CNBC Halftime Report – "Is a Bigger AI Correction Coming?"
Date: November 18, 2025
Host: Scott Wapner
Guests: Jenny Herring, Jim Lebenthal, Malcolm Ethridge, Josh Brown, Mackenzie Sigalos, Sema Mody, Mike Santoli, Courtney Reagan
Episode Overview
This episode tackles the recent sell-off in AI and tech stocks, exploring whether the correction signals deeper trouble ahead or a healthy pause. CNBC’s Scott Wapner leads a lively, nuanced debate with investment committee members Jenny Herring, Jim Lebenthal, Malcolm Ethridge, and Josh Brown. Discussion centers on analyst downgrades for tech giants, possible AI bubble risk, circular deals among mega-caps, shifting investor sentiment, sector rotation into healthcare, and renewed volatility in crypto. The group compares fundamental versus sentiment-driven causes for the pullback and speculates on what might come next for markets.
Key Discussion Points & Insights
1. AI Stocks: Bubble or Healthy Correction?
- Bank of America Survey: More than 50% of fund managers see AI stocks as a bubble. However, Malcolm Ethridge points out that “if they were asked the second question, ‘are you selling?’ the answer would still be no.” (02:28)
- Forced Participation: Institutional investors can't afford to be underweight in tech, especially in the dominant “Mag 7” AI names (Microsoft, Amazon, Nvidia, etc.), despite concerns.
- Retail vs. Institutional Selling: Malcolm suggests retail investors are more likely to be selling, as they rotate out of riskier microcaps and crypto-linked equities.
2. Major Analyst Downgrades: Microsoft & Amazon
- Rothschild Redburn Downgrade: They move Microsoft and Amazon to neutral, calling for “a more cautious stance on the hyperscalers” and questioning the prevailing “cloud 1.0 narrative” (03:41).
- Josh Brown: “It’s not impugning Microsoft’s strategy…More about how much future earnings growth have we already priced in. This is now three years of rallying on essentially the same concept…And it’s just an unrealistic idea.” (04:23)
- Questions for Nvidia: Josh wants Jensen Huang to address growing concerns about accelerated upgrade cycles and the mismatch between hardware depreciation and cloud contracts.
3. Correction: Sentiment or Fundamentals?
- Jim Lebenthal: “This has evolved into something that I would characterize as a sentiment-driven correction.” (07:29)
- On AI valuations: He compares current 30–34x forward P/Es for Microsoft/Amazon to the 1999 Cisco bubble at 120x. “Given the growth rates…does not frighten me at all. It will come to an end probably pretty soon.” (08:15)
4. The “Circular Deals” in AI and Cloud
- Scott: Raises concern over Anthropic, Microsoft, and Nvidia’s “revenue circle” (09:48).
- Jim: Acknowledges risk but differentiates from the late-90s fiber glut: “At each step…positive returns on investment being generated. That was not the case [then]. Could it end that way…? It could, but that answer won’t be known for two years.” (09:20)
- Malcolm: Argues we shouldn’t treat all circular deals the same: Reddit names leveraged like CoreWeave are riskier, but Nvidia investing in next-gen customers is logical and proactive. (10:06)
5. Market Weakness: Who’s Selling?
- Jenny Herring: “I think it’s the lower-end investor…who wanted to take risk, who wanted to hit a home run. The inability to take risk is starting to trickle up.” (11:36)
- Jenny disagrees with Jim: Believes it’s more about investors’ ability—especially lower-end—to tolerate risk, not just mood.
6. Oracle’s Debt & Transformation
- Oracle in Focus: Concerns over its rapid move to debt-finance data center and chip expansion. Sema Mody: “They need to find creative ways to finance the infrastructure…[UBS] removed Oracle from its preferred list and is changing its credit rating to deteriorating.” (15:41)
- Jim: Defends Oracle’s strategic investments, noting founder Larry Ellison’s risk tolerance and past success, with Baird’s $315 target (about 50% upside).
- Malcolm: Likes Oracle but says increasing concerns over margins and chip depreciation make entry tricky. “You’d be foolish to bet against Larry Ellison and crew…but at what price?” (18:12)
7. Valuation and Sentiment: Alphabet Gets an Upgrade
- Scott & Jim: Skeptical of Loop Capital’s late upgrade to Alphabet after a massive rally: “The time to upgrade…the stock was when sentiment got really bad.” (20:39)
- Sundar Pichai’s Warning: “No company is going to be immune if the AI bubble bursts.” (21:18)
- Josh: “Reasonably priced names like Alphabet will also be punished [if AI crashes]…but you won’t get murdered in Alphabet at a 27x forward multiple.” (21:51)
8. Equity Rotation: Health Care, Value, and Defensive Plays
- Social Media Reaction: Michael Burry’s pair trade (long Molina Health, long Palantir puts) is highlighted as emblematic of the shift away from frothy AI to safer sectors (24:39).
- Jenny: “Every day that the market’s had a terrible day, there’s been a disproportionate amount of green on my screen…and it’s the same areas: healthcare, real estate, utilities, energy.” (25:21)
- Josh’s Top Picks: Focuses on AbbVie, Amgen, and Lilly. “These are names that have started to be under accumulation before this whole storm and with good reason…big, stable, great earnings.” (35:21, 37:52)
- “I like the rising 200-day [on Abbvie] as a stop…more as an investment long than a trade.” (35:21)
- “Amgen…now broken the September 2024 highs…a breakout over a year in the making.” (36:50)
- “Lilly…is just outshining everyone, give it a couple days, let it cool off, but you want to be in these names.” (37:20)
9. Crypto Volatility
- Mackenzie Sigalos: Details wild swings as Bitcoin dips below $90,000, triggering forced liquidations nearing $1B (28:52).
- Crypto Equities Split: Some digital asset treasury names (like Marathon, Immersion) rebound, while exchanges also trade higher on the bounce, but overall confidence is eroding.
- Josh: Skeptical of “bitcoin proxy” equity premiums—“I can't think of a category of closed-end fund ever…trading at a persistent premium to its assets. So why…here?...Never captured my heart and soul.” (33:20)
10. Cybersecurity as a Tech Haven
- Malcolm: With tech under pressure, he prefers “selling Mag 7 and going into other tech,” especially cybersecurity: “the opportunity being created…to stay in tech, stay in giant margins…but not be so overly exposed to AI.” (40:19)
11. Uber: Still a Value Play
- Jenny: Rejects idea Uber’s drop is tied to sentiment or AI fears—“Uber shouldn’t trade in line with an AI play…terrific company…all for the $114 price target. It’s fundamentally sound.” (41:18)
- Josh: “This is the asset light business model in Uber…the company with the ability to partner with everybody…as this technology becomes ubiquitous, I think it's the clear and present winner today…stock is ridiculously cheap.” (42:08)
12. Market Structure & Technicals
- Mike Santoli: Sees the market as working off excesses in a healthy way: “It’s a layering of these concerns…when the market’s getting overheated…it starts to pull back, you find the reasons.” (46:19)
- No singular event: The rotation is from “overheated, crowded stuff” into former laggards like small caps and Bitcoin. The technical backdrop suggests the correction could set the stage for another rally—if economic conditions and the Fed cooperate.
Notable Quotes & Moments
-
On AI Downgrades:
“It’s really more about how much future earnings growth have we already priced in…This is now three years of rallying on essentially the same concept…”
— Josh Brown (04:23) -
On Tech Correction:
"Given the earnings growth rates of Amazon and Microsoft, to be at 30, 34 times forward does not frighten me at all. This is a correction. It will come to an end probably pretty soon.”
— Jim Lebenthal (08:15) -
On “Circular Revenue”:
"At each step…there are positive returns on investment being generated…We are nowhere near [late 90s fiber optic bubble].”
— Jim Lebenthal (09:20) -
On Lower-End Investors:
"The inability to take risk is starting to trickle up…Once you start to disaggregate the market, you see real pockets of weakness.”
— Jenny Herring (11:36) -
On Cybersecurity Rotation:
"I'm more interested in selling maybe Mag 7 and going into other tech…Cybersecurity ETF is down about 10% over the last month, which has created an opportunity.”
— Malcolm Ethridge (40:19) -
On Health Care Rotation:
“These are names that have started to be under accumulation before this whole storm and with good reason…big, stable, great earnings.”
— Josh Brown (37:52) -
On Uber vs. Autonomous Threats:
"The story is that Waymo and Tesla Cyber Cab are Uber killers…Same thing they said about Netflix and Disney+. What happened? The established player won.”
— Josh Brown (42:08)
Key Segment Timestamps
- AI Bubble Survey, Market Set-up: 01:01–03:41
- Microsoft/Amazon Downgrades & AI Premium: 03:41–08:15
- AI “Circular Deals” & Comparison to Fiber Bubble: 08:48–10:06
- Meta & Market Sellers: 11:09–13:55
- Oracle’s Debt, Ratings, and Strategy: 15:15–19:09
- Alphabet Upgrade, AI Bubble Risk: 19:52–22:52
- Value Rotation—Healthcare Names, Michael Burry: 24:39–26:43, 35:21–39:37
- Crypto Volatility & Bitcoin: 28:35–33:20
- Cybersecurity as a Tech Haven: 40:05–40:59
- Uber’s Business Model & Valuation: 40:59–44:07
- Meta Antitrust Win, Market Technicals (Mike Santoli): 44:07–47:15
- Final Trades: 48:35–49:12
Tone & Takeaways
The episode is energetic, candid, and at times combative, reflecting real uncertainty about whether the AI correction is just a cooling off—or something deeper. The Street’s top minds distinguish between sentiment-driven sell-offs and genuine cracks in fundamentals. There’s consensus that not all tech is created equal—those trading at fair multiples with actual earnings (Alphabet, Netflix, Uber, select healthcare, and cybersecurity) look increasingly attractive compared to expensive AI darlings. The warning signs of late 1990s-like excesses are not ignored, especially regarding circular revenue streams and relentless capex, but the consensus is nuanced. Investors are advised to be selective, focus on real earnings and free cash flow, and consider rotating into sectors showing stronger, more reliable fundamentals.
Recommended Next Steps for Listeners
- Watch Nvidia’s earnings and any commentary on depreciation cycles (likely to influence sector mood).
- Monitor for continued rotation into healthcare, value, and cybersecurity.
- Be cautious about chasing AI growth at high multiples—look for solid free cash flow and sensible valuations.
- For crypto exposure, focus on underlying assets over equity proxies; beware premium erosion.
- Stay alert for “circular deals” in tech as risk indicators, and distinguish between sentiment and genuine business model sustainability.