← Halftime Report
Halftime Report
Navigating the Tech Sell-Off 2/3/26
00:44:11
Scott Wapner and the Investment Committee debate the sell-off in tech and how you should navigate the volatility in the Mega-Cap names. Plus, the desk share their latest portfolio moves. And later, Josh Brown spotlights three names in his "Best Stocks in the Market." Investment Committee Disclosures
Loading summary
Transcript124 lines
- [00:00]
A
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market.
- [00:24]
B
Update podcast or find Schwab Market Update.
- [00:27]
A
Wherever you get your podcasts.
- [00:29]
B
Guys, it's no use putting it off.
- [00:31]
A
The best time for an underwear refresh is now.
- [00:33]
B
Tommy Don Underwear is designed for a perfect fit that stays put all day.
- [00:37]
C
There's zero chafe, thanks to four times.
- [00:39]
A
More stretch than competing brands and their innovative horizontal Quick Draw Fly is a game changer.
- [00:44]
B
With over 30 million pairs sold.
- [00:46]
A
There are thousands of men out there.
- [00:47]
B
More comfortable than you.
- [00:48]
C
Don't settle for less.
- [00:49]
A
Go to tommyjohn.com today for 25% off.
- [00:51]
B
Your first order with code comfort. That's tommyjohn.com comfort Tommy John comfort Perfected. 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 very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. It's the busiest week of earnings season with nearly a quarter of the S&P 500 reporting, headlined of course by the best performing mega cap over the past year, that is Alphabet and one of the worst, that is Amazon. We'll trade the markets with the investment committee. Tech is moving. The mega caps are. We will discuss with Joe Terranova, Stephanie Link, Shannon Sokotia and Josh Brown. I'll show you exactly what I'm talking about. NASDAQ is down more than one and a third percent and tech's getting hit really hard. Josh, you know, all of the mega caps are down. There are some stories, you know, out there about the impact and we're going to get into these a lot deeper. Anthropic has this new tool. It's weighing on a lot of the software names in video and open air. More drama. Apparently. We're going to get to that. But how do you see what's happening in these markets?
- [02:12]
A
I think we have one or two of these periods every year. The cause is always different, but the effect is always the same. Some of the most popular trades of the previous uptrend just get absolutely nuked. And I'm looking at some of the most widely traded, most popular stocks amongst both retail Institutionals, hedge fund darlings just nuked like one after another. I'm not going to say it's healthy or, or it's enjoyable as, as Taylor Swift saying, it's all right, we're dancing through the lightning strikes and every day it's like five new ones. So even the companies that have great reports are not, you're not really getting the benefit. But the companies that have even the slightest confusion around them, forget it. And that it's just one of those periods and you have to kind of run it out. Palantir is a really great example which I know we'll get to later, but just consider in an, in a normal market environment like what we had really since the start of the year, this name would be holding its 11 or 12% gap up open. It's only up 5% today. Imagine a stock like this after a report like that going red and it tells you risk appetite is coming out of anything that has to do with technology. The, the, just really quickly, the ground zero for this particular beating where you have stocks like Microsoft and a 25% drawdown, which is incredible. The ground zero is the application layer of the software stack. Every vertical, every capsize, doesn't matter if you're a company that has anything to do with selling the application layer of any technology process you can think of, even cybersecurity. The stock is not safe right now. They're coming for these stocks with massive sell orders.
- [04:04]
B
Let's, let's look at this anthropic story for a moment because it appears to be having a somewhat dramatic impact on several groups of stocks today. Microsoft's down two and a half percent, but they've released a new legal tool that is weighing heavily. You can look at some of the, not necessarily Nvidia, some of the SAS names where this is a software story, guys, we're talking about here. The IGV is now down 27% from its 52 week high. If you look at a lot of the SAS names today, and we're showing you some of the software names, But Intuit, there's DocuSign, there's Snowflake, there's Twilio, there's Service Titan. I gather if we looked at CRM or ServiceNow, you may see some similar type moves in this market. And they're not the only, they're not the only ones. There's some financial data providers that are lower today. So there's what I'm talking about. There's a service now down near 7. Let me see CRM did we ever show that? I'm not even sure. There's the exchanges which are down rather sharply. Joe, you were watching this earlier and flagged this for us as this just goes to the disruption that AI is going to have according to many on the software business, particularly SAS names, but also data analytics companies which are being turned upside down today. Yes, you want to give me some more on that? The cannibalization in software. It's absolutely real and it's interesting to me because yes, it's the software names, but also is the data service names that you mentioned. It's fact set, it's Broadridge Financial, it's Moody's, it's S and P Global and some of the exchanges itself. So I think this is a real theme. I don't think it goes away in 2026. If we look at software earnings in the current quarter, they are trailing the earnings for technology overall as a sector by about 15%. That's clearly troubling. I could tell you in the most recent rebalance, which you knew going into the rebalance, how uncomfortable I was feeling, Scott, about this. Software names. We had a dramatic reduction in, in the software names. Our technology weighting right now is at a historic low. We are seeing double digit weighting in five sectors. We have never been as diversified and that speaks towards where we are right now. Elevated volatility, but yet a rotational bull market. I still think the market's in a good place look today. Industrials doing well, energy doing well, materials doing well. So I think as it relates to these software names and the technology names, I do think when you look at your positioning, if you're staring at an overweight, it's time to take down that positioning. And I don't think you're sitting here saying I want to catch a falling knife, certainly not from an investment perspective. But you know what the problem is, is that the knife of software has fallen so far that people look at it and say it's way overdone. Like maybe they look at chips and say that upside move is way overdone. So maybe it's time to take some off of chips and maybe it's time to put some in to software. And then you have releases like this anthropic thing today and you have headlines that have moved and you have stocks that are falling and what you thought was a knife that had finally fallen enough to hit the cutting board, feels like the cutting board just moved lower. I don't, I don't know. You know, you invest in some of these Names like a Snowflake for example.
- [07:37]
C
Yeah, only I only have Snowflake synopsis and also Palo Alto. I actually think that the cyber companies are buyers right here. I mean they may go down because all of software is getting hit. But I think that you need and you talk to chief technology officers and they are spending on AI and they're spending on cybersecurity. And I do not think AI is going to take over cybersecurity. I actually think it's going to be the reverse. I think cybersecurity is going to be bigger than I have said it many, many times. Overall tech is crowded. We all know that. It's 35% of the S&P 500 today. Growth is down 150 basis points and was up 30 basis points. So there is, to Joe's point, a massive rotation which has been happening for the last several months. This should not be a surprise. We've been talking about it. The reason is because the underlying economy is actually stronger than most people had expected. And we got very good. It has been services, it's been part of consumer, it's been a I. Now it's manufacturing. Because we talked about this yesterday. We got Chicago PMIs, we got ISE yesterday on manufacturing, PMIs on manufacturing all blew out expectations. All are above 50, which is expansion. And that means the overall economy is doing well, better than people thought. And you want to own cyclicals and that's why you are seeing this rotation. And the problem with software, I think you have to be very, very careful and selective. The problem with software is there's no proof point short term that's going to dispel the concerns.
- [09:06]
B
Great point.
- [09:06]
C
There is no catalyst. So you want to be very, very careful. That's why I say the one I would look at or crowdstrike too. You can own cybersecurity.
- [09:15]
B
Fear, fear rules. Until there's something to discredit or discount the fear that people feel about that question, is AI going to kill software?
- [09:26]
C
Only 67% of software companies have beat on revenues and that compares with 83% of the tech companies that have reported outside of software. And so I think that the challenge here is that to Steph's point, if you have an opportunity across the market to be able to add to companies that have beat on revenue and beat on earnings this quarter and you still feel like with each release, whether it's Claude or whether it's anthropic, there's going to be a continued pressure on these companies. There has to be some evidence for you that they can turn the corner on that, on those revenues and grow their revenues in the second half of the year because you are not in a narrow market in terms of the ability to grow earnings this year. And so to, to underpin some of Steph's points, if we didn't have an alternative, if there was no alternative to technology like there was a couple of years ago, then I would say maybe you could step into some of these names, Scott. But there's plenty of other places to go and so don't spend so much time looking at what the S&P 500 is doing, rather look at these other sectors that continue to have momentum in this environment.
- [10:23]
B
I mean Josh, when you look at like service titan for example, which I think you made yet another bullish case on the other day.
- [10:33]
A
Yeah.
- [10:33]
B
You know that Stock's almost down 8% today. This, this is one of those stocks in the eye of the, the question on the storm around that question, how do you think about.
- [10:44]
A
They don't care. They don't. Right. You're exactly right. They don't care. Right now that when you see selling that looks like this and it's day after day and it's coming at already a 52 week low for most of the stocks in the index and it's affecting the Microsoft of the world. It's indiscriminate, it's liquidation, it's sector wide, industry group wide and they don't really care right now what the difference is from one versus the other. And then what the second phase of this, you see some of these, the selling gets exhausted. That's not going to happen in the tertiary or even the secondary players that'll have to start with the highest quality, most defensive, most defense, most defendable moats in the space. So if you're in let's say like a mid CAP Enterprise SaaS name and it's not, you know, it's not like a top 20 market cap. They will bottom, they're not going to bottom first and that's not where we should be looking. You know what else is interesting?
- [11:48]
B
You know what else is interesting? Let me, let me interrupt you just for a second because I like your reaction to this too. And then I want to hear from the group. If you look at what's happening to some of the private equity and larger private credit players today, those who have lent money to software firms, these stocks are getting crushed. I mean aries is down 11% today. My screen is KKR is down, Blue Owl is down 10. And the losses across the board here today are pretty dramatic.
- [12:24]
A
I would say two things to that. Number one, look how quickly we switched from, oh, my God, it's a bubble in data centers to, oh, wait a minute, actually, a lot of businesses might be worth way less than they thought they were because we're actually seeing adoption of these tools faster than expected and disruption from these tools faster than expected. How long did that shift take, Judge? Four days. I know you do this every day. It's almost imperceptible. But it's. Now it's pretty clear. We're not talking about air bubbles anymore. Now we're talking about, wait a minute, I might not actually be bullish for the stock market. That's a really, really big narrative shift, and everyone seems to have adopted it all at once. But the second part of that question, if every corporation is imminently disrupted, permanently disrupted, who's paying for all this stuff? And so that's like, really something that I don't think will get answered in one day. So if this is the cause of the 2026, the first correction of 2026, so be it. But now that seems to be a really big question. And you know, what's safe? You know what seems to be safer? All the physical. Physical commodities and the things that you really can't disrupt with the software reboot.
- [13:44]
B
Yeah.
- [13:44]
A
And it's a really interesting. Joe is. Joe is saying that, and I just wanted to echo what he was saying. It's not a market where there are no stocks going up. It's a market where there are very specifically disruptible stocks that are dropping like stones.
- [13:59]
B
NASDAQ right now, I mean, shands down one and a half percent on the day. So the slide in tech that we were watching as we came on the air looks like it's getting a little bit worse.
- [14:11]
C
Anyway, I would compare some of the pressure that we're seeing on private equity, private credit providers to what we saw in the aftermath of COVID with commercial real estate. There's an. There's an assumption, just as you saw with, with. With real estate funds, rates in particular, that there was this overabundance of office exposure. You're getting that right now in private credit and private equity. The other thing, Scott, is that there is. There are a lot of questions about the overlap and potential redundancy in private credit with your public portfolio. But that has been building. This is nothing new. You're just seeing the evidence of that in the last couple of days of trading.
- [14:41]
B
So the other story that we need to touch on and you know, on any other day, I guess we, we could have easily started with this because I mentioned at the very beginning of the show, the mega cap stocks were all lower, led by Nvidia, which is down for a second day. And there it is, down almost three and a half percent. That stocks about at the lows of the day. Is there growing friction between Nvidia and OpenAI day after that report about the $100 billion that Jensen Huang said was never a commitment to OpenAI. Now there's this new report that OpenAI is apparently dissatisfied with some of Nvidia's chips for inference workloads that they're reportedly looking for alternatives. That's from Reuters today. So it's two days in a row we're talking about these two companies which are so seemingly intertwined in the AI story in the arms race that it is that we needed to get our reporters back up because we need to know what's going on here. Christina Partzanovelos covers Nvidia, as you know, and she joins us now. So what do we make of this?
- [15:50]
C
I think it's important to point out Nvidia and OpenAI are involved in two separate deals. And which is which. Which is really creating a misconception about their actual partnership. The first deal that you mentioned, up to $100 billion, which was announced in September, has to do with OpenAI actually building its own data centers. If they build their own data centers, Nvidia will give $10 billion in each phase leading up to potentially 100 billion. This second deal with Nvidia and OpenAI has to just do with fundraising. My contact did confirm that Nvidia is involved with OpenAI's latest round of fundraising. Large amount. I don't know the actual amount just yet, but we kind of got that vibe from Jensen Huang over the weekend in Taipei when he said that they're still going to invest in OpenAI and it might actually be the biggest investment ever. Now, to your point about the Reuters article, you know, looking for alternatives, OpenAI has been working with other companies. They've already been working with amd, Broadcom for custom chips, Cerebras as well. So I don't necessarily think that's anything new and anything that the market should read as a negative for Nvidia because they're still heavily reliant on Nvidia. What stood out to me in that article was the relationship with OpenAI and Grok. OpenAI was supposedly in talks with startup Grok that makes these embedded chips that has embedded memory on These chips that supposedly, you know, answers chat queries much quicker than GPUs. Very recently in December, Nvidia swooped in and I shouldn't use the word acquired, but swooped in and took a non licensing agreement with GROK to hire all of their staff and get the and so we essentially can assume that OpenAI and Grok are no longer in talk. So that just shows a defensive play on Nvidia's front. So I would say that was an interesting little tidbit from that article. But overall, both parties, Sam Altman, Jensen Huang, are saying they like each other. They're still in talks. It's just a matter of which deal we're talking about. So keep that in mind when having this discussion.
- [17:50]
B
Okay, well that's why we had you come talk to us because you're able to put it into perspective for us and tell us what exactly we need to know. Christina, thank you for that. That's Christina Parts. So as Christina just alluded to, Sam Altman weighed in on all of this last night in a social media post that we'll show it to you, said the following. We love working with Nvidia and they make the best AI chips in the world. We hope to be a gigantic customer for a very long time. I don't get where all this insanity is coming from, which means Kate Rooney is going to cut through all of that for that part of the story. What do you make of this, Scott?
- [18:30]
C
That's a pretty strong reaction from Sam Altman. You know, we had talked yesterday about sort of the behind the scenes pushback from OpenAI saying, you know, they didn't know where it was coming from. That relationship with Nvidia is still strong. Sam Altman is known to sort of respond to things like Elon Musk on Twitter. I would say it's very rare for him to respond to a news article like this and he obviously it's hit, hit a nerve with OpenAI. I would say based on the Altman tweet and based on Sachin Katie, who's the head of compute over there, he points out our entire compute fleet he says runs on Nvidia GPUs. That's what I'm hearing. It's 100% of their current fleet right now. So Christina mentioned some of the existing partnerships that are sort of future ways to diversify. OpenAI is compute constrained. They have talked about this endless demand. You know, you can debate sort of the fiscal responsibility of that. There was reporting about some of Jensen's pushback on that I think there have been questions over are they spending too much? OpenAI would say absolutely not because it translates into revenue. The cfo, Sarah Fryer has really tried to make that point. Their point here is Nvidia is king. We need to work with Nvidia. We like Nvidia. We don't have a problem with their chips. If anything, we need more of them. Plus we need these other relationships with amd Cerebras. The list goes on. You've got Amazon as well. So they've tried to diversify that. That was a good point by Christina, that some of that is out there. We know that they've tried to look elsewhere. I think they have really tried to push back on any reporting that anything is on ice. That deal up to $100 billion in tranches. That was, I think over the last few days, we've seen sort of some cracks in that. You know, is it 100% guaranteed? Is it going to happen this year? That's one of the big questions. I would say the show of confidence from Nvidia is that fundraise is their current participation in the equity round. I'm told from Nvidia side. Not necessarily from them, but from sources who are familiar with the deal and who I've talked to about Amazon's participation, too. Term sheets have not been signed. I'm told that number could be up to $20 billion. So a lot of this is fluid, but clearly they are aligned. They're strategically dependent on each other, especially OpenAI and Nvidia. They do not want any perception out there that they have issues with Nvidia that would cause major problems for OpenAI.
- [20:41]
B
Yeah, well, no doubt it may cause whole problems for the whole chain and that's why this gets so much talk. Kate, thanks. It's Kate Rooney on that. On that side of this still, what feels like it's a developing story. Let's also remind you one more time, we probably flashed the promote promo up on the screen. Is there a better time to hear from Jensen Huang than tonight? No, you're going to with Jim Cramer. It's a CEO exclusive interview. Jim and Jensen Huang, you'll see it tonight on Mad Money, so don't miss that. Okay. We. We kind of glossed over Palantir today, which, you know, had very strong earnings. If we continue the conversation. Stocks up 7%. Joe, you own that. It got upgraded today to outperform from neutral at Baird. What do we think about this name, which, frankly, we used to talk about, I feel like almost every day we did we haven't talked about it that much. Well, we were talking about it every day because it had an astronomical rise. Momentum took hold, and it was supported by really spectacular revenue growth. And you saw that again last night. 70% revenue growth for this company reminded everyone why this company is perceived to be one of the software names that will survive the AI automate, automation that's cannibalizing right now, the software industry. So the stock, unfortunately, today is not trading as well. You would have liked to have seen a little bit more of a breakout. It's not trading well, though. I don't think for idiosyncratic reasons. I think it's more about what's going on in software overall. So it's one of the five names that we still maintain from the 17 that we previously had in software. It's one of my favorite names. We've held it for quite some time at $16. And besides Palantir, the other name I would suggest would be Zoom. I advocated for it last week. I bought it personally. It's pulling back right now into the supportive, moving averages, which is rare in the software names. It's funny, you know, we spent the last, I don't know, however many minutes talking about, you know, these companies, but these huge personalities. Yeah. Jensen Huang, Sam Altman, Karp, and Palantir. And don't forget about Elon Musk today and the news that Space X is now formally acquiring Xi. They value the combination at $1.25 trillion. I mean, you can invest in these things in the private markets, and anybody doing that, no interest, private equity is doing it for sure. The last 10 years, you have have nearly 2500 companies and about half a trillion dollars that's been invested in the private software companies. And I really think what's now happening is that we've questioned valuation for years. Okay. Now you're seeing the multiple actually contract on these software names, and I think that's what's the dominant force in the market. All right, let's do this. Let's get away from technology. How about that? Really? Yeah, let's do it. Yeah. I mean, we spent like, 20 industrial materials. And rightfully, rightfully so. I mean, you have no choice. You have no choice. This is where the action is today. The. The action year to date has been, oh, yeah, with that kind of small part of the s and P500 called energy, which is up 14% year to date. It's coming off the best week since October of 22. And Josh has bought Devon Energy. It's a New Buy. Tell us why.
- [24:04]
A
We wrote a column yesterday for best stocks. The market Sean wanted to take a look at. All right, if everyone is selling all these tech names like where is the, where is the money going? Because we have a belief system where we don't think it stays in cash for more than a few minutes these days. So we looked at some of the best performing names amidst some of the worst days so far. Late January, early February. And of those names, one chart looks really appealing to me. Pulled the trigger later on in the day yesterday and I remain long. The name is Devon Energy. This is Ticker DVN and stand back. We got a float shrinker on our hands. This is a company that has reduced its outstanding share count by 13% over the last four years. The last quarter they reported $400 million back to shareholders through dividends and stock buybacks. They also retired almost half a billion dollars in debt way ahead of the schedule they, they had laid out for, for shareholders earlier. It's not a sexy business. It's natural gas exploration and production and oil. It's paying a two and a half percent yields. But basically this is the type of stock that they're gravitating to when they come out of the Oracles and the Microsoft and guys give me like, give me like a three or four five year chart. Maybe it's hard for me to do this without candlesticks and moving averages, but this is snapping a downtrend that's been in place since May of 2022. Effectively this stock's been in a massive downtrend. It's been relentless and now that's over. So we have very close to 52 week highs. We have a breakout above 40. I'm using the 35 to 37 area as my stop. I'll be checking it each Friday toward the close. Traders might want to tighten that up to 37. Investors might want to use 35. And I'll be rolling that should this trade continue. I think there's very little overhead resistance left here for Devon. I think the stock's going to continue to move.
- [26:05]
B
Okay, we will watch that. Let's do one more move that we have, which frankly I'm surprised about. Stephanie Link selling what has been a big favorite. Right?
- [26:16]
C
Yeah, we can spend five seconds on this because it's simply. I just took gains. I'm up 70% in the name and I think the easy money has been made. I think that the CEO will continue to do a very good job turning this company around.
- [26:27]
B
Bill Brown, I just.
- [26:28]
C
Yeah, yeah. So.
- [26:30]
B
And that's why one of the reasons you bought the stock. Yeah, right. If not. If not, the key reason. Well, certainly one of his valuation.
- [26:37]
C
Look, I bought it when it's trading at 12 times. Forward estimates is now trading at 24 times. So it has rerated because of him, because they've delivered. I think he's doing a great job. I just want to take that money, take the profit and put it into some of these other things. Synopsis is one of them.
- [26:50]
B
Don't go well. I mean, you know, it's like a Culp. Larry Culp. Like investment for you.
- [26:56]
C
Not nearly like a Larry Culp.
- [26:58]
B
That was epic. Well, I mean, that was. My point is that when you believe, when you have such high conviction in the ability of a CEO to deliver, you like spins, you like all sorts of stuff like that. And the ability to execute like you thought Larry Culp was going to do, I mean, the proof is in the pudding, the stock. And so it is in this case, too.
- [27:21]
C
Yeah, I mean, and Boeing is in that case, too. So there's a lot. There's a lot that I have in this, in this space, but I just took my, my profits.
- [27:27]
B
Okay. All right. We. We're going to debate our top calls of the day coming up. Plus, we do have three new names that just hit Josh Brown's best stocks in the market list. And later, we do have another move from Joe as well. So we're real busy. We'll take a break, we'll catch our breath, we'll come back and we'll talk about all that.
- [27:46]
A
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed Daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [28:15]
B
Flowers die in three days. Matching underwear for Meundies, that's a gift that lasts.
- [28:19]
C
Meundies creates matching prints for couples and friends. Same adorable designs in different cuts for each of you.
- [28:24]
A
All made from their signature ultra modal.
- [28:26]
C
Fabric that feels incredibly soft.
- [28:28]
A
With 90,000 five star reviews, MeUndies matching.
- [28:31]
C
Prints are the perfect gift. Valentine's Day is February 14th, so don't wait. Get exclusive deals up to 50% off at me undies.com sxm code sxm.
- [28:40]
A
That's meundies.com sxm code SXM LifeLock.
- [28:46]
B
How can I help?
- [28:47]
C
The IRS said I filed my return, but I haven't.
- [28:50]
A
One in four taxpaying Americans has paid.
- [28:52]
B
The price of identity fraud.
- [28:53]
C
What do I do? My refund. I'm freaking out.
- [28:56]
A
Don't worry.
- [28:56]
B
I can fix this. LifeLock fixes identity theft guaranteed and gets.
- [29:00]
A
Your money back with up to $3 million in coverage.
- [29:02]
C
I'm so relieved.
- [29:04]
A
No problem.
- [29:04]
B
I'll be with you every step of the way.
- [29:06]
A
One in four was a fraud.
- [29:07]
B
Paying American.
- [29:09]
A
Not anymore. Save up to 40% your first year.
- [29:12]
B
Visit lifelock.com Special offer terms apply. Let's do some calls of the day, Bowie. Boeing reiterated by today bank of America. You've just mentioned Boeing to 70 is their target and execution story. So that's like what we're literally just speaking about that that has wings. That's their quote.
- [29:43]
C
I like that. We think that was pretty good. Yeah. I don't think there's anything new in this report, Scott, but total revenues and free cash flow are absolutely recovering, especially in the aviation business. Last quarter they delivered 160 aircraft. That is a massive year over year increase and speaks to the CEO and execution improving. And I think that this company is a very good shot at getting to $10 billion in free cash flow versus negative last year by 2030.
- [30:11]
B
All right. JP Morgan got upgraded today, Josh to neutral from underperform. At Bear, the target is 280. So that's obviously lower than where this stock is. What's your. What's your take on this?
- [30:26]
A
Yeah, I don't know what to do. Wait, so they're bullish but they think the stock's worth $50 less. So do I sell it and buy it back? I'm not, not 1000% sure what even is the purpose of that conclusion? I think over the next couple of years it's $500 stock. So I remain long. This is a core position for me. I've probably ignored I don't know 10,000 analysts buy and sell calls over the years. And I'll ignore this one tip.
- [30:53]
B
It's only about six, eight months ago that the stock was downgraded. So it's not that long in the. You know how I think most analysts work that. You see, I can't think of a catalyst between now and then and now that would make the stock be upgraded from an underperform perform. You know what I'm trying to say There hasn't been what Eloquently as I, as I said that.
- [31:24]
A
What happens is the Sell side research is not a public good. It's not a not, it's not a not for profit that's issuing research. They want to generate trading activity on the desk. It's the whole point. They want to have calls and they want to get the hedge fund PMs on the phone with the analysts who could explain what they see going on. And they ultimately, they want 2 or 3 cents a share. So you have to put out research whether you change your mind or not. But if you do change your mind or change your target, it gets a little bit more attention. The, the reality is as an investor, you don't really need a catalyst. Walmart just joined the one trillion dollar club today. I don't know, we haven't even mentioned it yet. It's pretty remarkable. What's the catalyst for Walmart over the last two years? There isn't one. It's just a core holding that continues to execute and find new levers to pull for growth. And that's J.P. do you understand? J.P. morgan just built a Death Star in the middle of Manhattan. They are not just content with the size that they've become, but now they're going to apply pressure. They are going to be incredibly profitable over the next couple of years as they already have been incredibly dominant. And I think you have Jamie Dimon there still for another couple of years. I don't think the next political cycle is the one he wants to jump into. So like, you know, upgrade, downgrade, blah, blah, blah, companies paying a nice dividend, buying back stock executing. I just, I tune it out.
- [32:54]
B
Okay. All right. Leslie Picker has the headlines for us.
- [32:57]
C
Hey, Scott. Iran's president says he instructed the country's foreign minister to pursue fair and equitable negotiations in nuclear Talks with the U.S. the comments mark a shift for Iran, whose Supreme Leader had previously dismissed the talks. A US official tells Mississippi NOW that plans for the Friday meeting in Turkey with US Envoy Steve Witkoff are tentative. New York Attorney General Letitia James announced today her office will deploy legal observers to monitor and document federal immigration actions in the state. They will be volunteers from the Attorney Attorney General's office who will be instructed not to interfere with enforcement activity. James's office says the effort is the first of its kind in the US and skier Lindsey Vonn says she is confident she can compete in her fifth Olympics Games this month after tearing her ACL in a crash four days ago. She said today the ligament in her knee was completely ruptured, but that she should be able to race with the help of Brace Bond made a comeback last season at the age of 40 after six years away from the sport. It's good news. Sounds quite brave and quite painful, though. Scott.
- [34:04]
B
I'm not doubting her.
- [34:06]
C
Me neither. Bullish.
- [34:08]
B
Oh, Lindsey. Yeah. Big time. Big time. All right. We'll see. And we look forward to that. Coming up, Josh Brown. He's ready with his best stocks in the market list. Try angel stuff for your tushy. It's made by Angels. Soft and strong. Budget friendly. The choice is simple.
- [34:36]
C
A role that feels like paradise and.
- [34:39]
B
Always at a heavenly prize.
- [34:42]
C
Angel Song. Angel song.
- [34:45]
B
So it's pick up a pack today.
- [34:48]
C
Angelsoft.
- [34:49]
B
Soft and strong. Simple.
- [34:52]
C
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.
- [35:05]
A
We'll teach professional skills to help you.
- [35:07]
C
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. Edu.
- [35:23]
B
Bubba Wallace here from 2311 Racing. You know what's slower than a pace.
- [35:27]
A
Car waiting at the car wash. That's when I fire up Jumba Casino. It turns these slow minutes into fast fun. With new games every week, you'll never get bored. Next time you're stuck in the slow lane, speed up with Chumba play now@chumbacasino.com let's Chumbo. No purchase necessary.
- [35:44]
B
VGW Group void. We're prohibited by law. CTNC's 21+ sponsored by Chumba Casino. All right, we're back. Josh Brown's best stocks in the market list. We said three names just popped. One is forming a golden cross. Which one is that?
- [36:15]
A
Yes. Well, here's. Here's the one that I want to talk about. Targa. I gotta do this fast. Targa. Trgp. So we wrote this up yesterday. If some of these charts look like they're going crazy, like we literally publish this at 10 in the morning yesterday. So I'm doing the best I can, guys. 2% dividend yield. Expecting 22% cash flow growth. They report in two weeks. So for this quarter, traders can use the 50 day as a trailing stop. It's about 183 to 185 is that area. The stock is a little bit extended now breaking through 200 RSI is tame at 72. Not crazy overbought. I want to get to WW Granger. This is tools, equipment, supplies. None of this is disruptible by our AI. They reported this morning stocks up 4% again. We talked about it yesterday. They just returned 1 $2 to shareholders last year via dividends and repurchases. They'll do the same thing again this year. Meaningful resistance at 1100 and at 1200. So maybe we just saw the first level break. The next level will be the next challenge. But then beyond that, there are no sellers in this stock. Last one, Cortiva. This is literally seeds, like planting seeds also has a pesticide business and I think they're going to spin that off and be two companies. Either way, Breakout Mode raised their full year guidance. Cash flow is explosive growth once again after a long time of nothing. Traders should watch for a move above 75, which I guess we're approaching right now on good volume. That's your trigger, I think you could buy. You see that Golden Cross Judge, to answer your question, you have a 50 day crossing above the 200. What that tells you is that the buyers are taking control of this chart. You see the accumulation since that low in September. No reason why this one can't keep going.
- [38:08]
B
All right. Good stuff. Thank you for that. We have a news alert down on Capitol Hill. Emily Wilkins, of course, has that for us.
- [38:13]
C
A.m. hey, Scott. Well, as you know, we've been following all shutdown developments and now it looks like very likely that the federal government shutdown is going to end this afternoon. This comes after the House just wrapped up a very challenging test vote. They needed to get basically all Republicans on board. Took some arm twisting, but they did get there. And now we are expecting a number of Democrats to join with Republicans and actually passing the funding bill that will keep most of the government funded until the end of the year, save for the Department of Homeland Security, which of course is going to be funded for now just until the 10 days so they can figure out some reforms for ICE as well as Customs and Border Patrol. Now, those negotiations could take much longer, but this does mean that things like the Bureau of Labor Statistics, faa, other organizations that have already started to see some early impacts will be going back to normal fairly quickly. Scott?
- [39:07]
B
All right, Emily, thank you. Good update. That's Emily Wilkins Santoli. He's next with his MIDDAY word. Welcome back. We have more on that developing story we hit a little bit earlier in the show and on a couple of of front that the future of that large in video investment into OpenAI, that that was part one, part two was that Reuters story from today that OpenAI was Reportedly dissatisfied. It's the word that was used in this story with some of Nvidia's chips. Sam Altman had responded to that on social media. And as we read you earlier, I also told you that Jim Cramer was interviewing Jensen Huang in an exclusive interview and you're going to see that tonight on Mad Money. However, we do have some sound from IT that is just in and he responds to this drama. Is there drama? Here's Jensen.
- [40:26]
A
At all.
- [40:27]
B
It's complete nonsense.
- [40:28]
A
We love working with OpenAI. We are incredibly honored and delighted to be able to invest in their next round. And so we're privileged that they're inviting us to invest for each one of their rounds. We would love to be invited and.
- [40:45]
B
We would consider, of course, investing in it.
- [40:47]
A
This is one of the most consequential technology companies in history.
- [40:52]
B
Okay. There's no controversy at all. I'm not sure if you caught the very, very top of that or not, but that's what Jensen Huang said just moments ago with Jim. And you can see the full interview tonight on mad money at 6pm eastern time. So you don't want to miss that certainly in light of everything that is being discussed over the course of this this week thus far. Mike Santoles here, our senior markets commentator, the overtime co anchor. Of course, if nothing else, today's price action in many names, especially software and we told you some of the exchange related names, we're trying to understand how AI is going to impact a whole large group of stocks. Yes. And then on top of it, anytime there's any question, drama, perceived controversy at the very top of the food chain with an open or Nvidia, you're going to have maybe a sell first respond later reaction. Yeah. And it reflects the fact that you, the areas of conviction within this trade have narrowed so substantially. It was, it was memory and it was Google. I mean essentially those are where everybody's panicking into those two areas because it was perceived that that was safe from a lot of other things. So I think you can take Jensen Huang's comments about their close ties and nothing going on here with OpenAI and then you can react by saying, well anything attached to OpenAI's ecosystem is actually what's suspect in this market right now. And not only that, Jensen has had nothing but enthusiastic things to say about his business in the future for the last six months and the stock has gone nowhere in six months.
- [42:28]
A
So I think you can kind of.
- [42:29]
B
Believe in the long term this is where we're going. But have we already paid for it up front on a lot of different fronts.
- [42:35]
A
And then of course, you bring up.
- [42:36]
B
The point of, you know, these moats drying up all over the market, at least perceived that they're drying up. And it's not just, you know, I don't like saying fintech. I don't think fintech's the thing. But PayPal, Visa, MasterCard have traded badly. They bounced yesterday, not today. So I do think that basically everyone's focused on the negative impact of I not really sure where to grab for safety. I mean, look, we're barely off the high. Sure, we've crossed 6900 in the S&P 17 times in the last 37 days. We're stuck here. But 7% of the NASDAQ's making a new 50, 52 week low today and the market's only 3% off its high. So there's destruction underneath. Well, because there's another story to tell that has people still bullish believing in the uptrend. I'll see on closing bell. We're going to get into this a lot later on this afternoon and Mike will be back with us to help us get into that. We're back after this. All right, welcome back. We talked a lot already this week about the rebalance in the Jyoti. That's Joe's etf. One of the interesting names that was added is Pultegroup. As you know, Stephanie's been bullish on housing for a long time. And now you add this. Tell me more. So From October of 2022 until the end of 2024, we maintained positioning in either one of the home builders, whether it was nvr, Lennar, Horton, we were somewhere at some point. We liquidated those names, moving into 2025. It's interesting because I think there's been really good resiliency so far this year in these names as it relates to Pulte. The reasoning behind getting back into it. Yes, it was able to pass the momentum screen, but it really was the quality screen that this name stood out for us. The return on equity, the debt to equity, very strong. So kind of building back into the builders once again. And it's interesting because once you take that first step in there, there's usually more to follow. Yeah, Steph, I mentioned at the top, nobody more bullish on this sector than you, Dr. Horton. Toll Brothers are the ones you own.
- [44:39]
C
Well, it won't take much because I don't think a lot of people do own these stocks. Right. And now if this us home builders now today are working with the Trump administration to produce a million homes. I don't know if it's right or not, but if so, that's $250 billion worth of new homes that would come onto the market market that would help the affordability program. And at the same time, these companies are minting money. They have. I mean, Dr. Horton has three and a half billion dollars in free cash flow. I have said this many, many times, they'd rather buy back their stock than actually produce homes. So if this program is right, it's accurate. This would be a nice flip for the industry and very positive. Somewhat antithetical though to the Trump's administration not wanting private investors to own these homes because it's rent to own. But we're not going to get the supply supply we need out of existing home sales though. So there's going to have to be new homes coming on the market to ease the affordability challenge.
- [45:26]
B
Rocket companies, how you play this?
- [45:28]
A
Josh, I bought the dip. I was on the air the other day. I thought the sell off was stupid. Maybe it was my final trade. I don't even remember. Anyway, it's right back. So I think the stock is significantly undervalued. They have built arguably the greatest refinance engine for their existing mortgage customers. And now with the addition of Redfin and Mr. Cooper, they've got a front to back, floor to ceiling platform for the entirety of the home buying experience. They're going to do very well and I remain long.
- [46:01]
B
All right, we'll take a break, we'll come back, we'll do finals. By the bay. We're heading out there because we are going to be live on halftime and closing bell Thursday and Friday ahead of the big game. And look who's joining us on the left there. Joe Montana, four Super Bowls, he never lost one. George Pine, Michelle Gass, the obviously the namesake stadium where this game is going to take place. Brad Gerstner, Mark Ganis, we're working on some other fun stuff and I look forward to all of you joining us while we do that. 3:00 clock Eastern today, Cameron Dawson, Alex Kantowitz, Chris Verone, Jim Stewart. So we'll kick that all around too. Josh, final trade. Quick, what do you got?
- [46:51]
A
ExxonMobil new 52 week high, new all time high. Raise the roof.
- [46:55]
B
All right, thank you very much.
- [46:57]
C
The roof champ. Talking a lot about large cap rotation, Scott, but a lot of that's going in small cap so don't lose the thread. All right.
- [47:04]
B
But coming out of small caps lately, go see Steph, go. Oh, right, right, right.
- [47:10]
C
The Hometown Automation, Automation and Robotics and early innings. I expect a good quarter.
- [47:15]
B
Okay, Joe Hubble added to Jyoti. All right, I will see at 3 o' clock on the closing bell. The exchange begins right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at Twitter, 12 Eastern only on CNBC.
- [47:34]
C
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Such opinions are based upon information the Half Time Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Olivia loves a challenge.
- [48:10]
A
It's why she lifts heavy weights and likes complicated recipes. But for booking her trip to Paris.
- [48:18]
C
Olivia chose the easy way with Expedia, she bundled her flight with a hotel to save more. Of course, she still climbs all 674.
- [48:26]
B
Steps to the top of the Eiffel Tower.
- [48:29]
A
You were made to take the easy route.
- [48:31]
B
We were made to easily package your trip.
- [48:34]
A
Expedia Made to Travel Flight inclusive packages are atoll protected.