Meta: The Magnificent “One” 2/7/25

Summary

Halftime Report: Meta - The Magnificent “One” (February 7, 2025)

Overview

In the February 7, 2025 episode of CNBC's Halftime Report, host Scott Wapner delves deep into the stellar performance of Meta, affectionately dubbed the "Magnificent One," amidst a turbulent market. Joined by top investors Josh Brown, Bryn Talkington, Jenny Harrington, and Steve Weiss, the panel dissects Meta's unprecedented 15-day streak of gains, compares it with other major players like Amazon, and explores broader market influences such as inflation expectations and impending tariffs. The discussion also touches upon significant moves in the cybersecurity sector, Uber's strategic positioning, and updates on key market headlines.

---

1. Meta's Unstoppable Rise

Scott Wapner opens the discussion by highlighting Meta's remarkable performance:

“Meta is trying for its 15th straight day of gains. It's the only one that went up after its earnings. Just remarkable.”
[00:00]

Josh Brown attributes this success to a combination of efficient spending and robust earnings growth:

“Earnings are growing, they continue to grow. Valuation still remains reasonably reasonable. And the thing we worried about most, that he wouldn't keep a tight eye on spending and efficiency is not there.”
[02:30]

Scott further emphasizes Meta's strategic capital expenditure (CapEx):

“They increased their CapEx markedly, yet the market's forgiving. They're executing their growth plan, which contrasts with other MAG7 companies facing slowing growth.”
[03:19]

Bryn Talkington reflects on personal investment decisions, admitting initial hesitation:

“I have just been totally wrong in not having excess exposure to Meta because... it's still the cheapest name in the group at 25 forward.”
[05:32]

Josh Brown praises Meta's pivot from metaverse investments to open-source initiatives, enhancing its ad revenue capabilities:

“Meta is spending on open source, which is an affront to open AI. Their ability to monetize through Instagram, WhatsApp, and Facebook strengthens their position.”
[08:36]

Bryn summarizes the enduring strength of Meta amidst the MAG7 rotation:

“The story of the MAG7 is the intra MAG7 rotation. Meta holding up the whole tent, while others fluctuate, showcases its indomitable position.”
[07:54]

2. Amazon's Mixed Fortunes

While Meta shines, Amazon faces challenges despite substantial CapEx:

“Amazon is down 4%, but look at what the stock's done. It's going to recover in March higher.”
[03:19]

Bryn counters negativity by highlighting Amazon's leadership in AI:

“Amazon is going to be one of the biggest beneficiaries of AI and the biggest cloud provider. Their early monetization and extensive investment position them well.”
[11:02]

Conversely, Josh Brown raises concerns about Amazon's gross margins compared to Meta:

“Meta's gross margins are like 80%, Amazon's are only about 50%. With Meta trading at 25 times and Amazon at 37 times, why wouldn't money rotate out of Amazon?”
[13:22]

Bryn clarifies the distinct business models:

“Amazon and Meta are not the same company or business. Amazon's advertising business, though growing, doesn't overlap significantly with Meta’s core operations.”
[14:18]

3. Uber's Strategic Positioning

A significant focus shifts to Uber, with Bill Ackman's substantial investment drawing attention:

“We believe Uber is one of the best-managed and highest quality businesses in the world. It can still be purchased at a massive discount to its intrinsic value.”
[17:02]

Bryn is bullish on Uber, citing its critical role in the autonomous vehicle ecosystem:

“Dara understands autonomous driving and fleet management, making Uber indispensable. It’s a hub for autonomous players, ensuring long-term dominance.”
[18:26]

Josh Brown reinforces this by highlighting Uber's free cash flow and potential growth:

“They could be well on their way to $10 billion in cash flow by 2027. The turnaround and shrinkage of the float make it a compelling investment.”
[22:25]

4. Tariffs and Trade Dynamics

The panel discusses the impact of potential tariffs on the market:

“President Trump has just put a pause on undoing de minimis rules for small packages from China, alleviating some immediate pressures on the USPS and postal services.”
[16:10]

Phil LeBeau highlights European considerations:

“The EU is contemplating changes to vehicle tariffs from the US, which could significantly impact European automakers exporting to the US.”
[28:05]

Josh Brown adds:

“President Trump plans to announce reciprocal tariffs next week, affecting countries that impose tariffs on American exports.”
[37:46]

5. Cybersecurity Sector Highlights

The cybersecurity sector sees notable movements, with CrowdStrike leading a comeback:

“CrowdStrike is now the fifth best performing stock year-to-date in the S&P 500, up 44% after last summer's drawdown.”
[25:55]

Bryn emphasizes the sector's importance and growth:

“Cybersecurity has secular growth driven by global threats. Investing in ETFs like BUG Cyber, which is at a record high, captures this trend effectively.”
[23:46]

6. Additional Market Movers

• Skyworks experiences volatility, with a significant drop attributed to reduced chip orders for the next-gen iPhone:

  “Skyworks is down nearly 25% due to a 20-25% reduction in chip orders, but we believe the reaction is overdone and expect a recovery.”
  [28:37]

• Moody's (MCO) is highlighted as a breakout stock under Bryn's spotlight:

  “Moody's is poised for a breakout, currently at $499. It's a critical data provider for AI on Wall Street, making it an intriguing investment.”
  [34:26]

• Cloudflare shows impressive growth:

  “Cloudflare reported 27% revenue growth and 29% profit growth this quarter, positioning it alongside top data companies like Snowflake.”
  [35:56]

7. Market Sentiments and Influences

Mike Santoli remarks on inflation and tariff-related sentiments:

“The market is unsettled by inflation expectations and upcoming tariff announcements, keeping indices flat despite underlying strengths.”
[40:42]

Bryn and Josh discuss investor behavior and market reactions to policy changes:

“Investors recognize that tariff-induced inflation is high noise and not necessarily self-sustaining, allowing the bull market to continue its course.”
[40:44]

8. Upcoming Earnings and Future Outlook

The team anticipates key earnings reports and their potential impact:

• Carrier Global and Marriott expected to report, with focus on tariff management and consumer health sectors.
• Robinhood poised for explosive revenue and earnings growth.

“Robinhood is looking for 100% revenue growth and 300% earnings growth. The stock is up 35% year-to-date and positioned for continued gains.”
[43:12]

Bryn also mentions Dell's strong infrastructure solutions group:

“Dell's infrastructure group is thriving, making it a favorable stock ahead of earnings.”
[44:14]

---

Conclusion

The episode underscores Meta's dominant position in the market, juxtaposed with the challenges and opportunities facing other MAG7 companies like Amazon and Uber. Trade policies and tariffs remain significant influencers, while sectors like cybersecurity and data services continue to exhibit robust growth. As the market navigates these dynamics, investors are advised to stay informed and strategically positioned to capitalize on emerging trends.

Notable Quotes:

• “Meta is trying for its 15th straight day of gains. It’s the only one that went up after its earnings. Just remarkable.” — Scott Wapner [00:00]
• “Earnings are growing, they continue to grow. Valuation still remains reasonably reasonable.” — Josh Brown [02:30]
• “Amazon is going to be one of the biggest beneficiaries longer term of AI.” — Bryn Talkington [11:02]
• “Uber is a hub for autonomous players, ensuring long-term dominance.” — Bryn Talkington [18:26]

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This comprehensive analysis offers listeners insight into the prevailing market sentiments, strategic moves by industry giants, and the interplay of economic policies shaping the investment landscape.

Transcript

[Scott Wapner]

Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. 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. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report. Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the Magnificent one as Meta marches higher again, we will discuss and debate that name along with Amazon, of course, and all the other big movers in this busy market today. Joining me for the hour, Josh Brown, Bryn Talkington, Jenny Harrington, Steve Weiss. Take you to the markets here and you will see that we do have red across the board. Nasdaq obviously getting weighed by Amazon here today. But there are a couple other things going on that we wanted to tell you about which probably already know but nonetheless worth reinforcing. You miss one year inflation expectations, they rose and the market took a little bit of a dip on that. Reuters reporting that the president told Republican lawmakers he'll announce reciprocal tariffs as early as today. We're watching for that. Those are weighing on stocks. We're going to get to all of it. We'll get to Amazon, all these other names that are moving. But can we please talk about magnificent Meta? I'd love to because the new record high, it's trying for its 15th straight day of gains. Guys both own it. But you get the first crack at this today. It's, it's the only one that went up after its earnings. Just remarkable. Look at the chart. This is two weeks. This is the stretch that we are on for this name.

[Josh Brown]

Right? And I think it's really simple. One is, and I've been saying this for the whole year. The combination of earnings growth at Meta plus the valuation was the most reasonable all of last year and going into this year it was the most reasonable out of the Magnificent seven. You take that and think about every time you asked me about it last year, what I said was we're worried that Mark Zuckerberg will be less efficient, you know, less careful with spending with the stock at 400, 500, 600, 700 than he was way back when it was at 80 and the year of efficiency was announced. But you know what, he's been totally efficient. So earnings are growing, they continue to grow. Valuation still remains reasonably reasonable. And the thing we worried about most, that he wouldn't keep a tight eye on spending and efficiency is not there. So I think it deserves to be the magnificent one place.

[Scott Wapner]

Look, clearly they executed the best out of all the mag seven in the quarter. So that's what you're seeing, be rewarded. What's interesting is that they too increase their capex markedly, substantially, yet the market's forgiving. They're saying, well, you're executing in your growth plan, so we don't care about that. So it gives you pause then with the others and what's really behind the others not reporting good numbers. It wasn't the CapEx increase, obviously looking at Meta, it was more the slowing growth in some parts of their businesses. So to me, I wouldn't say it's magnificent one. I still think it's, it's at least the way that it's. I mean we're obviously playing around. I know it is the magnificent one in the way that it has gone up over the last couple of weeks and the way that it has even in deep seek. It was the one that was up, everything else was down after earnings. It was the one that was up, everything else went down. Yeah, but here's my point.

[Josh Brown]

My point, I want to add one.

[Scott Wapner]

Thing is that you've had periods of time with the Max 7 where where matter stood alone in terms of having a terrible quarter in terms of spending, etcetera, etcetera. But look at where we are now. So my overall point is don't worry about this quarter, don't worry about some slowing growth here and there. The growth engines for each of these companies continues to excel. And by the way, with Amazon down 4%, who cares, right? Look at what the stock's done. It's going to recover in March higher. The other thing that's interesting too is that if you look at Josh, the CAPEX numbers for the MAG7 at least for Amazon, Microsoft, Alphabet and Meta, they're spending the least now they're not spending a little, they're spending the least relative to the Amazon 100 billion and Microsoft at 80 and Alphabet 75, they're 60. 65. Yes, it's up from 37. They were spending the lease last year. Now they are continuing to do that and guys in the control room, can you pull up for me? Josh, I'm going to send it to you in a second. Can you pull up for me in October of 2022 chart till now? I want to show you something when we do that. But Josh, this stock, I know you don't own it, but man, what do you make of this?

[Bryn Talkington]

Well, I definitely own it. It's one of the biggest stocks in the world. So anyone with an S and P index, anyone with Q's exposure, but you.

[Scott Wapner]

Know what I mean, I don't, I.

[Bryn Talkington]

Don'T own an outskirt. Yes, I don't own it outside of that. And quite frankly I have just been totally wrong in not having excess exposure to Meta because to Jenny's point, even after this run it's still the cheapest name in the group is 25 forward. Like would anyone say this doesn't deserve a slightly above market multiple? Of course it does. So that's number one the thing. The comment I would make though just generally about CapEx plans. These number one, these are like buyback announcements the board authorizes, but that doesn't mean they have to happen. And we see this all the time. Just because a company announces their guidance for CapEx, that doesn't mean they wrote a check. And all of that stuff is subject in my opinion to market forces. If all of these stocks end up in 15 and 20% drawdowns by the summer, which of course is very conceivable. It's no one is saying that they have to go through with these capex spending plans. So I'm not saying it's bearish or I'm not saying like totally disregard it. Just understand it's always a fluid situation. Meta right now is the only name that's, that's got good relative strength. The rest of these names are in about the RSI are in the 40s, five out of seven are down. But and this is key, Weiss made the right point. The story of the mag 7 is the intra mag 7 rotation. And the reason why this theme is so difficult to bet against year in and year out is because at any one moment in time Meta might be the weak one. And maybe Apple picks up the slack or maybe now it's. It's Microsoft and Tesla go on a run or in video takes the driver's seat. And this has been a pattern that has been taking place for years and it's why this theme is so indomitable. So right now it's Metta holding up the whole tent and, you know, thankfully. But if you equal weight, all seven of these names judge they are 4% below the all time highs. So they're all hanging in there, even though they don't all look good.

[Scott Wapner]

Thanks for putting the chart up. And the reason why we're sticking on it and the reason why I called for it, Brin, in the first place is because October 24th of 2022 is when Brad Gerstner wrote his letter telling Meta time to get fit. They did. They listened. Not at first. Sort of gave them the Heisman. Then they did get fit. And the Stock's up like 400% since Gerstner wrote that letter. One of certainly the most seminal moments in the arc of that company as a publicly traded entity for investors. There's no doubt about that. Brin, I know you own it through other vehicles as we talked yesterday, but you don't own it outright either. What do you make of this streak, which is going to be 15 today if it holds green?

[Josh Brown]

I think you have a confluence of different things. Yes, the stock's the cheapest one. Where Brad wrote that piece, which was just such a seminal piece about, you know, Mark Zuckerberg was spending billions in this metaverse, which still doesn't exist. Now they're spending billions in open source. And I think that with Deep Seek earlier this week, I think it was a really wake up call that where Metta is spending is on Lama, which is open source, is definitely an affront to open AI, which is closed source. And so I think when a company of this size is spending 65 billion or whatever the number is, but the market's saying, yes, I think there will be an ROI here. And I still think with Meta, where their spend is so important is don't forget this is an ad company. And so I think they're actually able to inside of Instagram, inside of WhatsApp, inside of Facebook, able to monetize this, I think rather quickly. And so I think that helps them get stronger and stronger versus with Google or the other companies you really have to question. So, you know, kudos to Jenny and Steve for owning this and definitely high five to Brad Gerstner for providing that piece and that Mark actually listened to it.

[Scott Wapner]

You got $270 billion in market cap added over the last two weeks during this stretch of time. Amazon obviously is not higher. It is not a standout, at least relative to its earnings report because its guidance was disappointing. The Capex was huge revenue guidance, implying the lowest growth on record. Capex is going to be $100 billion this year. Super analyst Mark Mahaney of Evercore ISI, he predicted this move in the stock when we spoke yesterday ahead of the report on closing bell. Listen, if they give Capex guidance, it's only, it's going to be because it's a really large number, like 90 to 100 billion. And they want to, they want to, they want to get the market used to that number. And I think the stock would probably sell off on that unless there was acceleration in AWS. Not really an acceleration that much in AWS. I mean, 19%, that was the number that Mahaney was looking for. Some thought maybe it should be 20. 19% was what you got. So, Josh, what's your takeaway? 10 price target raises, 5 price target cuts. This has been one of your most favorite names.

[Bryn Talkington]

The stocks going higher. They beat on the top line, they beat on the bottom line. Revenue was ahead, earnings per share was ahead. And as far as guidance, look, we all understand that this horse race of, well, this is where the 50 analysts are to the penny. And then is the company five pennies behind or two pennies ahead? I guess there are people that trade based on that stuff. I have never been able to make money on that. The big picture here, and this is really important, Amazon is going to be, along with maybe one or two other companies globally, the biggest AI player and by definition de facto beneficiary, period, end of story, is the biggest cloud. They're spending the most money. They will have the most tools and products and the most users of AI solutions on their platform. They will be early to monetize. They will monetize as well or better than any other player. And I'm old enough to remember when people were worried about Amazon being behind. Now they're talking about spending $100 billion. For context, that's the market cap of Nike and we're talking about one year's worth of capex. These aren't stupid people. This is not bubble, you know, these aren't bubble people. These aren't people that haven't been through ups and downs of tech spending cycles. They clearly see profitability as a result of this level of capex. Maybe they'll be wrong. But historically the right thing to do has been to give these people the benefit of the doubt when they go into a capex cycle that they have some semblance of an idea of what they're doing. So that number that they put out there, it's, it's like a buyback number. We don't know if it'll happen. But, but just speaking that boldly I think is more important than the 4% drawdown in the shares today.

[Scott Wapner]

Jassy talking about the inability to keep up with demand, something we also you know, heard from Microsoft. Not enough hardware, not enough data center capability. If you look, look at the data center related stocks today, you show you a number of them. Vertiv, Dell, Oracle, Arista, they're worth taking note of. Marvell, the bottom is down 7% today because it's an Amazon supplier for custom chips and other data center related equipment. So we're watching that too. But you want to make a point Jen?

[Josh Brown]

Yeah, I actually disagree with you Josh. When you're like Amazon's definitely going up, what a shock. And the reason I disagree with you. Hold on. But you fed me the reason I disagree, no dividends. And here's why. When we were on a couple of weeks ago you said something really interesting and you're like Jen, don't forget like really focus on gross margins. And it bugged me at the time that off the top of my head I didn't know what gross margins for all of the Mag seven were. So I now have a cheat sheet. But that plus the comment on the rotation. Right. So if we look at for example Meta versus Amazon, Meta's gross margins are like 80%, Amazon's are only about 50%. And then you couple that up with Meta still trading at about 25 times, Amazon trading at 37 times. I think if you are right actually about money rotating then why for quite some time wouldn't money rotate out of Amazon with its rich multiple and 30% lower margins and into into something like Facebook. Sorry Metta, so old fashioned. So they're like, you know, you gave me the reason I disagree with you.

[Bryn Talkington]

So Amazon launched an advertising business three years ago and it's really the only place that they materially overlap with matters core business. They happen to have the third largest advertising business in the world and I think it grew substantially. This past quarter was one of the highlights and what they just announced catch up on Amazon and there understood but Amazon and Metta are not the same company and they're not the same business.

[Josh Brown]

They happen to the max seven in that line to the places cheapest with the best margins. Right.

[Bryn Talkington]

All right, maybe tactically that, that, that would be a good call. But I'm not arguing that. My point is I think Amazon is going to be one of the biggest beneficiaries longer term of AI and I like the signaling of what they're planning to spend. Whether they follow through or not on the whole amount is not the point. They already have like an installed user base that is using AI tools now. They're not trying to attract people to come to the platform. And there's a lot of room for both Metta and Amazon to both work. I don't view these two businesses as being head to head competitors.

[Scott Wapner]

Weiss, you don't do this. Amazon. Weiss. I own Amazon. I own Meta Microsoft. But Amazon has traded at a high multiple for a long period. Exactly exist. It's actually lower than it's ever been.

[Josh Brown]

I'm just saying higher.

[Scott Wapner]

So the point is so hoping for a different paradigm on valuation. I just don't think it's going to happen. Future extremely bright in terms of Meta spending less. It's because Met is spending for their own business versus Microsoft and Alphabet spending for customer businesses that line around. I got some breaking news that I need to go to D.C. for with our own Megan Casella at the White House. What do we know?

[Josh Brown]

Hey, Scott. President Trump has just signed an executive order that puts a pause on his undoing of de minimis rules that refer to small packages coming in specifically from China. Now this requires a little bit of a backstory. When Trump imposed those 10% tariffs on China, he also undid the de minimis rules that apply to small packages worth less than $800. Now these packages are going to have to see closer inspections and will have to pay duties on them. But this caused something of a backlog with the US Postal Service and with other mailing agencies. Now, Trump signing this order saying that he's putting all of that on pause so that the USPS and other companies can get systems in place to better process these packages. That pause will last until the Secretary of Commerce tells the White House that it's all systems go and packages can be processed in a more expedient manner. So that being signed now, de minimis undoing on pause for the moment. Scott.

[Scott Wapner]

All right, Megan, thank you for that. The White House, Megan Casella, let's show a chart of Uber, please. Intraday if we could, because Bill Ackman has revealed a new position today. 30 million shares, in fact. Says he bought it in early January. We can show you the post on X that he did a short while ago in which he says, quote, we believe Uber is one of the best managed and highly our highest quality businesses in the world. Remarkably, it can still be purchased at a massive discount to its intrinsic value. This favorable combination of attributes is extremely rare, particularly for a large company. So was Josh just down on earnings? They revealed the buyback. You've already said it was the most mispriced stock in the NAS 100. Mr. Ackman obviously agrees with you. What do you make of this position? 30 million shares is nothing to say sneeze at, that's for sure. You know when we've had debates about this stock, I mentioned Gerstner earlier, right. Who told us last November in San Francisco that he sold it because he was worried about the competition with Tesla for fsd full self driving. What's your take here?

[Bryn Talkington]

I've been pounding my fist on the table on this name since it was in the high 20s, low 30s on this network week in, week out every month. I'm telling you, this is $100 stock.

[Josh Brown]

What.

[Bryn Talkington]

What Bill Ackman actually said was not that he bought it in early January, said he started buying it in early January. And this is really important. He's. He's acquired 30.3 million shares in the span of a month. But if you watch the price action in this name yesterday, you could tell he was sucking this thing up like Daniel Plainview drinking whoever's milkshake was dumb enough to sell it to him in the low 60s. Ackman is going to win here. I think I'm going to win here. I remain long. I completely agree with his take on what Dara has been able to do. I think that is not in the share price, just the incredible turnaround here, the massive cash flows. This is a company that could be well on its way to $10 billion in cash flow. And they just started to shrink the float. I think it's like not even the first inning of autonomous. People have these opinions about who's going to win. Dude, you can't do autonomous without fleet management. You can't do autonomous without an app that toggles between human drivers and autonomous vehicles. Because quite frankly, when you want to ride, you don't care who or what is driving. You care about the cost and the convenience and how quickly the thing can come and get you. You're going to need Uber at the center of this ecosystem. This is not a shock to Dara, where he woke up and said, oh my God, there's full self driving. This guy has been around. He understands what's happening here and I think it's worth betting on his vision being the hub and letting all of these autonomous players being the spokes. That's the bet I'm making. I remain long will not sell. Added to it on weakness and I think it's, I think it's a great tweet that he put out and happy to have him on the team.

[Scott Wapner]

Yeah, Ackman betting on Dara too because he was effusive really in the praise of Dara Khasrowshahi in part of that post. Speaking of autos, we'll get back to the story in a second because we got a lot of ownership but Phil LeBeau has a news alert because GM and Ford are both moving. We can cycle through some intraday charts of these to see those moves. And Phil LeBeau is going to tell us exactly what's going on. Phil? Sure. Yeah. There are reports out of Europe that the EU is thinking about changing its policy when it comes to tariffs of vehicles that it imports to Europe from the United States. Currently there's a 10% tariff on those vehicles. The vehicles coming from Europe over to here, 2.5%. And remember there's the chicken tax. So they can't build pickup trucks over there and be imported over here to the US that's a 25% tax. That's why you don't see any pickup trucks built in Europe. But the bottom line is the president's moves when it comes to tariffs, specifically how they interact with the auto industry. It's having an effect. And the EU realizes now that Canada and Mexico are, for the time being taken care of. We don't know what's going to happen at the end of the 30 day pause. And China is got a 10% tax. What's next for the US in terms of vehicles imported? Scott? And it's the EU by the way, of the 16 million, almost 16 million vehicles that were sold in the United States last year, just under 5%, about 4.9% according to S and P Global Mobility. They were built in Europe and shipped over here to the United States. So there's substantial business there that the EU is worried about in terms of the European automakers. Yeah, Phil, thank you for the update. We'll watch both of those stocks. And speaking of tariffs, and I mentioned the report from Reuters at the very top of the show as one reason why stocks had softened a bit because these reciprocal tariffs that could have been announced as early as today. The president himself now says he's announcing them next week. So that is one story that seems like it is going to happen according to the president himself next week. You do have the stock market off a bit. NASDAQ and S and p are down by 1% plus each. Back to our Uber story. 30 million shares. New position initiated in January. Bill Ackman, we're. What do you think?

[Josh Brown]

Well, I'm so glad that we got to come back to it because I wanted to say I agree with everything Josh said. I have no bones to pick.

[Scott Wapner]

He covered everything under dollar stock in your mind also?

[Josh Brown]

Yeah, I think I could get there. And that's real. You know, when we actually bought this way back when it was like $22 a share. The estimates which blew our minds then were for 2 billion of free cash flow that one year, 4 billion the next. We're up to legitimately. Josh mentioned it. 10.6 billion of free cash flow expected in 2027 and they've exceeded everything. So you know what? It actually could get there. I really like the juxtaposition too between Ackman and Gerstner because it's a good reminder for all of us that like, one man's trash is another man's treasure. And this is what makes the market. And even though these guys are so smart and so brilliant, like they're not always right and they're not always wrong.

[Scott Wapner]

You know, shout out, of course to Bill Baruch who brought it on the dip right after the. Yes, he did on shout out to.

[Josh Brown]

Jenny and Josh who bought it in the 20s.

[Scott Wapner]

And he did come on our show as well, did Bill Baruch and tell us that he was buying more Uber. I want to hit fortnet too. Not so specifically. It is higher on earnings. Dan Ives raising the price target. But the cyber names are all moving on it. Ones that are owned in this show. Crowdstrike. Josh Brin. The bug cyber ETF is a record high today. CrowdStrike. Palo Zscaler mentioned Fortnet getting a nice lift today.

[Josh Brown]

Yeah, I mean, I own all those names. I've owned this ETF for a couple of years. I think that this sector has secular growth, which I think all of us have talked about this. They'll. They'll switch hands. Which ones do better and which ones do worse. That's why I like the bug. It's concentrated with about 30 of the top names. It's not equal weighted. It's got a cap weighting. And I just think you have this secular trend. And there's other names that we'll talk about later like a cloud fair that's stiller in cybersecurity. And so I think, as we all know, we have to have this sector in the market be very important because of all of the cybersecurity, especially in China, Iran, etc. And so I just think this is a great way to own it versus owning the individual names.

[Scott Wapner]

And here's the good news about what we know. Despite wanting to dismantle or change over the CIA and folks bi CIA and FBI, one thing Trump is focused on and where the Biden administration significantly held us back is using cyber not only as a weapon, but as a defense. The Biden administration, according to the people in D.C. at the defense companies and frankly at CIA, would not let those agencies use cyber to match with the big four, Iran, Russia, China and North Korea. Now we can and also use it. So it's going to be extremely important. So while the defense budget is up for grabs, this part of it is not. We significantly underspent on it as a government, as a Department of defense. That will pick up substantially. Guys, give me also if you can give me a week to date on, on. You know, real quick, Josh, I want to do one more name. Go, go ahead. Real quick.

[Bryn Talkington]

Just CrowdStrike is now the fifth best performing stock year to date in the S&P 500 RSI of 71. So still not crazy overbought. But this is like in the pantheon of comebacks. It was in a 44% drawdown last summer in the wake of that bug. I don't think we've ever seen a company come back this fast. And it's really a credit to George Kurtz and his leadership. This is Crisis Management 101. Every other name in the S&P 500 should look at what just happened here.

[Scott Wapner]

No, thanks for the value add and I'm glad you said that. I do want to hit Netflix before we take a break. We talked about the momentum ETF the mtum, which was at a record high. JP Morgan within there gets a positive call today. Netflix is a record high today, too. Weiss, they're considering a bid for Formula One's US TV rights. What do we think as they try and sort of build out their exposure into sports and they have an ability to leverage that more than anybody else buying the rights. So I hope they do. The stock took that leg up past $1,000 target that everybody had after Disney reported loss in subscribers. So points out the unique asset here. The Absolute flawless execution. I'm not selling any of it. All right, all right. We're going to take a quick break. I feel like we hit a lot of stocks in that first go around here. And coming up, a very bad, a bad week for one of Jenny's stocks. It's down nearly 25%. We'll update that name and Jenny's going to tell you how to play it from here. Plus our calls of the day. We're back in a couple minutes. Business. It's all the things that keep this world turning. And behind every one of these companies is a partner helping to keep it all moving. It's why the local flower shop and your favorite pizza joint, the startup in the stadium, hospitals and hotels, banks and restaurants nationwide all choose the advanced network cybersecurity solutions and round the clock trusted partnership from Comcast Business, the company that powers more businesses than anyone else. Comcast Business powering possibilities restrictions apply. Call or visit comcastbusiness.com to learn more. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. 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. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson report. Learn how to use AI to be.

[Josh Brown]

More successful with CNBC.

[Bryn Talkington]

Make it's new online course.

[Scott Wapner]

We'll give you examples that can help you master AI tools.

[Bryn Talkington]

Go to CNBCmakeit.com AI and register now.

[Scott Wapner]

All right, let's talk some more names. Skyworks is rebounding a little bit today. It doesn't seem you see it here. Dreadful week. Worst in fact since 08. December of 08. Worst day since October of 87 is what it did yesterday. I told our viewers that you were traveling yesterday which is why you couldn't join us. But now you're cornered.

[Josh Brown]

That's okay.

[Scott Wapner]

So what do you do with this name now?

[Josh Brown]

Well, coincidentally, I was cornered yesterday. I was squished into a flight foursquare on an A sell. I was terrible. I would have rather been calling in. Okay, so what you do, what we're doing is we're waiting it out a little bit because we think that the share price move yesterday was a bit dramatic. So they announced earnings and they said there's going to be. Yeah, they said, they said there's been a 20 to 25% basically real estate reduction in the chips that they put on the next generation iPhone. That's a lot. But it's also, I don't mean to make this sound like an excuse, it's just the iPhone. They also do Android, they also do cars, they sell chips all over the place for other things. So you take that and it's 25% of one thing. Shares traded down 25% also. So then I said, okay, what are earnings going to really come down by? Goldman actually reduced their earnings estimates by 30%. That seems too like too much. And so if earnings really were to come down by 30% and the share price was down about that much, that would make sense. But for one product. And these are like very, very long lead time chips that go into things. I think it's overdone. So we are getting out, right? The growth, it was in our discipline growth strategy has 700 million of free cash flow still. That will give them room to buy back shares that supports the stock. It just seems overdone here. So we're just kind of like taking a breath, letting the shares recover a little bit, hopefully more than the 11 3/4% that they're at now.

[Scott Wapner]

Did I just hear you wrong? You said you're getting out.

[Josh Brown]

Yeah, but not today. Not overdone. Sorry. We're getting out because it doesn't make sense for the strategy.

[Scott Wapner]

You're making the case that it's overdone but you're saying you're getting out.

[Josh Brown]

Yeah, totally. But not today.

[Scott Wapner]

But not for the viewers.

[Josh Brown]

But not today is the answer because this is, this is just too much. Right. And I don't think that the analysts like the one Goldman cut of 30% to earnings, that seems like too much. So we'll probably give it a few weeks, see where the dust settles. Kind of let some rationale.

[Scott Wapner]

You just like to try and make a little bit of money back before you sell it.

[Josh Brown]

Right. But this sounds like that is correct because I really think this share price here is overdone. So. So it can't work for our growth strategy going forward. I actually asked the question, does it now work for the equity income strategy because it now has a 4.2% yield. It depends on what investors want. Like if your starting point is today and you think, okay, the shares are overdone and you're getting a 4.2% yield, if your starting point is today, it could make an interesting investment. But for our growth strategy where you need real earnings growth ahead. Right. Plus Free cash flow, growth ahead, then it's not there. So it's going to work for, you know, it's just like Ackman and Gerstner, like our trash may be someone else's treasure. And we're hoping to get a little bit of that treasure before we fully brin.

[Scott Wapner]

Let's talk some roadblocks, if we could. It was downgraded today to a sell at Moffitt Nathanson. Price targets 34, they keep that the same, but they make the argument that shares have just simply run too far, far too fast. You own the stock. What do you think?

[Josh Brown]

Yeah, I mean, I own the stock around 30. And when analysts make these downgrades to a sell, typically analysts follow price. The stock moves higher, they raise price. Stock moves lower, they lower it. But his sell target or her sell target at 34 seems very off base. And so I think you have to ask yourself, how am I valuing the company? And I think this company, although it was down yesterday, their daily active users weren't what the market have seen. You know, Dave Bouzouki has continued to defy the naysayers, whether it's Hindenburg's piece that they put out this piece. And this company continues to be at the. At the crossroads between gaming and what's happening today. Like, they signed a deal with Mr. Beast. They're doing the NFL, they're doing the NBA. They did squid games a few years ago. And so it's just such an interesting ecosystem that they're able to quickly stand up with their outside developers and build games that are of current interest today. And so I think it's a very sticky platform. Japan is growing very strong, so their international business. And so I think that's why you're seeing the stock recover today, because it was definitely, I think, an overreaction. And I think the analyst is completely off base here.

[Scott Wapner]

All right, let's get the headlines now with Angelica Peoples. Hi, Angelica.

[Josh Brown]

Hey, Scott. The University of California student government sued the Trump administration today to keep Elon Musk's Department of Government Efficiency doge from gaining access to sensitive data at the Department of Education. The student organization, which is being represented by two consumer advocacy groups, accuses the agency of violating IRS policy by giving Musk's team access to data of over 42 million people. The Education Department has yet to comment. Federal Election Commission chairwoman Ellen Weintraub said Thursday night that President Trump has moved to fire her. Weintraub, who has served on the commission since 2002, called the Action illegal. And says she will fight it. The White House tells NBC News that the president, quote, has made a decision and it's not her. And more than 90 passengers and crew on a Royal Caribbean cruise ship are sick with a gastrointestinal illness. The CDC says the affected people have been isolated. The ship, the Radiance of the Seas set sail From Florida on February 1st for a week long journey. Royal Caribbean has yet to comment.

[Scott Wapner]

Scott, back over to you, Angelica. Thank you very much for that, Angelica. People's coming up, we check in on Josh Brown's best stocks in the market list. One name that he did flag for you last week is up big since then, which is why he'll give us an update next. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. 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. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson report. Learn how to use AI to be more successful with CNBC Make it's new online course. We'll give you examples that can help you master AI tools.

[Bryn Talkington]

Go to CNBCmakeit.com AI and register now. Name of the company is Moody's. The ticker is MCO. This is a $499 stock that I think when it breaks 500, all bets are off.

[Scott Wapner]

Okay. Well, that was Josh Brown yesterday Giving our friend Al Michaels the new stock pick. Stock went up 502. Was up at 504 today, Josh, before it took a little bit of a turn with the overall market as well. But that was a fun moment for Al and now we'll have to track it. You did well with ebay. Now the pressure's on. You got to perform again, my man.

[Bryn Talkington]

Oh, that's not pressure. Do you understand? I used to make 500 of those phone calls a day from not very far from where you're sitting right at this moment, young man. Look, I think Moody's and another name, it's on my best stocks in the market. Let's see, almost the same business is S and P Global SP gi. I think there's a daunting realization that these companies are the data providers to anything AI on Wall street and everyone is their customers, from the index ETFs to the hedge funds. And it's like it's a really interesting business and most of these companies really still haven't been discovered, despite the fact that the stocks have done well. So we'll keep an eye on Moody's, but this is a breakout in progress and I think it looks great.

[Scott Wapner]

We wanted to give also an update for our viewers on a few of those names that you mentioned last week on your best stocks in the market list. Cloudflare up 19% in a week. That's the highest level since December of 21 1. What, what do you want to say about it now?

[Bryn Talkington]

So just to reiterate, the premise of this idea is hanging near the goal. So we want to look at stocks that are working, that are already good, stocks that are under accumulation, and we want to understand what the story is and when they're approaching these breakout areas, you know that that's the opportunity. We're not looking for the cheapest, lowest price, worst chart. Like, that's not the game that we're playing here. We're hanging by the goal. And when you hang by the goal, you're going to score more. So what's happening? Cloudflare, very simply, this is a data 27% growth this quarter in revenue, 29% in in profits. And you know, you're talking about a company that is at the sweet spot, similar to a Snowflake, similar to a databricks, which is not yet public. All this air spending that we're talking about 50 billion, 75 billion, 100 billion. What are they spending it on? In addition to GPUs, you've got to have data sets and you've got to have the ability. I hear, and I think that's Brin, you've got to have the ability to manipulate that data and make it worth something. Otherwise, what is the point? What do we need all this equipment for? So that idea is why Cloudflare is doing what it's doing.

[Scott Wapner]

Cognizant was on the list, four and a half percent since then. Accenture about a half percent. GoDaddy's flattening Gartner is down about two and a half percent. Let me get back to Megan Casella, by the way, who has more breaking news for us from the White House. What are we learning now?

[Josh Brown]

Meghan, hey, you've got busy day here as always. President Trump just spent about 25 minutes in the Oval Office talking with reporters and sitting alongside Japanese Prime Minister Ishiba. And a few headlines to bring you here. The first is on U.S. steel and that proposed takeover by Nippon Steel, that $14 billion takeover. Trump saying that the two leaders will be discussing that, but that he has not changed his mind on that deal. And remember, he has long been opposed to this. So suggesting that he's not shifting his his opinion on that, but they are going to be talking about that further behind closed doors. And at the same time, I will flag CBS News is now reporting that Trump is considering allowing the deal to move forward and supporters of that deal are very much hoping that there could be some daylight here and some room for him to change his mind on that. So saying right now that he continues to be opposed to it, but some reporting that that might not be true for long. Trump also saying that he will probably be meeting with Chinese President Xi Jinping, but no further details on that yet. So we don't know when that would happen, whether it would be by phone or in person. But of course, lots to watch there as those Chinese tariffs took effect earlier this week week and the retaliation as well. And then just one final point, and I know you hit this briefly, Trump also telling reporters that he does plan to announce reciprocal tariffs next week. This is the idea that any country that has a tariff on American exports, he will match that tariff on their imports coming into the US So he says that now. That will be announced next week, Scott. So more to watch there as well. He says there will be a news conference and we'll get all the details then. Scott.

[Scott Wapner]

All right. Appreciate that update and important, important one at that. Moving some stocks at this very moment. Megan Cassell at the White House, Mike Santoli next with his midday word right here. All right, Mike Santoli, senior markets commentator at the desk for his day word is obvious. I mean, the market just doesn't like inflation. It doesn't like possible inflation caused by tariff headlines and it doesn't like inflation expectations from you, Mitch, that were elevated. It's a high noise environment. I do think that is the case. Now, the inflation expectations piece, I always try to discount that as a real factor because most normal people don't walk around with a one year inflation target in their minds. But I don't think it shows think about inflation. I do, I think normal people. So I think honestly what it is though is it's one more reason for the Fed to sort of be a little more hawkish or a little slower to move if the job market weakens up. They've said this. They said we're willing to look through the tariff effect on inflation so long as it's not being piled on top of A change in expectations. I think it's all about eggs and tariff announcements. That's what the UMESH number was. That being said, the ten year is still below four and a half. It's not cracking above that again.

[Bryn Talkington]

The market itself is definitely taking on.

[Scott Wapner]

Just modest amounts of water at the index level but it's flat for the week. So it continues to try and sort of trade one thing off the other. It's I think a kind of a.

[Bryn Talkington]

Less dynamic job market but a tight one.

[Scott Wapner]

And so you have this all of these things that seem as if they're at this equilibrium spot and we're waiting to see which way the next policy influence or something is going to make a turn. Well, you know, look, you're going to be driven by White House headlines for the next couple of weeks until you get in video's earnings in front of you. Yeah, that's the next cpi next big event. Yes, I mean you are going to get a little bit of inflation. I just, I'm sort of puzzling over what investors are going to take away from the fact that the Monday morning tariff sell off was a buy this time. Right.

[Josh Brown]

I mean you had the deferral and everything.

[Scott Wapner]

So we'll see what kind of trading.

[Bryn Talkington]

Patterns pop up on that.

[Scott Wapner]

Clearly it was an automated sell on that inflation expectations number. We don't like the aggressive tariff headlines but I think also investors recognize that it's high noise value. In other words, the fate of this expansion in this bull market is not going to rest on the balance of trading goods in and out of the United States and what we charge for the thing to push it. It could, but I don't know if it's the kind of inflation that self sustains and gets the Fed active. Yeah, I'll see you on closing bell. Yeah, that's Mike Sentoly. We'll see him for his last word a little bit later. The setup is next. We got the setup for you right now. Carlisle earnings next week Tuesday. Josh, before the Bell thoughts?

[Bryn Talkington]

This is one of the laggards of the group. I think that they're going to have a lot of great things to say about interpretation, mutual funds and private credit and I just think they're not getting enough credit for the turnaround itself. So I'm a big believer in management. I think Harvey Schwartz is fantastic and.

[Scott Wapner]

I'll be listening Carrier Global Tuesday before the bell as well. Jenny?

[Josh Brown]

Yeah, I think the thing that people are going to listen to the most on that is is tariffs and how they're managing and what they're thinking about, what we've seen so far from all of our earnings calls and all the strategies is there's like really no focus on Mexico. Mexico and China, no real concern there. But it's how, it's what people are saying about China.

[Scott Wapner]

You got Marriott too that morning.

[Josh Brown]

Yeah. And you know, it's funny, last week someone asked me something about Marriott with respect to tariffs, like there's no risk there. Steve and I were talking in the break about permanent compounders. Marriott's just a permanent compounder. So here you're going to look to the health of the consumer, see how people are spending, see what, what, you know, what's going on there. That's the big picture. Let's both those companies have no reason to report bad earnings.

[Scott Wapner]

Okay, let's get two more in. Give me 10 seconds on Robin Neighborhood next week.

[Josh Brown]

Brent looking for 100% revenue growth, 300% earnings growth. This stock is under owned by institutions. They're going to crush numbers. I think the stock looks really good going into the earnings earnings report next week.

[Scott Wapner]

You got middle of next week. Read it also. Josh.

[Bryn Talkington]

Yes, the stock is absolutely explosive. I think right now it's one of the top performing names in the market. Up 11% this week, 35% year to date. RSI 74. I'm up about 100% in the name. I'll be rolling up my stop as a risk management function but I still want to be here. So I'm going to give it longer of a leash than I normally would. This thing is just on fire.

[Scott Wapner]

All right, good stuff. Finals after this. Quick break. Last hour closing bell. I hope you'll join me 3:00 Eastern. Tom Lee will be with us here on set. Rich Clarida will join us as well. Cameron Dawson and Laurie Goodman too. And I hope you'll be there as well. Bryn Talkington. Your final trade is what?

[Josh Brown]

Dell. The earnings come out February 25th. Their infrastructure solutions group is on fire. It's the heart of the data centers. I like the stock going into earnings.

[Scott Wapner]

Highlighted that earlier along with some other names. Thank you. Josh Brown.

[Bryn Talkington]

Reiterating I am staying long. Reddit rolling up my stop. Higher valuation now than when I got in but a better business.

[Scott Wapner]

Great stock. Weiss, Taiwan semi. All these Capex announcements are great for Taiwan semi. Jenny Harrington.

[Josh Brown]

Okay, here's one from our growth strategy Apptiv. They reported yesterday Momentum looks like it's finally changed and it should. Nine times earnings, 9% free cash flow yield mid teens earnings growth ahead. They're breaking the company into two and it should be great.

[Scott Wapner]

Okay, should be great. We'll see. I thought it was going to be skyward.

[Josh Brown]

I thought if I said what they were going to be, it was going to take too long.

[Scott Wapner]

All right, I'll see you on closing bell. We'll follow meta, see if we go 15 in a row and the rest of this market too. Exchanges now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. 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 affiliate, 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.

[Josh Brown]

Expression of an opinion.

[Scott Wapner]

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. learn how to use AI to be.

[Josh Brown]

More successful with CNBC Make it's new online course.

[Scott Wapner]

We'll give you examples that can help you master AI tools.

[Bryn Talkington]

Go to CNBCmakeit.com AI and register now.