- [00:56]
Shannon Maldonado
Start your free trial on shopify.com Carl
- [00:59]
Scott Wapner
thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the latest on the tech reset. The space is trying to bounce today. The committee also taking its positions ahead of the space X IPO pricing tonight, trading tomorrow. We'll have the very latest of course, coming up. Joining me for the hour, Josh Brown, Jenny Harrington, Rob Seachen, check the markets here. Told you this bounce is trying to happen in tech. Two thirds of 1% for the NASDAQ. That's where we really have been focused. We're right around 7,300 for the S&P. Q's are down 4% this week. That's notable. Nasdaq's down a couple of percentage points this week. The Sox has been down for the past five days, the epicenter of a lot of the selling. So what's going on? That's the question we want to ask Jonathan Krinsky. BTIG says today at this point, our assumption is that this is still a positioning unwind, not a regime change. But we don't think it's fully run its course. As a result, we would suggest you remain seated with your seat.
- [02:01]
Jim Leventhal
I can hear you. Okay.
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Scott Wapner
And I've got program as we expect more near term turbulence. What do you think?
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Josh Brown
Yeah, I think that's fair. It's too, it's too soon to say, oh, that's it. We saw the top of tech. Never going to be as good again. People have made that call over the last Three years on multiple occasions and then pie right in the face. So Jonathan's a technician. I don't think a technician wants to say a rocky 30 day period is like the end of what's been a 36 month bull market. And I don't want to say that either. However, Mag 7 are now as a group negative on the year. We had blow off tops in Korean stocks, memory stocks. You see the semis bouncing 3% today. Not a ton of conviction, not a lot of volume behind, behind these moves. The software rally that added fuel to the fire, well, that's unwound very quickly at their peak. A few days ago the software names got to within 11% of their year highs. Now they're backed into a 23% drawdown. A lot of broken hopes and dreams in that space. So I'm looking at the action in Oracle. I'm looking at some of these unwinds continuing to unwind far below where I thought the unwinds would go. And I'm basically sitting here saying why tech right now? It's too messy technically. There's so many other things that are working I want to spotlight. We talked about Casey's. This is both a porterhouse constituent and in the best stocks in the market. We've been talking about it all year. It's literally pizza in Nebraska. I don't even know what the story is here beyond just higher gas prices, more revenue. Look what the market did to this stock Yesterday. Went up 15% on earnings. It is the best performing name this week in the s and P500. There are a lot of Casey's general stores in the tape. We don't need to just be minutely focused on the Microns every single day. I think there are a lot of ways. Starbucks up 7% over the last week. Darden's up 8%. Best Buy, believe it or not, up 7. Can view up 7. There are places to make money. There are winners in every sector in the market inside of biotech, up 7% over the last week. So that's what I'm focused on, Judge. I'm not as focused on how long will this tech on wine go for. It hasn't gotten me out of bed yet. They're knocked down enough for me to say that's it, we're good. And I don't think things were as dire as the bears do.
- [04:30]
Scott Wapner
I think Jenny B of A largely agrees with, you know, the views of Josh. Too early to buy beaten down tech. They say it's time for value. As he points out. A number of stocks that's really the, the epicenter of the debate right now. Buy the dip in tech or buy other things that are available at pretty reasonable prices that have all but been forgotten in this huge run up.
- [04:56]
Jenny Harrington
Right. And I think, I think there's been a lot of movement into that already. So, so for me, I look at the portfolio and I have stocks that are up like 60%, 80% on the year. And there are things that we don't talk about like Ryman Hospitality Properties and Lamar Advertising which does billboards or in our growth strategy material on which is a materials company or Albany Invest, Albany International, which is like carbon weave fibers. So there's a lot out there. So I worry a little bit, Scott, that the positioning, the move into value has already started to happen and, and that some of that, some of that bloom is off the rose already. I think there's more to go. But when I think, I totally agree with Josh and I think too, when we think about Mag7 being down, I think of it more as flat. And I think that that is really healthy. There is, to your point. Exactly. There's so much messiness going on right now. They're going from cash flow producers to cash flow consumers. The whole world's changing. So I actually feel really good about them just being flat. And I look at this as maybe not an either or, but fine, let them consolidate, let them grow into those multiples which they're doing. I think it's incredibly healthy and if you happen to have new money, you know, make maybe just start to continue to broaden that out even though it's already happened. But I don't, I don't think you're going to get, I don't know, I look at it, I'm like, shoot, some things are up so much. I would have rather entered them six months.
- [06:17]
Scott Wapner
Mega caps, not flat mean that you look at the percentage that they're off their 52 week. I'm talking about the Mag 7, Microsoft's 27% off.
- [06:28]
Josh Brown
You're right.
- [06:29]
Scott Wapner
Met is down 27% off of its 52 week high. Amazon's down 12, Nvidia's down. They're all down considerably off of their 52 week highs. It shows you the, you know, the selling that's taken place in the very top, heaviest part of the market. I don't know how you Rob, feel about opportunities to buy some of the dips at this point. I think we're all kind of waiting for the dip buyers to show their hand and there's Not a lot of conviction yet. As we set off the top of the broadcast.
- [07:01]
Rob Seachen
I view that as a really healthy thing that there's not a lot of conviction yet. But again, I would fall into the camp that many of these have not fallen enough. And keep in mind that we own a lot of these. We are talking to clients about building positions into our growth portfolios, into our dividend portfolios at right times. And sometimes that takes a 5% reset, which the only area we got that was in tech. Right. And so we took advantage of that. We'll talk about that later in the show. But it was much more surgical than typically. There's no doubt that this has been an earnings driven market year to date. And what's done well should have done well because that's where the implications of earnings growth have been the highest. What's interesting and what they were talking about is the rerating that we see. You know, 40% of the stocks in the S and P are down for the year. It's just a really interesting dichotomy. So I do view it as a little healthy that this is happening.
- [08:02]
Scott Wapner
Why don't you think that these names have fallen enough? If you point to the fact that it's been an earnings driven move to begin with. The reason why the Microns of the world and the marvells of the world ran up the way they did straight up into the right is because their earnings presented a new paradigm for those stocks.
- [08:24]
Rob Seachen
Correct.
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Scott Wapner
Forced people to understand that they were underestimating the earnings momentum that they appeared to have. So if they've pulled back, what makes you believe that they haven't told back?
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Josh Brown
Because the token enough because the tokenomics discussion has entered the chat. That's, that's the, that's the real, that's
- [08:41]
Rob Seachen
the real answer here. Here is the thing that I think when you price a terminal value and you price it off an exceedingly high earnings period, which some of those earnings were driven by sales. Right. There was still healthy organic earnings growth, but there was still profits being brought in by sales of privates. And I think sometimes we can pull forward enthusiasm into price if that makes sense.
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Scott Wapner
It does.
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Rob Seachen
Well, even though the underlying we did with the Microns of the world we did briefly. Now we're going to rewrite and re underwrite for what I believe is a more sustainable earnings growth trajectory. And I think it's going to be a little more broad based and I think you can still be constructive on equities. But let's be honest, we're entering a seasonally weak period. You have geopolitical tensions that are, that are pressing on rates. You're in a quieter earnings period. And so usually you have something come along to save, save the day in the interim. You have midterm elections coming up and you have a big couple big IPOs that are coming. And the reality of it is supply is coming on to the market. And so this is just digestion, it's, it's not negativity. And I want to react really to Oracle for example, announcing a spend. Yeah, if you run a private company, and this is why I love investing in private companies, you don't need to manage quarter to quarter, quarter. So when you see a long term opportunity that is going to change the ROE characteristics forward of your business, as we do all the time at New Edge, we will make that investment even if there's a quarterly impact. A company like Oracle is going to come out and say we are committed to this spend because we know this is an arms race and we are going to win. They actually had good numbers. I don't own Oracle, but I'm using them as an example and the market punishes that. Guess what? That gives you an opportunity to get
- [10:41]
Scott Wapner
in there and well, you could say it's rightful punishment. I mean by these equity offerings, it's dilutive, obviously. People had already been concerned with Oracle's debt raise. Now it's an equity offering. The point being their spending machine is ramping up, not down.
- [11:01]
Josh Brown
May I? The fundamental thing that's changed in the last two weeks is this discussion about the price of compute. That's right, the value, the value of these workloads. And we're now going to, I think the second half story. You'll see this desk closing bell, it'll be filled with people saying, what I'm about to tell you right now, what's going to happen here is we're going to start to delineate between premium usage of compute versus cheap dirty usage of compute. That should not require the same, the same pricing on compute and the same amount, the same volume of compute. So me looking up a recipe for fettuccine bolognese should not be taking place in the same part of the data center using the same chips as NASA trying to calculate the trajectory of, of a satellite launch. But that is literally what the AI build out has, has started as.
- [12:01]
Rob Seachen
It's just this starting to bifurcate,
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Josh Brown
Right? That's exactly right. And now what we're going to start to see is haves and have nots. We're going to see Adam Smith economics start to like weigh on all of this activity. Companies starting to get rational about. Wait, wait, wait, wait, wait. Why are we underwriting all of this AI usage that's just like blanket. Yeah, sure, put whatever you want in the query and we'll consider all that compute the same. And so what you're seeing in the stock prices, which is we're not a tech show, we're a stock show. What you're seeing in the stock prices is we think are we really going to have memory demand on the scale that we thought we would? Are we really going to have chip usage in the same way that we have? And all of a sudden as rational economics take hold, you're going to start to see a rethink in all of this earnings growth and whether or not we get.
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Scott Wapner
Jenny, I want to hear from Jenny because I mean that if you were to say rational economics mean no.
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Rob Seachen
Rational, rational, rational optimization.
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Scott Wapner
No, I understand but the whole point is supply, demand. If you want to go to the down to the, the core of, of economics. Jensen Huang's out over last weekend talking about the memory shortage lasting for years. To answer your question, is he just
- [13:20]
Josh Brown
throwing open air will come public later in September losing a $22 for every dollar in revenue? I don't think so.
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Jenny Harrington
To that point you just saw today, or maybe it was last night open, I start to say like hey, we're going to be more competitive on pricing. That's huge. Citadel put out a piece and they named it Tokenomics. I'll tweet it out later. But here's the bottom line that they say. We hence are going to see growing signs of a bifurcation in frontier versus everyday usage. And I think that's the way to think of it. Frontier versus everyday. Exactly.
- [13:52]
Scott Wapner
Josh's point, right?
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Jenny Harrington
Yeah, exactly.
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Scott Wapner
Fettuccine versus satellites.
- [13:55]
Josh Brown
Taking it further, taking it further. You're going to see a futures market in compute spring up probably out of Chicago or somewhere where people understand how to price commodities futures. You will absolutely not just see this runaway way train of endless compute for everyone for free. It's just, it's not sustainable, it won't be sustained. And now you're going to see a rethink on a lot of stuff.
- [14:18]
Jenny Harrington
What surprises me, that surprises me is that this is happening now. I thought we were still six or nine months away from it. It was obvious that it was coming but everything in this space is moving so fast it's mind boggling.
- [14:29]
Scott Wapner
So including Oracle, Jim Leventhal is joining us. We Needed to hear from somebody who's in the stock today. Just given the pullback, the questions that have already already existed in this name. I appreciate you joining us. Just want to have a brief chat with you on what you're doing, if anything, with this name and how you're thinking about this move after earnings.
- [14:48]
Jim Leventhal
Well, I'm with Rob on this and I thought he summarized it pretty well, which is to say you've got to spend money to make money. I do see this as an opportunity. With the stock down 11% and I'm adding to it. I'm also saving some dry powder because I'm not sure that this is going to be the bottom, but I do think this is the opportunity. Now, when I say you've got to spend money to make money, what the company is saying is that they are hitting record revenue record oci, that's Oracle Cloud Infrastructure Growth. And they see that continuing in the years ahead. So they're predicting whether they're right or wrong. Whether you believe them or not, this is what they're predicting. 28% compound annual growth rate over the next five years in earnings per share. 28%. And you're getting that today at 22 times forward earnings. By the way, if you look at fiscal year 28, just remembering that they're on a May end of the year, they're at about 16 times. I tell you, that's a bargain. But, but if you want to take the other side and say, hey, you know what? I don't think management is right or maybe the, the cost of compute is going to come down and therefore Oracle's revenues are going to come down with it. That's fine. That's what makes a market. I'm a buyer. I think that the track record of this management shows that when they say what they're going to do, they actually exceed it. So I'm pretty happy with getting in, getting added to it at this price.
- [16:06]
Scott Wapner
All right, so I just want to make some real clear. So you, you did add to it or you're going to add to it or what's the deal?
- [16:13]
Jim Leventhal
Yep, I added to it today, but I also saved dry powder to add to it more in the days to come because I'm not sure that today is the bottom. But I definitely want to make a statement here that at this price right now, you can buy it and I think you're going to make good money from it. Rob, there's a hint for you. You were talking positively about it, but you said you didn't own it, well,
- [16:35]
Scott Wapner
he's, he's in some respects doing what you're doing, but in the names that are in his universe, I'm going to let you go. And I appreciate you calling in and giving us the update or showing your face actually and doing it like that. We'll see it back on the set, Jimmy. Soon. So, Rob, you look at some names. Texas Instruments. Okay. Chips obviously have been, you know, unsettled. You, you bought that name. Fresh new buy.
- [16:58]
Rob Seachen
That was a fresh new position.
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Scott Wapner
Okay. And you, you bought more service now and you sold Salesforce. So there were. Those are three critical moves within the context of this conversation. Take me through that.
- [17:10]
Rob Seachen
Yeah, so listen, we have been overweight the semis. It's been one of the, the great catalyst for the outperformance that we've had pretty significantly in both our growth and frankly in our dividend portfolio. Because, you know, Broadcom was in the, in there for a bit, if you remember, and we've owned it. So, you know, Texan, interesting world leader in unglamorous chips, cars, factories, defense. And it's emerging as a critical piece of data power regulation. And you know, I would say, you know, they also own their own manufacturing, which is a really unique component. They're not.
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Scott Wapner
Give me a year to date on Texan, guys, please.
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Rob Seachen
It's.
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Scott Wapner
Go ahead, Rob. Sorry.
- [17:55]
Rob Seachen
Yeah, yeah, there you go. So it's looking at the price. It's pretty expensive, has a low dividend, outside the norm for us. But we're trying to find, focus on where we can find demand that's growing in an above average pace. And we think they're there in the analog space. This is exactly the setup where we want to buy a business like this.
- [18:20]
Scott Wapner
So then the, the. So much for the rebound that we've been seeing in software, right? I mean it's given like half of it back. A lot of these names continue to turn lower. So there doesn't appear to be any concern, conviction that all of a sudden software's out of the woods. You sold Salesforce. So there's been critical questions around the two names that I had mentioned. Salesforce, so called SaaS Apocalypse. Right. And then ServiceNow, the trajectory of the charts looks somewhat similar. Not identical. Their stories are a little bit different obviously, but nonetheless they've been caught in the vortex of the questions about AI killing software. Salesforce down 37% year to date, guys. Give me service. I want to see that too. Year to date. There it is. So they're more or less the same. Take me through the Decision making here.
- [19:11]
Rob Seachen
Two, two different, two different trades. One was to add to a position, the other was to take, you know, take a tax loss. So we were not down in service now because the entry point but we were down in Salesforce so wanted to take a lot a loss in move. Listen, Salesforce is a great franchise. We use IT growth is the problem. So we want to upgrade the durability of our portfolio to ServiceNow. And if you look at ServiceNow, 90% of big companies run their internal operations of a ServiceNow. Okay. It is critical and I think we've lumped a lot of software as a service into all one bucket initially when there is truly critical infrastructure that needs to run. They're the air traffic controller for the whole corporate IT stack. And so we just think they have a little better of a moat and we think they're going to be an AI beneficiary and not an AI casualty as they, as they are building apps on top of their model. And we're buying more on the derating. If you look Stock is down 50% from its peak. It trades at a 24 forward P. That's a 60% discount to its own internal multiple.
- [20:33]
Josh Brown
So
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Rob Seachen
in all aspects of your corporate infrastructure, IT security, compliance, all layer on this. So and the partnerships with OpenAI and enthusiastic philanthropic let let users build on top of that. And frankly I'm seeing that in my business. So that's a little bit of an experience.
- [20:54]
Josh Brown
Trust any of these stocks outside of cybersecurity? I own some software. They act like garbage. I don't expect that to change this summer. The problem for these companies, no matter how well they're executing and no matter how much investment they themselves are making into an AI future, the market does not believe believe them. The market doesn't do something.
- [21:13]
Rob Seachen
I agree with you on though.
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Josh Brown
The market does not believe they will be able to roll contracts at the same pricing or higher pricing. And here's your problem. This has been a one way bull market SaaS, enterprise SaaS for 15 years, every category. And the bigger the companies were, the stickier their contracts were. And that's been true and it's been a great trade. The problem is a lot of the earnings growth has not been about adding new heads exactly. It's been about adding pricing. By the way, why I don't love the memory stocks, A lot of the earnings growth is from pricing, not volumes. So how, how what do we do? What are we going to do In a world where companies are going to get really good at utilizing less Headcount and now have the chutzpah to say to their sales rep, yeah, I don't care that the contracts up next month, I'm not giving you another five year deal. I'll give you another one year deal because I got 500 people in the basement playing with Claude and I'm not convinced you're doing something for me that I can't do for free. And that is what the market is telling you on these failed rallies. Nobody believes that these companies have as
- [22:23]
Rob Seachen
good a story as that's what makes a market. What they're questioning is the terminal value of these businesses.
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Scott Wapner
Business.
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Rob Seachen
So when you look at forward cash flows and you try to identify what's a business worth and you might not be, it's the same thing in the private equity names. If you're not able to renew at the rate that you have right now, markets immediately discount that down. But here's my point exactly. It's already happened.
- [22:50]
Jenny Harrington
No, no, no, it's not over. It hasn't fully happened. And we keep sniffing around this space over and over because when you see an entire industry where everything's down 50 and 60%, there should be opportunity. And we dig in over and over and we're like, Great, it's down 60%. It's still not cheap enough. It's still 30 times, it's still 20 times. It's still too much for the uncertainty in the future and the growth that's not that impressive.
- [23:12]
Josh Brown
These sell offs also started from above market multiples way.
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Rob Seachen
It's not like these stocks were in 20, 20 maybe.
- [23:18]
Jenny Harrington
No, no, no. They were like 60 times the 40 times and 50 times before this.
- [23:23]
Josh Brown
I want to look, I want to buy stocks that are down 60% too.
- [23:27]
Rob Seachen
I would join the party.
- [23:28]
Jenny Harrington
Down 60%. They need to then have a compelling valuation which most of the or they
- [23:33]
Rob Seachen
have to have a compelling strategy, Jenny, to unlock value on top of their ecosystem, which is effectively a moat that allows them to build that.
- [23:42]
Jenny Harrington
Here's the thing, moat is a dangerous word to use in this AI world that we're living in.
- [23:47]
Rob Seachen
So you think one guy in their basement with some AI is going to be able to displace no service.
- [23:52]
Jenny Harrington
Now, I think, I don't believe margin. I think at the margin competition will come in. And if at the margin competition comes in, then Josh's point, I don't think
- [24:00]
Josh Brown
we're rob, which is I don't think anyone's saved one guy in the basement,
- [24:03]
Scott Wapner
Claude in his basement.
- [24:05]
Josh Brown
We're saying anthropic we're not.
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Rob Seachen
Okay.
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Josh Brown
We're not. We're not saying the odds. Completely displaced.
- [24:12]
Rob Seachen
So, you know.
- [24:13]
Jenny Harrington
Well, that's the beauty of the business. All right, good.
- [24:14]
Rob Seachen
It is.
- [24:15]
Scott Wapner
I have now how much of what we've seen recently in tech is due to positioning around space X prices tonight debut tomorrow on the nasdaq, which is why I told Leslie Picker we'd be seeing a lot of her this week. And here we are, and she's on the set at post nine to give us the very.
- [24:34]
Josh Brown
Oh, is there an IPO this week,
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Jenny Harrington
do you think, Leslie, are you wearing that bright coat green, to try and, like, you know, manifest? What color are you gonna wear?
- [24:43]
Leslie Picker
To be totally honest, I. I pulled out an orange dress this morning for the next. And it was. It needed to go to the dry cleaner, so I got the next bright one instead. But, yes, channeling and channeling. All the green vibes, I guess, but
- [24:57]
Scott Wapner
are there green vibes, do you think, around this?
- [24:59]
Leslie Picker
I don't know. I don't know. At this point in time, I couldn't tell you.
- [25:02]
Scott Wapner
Interesting, right?
- [25:03]
Josh Brown
That you.
- [25:03]
Scott Wapner
You normally would have sort of an idea that. Yeah, it feels like there would be a lot of. Four times. This one's a little. This one's hard to figure because of the pricing, the retail demand, the fact
- [25:16]
Josh Brown
that it's been sold 3% of the float. Of course it's gonna pop. They are engineering a pop. Am I the only person that understands this?
- [25:21]
Rob Seachen
Do you think any underwriters of this go down?
- [25:25]
Josh Brown
It's not going. All right. I'm not a guarantee. Of course it's 3%.
- [25:31]
Leslie Picker
There are plenty of examples of IPOs with small floats that did not pop on the first day of trading. So I don't think.
- [25:36]
Josh Brown
How many had Elon Musk involved? Let me ask you. Let me ask you this question.
- [25:39]
Leslie Picker
The question that's.
- [25:40]
Josh Brown
The 30 firms on the COVID of the book is every firm on Wall street, including fictional firms. Like, literally, firms from movies. Nobody. There's nobody. I hear you involved in this. That's. That's. That's like. It's going to say, oh, I guess we'll see what happens.
- [25:55]
Jenny Harrington
You going to buy it then? If you're.
- [25:56]
Josh Brown
No. And by the way, the other thing they're doing from.
- [25:59]
Scott Wapner
Let's shrink in the window.
- [26:00]
Josh Brown
There'll be 90 days of 90 minutes of trading, max, probably on opening day.
- [26:05]
Leslie Picker
That's possible.
- [26:05]
Shannon Maldonado
Yeah.
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Josh Brown
Okay.
- [26:06]
Leslie Picker
It is going to be a very short day. The other technical element that is bringing people to the table, I'm told Is this idea of, and we've talked about it a lot of the fast tracking of the mega cap IPOs into various indexes. We have some new data looking at how that could represent about 30%. Passive funds could represent 30% of the float. After two weeks of trading, you've got potentially 30% for retail, which leaves just 40% for active investors. So what does that mean for price discovery is a big question here. Obviously the first two weeks are expected to be very volatile given what you mentioned about the small float, given the index fund implication here. But you know, you talk to people and they say, oh, at $1.8 trillion, this is really steep on what we've seen in terms of historical revenue, about 19 billion. Then you talk to other people who say, but this is a trade that's set up to succeed given the dynamic with these index inclusion rules and the fast tracking. So I think a lot of it depends on the momentum they get tomorrow, even if it is 90 minutes of trading. The other thing I would say too is that if you do have a larger proportion portion of retail, it's nothing's ever been tested at this size before. This is three times the largest US IPO that we've ever seen. So when we hear these over subscription numbers, we don't know what four times means $75 billion offering because it law of large numbers is a really big deal. So it's four times good, it's four times bad. I don't know. Facebook, 20 times oversubscribe.
- [27:33]
Josh Brown
I'm getting text messages that are like my buddies at UBS or my friends friend that my broker, Morgan Stanley, they said they get me stock, they're saying it's four times oversubscribed. I'm old enough to remember 10 days ago when we were sitting on this desk the day Cerebras went public and what we were saying is the deal is 20 times oversubscribed. Pull up a chart of that thing since it went public so that, that amount of times over subscribed thing, that doesn't move me in any direction but
- [28:03]
Scott Wapner
because of the, the large retail population in terms of this is the success or failure, whatever you want to call that, more hanging on what retail does. Because when I've asked a lot of pros, are you interested in ipo, they're like, well, we already own it. Yeah, we already own it in the private market. A lot of larger institutions have already owned it privately so that retail better show up at the door or then you could have a problem.
- [28:35]
Leslie Picker
Retail is the big Wild card. And basically the way the process works is in a typical ipo, you'd have a range. And today in the process of this particular ipo, you kind of know where it was pricing within, above, below the range. Well, they have a fixed price, so you already know it's $135 per share. They have to formalize that. And that usually takes place after market. You know, today for, for this example, then what happens is the allocators that the banks will go to each group and say, okay, you put in a request, you put in an indication of interest for this amount. We are going to give you this amount. Do you confirm? And then they will confirm their order. So right now all of this is just indications of interest. They're not binding orders. So we'll have a better sense after, you know, that process takes place, how many people actually bite what they're cut back by. And to your point, retail is a wild card. This deals a little different because there's a lot of institutionalized retail involved from a lot of these private banks. So you mentioned the number of book runners on the deal. A lot of them are there because of their geographical footprint. You can go to Germany, you can go to Japan, you can go to the UK and you can tap those retail environments. It's not necessarily the people in Robinhood being like, yes, I will take my 10 shares, thank you very much.
- [29:49]
Scott Wapner
That's why also I think that when people address, well, there's so much demand, I mean, so much supply coming on the market, they're not necessarily taking into account the global footprint of, of that demand.
- [30:01]
Leslie Picker
Exactly.
- [30:02]
Scott Wapner
A lot of money around the world. You think like things are liquid here, they've been liquid everywhere. And looking for a place to have a home for that capital is why I think those questions are, may be a little bit overdone, but we'll see. We'll see you tomorrow, I'm sure. Well, I'll see you later. I'm sure. That too. That's your closing bell. All right, here is a reminder. Brad Gerstner, SpaceX investor. He'll be here tomorrow at post nine. Remember what we did with Cerebras, we're going to run it back with Brad right up until it opens. Maybe it opens during our hour tomorrow and half, maybe it doesn't. We'll see, given the size of that. But nonetheless, we'll run you right up with everything you need to know as a prospective investor in this or if you already do own it in the private market. What you should be thinking about as the biggest IPO ever comes to market tomorrow. And then another reminder, a big interview. Morgan Brennan has an exclusive with SpaceX COO and President Gwynne Shotwell. That's big. Morgan sat down with her at the company Starbase Texas headquarters is ahead of the IPO starts rolling out 5am tomorrow on her program. Look forward to all of that coming up, we do have some news Crossing on Waymo. That company is taking aim at Uber. It's a fresh take to the headlines. Trades next.
- [31:23]
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- [32:49]
Scott Wapner
foreign. Welcome back. We have some news crossing on Waymo. It's related to Robo Taxis. Mackenzie Segalis Tell us more.
- [33:09]
Shannon Maldonado
So Scott Waymo announcing it's launching its first subscription business, a 30amonth invite only tier for tax heaviest users. That includes priority pickups, 10% back in Waymo cash and early access to new cities. Essentially taking a page from the Uber One and Lyft Pink Playbook, Uber is now at a 52 week low with its market cap roughly neck and neck with Waymo's latest private market valuation. Now part of the pressure is that this is the latest example of Waymo cutting Uber and Lyft further out of the autonomous vehicle ecosystem as it builds more of the ride hailing business around its own app. Premier gives Waymo a recurring revenue product, more pricing power and another reason for
- [33:49]
Seema Modi
riders to stay inside of its ecosystem.
- [33:51]
Shannon Maldonado
Now, the company wouldn't tell me when
- [33:53]
Seema Modi
its Uber or Lyft contracts expire or
- [33:56]
Shannon Maldonado
whether more are coming, but Waymo is making clear that it has two businesses, the driverless system and then the consumer layer on top of that, with Premier really pushing it deeper into the lane that Uber and Lyft would much rather own.
- [34:09]
Jenny Harrington
Scott?
- [34:09]
Scott Wapner
Okay, I mean, Josh, this is the issue that's been the overhang on Uber the whole time, right? Robo taxi competition, Tesla, whomever else. What do you think?
- [34:20]
Josh Brown
I mean, Tesla doesn't actually have robo taxis. They, they have a plan to, but they're human drivers and the number of cars that they have on the street are like, they round down to very few. So it's really about Waymo. And every time time Waymo has news, Uber stock price falls. I think Uber has more than 50 million people now paying them $10 a month for Uber One, and Waymo's coming in at a price point that's three times higher. It seems like they're going to do more in terms of free cancellations. And I would imagine if that's successful, Uber may re examine what they're offering at $10. They may say, let's offer more, do a more generous cancellation rebate back or whatever. But this is all to be expected and I don't think anyone's truly surprised about it.
- [35:08]
Scott Wapner
No, but is this a robo taxi chart? I mean, is that, is that what that is?
- [35:12]
Josh Brown
Because Uber has never been more profitable, has never had better growth, has never had better economics. But again, people look at this and say, I don't know yet. I feel like if Waymo captures a huge portion of the market, Uber may be in trouble with its human drivers. They're looking past the fact that Uber has more to gain from autonomous cars than any other company out there, because a huge part of the take rate is going to the human driver. So Uber is working on its autonomous network. Their approach is not to own the cars, but rather to have a huge ecosystem of other players. We'll see who wins. But I'm a shareholder.
- [35:52]
Jenny Harrington
But I think that's the thing. Like, I don't think it's, we'll see who wins. And I think that that's been one of the challenges.
- [35:58]
Josh Brown
You know, who wins?
- [35:59]
Jenny Harrington
No, I don't think there's one winner. I think that, I think that, I think that we've looked at it as Uber's gain. I mean, Uber's pain as Waymo's gain. And it's not that I Also think that the addressable market here is bigger than we can imagine.
- [36:11]
Josh Brown
I agree with all.
- [36:12]
Jenny Harrington
Like, we all have teenage kids, right? What are they doing? They're not driving to parties anymore. That's a whole market that's like barely touched.
- [36:19]
Josh Brown
The bears would answer you and say, we were told that there would be multiple players in search.
- [36:24]
Jenny Harrington
There's one that's so different now.
- [36:27]
Rob Seachen
One is aging.
- [36:29]
Jenny Harrington
Hold on. With the aging demographic. With the aging demographic, they're getting more and more comfortable. To start using Rideshare, to start using Uber, to start using Waymo, I just think it's an enormous market. I do not think this is the winner takes all. You know, even Google, like that's the.
- [36:42]
Josh Brown
That DAR is making, is that it will not be winner takes all by the way of autonomous cars for everyone.
- [36:47]
Jenny Harrington
Right. And by the way, Uber still trading at 24 times. They're still minting like 16 billion of free cash. You know, they're still very profitable. I don't have a problem with 20.
- [36:55]
Rob Seachen
I'd rather go with the optionality of Waymo inside Google.
- [37:01]
Scott Wapner
Why? Why do you think that the stock deserves to trade at that valuation, which is a mild Above.
- [37:08]
Jenny Harrington
Yeah, it's like a little above market.
- [37:10]
Josh Brown
Because there is 35% growth, that's why.
- [37:13]
Jenny Harrington
Okay. Because there is uncertainty out there. We're not really sure. I think that there's been a misperception of that, that there's a winner. Right. And that's put some pressure on it. There is competition coming in.
- [37:23]
Scott Wapner
I'm not saying it doesn't deserve it. I just want you to tell me. Because when you say you don't have a problem with the multiple, I just want you to tell our viewers why you don't have a problem with it. That's all.
- [37:30]
Jenny Harrington
Because if you think about Uber, four years ago ago or five years ago, there was significantly less competition. Now there's more competition. And so that's putting pressure on the multiple. It's, you know, if they keep growing at 35 times and the multiple should expand. But we're in a moment where competition's entered and shareholders are still trying to figure out, okay, how does that flesh out? You know, where. Where does the dust settle on this?
- [37:51]
Josh Brown
Uber is delivering food. Uber eats is half the business. It's a huge driver for the rides in there, too. Not from Waymo. And then the second thing is Uber is taking its membership and pushing into areas like travel, booking hotel rooms, etc. I'm not saying that Waymo can't do that. I'm saying they're not currently doing that. So it's obviously Waymo is a real competitor where Lyft wasn't. And the landscape has changed. And that's why this is not 40 times earnings with 35% growth, it's 24 times earnings. It's a substantial discount relative to the growth rate. But we all understand why these are real competitors.
- [38:31]
Jenny Harrington
Fair valuation to pay. You could buy it here.
- [38:33]
Scott Wapner
Got to bounce. Gotta bounce. Best stocks in the market from Josh. Coming up next,
- [38:38]
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Adventure Global. We think about what can be done, not what's usually done through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy. It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show, see terms@discover.com credit card.
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Jenny Harrington
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- [39:58]
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- [40:16]
Seema Modi
We are back on the hashtag report. I'm Seema Modi with your CNBC news update. Billionaire Ken Griffin is investing even more money in Miami. This follows Griffin's clash with New York City Mayor Zoran Mamdani over the proposed Pierre to tear second home tax. A report from Bloomberg says Griffin is expanding his plans to construct a 300 unit apartment building and a parking garage in addition to building buying a 22 story condo building across the street that will begin demolition soon for more development. In other news, the FDA has granted emergency authorization for an over the counter new world screwworm treatment that can be given to pets. The FDA says it spent nearly a year fast tracking reviews and getting ready for the arrival of the screwworm. The outbreak stands at 7 total cases in the United States and the Pentagon. Lockdown and evacuation was a flood False alarm. According to cnn, Shelter in place protocols were in effect after an air quality issue was detected in the building with multiple floors and corridors reportedly affected. The Arlington, Virginia Fire Department posted on X that a hazmat team was on site for what it called a hazardous materials incident. Halftime. We'll be right back after this.
- [41:39]
Scott Wapner
We're back. Josh Brown's best stocks in the market. The spotlight is today on which name
- [41:44]
Josh Brown
we're going to talk about. Travelers, Ticker symbol trv. If you believe what I believe, which is that the market is going to start rewarding a different element of the AI trade. Market's going to start saying, well, all right, everyone's spending. Who's spending wisely? Who actually has something to show for all their consumption of compute? They're going to look at names like Travelers. And I think that's exactly the process that's happening right now in this rotation. Management had a 21% jump in Q4, 2025 underwriting income and they pointed directly at AI driven efficiency gains. In February, they launched an AI claim assistant that they built on top of OpenAI models to handle auto damage claim calls. If you think about a company that's got as much to gain in utilizing AI like a Travelers, you can quickly see the market is saying, oh, wait a minute, maybe the costs here, maybe the efficiencies here are actually meaningful to the bottom line. And that's what's happening. They also just announced the deal with Anthropic. They've got all kinds of things happening and not just experiments. They are looking at their profitability and telling the street, this is AI. This is AI. This AI. I think that this is the next leg, the second half of this year. The AI consumers, the companies themselves. So I'm very excited about that theme. I think the stock plays well there. Let's talk about the technicals. If you're a true technician, you're waiting for a break above 310. That's been resistance. But I want to point out the risk management piece here. Four times, keep the chart up four times this stock has kissed that 200 day. Look how fast the buyers came in, exactly where they needed to. This is a very solid accumulation story. Every time they come in, that's about 288, 289. So that's your pivot point. A close below that level on a weekly basis, checking it out on a Friday afternoon, that tells you something here has changed. The buyers are not coming in. But until that happens, I think you could be long. And if it breaks 310 look out above. There are no sellers.
- [43:52]
Jenny Harrington
So if you want Josh's argument on where can you get like a really great second derivative, derivative play on AI beneficiary. The insurance space is perfect, right. It helps them with with risk management, it helps them with documentation. So here are two juicy divers dividend ones from our international strategy. You've got AXA which trades at 9 times earnings with a 6.3% dividend yield grows at 7 to 8% earnings. Zurich 14 times almost a 6% yield also grows at about 18 times earnings. Sorry, 8 times earnings.
- [44:21]
Scott Wapner
We got some more committee moves by the way. We'll take a quick break. We'll focus on the financials next. So you trimmed Wells, bought more MasterCard but I want to center in on Morgan Stanley which is a fresh buy, correct.
- [44:37]
Rob Seachen
Brand new.
- [44:38]
Scott Wapner
Why?
- [44:39]
Rob Seachen
I think it's a result of financials have been really weak. We know that there are new relative lows below the 200 day. The flatter curve is driving a lot of that. So we actually like the fee earners not the spread earners if that makes sense. And those net interest margins are being challenged. And you know Morgan Stanley is a company that is clearly executing, executed and performed well. They balanced out their streams and migrating from predominantly in investment banking, capital markets business to investment banking in wealth management and asset management business. And they don't depend on lending profits like some of these others do. They've seen double digit top line growth there. They're trading at 17 times 4p with a 2% dip dividend. To me if you're going to be in the space which we generally all always are, you want to be where there's the most cyclical tailwinds. And oh by the way there's a lot of optionality to capital markets activity starting to pick up. So you've got this nice base recurring fee.
- [45:44]
Scott Wapner
What else do you own here? You obviously trimmed well as you bought more MasterCard but the big Morgan, you own JPM, you don't own Goldman.
- [45:51]
Rob Seachen
Do not own Goldman. Okay.
- [45:52]
Scott Wapner
All right, we'll do final next. Closing bell, three o'.
- [45:58]
Jenny Harrington
Clock.
- [45:58]
Scott Wapner
Rick Reeder, BlackRock's going to join me. Tony Pascarello, Goldman Sachs is going to join me. We'll have the very latest on the upcoming SpaceX IPO. Looking at some reporting retail orders said to increase to over $100 billion. Now that was from more than 70 which was earlier in the week. Numerous large institutions, sovereign wealth funds, more than a billion dollars each. So that's given you a little insight into what demand could be. Tomorrow when the trade happens, we'll cover it live. As we said with Brad gerstner right here post 9 what's your final trade?
- [46:32]
Rob Seachen
Lilly P has re rated the 29 from 50 and you get 30% top line growth.
- [46:39]
Jenny Harrington
American Express they made positive comments at the Morgan Stanley conference this week. Good first quarter. Second quarter's tracking well too.
- [46:46]
Josh Brown
Live Nation on the verge of a new 52 week high. Huge upgrade for Morgan Stanley this week. Raise the roof.
- [46:51]
Scott Wapner
All right, the exchange is now all
- [46:53]
Shannon Maldonado
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, and 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 Ever notice how
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Jim Leventhal
life's best stories don't happen in your living room?
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Josh Brown
They happen on the open road, out
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Josh Brown
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Josh Brown
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Scott Wapner
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Josh Brown
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