← Halftime Report
Halftime Report
Live from Apple Park at WWDC 6/9/25
00:47:26
Scott Wapner and the Investment Committee are live in Cupertino, California at Apple’s Worldwide Developer’s Conference to debate what to expect from the company. Plus, Stephanie Link details her latest portfolio moves. And later, we discuss the latest Calls of the Day. Investment Committee Disclosures
Loading summary
Transcript117 lines
- [00:01]
Scott Wapner
Want to quickly create and execute trading strategies to help keep up with the markets. With Fidelity Trading Dashboard, you can access live data, advanced charting, portfolio insights and automated alerts all on one screen. We streamlined the trading experience so you can build and place trades better. Your Fidelity Trading Dashboard is ready now. For free, visit fidelity.com tradingdashboard Investing involves risk, including risk of loss Fidelity Brokerage Services, LLC Member NYSE SIPC Are you.
- [00:32]
Steve Kovach
Still quoting 30 year old movies?
- [00:33]
Stephanie Link
Have you said cool beans in the past 90 days?
- [00:37]
Dan Ives
Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past.
- [00:42]
Steve Kovach
Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back.
- [00:50]
Dan Ives
Welcome to the now it pays to Discover.
- [00:53]
Steve Kovach
Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [01:00]
Dan Ives
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thank you so much. Apple park in Cupertino, California, the backdrop today for a special Halftime report on location. Welcome everybody. I'm Scott Wapner. It's great to have you with us as we await the start of the company's Worldwide Developers Conference. CEO Tim Cook will take the stage for his keynote in just about an hour amid a flurry of questions about the company he runs, an AI strategy played by doubt and delay, a stock price stuck in place as the trade war weighs heavy. We'll ask our experts over the course of this next hour if this will be the event that gets things back on track. The investment committee, they are with me back east today. Apple shareholders Rob Secchen of New Edge and Joe Terranova through his Jyoti etf, and one committee member who sold shares many months ago and hasn't looked back. Stephanie Link along with us today as well, super analyst Dan Ives and all things tech expert Alex Kanchowitz along in just a bit as well. We start though here with CNBC's Steve Kovach. He's alongside me once again to help set the stage. It's great to be with you on what has become an annual tradition for us for what some now are calling a prove it moment for this company.
- [02:27]
Scott Wapner
Yeah, it's exactly it because when we were here and a year ago, Scott, what did we get? We got Apple Intelligence. There was all this pent up questions and demand and wondering what is Apple going to do with AI well, it was Apple Intelligence. And since then we saw the rollout, some of the features did roll out on time and we saw this idea of Genmoji and summarizing notifications and they were cool, they were okay. ChatGPT came along, that was okay. And then the big whiff this year, that was missing out on that AI version of Siri, where that, that was supposed to be Apple's answer to ChatGPT and all these other things, well, that is now indefinitely delayed. So here we are, Scott, the pivotal moment for them to kind of reset the stage here, reset expectations. How are they going to play along with this AI thing? And like we've been talking about last week, there are a few things they can talk about right now that can kind of alleviate some of the concerns. One is making more partnerships like they already did with ChatGPT. There's Google Gemini, which a year ago at this very event, Scott, they said, hey, we are gonna partner with Google. We are gonna incorporate Gemini into this. Maybe we get that today. Eddie Q, the services boss, testifying in that Google DOJ case a few weeks ago, saying, hey, we're looking at Perplexity, that hot AI startup that is already becoming a search AI engine for Motorola, soon to be Samsung. Maybe we'll see that in Apple too. And then there's the developers. This is a developers conference, after all, and they need to convince developers we have the AI tools that are just as good or as better than what you see from the competition.
- [03:56]
Dan Ives
You point to a backdrop with a lot of pressure on this company. The Wall Street Journal today, one of their headlines says, Apple's growing list of problems clouds AI reboot, AI troubles, tariffs, Google payments, app store fees. Way down on the stock ahead of wwdc. I guess my question to you is, will they deliver enough to satisfy people who want so much, whether it's the analyst community or the shareholders? Brian White was on the network earlier and said they probably won't make a big bold announcement today around Apple Intelligence. Is that going to fly?
- [04:28]
Scott Wapner
Yeah, the vibe is much more muted than it was compared to a year ago because remember, what they announced did not come to fruition. They. They failed to deliver on this big AI promise, Scott. And they're going to be very careful this time because they lost a good, fair amount of credibility by saying, we're going to have this amazing new product. We're going to advertise it along with the iPhone 16. So this is a reason, Scott, why you should buy an iPhone 16. There is supposed to be a Super cycle. None of that materialized. So they're going to be extra, extra careful that everything they say on stage today is actually going to launch. When they say it's going to launch.
- [05:02]
Dan Ives
The stock really tells the dramatic story, doesn't it guys? You take a look at what the stock has done year to date. It's obviously dramatically underperformed its MAG7 peers. And by no small amount, Tesla feels like it's in its own category, of course. But if you look at that performance on a list, you will see there is Apple. It sticks out like a sore red thumb down 18%. That stock is on the same time frame. Now, Microsoft today is going up for eight days up in a row, right? So it gives you the divergence between some of these names. Rob Seach and I said you own the stock and you own it outright. What are your own expectations coming into today?
- [05:42]
Joe Terranova
Well, maybe, maybe you get some exciting news from this conference, but given their slow progress on AI thus far, Scott, I think it's fair to be skeptical. That said, historically this stock has really performed well in the three months following this conference. Over the last 15 years, the average gain is about 12% and there was only one down year and that was the 2015, the year of the China growth scare. And last year we were up 14% in the three months following. Obviously they delivered that, that news which never met expectations. But we realize this may be a sell the news moment for them if they don't deliver something absent a big announcement. But it's hard for us to be too pessimistic on this name and it's hard to be materially underweight. Apple, given their, their management is typically shareholder friendly, they have a tremendous balance sheet and there's a ton of negative news surrounding this stock. So when you have that kind of cocktail, you know, we're neutral. We decreased the neutral. We didn't want to go lower than that because of what we saw in the second of last year. So long term core holding that we're neutral right now. Hopefully we get some good news.
- [06:58]
Dan Ives
Yeah, neutral. Joe. Joe, you no longer own the shares outright, but as I mentioned at the very top of the program, you do through your Jyoti etf, which looks at quality and momentum. This stock, I don't think anybody would argue with the fact that it's quality. And Rob lays it out as to why. And you've been punished over the years if you've gotten too pessimistic. But what about momentum? Can today get the momentum back for Apple stock?
- [07:27]
Joe Terranova
Okay, well, first of all, as it relates to today, I think there's one important word, and I heard Rob mention it, and that's progress. So potentially, Scott, just enough progress on the development of AI and the ability for developers to contribute there, that might just be enough. And I think one of the reasons why that actually might be enough is, is because if you look at the sentiment surrounding this stock and it's had an awful year and it's probably directly attributable to the trade war and sitting in the center of that contentious situation right now. But if you look at sentiment, you take the seven largest technology companies. Apple has the lowest percentage buy rating of all those seven companies at only 60%. So there's not strong compelling belief that behind this company it's kind of waffling. It's kind of, as Rob said, you can't not own it, but you're not really excited to own it because is it really a growth stock anymore? It really trades more like a value stock. Why are you owning this stock? You're owning the stock because of the ecosystem, high margin services business, the ability to return capital to shareholders. But the revenue growth is missing. You haven't seen double digit revenue growth in this company since 2021. And, and the expectation is as you look forward over the coming year, you're not going to see anything more than maybe mid single digit revenue growth. And you mentioned Microsoft. That's going to give you double digit revenue growth. Alphabet is going to give you double digit revenue growth. So this is really becoming more value tech than anything else and it's not that exciting.
- [09:07]
Dan Ives
I'm trying to figure out how you can call it value tech when it trades at 26 times. It trades at a growth premium. It doesn't trade as a value stock premium in any way. So for somebody who owns it, you're suggesting it's overvalued.
- [09:23]
Joe Terranova
I think potentially it is. I think over the last 10 years the average valuation on stock is somewhere around 22 times. By the way, I have it trading at 27 times. I could be wrong on that.
- [09:33]
Dan Ives
It's down from 34 times 27, 26. They both make the point it's not trading at.
- [09:41]
Joe Terranova
Both above the historical average over the last 10 years. And I'm not growing at double digits anymore. I'm not growing like I was back seven, eight years ago at 20 plus percent. I'm growing at 4% at best. And there are years like 2023 where I'm actually having negative revenue growth.
- [09:59]
Dan Ives
Steph, you've been the doubter I suppose is the best way to say it. You have a sell rating on the name. I mean, because you did own it and you sold it. And as I wrote in the intro, you haven't looked back. And one of the reasons is the valuation, right?
- [10:13]
Stephanie Link
Oh yeah. I mean 26, 28 times forward estimates for 7.8% earnings growth and 5.1% total revenue growth. I'm not paying 28 times for that. And it's really interesting. It's like what a difference a year makes. Because last year I actually bought the stock ahead of WWDC because I expected them to talk about AI and that to be the catalyst. Fast forward to where we are today. They haven't delivered on AI and as a result iPhone 17 is not going to be a super cycle unless they have AI in it. So to me, I think you have time. And oh, by the way, yeah, the tariffs are a big overhang. If there are 25% tariffs on Apple, they're going to have to increase pricing something like 2 to $400 per phone. So you know, that also might eat into the demand side of things. So I just think this is, this is kind of dead money. I know it's down a lot, but it's just not cheap enough for me. And I think you have time.
- [11:14]
Dan Ives
It's really amazing what's happened too in the last year. Steve Kovach we can take people through a timeline to remind everybody. Remember we sat here a year ago amidst really profound optimism about what was going to happen here. Some of the analyst notes leading in. Let the games begin from Loop Capital. Dan Ives is going to join us in just a moment. He said that this event one year ago was going to kick off an AI driven growth cycle, a new frontier. Those are his words that he wrote just ahead of this event one year ago. And as we see this timeline here, it was in June of 2024 that Apple did announce Apple Intelligence right here at WWDC, the first features released in October of that year. And then December, the chat GPT integration announced. The stock hits a new high. It was almost a straight line up to the right from WWDC until the end of the year when that stock hit a new high. And then some of the issues started to come about and the stock started to go south. Improvements were delayed. For Siri, the AI executive shakeup happened. The rollout in China was delayed according to the Financial Times as well. So that's where we were today, is where we are. Which raises the stakes, right?
- [12:25]
Scott Wapner
And exactly the whole Point of Apple intelligence was to move more iPhones. They purposely designed it so it had to work on those newer phones. At the time it was a 15 Pro or better. The implication of course being the 16 was even announced yet. But okay, I'm going to need to buy the new phone if I want to use all this AI stuff. And yes, that was the case. This is going to move iPhones. It's going to create a new super cycle. And that never materialized. And right when we got that Siri delay announcement, people started reducing their estimates saying that was supposed to be the super Siri. That was supposed to be the version of Siri we were kind of promised by Steve Jobs when he first bought Siri over a decade and a half ago. That was what we were supposed to get and it just did not happen. And that was supposed to help them sell more iPhones. Now services again is cranking away. But that's not AI that's taking a rake off the App store. That's advertising. That's other kind of stuff. That Apple has been doing a great job at extracting more value out of each iPhone in the billion billion plus ecosystem. What can they do today to create some monetization around artificial intelligence? I don't know. I think our friend next to me is going to tell us that.
- [13:31]
Dan Ives
Well, Needham analyst Laura Martin downgraded shares just last week. 225 is the price target. And that was based on, look, the lack of excitement around AI to this point, which hasn't led to a great iPhone replacement cycle. And she fears that it might not for the next 12 months. Rosenblatt, after earnings in May, cut the stock AI strategy. A big reason why. And now we do bring in the aforementioned Dan Ives of Wedbush. He is here. He has made calls as flashy as his blazer is today and he hasn't really wavered at all. It's nice to see you. Great to be here. Welcome. It's good to be with you. I mentioned your note from one year ago which you declared this a new frontier, that it was going to kick off AI driven growth cycle for the years to come. Hasn't happened, has it?
- [14:20]
Alex Kanchowitz
I mean, I'd say it's delayed, but our confidence that the consumer AI revolution runs through Cupertino remains. I mean, I just continue to view 25% of the world is going to access AI through an Apple device. Now has that been delayed a year? Did they hit snafu's? No doubt. But I think what Cook is going to come out with today, it's laying the seeds of growth for the hearts and lungs the developers that more and more when you see these apps where are they going to be on the app Store? Apple is going to be on the consumer AI revolution. I continue to view them as the best consumer AI revolution play and I don't sit here in any way feeling less confident in that story in terms over the next two, three years.
- [15:01]
Dan Ives
But when you when you declared it last year that this was going to be the start of AI monetization and here you are writing a note as of Friday and then again today going in declaring the same thing the skeptics are like okay, I'm not sure I need to. It's a show me story as I said at the very top a prove it. Prove it that they can do that.
- [15:21]
Alex Kanchowitz
Look, it's a prove me story and no doubt right now New York City cab drivers bearish and Apple not just in wwc but just given what we see with tariffs back against the wall Cook is he 10% politician, 9% CEO. The Alibaba partnership in terms of AI, you know that continues to get to it. But Scott, I think we sit here, it's going to be step by step in terms of iPhone 17 in terms of iOS 26. And I think we sit here over the next six, nine months and view this actually as a huge buying opportunity. Not the time where I view that this was a value tech stock. I continue to think it's a growth tech stock. I think double digit growth will be yet again in that Apple Store.
- [16:01]
Dan Ives
Are there holes in the Ives story?
- [16:03]
Scott Wapner
I'm curious because you sound like you're talking about the app Store like this is going to. The growth is going to come from the App Store. We're going to give the developers all these cool new AI tools. More apps get made, more money gets made. Apple takes its rake. How do you play in the epic games case though? Because we're already seeing big names Spotify, Amazon, Kindle, so many others start to take advantage of these new web payments, not give Apple the cut. They'd rather play Stripe or someone else 33 to 5% as opposed to 15 to 30% to Apple. How does Apple combat that? What can they are they do you expect them to offer some better economics for developers or something? Because otherwise they're just going to go to the web. That's how open I started on the web. I mean what prevents them from going over there?
- [16:46]
Alex Kanchowitz
It's a great question. Look, my view is that many consumer if you think about it, you would think about the Apple services ecosystem, that golden ecosystem that they built. Many consumers, they continue to buy in that Apple ecosystem. Will some go out? No doubt. Is the regulatory, you know, potentially some. You know what I view as headwinds with epic.
- [17:04]
Dan Ives
Yeah.
- [17:04]
Alex Kanchowitz
But when you look at the Rocket Gibraltar services, you look at the install base 1.5 billion, you know, iPhones worldwide, you look at the 2.4 billion iOS devices betting against them, again, I can. It's like betting against Shaft. We're in a golf tournament. I just view it. Is that where they are right now and the valuation? I just think haters have all come out and they've had good reason in terms of what Apple's given them, in terms of some of the delays. But I think what you get today, Scott, you actually get the seeds of growth. And I think the sentiment in here, super low bar in terms of going WWE soon.
- [17:37]
Scott Wapner
I think if we want what Dan is saying to materialize, they're going to have to give us some amazing new AI developer tools. It's better than the APIs that you get from OpenAI, better than the open source stuff from Meta's llama models. It's better than everything else they've been playing with and developing on for years and years now. They're going to have to really wow the developers something in order to do what you just said.
- [17:58]
Alex Kanchowitz
I mean you've talked about developers of the hearts and lungs of Cupertino and that's, and that's. That continues to be, in my opinion, best install base in the world.
- [18:07]
Dan Ives
There remains though doubtful as to whether they will deliver enough today. They may deliver to what you expect over the coming months ahead, but it's today, given what the backdrop is and where the narrative has gone as to whether you'll get enough today to make the assumptions that you think would happen.
- [18:24]
Alex Kanchowitz
Yeah. And I think, I think to your point, they're not going to over promise under deliver obviously last year, I think little trauma what we've seen here. But I think what they're going to do is they are going to talk AI. They're going to start to, I think chip by chip, you know, go away at this strategy in terms of where they need to be. And I just think this will be a $4 trillion markup and in my opinion, AI continues to be the consumer. The consumer AI revolution runs through Cooper carry. They're the toll collector in this AI revolution.
- [18:52]
Dan Ives
Need to get the China issues figured out because I know you have such high hopes for the Baba relationship. They just need to get it going.
- [18:59]
Alex Kanchowitz
Look, and part of it is at Cook. I mean, it speaks to like, obviously you're under a spotlight in terms of Trump, in terms of the India situation building in the U.S. as we've said, it's a fairy tale building iPhones in the US unless you want a $3,500 iPhone. But we need to actually see them navigate this because they are involved in this storm. But that's why Cook is the hall of Fame CEO. He is.
- [19:20]
Dan Ives
All right, we will see you on the backside of all of this to get your first reaction to what you've seen and heard inside the buildings behind us. And we look forward to doing that. Dan Ives of Wedbush, thank you very much. So, Joe Terranova, you heard Ives make the case, the bullish case for Apple. He disagrees with your notion, by the way, of it being a value stock, says it very much is a growth name and you will soon learn once again why.
- [19:47]
Joe Terranova
Ok, well, it's not a growth stock today. That's just a plain and simple fact. I hope that it becomes, and they're able to show us today the evidence why they will revive the growth in the future. That's why people want to be excited about Apple, because it's something potentially tangible and is is exciting that will be delivered to the consumer as it relates to AI. But in the moment, Apple is really paying you to wait. They're paying you through the buyback, they're paying you through the dividend. They are not giving you the revenue growth. They haven't given you the revenue growth for multiple years now. And I'm glad that Dan's confident about him.
- [20:22]
Stephanie Link
And we're long.
- [20:23]
Joe Terranova
I hope Apple goes higher. But the reality is what I see in front of us right now is there really isn't very much to get excited about in terms of actual price of progress, progress moving towards the deliverability of that tangible product to the consumer.
- [20:41]
Dan Ives
Well, the other issue too is that the competitive landscape is much more crowded. And we seem to be learning that more and more, if not by the hour, but certainly by the day. You had the news reported by Bloomberg a day ago that Metta was in talks for a multibillion dollar investment into an AI startup called Scale AI and that could exceed the investment of some $10 billion. It would be Meta's biggest external AI investment ever. So that's just one angle. Google just had its big I O developers conference. What'd the stock do after that? It went up. There was a lot of optimism about that as well. Big technologies Alex Kanchowitz is with us now on the competitive landscape, which, as I said, it's great to see you here as well. Feels like it's getting a lot more crowded, isn't it?
- [21:27]
Steve Kovach
It's definitely heated and I'll make a point here right away. There's only a few companies that can build what Apple and Google. Well, Apple's trying to build, right, a contextually aware assistant that knows everything about you because it has all your data, where you're going, what you're doing, you do your email, your contacts and can make sense of that. I'll say Apple, Google and Amazon maybe can turn that into an assistant that you use every day all the time, that supersedes every category. That's something that can boost devices, that's something that can boost services. That's why people were excited last year when Apple said, when Apple said we're going to do this. In the years since who's made the move, it's been Google and Amazon and we don't have Alexa plus yet, but we have the vision for that. We have, I think, tangible progress from Google. Meanwhile, we're sitting here this year looking at what's probably going to be operating system upgrades and then maybe some developer tools from Apple. So Apple had the right vision last year, but when you look across the competitive landscape, the other two have made significant progress while Apple stands well, you're.
- [22:25]
Dan Ives
Making the point too that we're just going to have to be patient as shareholders, that today is not going to be the great payoff unless there's some surprise in the keynote from Tim Cook relative to where expectations are, including from yourself.
- [22:37]
Steve Kovach
Patience might be the word of the day or even the year for Apple. People are talking about this as an AI gap year for Apple that they made the big vision announcement last year. Not a lot of progress this year as they tried to build it. It's hard to build. I mentioned Amazon and Alexa Plus. They made this big announcement in February. We still haven't seen Alexa plus rolled out broadly. So this is a very difficult thing to build. But you need an AI develop development team inside your company that really has the chops. We haven't seen that from Apple. That's why we're in this scaled back moment today. Can they right the ship?
- [23:08]
Scott Wapner
Maybe.
- [23:08]
Steve Kovach
Do they have time? I think they do, but we're going to have to see some movement.
- [23:11]
Dan Ives
So you were at Google I o you spoke with Sergey Brin and some others there. So you're right in the thick of it. There's that Angle, there's now The Jony I've OpenAI development. The building behind us was kind of built in some respects, you could say, on the vision of Jony I've and Steve Jobs and in many respects the leadership of Tim Cook. He deserves as much credit as anybody given what the stock price has done in his tenure as the CEO. But those are all new wrinkles. Now, as we're thinking about, well, what does the eye of OpenAI partnership lead to? Are we thinking about new devices? Does Apple, are they thinking about a new form factor, new devices that are going to be at the forefront of this revolution?
- [23:56]
Steve Kovach
Absolutely. Well, what Sergey told me was any engineer should not be retired now. He doesn't have to work. But he said, this moment is so exciting that there's no way I'm sitting it out. He's in Google working on the technical side of AI. Okay, so not just setting vision, but actually there in the trenches. And the same with Jony I've. He said, okay, listen, I can't sit this out anymore. He partners with OpenAI. You know, there's a concept in Silicon Valley that most people within the tech ecosystem, they have one good idea, so they build a company and then they, maybe they sell it or they exit and then they try to just go do it in a subsequent format. And if you're able to come up with a couple good ideas, you get a building like this, right? Steve Jobs, not only the Mac, but the iPhone, the iPad, and he also bought Siri, by the way. So what we're going to have to see is reinvention throughout Silicon Valley. Like you said, this is a moment where every company is going to have to reinvent beyond their bread and butter if the AI vision is lived out the way that many expect it. And that's kind of, that is the moment that we're in right now with Apple to see if they can actually rise to that occasion and say, we are going to reinvent despite this, you know, unbelievable business that's brought US to a $3 trillion market cap.
- [25:05]
Dan Ives
How are you thinking about the competitive landscape? I mean, you think of it even beyond that when you, you look at Huawei and China and the like, but in the broad spectrum of competition, it's getting more fierce, it's getting more crowded, and it may not be winner take all, but there's a lot of, there's a lot of potential winners who want to take a lot.
- [25:22]
Scott Wapner
Not even close to where take all. But I also just look thematically at what OpenAI is doing. The way they announced that Johnny I've partnership was brilliant. They went to the reporter who breaks all the news on Apple and gave him that story. The interview with Jony. I've they've been the fact that they took Johnny I've as as their leader on this, it's just a huge, not a nice word but a huge you know what to Apple by doing this and there's they, yes, they're Apple's partner, but they're also their rival. And Apple would not be in the position it was in today without OpenAI doing what it's doing. You talk, you mentioned Huawei, you mentioned China. The bleeding has not stopped in China. It's the deceleration has slowed down. That is true. It's not down as much as it used to be, but it is still way down off the peak. And that is in part because of the regulatory regime in China saying we can't let you guys launch Apple intelligence. We figure out this trade war thing with the president yet another way the president is hurting this company right now. And then also Huawei just because right when they came back online a few years ago, they just started steadily eating and eating and eating into Apple's market share. It turns out Chinese customers love Chinese brands and who homegrown brands and Apple still, even before we got into this AI conversation, Apple still did not have a good answer to go toe to toe with Huawei. They benefited so much, Scott, during the pandemic when Huawei was out of the game and they were able to sell, sell, sell in China, sell, sell, sell all over the world in Europe where Huawei is successful as well. And now the AI thing on top of it. It's a really tough nut to crack for them. The competition is really hot right now in a way I haven't seen it since, you know, early 2000 and tens with Samsung.
- [26:59]
Dan Ives
All right, so we're going to talk to you before this whole thing gets going. We'll see you back. Steve Kovach, thank you very much. Alex Kanchowitz, big technology. It's great to have your insights too. We will visit with you too on the backside of this event today with Dan Ives and we'll see what's taken place and we will certainly look forward to your opinions on it. Coming up next, we will have the very latest on those high stakes trade talks between the United States and China. We'll have a live report from the White House coming up. And later, Stephanie Link has a new buy you want to hear about. We'll tell you what it is coming up. We're live today in Apple park. WWDC about 30 minutes away. We're back in two.
- [27:39]
Steve Kovach
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?
- [27:45]
Dan Ives
Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past.
- [27:50]
Steve Kovach
Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically, automatically earn cash back.
- [27:58]
Dan Ives
Welcome to the now it pays to Discover.
- [28:01]
Steve Kovach
Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [28:07]
Dan Ives
All right, listen up.
- [28:08]
Joe Terranova
The only gift that any dad wants on Father's Day is Gold Belly. Gold Belly ships the most iconic foods from the best restaurants across the country straight to his door for free. Let him kick back and chow down on award winning barbecue from Texas, Epic deep dish pizza from Chicago or colossal pastrami sandwiches from New York. Make dad feel like an absolute legend this Father's Day. And go to goldbelly.com to get 20% off your first order with promo code DAD. That's 20% off@goldbelly.com code DAD.
- [28:38]
Scott Wapner
Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities.
- [28:48]
Steve Kovach
So do like I did and have.
- [28:50]
Scott Wapner
One of your assistants assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com.
- [28:56]
Stephanie Link
Switch upfront payment of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full terms@mintmobile.com.
- [29:24]
Joe Terranova
All right.
- [29:24]
Dan Ives
Welcome back to the Halftime Report live in Cupertino, California today, stocks as you see, pretty mixed. There's the S and P barely green. NASDAQ as well. Dow is just a smidge negative as we wait at news from the US China trade meeting today in London. Mega casella at the White House for us today, the very latest. Hi Megan.
- [29:42]
Stephanie Link
Hey, Scott. That's absolutely right. These talks now are in their favor. Fifth hour having started just after 8am Eastern. And you know, unlike the Geneva round, we are not really expecting a big breakthrough here on the terror front. For example, this is really a much more technical round of talks mostly centered on two issues. You can see the live picture there of the location where these talks are ongoing. But the two issues here, Kevin Hassett told us on CNBC earlier today that the goal for the White House was to get a handshake agreement with China, restarting the flag flow of rare earth minerals, likely in exchange for the US Than loosening recent export controls. The Wall Street Journal also reporting just in the last hour or so that the president authorized Treasury Secretary Scott Benson to take some steps to undo some of those recent restrictions on things like jet engines and chip software in order to get these talks moving. So we're waiting for more on that. And in the meantime, Scott, as for the other big story here, that's the fallout between Prices, President Trump and Elon Musk. And after last week's really tumultuous back and forth between the two. Musk was posting on social media this weekend in support of the president, mostly about the ongoing L A protests. But President Trump told NBC in a phone interview on Saturday that he had not spoken with Musk and he did not expect to. The president saying that while he would be allowed to cancel government contracts with Musk's companies, Starlink and Space X, he was asked about, he says he hasn't given it much thought. He also called Musk, quote, very disrespectful, and he said he assumed their relationship was over, saying that he saw no reason to try to repair it. So, Scott, likely not the end of what we're hearing between these two men, but for now at least, the president appears to be trying to move on. Scott?
- [31:24]
Dan Ives
Meghan, thank you. Megan Casella, North Lawn of the White House with the latest on both of these, those fronts which have obviously garnered a lot of interest. Stephanie Link, on the market standpoint, first in these trade talks, what are your expectations? What, what do you care about most coming out of this as to where you think stocks go from here?
- [31:42]
Stephanie Link
Well, Joe used the word progress in the last segment, and I would say the same thing. I just want to see, I want to hear progress. I don't think we're going to get a lot of detail, unfortunately. But Scott, you know what's interesting? In the face of all of this uncertainty, we are still growing right now, GDP almost at 4%. The Atlanta Fed Tracker came out late last week at 3.8%. And I went back and I looked at the first quarter GDP numbers and remember the first quarter, which, which was actually a negative in terms of GDP, but final sales to private domestic purchasers rose 3%. Business equipment sales rose 22%, consumption up about 2. So we are in a position to handle this very well. And why we care is because we always bring it back to Earnings. And I think earnings are going to continue to deliver and exceed expectations. So I just want to get this behind us and let's start focusing on the other parts of the administration's growth agenda, meaning lower taxes and also deregulation. And I think that will be very much welcome from me.
- [32:50]
Dan Ives
Anyway, Joe, I want to get your thoughts on the falling out between Elon Musk and the President. You own the stock. I don't think we've heard from you directly related to that issue yet. A couple of calls on it today do, however, mention it downgraded at Baird today. They say that Musk's ties to President Trump have added considerable uncertainty. Also downgraded today at Argus. They're concerned that the war of words between the two, along with the expiration of EV credits, could further weaken demand for new Teslas. How are you thinking about all of this? Feel like Joe's audio is having a bit of an issue. We'll attempt to work on that. But you did see those two downgrades today. I'm right here, so now we can hear you, Joe. So tell me how you're thinking about this.
- [33:46]
Joe Terranova
Yeah, so look, we what the strategy that we incorporate, it's rules based. So I have a universe of 500 stocks. I can't change that, 500 stocks without going to the SEC and changing, changing their prospectus. I'm not going to do that. But I will say this. If I had the ability, if I had the discretion to kind of tweak the strategy, there are certain stocks where I would say, okay, you know what, forget about the actual capital that we're going to expend on investing. Why are we expending the mental capital in being in these names? Because there's such a chaotic nature surrounding Tesla. And that chaotic nature has existed for far many years. He is, without question, arguably the world's greatest innovator. He is a phenomenal businessman. And what he's focused on, when he's specifically focused on Tesla centric strategies, that's when the stock thrives. But when you have all these extracurricular activities that are taking him away from thinking about the innovation in the future of the business, it's just too chaotic. And I understand why anyone who has the discretion would exert that type of mental capital. In addition to that, remember the significant challenge that Tesla has in terms of margins is because they are reliant on a lot of components and materials from China for the development of batteries. And because of the high tax tariff rate there, that's going to continue to be a challenge for this company. And you're going to see margin compression as a result of it. So there's nothing we could do. It's in the universe. So we'll maintain positioning there. But if you have the ability to exert discretion, I just don't understand why you accept the chaotic nature surrounding it.
- [35:42]
Dan Ives
All right. Yeah, you sound a little frustrated. I think as many have as they've watched this stock, do I think what they didn't expect since the election? Joe, thanks. Let's get the headlines now with Courtney Reagan. Hey, Courtney Reagan.
- [35:55]
Stephanie Link
Hi, Scott. Well, the biggest overnight drone bombardment of the war. That's what the Ukrainian Air Force is saying today after Russia launched almost 500 drones and 20 missiles at Central and western parts of the country. The escalation comes as the two countries began a prisoner swap today, agreeing to exchange 1200 prisoners each. The hidden costs of home ownership are averaging just over $21,000 this year according to new bank rates study out today. Hidden costs are those that go beyond a mortgage, including home insurance, property taxes, utility and energy costs, and home repairs and maintenance. The states with the highest costs are Hawaii, California, New Jersey, Massachusetts and Washington. Those with the lowest cost are West Virginia, Mississippi, Indiana, Missouri and Arkansas. And Lilo and Stitch made it three weeks in a row at the top of the box office. According to studio estimates, it made 32 and a half million at the North American box office, beating out the John Wick spinoff Ballerina, which took home 25 million. Lilo and Stitches now closing in on $800 million globally. Scott, back over to you.
- [36:59]
Dan Ives
All right, Court, thanks so much. Courtney Reagan. Coming up, committee moves. Stephanie Link has a really interesting new move to tell you about. It's a buy and we're going to tell you what it is. It's already in Joe's portfolio. We were reveal it next.
- [37:16]
Steve Kovach
Are you still quoting 30 year old movies?
- [37:18]
Stephanie Link
Have you said cool beans in the past 90 days?
- [37:22]
Steve Kovach
Do you think Discover isn't widely accepted?
- [37:24]
Dan Ives
If this sounds like you, you're stuck in the past.
- [37:27]
Steve Kovach
Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back.
- [37:36]
Dan Ives
Welcome to the now it pays to Discover.
- [37:38]
Steve Kovach
Learn more@discover.com creditcard based on the February 2024 Nelson Report.
- [37:44]
Stephanie Link
Hey guys, have you heard of Gold Belly? It's this amazing site where they ship the most iconic famous foods from restaurants across the country anywhere nationwide. I've never found a more perfect gift than food. Gold Belly ship Chicago Deep dish pizza, New York bagels, Maine lobster rolls, and even Ina Garden's famous cakes. So if you're looking for a gift for the food lover in your life, head to goldbelly.com and get 20% off your first order with promo code GIFT. That's goldbelly.com, promo code GIFT.
- [38:18]
Dan Ives
All right, welcome back to Cupertino as we await WWDC 25 here at the top of the hour at Apple Park. In the meantime, we have some new moves from Stephanie Link that we think you'll find pretty interesting. Steph, you bought Uber. You joined the party.
- [38:33]
Stephanie Link
Why I joined the party. I've been watching this for such a long time that I just had to do it. Look, these guys have the dominant market share in the industry. 68% market share, 32% global share. They're in 10,000 cities and 70 markets. What got me interested though recently is they have two things. They have a whole new slate of products, affordable products that I think is going to continue their momentum. They've got margin expansion, but also the CEO of Palo Alto was announced to be on their board last week. And I think you're going to start to see more M and A as a result. And so it's not cheap. The stocks had a heck of a run, but it is still 7% below its highs. So I started with a very small position and on any weakness, I'll be adding to it.
- [39:21]
Dan Ives
All right, a quick comment from Joe and then I want to get to another move from Steph. But Joe, how about this?
- [39:26]
Joe Terranova
Obviously, obviously I support what Steph so eloquently stated. This company, what has impressed me most about it is how they have navigate the complete turn in their balance sheet, how they now generate cash. And that cash allows them to set forth into a lot of the different areas of business that is allowing them to have that diversification.
- [39:51]
Dan Ives
Steph, I arguably think the other moves more interesting in some respects. You sold Home Depot?
- [39:57]
Stephanie Link
Yeah.
- [39:57]
Dan Ives
You're the one who had. Housing is like a key bullish theme of yours. So what happened?
- [40:04]
Stephanie Link
Well, I still own Dr. Horton and I have been adding to Dr. Horton on this weakness. It's a heck of a lot cheaper than Home Depot. Home Depot. There's nothing wrong with it. It's just, it's not very, it's, it's not cheap by any means at 25 times estimates. And I think there's more leverage on the Dr. Horton, the homebuilder side versus the retail store. So I'm just, I'm still very bullish on housing for the long term. I know we need to see interest rates come down to see real demand, but I do think we have pent up demand. It's just a matter of waiting out on the interest rate front. So I just think that Dear Horton is just a lot cheaper. So. And plus, in consumer, I just like the Uber story better than Home Depot.
- [40:48]
Dan Ives
Okay. All right. Well, we'll follow that story, both of them. Stephanie, link up next. Mike Santoli, he's here with his Midday word. It's a WWE WDC edition because we get his take on Apple's importance to the broader market. Is it what it used to be? A little opine on that next. Welcome back live to Apple park today for the halftime report. Senior markets commentator Mike Santoli joins us with his midday Word. We're doing a WWDC edition of this. Okay, Mike. And you know what they used to say, as goes Apple, so goes the market. Well, not necessarily anymore.
- [41:41]
Joe Terranova
No. And you know, I would argue and have argued for a while that its bellwether status used to be overstated and it's only more true now in a lot of respects. That's a two year chart of Apple relative to the S&P 500. You see how it gapped out very widely with that downturn in Apple in early 2024 after a very strong 2023. And you see also that Apple did not lead the rest of the market down. In fact, Apple had to catch up to the broader tape. And then more recently, you see the divergence as well. So it's not just about Apple kind of having leads and lags because it goes on these big streaks. A couple of reasons for this. One is that it's just not as big relative to other large tech stocks as it used to be. Right. You have the rest of the Magic 7 has filled in Mag 6, whatever you want to call it. It was five times the size of Nvidia three years ago. Now it's the same size it was four times the size of Meta three years ago. Now it's double Amazon. All of it is basically just not what it used to be. And I would also point out their years 2011, 2013 where it went totally different directions or magnitudes from the market. So I guess basically you have to look elsewhere for your lead dog.
- [42:50]
Dan Ives
Now your points are well taken. Microsoft biggest S&P 500 weightings, Microsoft at 6.9%, Nvidia 6.8 and Apple 6. And in terms of the Nasdaq 100, it's Microsoft Nvidia and then Apple, the market itself. Lastly, Mike, before I let you go, are we just waiting a bit on London, see what happens out of that meeting?
- [43:12]
Joe Terranova
I think that's a big part of it, at least in the immediate term. And then I think we're just going to maybe hesitate here around that 6,000 mark. We went through the jobs report, Catalyst looking for the next one. Market is both looking very strong in terms of reasserting this uptrend, but also maybe bereft of of its next obvious directional move as it looks a little bit overbought. What's interesting though is it's rotating. You have the Russell 2000 up 2/3 of 1% when the big caps are asleep. So it seems like maybe they're grabbing for some laggards here.
- [43:44]
Dan Ives
All right, I'll see in a couple of hours back on closing bell, but we'll see what happens both here in Apple park today and then those developments with the trade talks in London. And we'll get your perspective on that. Closing bell. That's Mike Santoli. We do have committee stocks on the move, many of them today, a few names getting slammed. We'll tell you exactly why we are back. I want to show you a group of stocks today that are on the move and to the downside, rather decidedly. Take a look at Applovin Interactive Brokers, Carvana Robinhood. There you go, 4% for almost everything. But Carvana, the news of the day here, there are no changes to the S&P 500 happening right now. And there was a lot of speculation around some of these names getting in. In fact, they're not. So they're selling off. It's relevant for us, Joe, because you own Applovin and you own Interactive Brokers. Applovin got their target raised today by 40 bucks at Morgan Stanley to 460 interactive today got downgraded at Citi. What do you think is a group?
- [44:56]
Joe Terranova
Because there's actually another name that we own that is part of that S&P 500 disappointment. That's Veeva Systems. In the case of Applovin, this really stalls what has been positive momentum after the last several weeks. A little bit skeptical that Applovin can advance from here without some really good fundamental news. In the case of Interactive Brokers, I actually think the fundamental news is there. So I take the other side of this disappointment and I think the intraday price action is reflective of that. I think the same for Viva Systems. You're seeing that it's bouncing from much lower pricing earlier in the day and the fundamentals are strong there. They exist as well.
- [45:39]
Dan Ives
Call today. Stefan G.E. vernova from Goldman. They reiterated their buy rating and they take the price target to 570 from 500, I think.
- [45:48]
Stephanie Link
Well, the stock's up 200% in the past year, so it's had a heck of a run. I have been trimming it just because it's up so much. But you know, I have been all over the electrification theme. We're going to spend $4 trillion between now and 2050 on this theme. And that's power, that's grid, that's AI, that's data center. So I own a whole bunch of names. Ge, Vernova, obviously the one, but Quanta, Eaton, Rockwell. Vertiv was a new position for me last week. I think that this theme is in very early innings and I think you could maybe not buy the G for Nova. Those other names I mentioned I think are better values.
- [46:22]
Dan Ives
Rob, BFA is bullish on both KLA and LAM research today. They take the price targets up on both. KLA goes to 900, Lam goes to 100. Your thoughts? You own both.
- [46:34]
Joe Terranova
We do. The semi sector has been one of the best year to date. I think KLA is up north of 30%, Lambs up north of 20% segment. They're both a little more expensive than they historically trade. They. They both continue to do well because on the back of the tailwinds offsetting some of the legacy parts of the chip segment, but they are fully valued. I don't know that I'd be a chaser right here, but we're going to continue to own them.
- [47:07]
Dan Ives
All right, we are literally minutes away from WWDC25, the keynote from CEO Tim Cook. Kicking off in the buildings behind us, this complex here. I'm here again with Steve Kovach who is going to be listening intently to everything they say. What are the chances of any surprises? Number one. And the idea that I get the disappointment and I get the fact that investors always want more rather than less and they want it now rather than later, but this is still Apple and they're never first or rarely, but they're usually right and best right. And the thought still is that give this company time, as Dan Ives used the word patience, and they're going to get it right. Whether it's today, tomorrow or the next day, it's going to happen.
- [47:51]
Scott Wapner
Yeah, a couple of things there. This is really their chance to reset the narrative that we've been talking about all year. Let's put tariffs aside. Kind of out of their control right now to a degree. But the stuff they do have control over is how they deal with developers, how they deal with artificial intelligence. And to Dan's point earlier, what can they show us? They're at least making progress there. We know we're not going to get a surprise. I'd be surprised if we got a surprise. We're not going to see an Apple car or a new virtual reality headset or some kind of magical AI device is going to be very developer focused and very wonky and some issues. But look, we're showing you this board right now. This is the kind of stuff that both developers and investors are going to be watching for because of this whiff on the AI strategy, on the failure to deliver a lot of their promises. What can they do, who can they partner with in order to sort of fill in the gaps in time and also give developers the tools they need to stay on Apple and not go somewhere else? I guarantee you there are so many other companies, Microsoft, OpenAI, Google, they would love to take these developers away from Apple and this is probably their best shot.
- [48:55]
Dan Ives
All right, we will talk to you afterwards and see what has happened here. Steve Kovach, thank you very much. We'll do finals next. We're back here at Apple park where Tim Cook has already taken the stage at WWDC here a few minutes before the top of the hour as things have officially gotten underway, we heard him making some remarks to the developers and we'll have the post game show at 3:00 Eastern, of course on closing bell. Kanchowitz and Ives and Kovac back with us along with some others as well. Guys, let's do some final trades. Stephanie Link, what do you have for us?
- [49:32]
Stephanie Link
First, Broadcom. It was an outstanding quarter conservative guidance.
- [49:39]
Dan Ives
Thank you, Joe Terranova.
- [49:41]
Joe Terranova
In the last five years, Boeing has never showed up on a momentum screen. It's starting to do that now.
- [49:48]
Dan Ives
All right, Rob Sechin, welcome.
- [49:51]
Joe Terranova
I think this Alpha Wave deal shows that they're elbowing to the data center market. It's a cheap way to play the semi space.
- [49:59]
Dan Ives
All right, guys, thanks so much. I'll see you on closing bell right after WWDC ends. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [50:16]
Stephanie Link
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.comhalftimereportdisclaimer.
- [50:55]
Dan Ives
Your new beginning starts now. Dr. Horton has new construction homes available in Ellensburg and throughout the greater Seattle area.
- [51:03]
Joe Terranova
With spacious floor plans, flexible living spaces and home technology packages, you can enjoy.
- [51:08]
Dan Ives
More cozy moments and sweet memories in.
- [51:11]
Joe Terranova
Your beautiful new home.
- [51:12]
Dan Ives
With new home communities opening in Ellensburg and throughout the Seattle area, Dr. Horton.
- [51:17]
Joe Terranova
Has the ideal home for you.
- [51:19]
Dan Ives
Learn more@drhorton.com Dr. Horton America's builder and Equal Housing Opportunity Builder.