← Halftime Report
Halftime Report
Rethinking the AI Trade 9/10/25
00:42:54
Frank Holland and the Investment Committee debate the blockbuster move in Oracle and what it means for the AI trade. Plus, we discuss some of the Committee’s stocks on the move. And later, we hit the latest Calls of the Day. Investment Committee Disclosures
Loading summary
Transcript129 lines
- [00:00]
Skechers Advertiser
Moms and dads. Do you wish you could know where your kids shoes are at all times? Now you can with Skecher's newest Apple AirTag compatible sneakers. Find My Skechers. There's a clever hidden Airtag compartment under the shoe's insole. It's sleek, secure and your child can't feel or see it. Then you can check where your kids shoes are on the Find My app. Plus they're available for boys and girls. Get Find my sketchers@skechers.com, a Skechers store near you or wherever kids shoes are sold. Apple AirTags sold separately. Hey Fidelity, what's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on US stocks and ETFs.
- [00:42]
Frank Holland
That's music to my ears.
- [00:44]
Skechers Advertiser
I can only talk.
- [00:47]
Joe Terranova
Investing involves risk, including risk of loss.
- [00:49]
Frank Holland
Zero account fees apply to retail brokerage accounts.
- [00:50]
Joe Terranova
Only $0 commission applies to online US equity trades and ETFs and retail fidelity accounts sell order assessment fee not included. Some account types and securities excluded. Details of Fidelity.
- [00:56]
Frank Holland
Com Commissions Fidelity Brokerage Services, LLC Member.
- [00:58]
Joe Terranova
NYSE SIPC.
- [01:02]
Frank Holland
I'm Scott Wapner and you're.
- [01:03]
Joe Terranova
Listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day.
- [01:10]
Frank Holland
We record this live weekdays at 12 Eastern.
- [01:13]
Joe Terranova
Listen in.
- [01:16]
Frank Holland
Welcome to the Halftime Report. I am Frank Holland in for the judge Scott Wapner front and center at this hour, rethinking the AI trade following those blockbuster results from Oracle, the investment committee standing by without their playing this monster move. Joining me for the hour, we have Joe Terrano, the Jason Snipe and Jim Leventhal. But first, quick check on the markets. Right now. The S and P and the Nasdaq both hitting fresh record highs. Right now you're looking at the S and P up just under a half a percent, the Nasdaq up just over a third of a percent. The outlier here, that's the Dow pulling back nearly a half a percent. Also this morning we're waiting or this afternoon I should say we're waiting. The first trades for Klarna, that stock pricing at 40 bucks a share. It's now indicated to open between 52 and $54 a share. We're going to bring you those first trades as soon as they cross. Our Leslie Picker is standing by. But let's start with chart of the day. Now look at this chart, guys. Oracle, just amazing. The stock soaring to a new record high as the company offers bullish outlook on strong demand. Shares up over 41%. Everyone here at Post 9, you own the stock. Joe Terranova, I'm going to start off with you. Is there anything in this, this report to nitpick at? Or is this just a blockbuster report that moves the markets higher, that moves the AI trade higher, that gives a boost to software hardware energies? Is it just that or is there something else here?
- [02:31]
Joe Terranova
Well, it's a great question to ask because I think the, the natural re and natural response to seeing an individual stock up 41% is to automatically think you could take the other side, that you're going to get some form of mean reversion. You began the show by saying rethinking the AI trade. I think that's actually a real challenge if you're going to do. There's nothing to rethink here. This is very clear. This is actually. You should not be outthinking yourself. The AI trade has been the dominant trade for the last several years. It is literally the catalyst that has saved markets in the last two years when we were coming out a very punishing interest rate hiking cycle from the Federal Reserve. So I don't think by any measure here you try to overanalyze what this is and get in front of it. You do not short it. You understand that if you have been there, and in the case of Oracle In July of 2024, we added it to the ETF at $139. Why did we do that? We did that because we knew the quality of factor was strong, but we saw the momentum factor begin to build alongside that. This company right now, and the street is expecting that their cloud infrastructure growth over the next five years goes from 10 billion to 140 billion. Okay, so there's nothing there really to overthink and to get in front of. If at some point this momentum reverses itself in the artificial intelligence and generative AI trade, that'll be well known to all of us within the marketplace. But I think the most simple thing to do right now is to understand how dominant this force is in the marketplace. And you could do one of two things. Participate or sit on the sidelines and wait for the inflection point. And this report says it's not coming anytime soon.
- [04:25]
Frank Holland
I mean, we're looking at a right angle on a chart. How often do you see that?
- [04:28]
Joe Terranova
JOE terranova It's a parabolic move. Parabolic moves are very tempting. Parabolic moves can sometimes be scary. But parabolic moves most of the time means if you're not participating. Take a step back and observe for a little bit.
- [04:44]
Frank Holland
All right, Some people are doing a little bit of thinking about this. The analyst in this case B of A raising their price Target on Oracle from 295 up to 368, Citi from 310 up to 410, UBS from 280 to 360, etc. Etc. Etc. We keep going here. Jason Snipe, same question to you. Is there anything to really think about or is this time to put more money back in tech, more money into this trade and also those second derivative plays, energy infrastructure, etc.
- [05:11]
Jason Snipe
Yeah, no, I mean, I can't remember the last quarter I saw like this, right? You know, RPO 455 billion up 359% year over year. You know, it was a miss on the top and the bottom. But it's obviously all been about the guide. You know, for me that the glaring theme for me is capacity constraints. They added 4 billion multi year contracts this quarter from three different companies. Obviously suspecting open air is one of them. But these are, this is overflow from Microsoft, Google and Amazon. So to Joe's point, I think this theme is alive and well. It has been for some time. We've seen other numbers from different companies, whether it's AI Jason or AI Direct. You know, obviously we saw a quarter from Marvell last week that wasn't so hot. We saw from Broadcom that was really strong, you know, in video there were some blemishes there on the data center revenue. But this quarter was really strong. The theme I think again is very much intact and I think it is, again, it's not indiscriminate buying, it's being selective here. But these are obviously one of the winners.
- [06:17]
Frank Holland
You hit some metrics we're going to touch on in just a second, but first I want to go to the paragon of patience, Jim Leventhal. He's been waiting. He has been waiting. Jim, I know you want to take a bit of a victory lap. You bought this stock a couple multiples ago. Just give us your narrative on Oracle, how you feel about how it's trading now and tell the audience where you bought this stock at.
- [06:35]
Jim Lebenthal
Yeah, I bought this, I bought this two and a half years ago at $86 a share. Sorry to one up you, my friend, but you know, we both, all three of us have gotten in at great prices and actually instead of just pounding my chest, which is a little obnoxious and I apologize for that, I want to draw a conclusion from that, because I agree with Joe and Jason about the full threaded, full throated defense of AI and this stock in particular. I don't think you're going to get a pull time, a pullback anytime soon in Oracle. But think about what was going on with Oracle in 2023. It was a time frame where it was kind of burbling along while Nvidia was going from $20 a share to $150 a share split adjusted in that time frame. And the point that I'm making here is with regards to the AI trade and not trying to overanalyze it, but not all of these stocks are going to move at the same time. Clearly. Right now this is Oracle and this is Broadcom's time, right? They are moving, they are moving hard, hard. I'm taking nothing away from Nvidia, which I own. But what I am saying to you is it is okay to start thinking about what might look like Oracle did two, two and a half years ago. I'm going out on a limb here and I've said it before, does anything.
- [07:45]
Joe Terranova
Look like that, Jimmy?
- [07:45]
Jim Lebenthal
Well, let me. I'm glad you asked, Joe. I'm going to give you my answer. You don't have to agree with it. I do think Cisco Systems looks like Oracle 2, maybe three years ago because now you've got Oracle at a multiple as of yesterday of 50 times. But it's growing into that, right? As the estimates are going to go up, that multiple is actually going to go down. I'm starting to see Cisco do the same thing. And frankly, Cisco's multiple, Joe, to answer your question, is kind of exactly where Oracle was three years ago. Now, I know you, you know me, Jason knows me. We get a little sardonic smile on your face, maybe we're going to, you know, mix it up here. It's all good. It's all good. You can't have that opportunity without people saying, get out of here, you're crazy. It's Cisco. Just think about it. Cisco has a lot of the same drivers. That is a I in a nascent phase that Oracle did two, three years.
- [08:36]
Joe Terranova
Jimmy, you're putting a smile on my face because the ETF owns Cisco.
- [08:41]
Jim Lebenthal
We're there, my man, we're there.
- [08:43]
Joe Terranova
Today is about AI. It's about the halo, it's about utilities that are working well. Look though, if you're sitting there and saying, well, how do you feel about the market today as it presses higher? This isn't a broad based rally today. It's not. This is all about AI, let's be clear. So there are some that will push back and say, well, what do I have to go on as a catalyst beyond AI and technology? And that is a fair point. That's a fair point. Because today it's not really lifting the entirety of the market.
- [09:14]
Frank Holland
Yeah. By the way, Jim Leevon of all saying, I don't want to toot my own horn, but beep, you know, I mean, taking a little victory lap, very quickly apologize.
- [09:20]
Jim Lebenthal
So it's a little gross.
- [09:22]
Frank Holland
You already hit on some of the second level plays here. You're mentioning Cisco, you're looking at Broadcom, those shares up about 9%. Nvidia is up about 4%. Is, is this just really a sign that some of those second level plays, second derivative, whichever we want to talk about it, this is their time as well. Is this also a sign that Palantir, it's safe to put money back in there after this report. That's stocks seen a lot of volatility. Is this also about a Vista? You say put money there because if you're going to have this kind of data center build out in this kind of a structure, build out, you need power as well. I mean, is that the way you guys all see it? Jim?
- [09:53]
Jim Lebenthal
Yeah. I mean, look, Jason pointed out the remaining performance obligations, 455 billion for Oracle. Guess what? That money is going to float through the supply chain. I don't care if it's utilities, I don't care if it's Cisco or Broadcom. That's a lot, lot of money that's coming into the ecosystem and it's going to hit a lot of pinball. You know, a lot of pinball bounces before it gets to the bottom, you know, so there's. Yeah. For the trade writ large.
- [10:20]
Frank Holland
Sorry to cut you off, Jimmy. A lot to talk about here. I want to go back to rpo. Jason, you kind of hit on that. Nearly half a trillion dollars in rpo. Tremendous. They actually named a few of the companies they're getting it from in the public markets. Meta, Nvidia and amd, three of the names they named. They also named some private companies, including OpenAI and XAI. With that kind of money coming into this name, Joe, I'm going to come back over to you. Where else do you want to go? Is it utilities, is it industrials like a GE Renova and an Eaton that help? I mean, where's the second play to get ahead of the curve? Because today, as I mentioned, Broadcom's up, AMD's up. Looking at Alphabet and Microsoft, they're actually up, but just very slightly. Looking at some other names like this or last time I checked, up about 6%. Arist up about 6% as well. How do you get ahead of the curve? I think that's what people are trying to figure out.
- [11:05]
Joe Terranova
Well, I think first of all your, your question infers that a lot of people might have sat out on the sidelines and if they have, is this the moment to. To kind of re engage? I don't know if I feel comfortable saying yes, this is the moment where you want to re engage. I said last week to Scott on the show that I felt this. The thematic investment philosophy of artificial intelligence, advancing the innovation towards generative AI. It might be maturing and I use that word maturing as it relates to one critical aspect of that and that's positioning. Look, we know about how powerful this technology is, we know about this innovation and people have been allocating there now for multiple quarters for the better part of the last two and a half years. So I think positioning is critically important at this point. Yes, it is going to be all the places that over the last several years like utilities and some of the industrials. And you mentioned Palantir, which is up 2.6% today. But we know that, we've known that over the last several years. So I think you have to be very judicious in where you're going to engage if you haven't engaged yet. And this is a sobering statement and quite candidly, if you haven't participated, you're kind of sitting on the sidelines for a party that's been going on for the better part of the last two years and you might have just missed it.
- [12:33]
Frank Holland
Well, the party has been going on for the last two years, but in recent weeks we've seen a lot of reports like from the B of A flow show money coming out of tech. We've seen what we thought was a broadening at least for a week or two there. We saw the equal weight outperforming the.
- [12:45]
Joe Terranova
Market weighted, I think, I think that's tactical more than, than anything else. I don't think there's anything in front of us and my remarks where I've said if you sat out for the last two years, you might have missed it. That doesn't mean there's an inflection point in front of us. This can go on for far longer than any of us can possibly imagine. But when you're prudently understanding risk relative to reward, you have to factor that in and understand you've got dramatic price increase appreciation here. And I'm not so sure up in the stratosphere is where you want to re engage.
- [13:16]
Frank Holland
I want to add something else that Jason Snipe mentioned. The database revenue up over 1500%. I mean just an, an unbelievable number. A lot of that business coming from Microsoft, Alphabet and also Amazon is the business that they can't handle. They kind of, some people call it dumping but they kind of send it over to Oracle. So is that a very bullish sign in all of your minds for those three names as well? Those hyperscalers, the fact that they have so much capacity they have to actually, for lack of a better way to say it, dump it on Oracle. And then on the flip side, is it a little bit concerning about how profitable that revenue really is because they are bringing it to them. It's kind of similar way that Amazon sends their packages to UPS and FedEx. They're dumping it on them at a very low margin. Is that at all a concern going forward, Jason?
- [13:57]
Jason Snipe
Yeah, so I mean you mentioned Microsoft and Microsoft has obviously been pulling back a little bit over the last few weeks. Weeks now. You know one of the things that I really like what they did recently with this deal with Nebby is this five year $17 billion deal which is really going to provide tremendous GPU infrastructure. So you know, I look at companies have a suite of products and services that could really benefit from obviously this AI thing that we've been talking about, you know, diversified product set, you know and I think they're starting to monetize Co pilot. And I look at how large these companies are as an example with Microsoft being 24% EPS growth in the last quarter, 18% revenue growth, Azure up 39%. So you know, I think as it relates to the entire theme, it goes back to the point earlier. It's not all or nothing here but there are the players that I think will continue to grow. And I think some of the hyperscalers that have pulled back like in Amazon or in Microsoft recently, there might be a window to add some exposure.
- [14:54]
Frank Holland
By the way, Joe gave me a side eye when I was like could it be concerning about the profitability? I mean you got to look, I got to pull at some strings here.
- [15:00]
Joe Terranova
We got to look at, I will say what could be concerning is there's this stealth force surrounding the AI trade and that's open air. It's very difficult to understand. We're trying to figure out what's the right valuation. Now we're somewhere north of half a trillion dollars. Does this company eventually go public? Close to a trillion dollars, but really underneath Surface, it's difficult to understand exactly what that income statement might ultimately look like. And on the other side of that, the positive element is this powerful force is obviously driving a lot of the growth that we're seeing in the publicly traded AI facing names.
- [15:37]
Frank Holland
Yeah. Also that report today that Microsoft's going to buy AI from Anthropic and a bit of a shift away from Open Air.
- [15:43]
Joe Terranova
Defying.
- [15:44]
Frank Holland
Raising some other questions about Open Air, because we really thought those two, they kind of had a marriage that was going to be a big tailwind for Open Air. Not saying it's not anymore, but this narrative is changing a little bit. Want to shift gears a little bit. Turning to Apple, Apple shares actually lower after their big iPhone event yesterday. Everybody here on the desk owns Apple. Jim Lee, Beth, I'm going to come over to you. What did you make of the event? Are you going to rush out and buy an iPhone 17?
- [16:06]
Jim Lebenthal
I think this is a question of degree. I'll answer your question. No, but I probably should. And I think the answer actually informs what to do or what's maybe ailing Apple. Does it move the needle? What happened yesterday?
- [16:17]
Frank Holland
Sure.
- [16:17]
Jim Lebenthal
A little bit thinner and, you know, better. Better cameras, whatever. I mean, it moves the needle a little bit, but it doesn't move it a lot. I own Apple. I'm not going to sell it. I think it can be a market performer that is move with the S&P 500 over the next 12 months. But do I think it's going to do something like an Oracle is doing today? I really don't. Not anytime soon. Maybe that's an unfair comparison. My point being, just to kind of sum it up to me, it's a little bit pricey, but it's going to benefit from passive investing and the weight that it has in so many important ETFs. So people are going to be buying it whether they know it or not when they buy passive ETFs. But I'm not that surprised that it's down today. Frank. It just wasn't that like, it just wasn't that thrilling. Is that. Am I going to get kicked out for that?
- [17:01]
Frank Holland
No.
- [17:02]
Joe Terranova
But it reminds me and Jimmy, you and I are old enough to remember the commercial. If you go Back to the 80s, the Wendy's commercial. Where's the beef?
- [17:08]
Jim Lebenthal
Sure.
- [17:09]
Jason Snipe
Okay.
- [17:09]
Joe Terranova
Where's the.
- [17:10]
Jim Lebenthal
I like that. Where's the.
- [17:13]
Joe Terranova
And really, that's what everyone is waiting for with Apple. Now, I did make the purchases when Tim Cook visited the White House. I felt as though that was a moment that could incite and introduce a lot of buying from people that were sitting on the street sidelines. And that kind of worked. You got from the 205 area, upper 235 to 40ish level. The stock is pulling back now. And it's pulling back because, yes, you have new products, but where's the beef? They want the AI and I think the street didn't deliver.
- [17:45]
Frank Holland
I got to say, if I had an iPhone 17 in my hand right now, would you even know? I mean, would you really know? That's the other thing I think about when I'm talking. And I'm not knocking Apple because of course it has some new features. Features. And the AirPods sound interesting with live translation, but go ahead, Jason, I cut you.
- [18:00]
Jason Snipe
Yeah, no, so I was going to say AirPod translation. That's cool. You know, the new hardware shift, I think we haven't seen that in a little while. You know, the thinner, the thinner phone. But to, to Joe's point, no real shift in a high. Right. So this 17 is not going to be the story I think folks are looking towards 18 potentially is now we see some real AI development.
- [18:22]
Jim Lebenthal
To put it really succinctly. To put it really succinctly, no, I'm not going out to get a new iPhone, but I'm certainly not going out to get an Android either. It's not like there's some critical loss here.
- [18:31]
Frank Holland
Right. So quick, I know this is an unpopular topic, at least on this desk. Valuation at 29 times forward earnings. I'm not sure this is going to be a super cycle when we're talking about this. It might be a cycle, but it doesn't feel very super. Joe Terranova, I mean, any questions about the valuation of this company and the idea that hardware is about 51% of the business. Business, and nobody's really amazed by this new phone.
- [18:53]
Joe Terranova
So listen, we've talked at length on this show. I know Scott talked about valuation as being a North Star and determining whether you want to get in or out of a particular name. Historically, yes, Apple is at the upper end of its valuation. And then the question you ask yourself along with that, and again, I have a personal position in Apple. It's at half size now, but there is a degree of skepticism that along with that high valuation, they're not delivering you the growth. They're not delivering you the growth that they have delivered in years prior and they don't seem to have the clear direction in terms of when they will stimulate that growth once again. Now why the pushback on that would be well then why do you own it? And the reason is that you own it and credit Jim Craven with this. You own it, you don't trade it. But this company is such a powerful force in terms of its ability on the downside to step in, use its capital to buffer any significant decline. So I don't look at Apple from the standpoint of okay, I want to take a natural short position on it, have a modest position on it, but I don't think you have extreme excitement relative to where the other technology growth names are.
- [20:07]
Frank Holland
Snipe Jim, any questions about valuation in this company? I mean all three of us, all four of us seem like we're questioning the sales cycle that's coming up, whether it's super just regular, whatever the case may be.
- [20:17]
Jason Snipe
Jason now what I will say, and I don't want this to be missed is there was they did have a really strong quarter this past quarter, right? Revenue growth was up 10%. EPS growth was up 12. Services were up 13% in China which was concerns obviously about China with geopolitical tariff News. China was up 4%. Now there was an $800 million tariff hit and they're guiding for a $1.1 billion tariff hit this next quarter. But the their earnings report was solid and I think, I think that's notable. And to share, I mean I guess.
- [20:52]
Frank Holland
We got to shift to the broader markets. I mean after this trade has been confirmed, we know the weighting of a lot of these mega cap tech names on the markets on the major indices in your mind we're seeing some price target increases by the way, Deutsche bank raising their price target for the year. Joe, is this basically the green light for this secular bull market? Just keep powering through at least through the end of the year because we're more than likely to get some rate cuts in September, maybe the first of many, but more than likely September. Going through year end, are you feeling pretty good?
- [21:20]
Joe Terranova
I think the calendar is the friend to the market. I think the calendar works in the favor of the market where you get potentially the chase for performance if in fact you could get broadening out, if in fact small caps can do what they have been doing in the last several weeks, they are under owned. If you see a rebuilding of positioning that's going to benefit as well. I also think while the calendar might be your friend towards the end of the year, I think the calendar as you move into 2016 could be your enemy because I think you begin to run out of a lot of the catalysts that you found in 2025. And let's remember you also have a midterm election year and markets generally do not like the lead up into a midterm election. So I think those are two competing thoughts to kind of keep in your mind where, yeah, things might look good into the end of the year, but how am I going to think about as we navigate the calendar turn into 26, what could be a little bit more of a volatile environment and maybe have some corrective behavior, you know, to.
- [22:20]
Frank Holland
Your point, JP Morgan, Duprovko Lacos and his team coming out title some caution warranted with six rate cuts currently priced in by the end of 2026. As you mentioned, turning the calendar page could be a different story. We believe risky assets may be vulnerable at a time when tariff reduced inflation is starting to flare up, possibly restraining the Fed's forward easing path. Snipe, I want to come over to you, should you be a little bit careful going forward? I mean the idea that so many of these cuts are baked in again, we were pretty sure we're getting September, but after that a lot of questions.
- [22:49]
Jason Snipe
Yeah, no, I think, I think absolutely it's time to be a bit concerned to Joe's point on kind of the calendar that the cut is obviously baked in. We're in a, you know, a zone where we're starting the cutting cycle clearly with PPI numbers that we saw today. We'll see CPI tomorrow, which is some soft numbers this morning. And then obviously labor has been soft as well. So I think, you know, you know what that cycle is going to be. I think for me, as we look to the decision next week, which I think the market obviously knows what we're going to do. It's going to be about the commentary how we heard in Jackson Hole, how dovish the market. It kind of took a lot of that discussion. Let's see what it looks like next week.
- [23:28]
Jim Lebenthal
Yeah, and on that note, I wouldn't be surprised if you got 25 basis basis points next week and the market sold off a little bit. I mean the market is now, if you look at Fed funds futures, it's expecting three rate cuts by year end. That might be, there might be some room for disappointment there. And even if there's no room for disappointment, what if you just get the three rate cuts and they're already priced in? I think you said that a second ago, you know, before Oracle's move today, the market was not exactly cheap. It hadn't exactly been, you know, sitting down. So there was a lot priced in.
- [23:57]
Frank Holland
Yeah, keep in mind S and P and NASDAQ pretty much actually at records right now. I should say one of the thought really quick Barclays upgrading high volatility to positive downgrades quality to negative. Joe, turnover. Your thoughts on that? Don't hear that very often. Downgrading quality to negative.
- [24:12]
Joe Terranova
Well, they're a little bit late on that story. I mean look at the tape today. Quality is actually significantly underperforming. In fact, I believe quality represented by some of the major etc ETFs is lower on the day as is the S and P equal weight. So the story today, can we get a grab a chart of emptum, the momentum ETF that's having a really strong day. I think it's up somewhere around 2 plus percent on the day. So I understand. There you go, 2.46%. I understand why a lot of the analysts are recognizing what we all see see already in the marketplace, which is momentum. High beta, high volatility. That's the story of 2025. Listen, you don't have to like that. And when you are managing money, one of the things that you have to come to grips with, and it's taken me a long time to understand this, is this. Every year you're not going to be participating in one of the favorite strategies, whatever your strategy might be. There's going to be periods where your strategy strategies just not in favor. If I think about what I have presented to the market with the ETF and the quality momentum strategy, I go back, I look at 23, that was a punitive period for me. Felt awful. I'm equally weighted and you have seven stocks driving the significant outperformance. So look, in 25, if you're a value investor, if you're rolling up your sleeves and you're doing the analysis, you know what? Kudos to you. I still believe that stuff works stocks. But right now a premium is being paid in 2025 for looking at stocks that are going from the lower left to the upper right and where there's skepticism and where there's underweight positioning and the opportunity to rebuild positioning.
- [25:54]
Jim Lebenthal
Joe, to a certain extent there's overlap between the two categories that you just spoke about. You know, the stocks that I'll call them value stocks. Right. I mean I remember 2023 into 2024 was kind of painful, frankly for a guy like me who, who's doing that Analysis and saying why aren't these stocks moving so, you know, and now they have momentum with them. I mean, not today, obviously Oracle is sucking out a lot of the oxygen from anything else in the room. But there's overlap between the two categories that you're saying actually doing the analysis this year is paying off.
- [26:23]
Joe Terranova
Always think where can you, where can the market rebuild positioning? And if we look across the equity size classes, without question the biggest opportunity to rebuild positioning is in small caps. They now have to prove themselves over the coming quarter both in terms of performance but also in terms of earnings growth.
- [26:43]
Frank Holland
You know, it's funny you say that we got to go after this, but B of A says they see more inflows in a small caps. They see a lot of the inflows this year have been in the single stocks. They see the potential for more to go into ETFs. I mean right now the IWM. Is that something you would buy, Joe, just, just kind of go down the line. Is that something you, you'd see a lot of opportunity in with the idea that maybe we're in a rate cutting cycle, but at least one rate cut.
- [27:03]
Joe Terranova
I will say I am far less skeptical about their ability to sustain a recovery than I was six months ago. I think that over the last more 60 to 90 days. Less skeptical.
- [27:14]
Frank Holland
That's okay.
- [27:14]
Joe Terranova
Over the last 60 to 90 days I think they are proving that there is the potential for an end of year run up in small caps. And I think biotech is one end the of industry that you really want to look at in terms of rebuilding positioning quickly. The other would be regional banks. I think regional banks are ahead of biotech in terms of the positioning rebuild.
- [27:35]
Frank Holland
All right, really quick snipe, Jim.
- [27:37]
Jim Lebenthal
I'm not going to do the. I'm sorry, do you want to go ahead?
- [27:39]
Joe Terranova
No, no.
- [27:40]
Jason Snipe
I was just going to say clearly, I mean the right cutting cycle is a catalyst for the small cap name. So I think definitely there could be some run up into the year. No doubt about it.
- [27:48]
Jim Lebenthal
I'm not going to do the ETF. I like, I like particular stocks. I did IJR, the S&P 600 earlier this year and it just, you know, it's too many macroeconomic forces. I want company specific names.
- [27:59]
Frank Holland
We got to leave it there. Oracle shares still up 40%, believe it or not. Coming up next on halftime, more committee stocks on the move. We'll start with a pop for Robinhood as it unveils its own social media network. Shares of Robinhood up about a half a percent and we are still awaiting the first trade for Klarna. It's now indicated to open at 53 to 54 a share, originally priced at 40. Halftime's back in just two minutes.
- [28:20]
Skechers Advertiser
Stay with us moms and Dads do you wish you could know where your kids shoes are at all times? Now you can with skechers newest Apple AirTag compatible sneakers. Find My Skechers. There's a clever hidden Airtag compartment under the shoe's insole. It's sleek, secure and your child can't feel or see it. Then you can check where your kids shoes are on the Find My app. Plus they're available for boys and girls. Get Find my sketchers@skechers.com, a Skechers store near you or wherever kids shoes are sold. Apple AirTags sold separately.
- [28:53]
Joe Terranova
NetCredit is here to say yes to a personal loan or line of credit when other lenders say no, apply in minutes and get.
- [29:00]
Frank Holland
A decision as soon as the same day. If approved, applications are typically funded the.
- [29:05]
Joe Terranova
Next business day or sooner. Loans offered by NetCredit or lending partner.
- [29:09]
Frank Holland
Banks and serviced by NetCredit applications subject to review and approval.
- [29:13]
Joe Terranova
Learn more at netcredit.com partners NetCredit credit to the People.
- [29:23]
Skechers Advertiser
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org.
- [29:54]
Frank Holland
And welcome back to Halftime. Let's get to some committee stocks that are on the move. First up, we're talking Robinhood is going to launch a short selling option as well as its own social network. Robinhood's in the Jyoti etf. Joe, what do you make of the move? Shares up about three quarters of 1% right now. I'm talking about that social network and the short selling.
- [30:12]
Joe Terranova
Well, the company is obviously maturing in terms of the intellectual capital that I've brought on to leadership. I think that's really the most important thing. They've built a very strong team around Vlad that's on allow them to diversify the model away from what we knew it to be when the IPO came out in 2021. So now you have a company that is able to compete with others in the brokerage space in that regard. I still think it still has the stigma of being crypto Oriented, but it is much more than that. That maturity, the inclusion, the s and P500. It's one of the reasons why it even is a candidate in the universe of 500 stocks that we actually screen the decision to implement and execute and add it to the etf. Be totally humble about it. It's based on momentum. It is what it is. Yeah.
- [31:07]
Frank Holland
Also kind of an AI play. Now they're using what they call custom scans to let users use large language models to help screen for stocks. Jason, I see you nodding. Do you see this being kind of more lumped into the AI trade? No, you don't own it. But the idea of using large language models to pick stocks and also just the excitement of short selling, I think, you know, there's a lot of people out there that enjoy using the options market to try to really juice their returns.
- [31:30]
Jason Snipe
Yeah, no, I think it's super interesting. We don't, we don't own the stock, obviously. It's performed very well so far this year. And I think that there's a lot of innovation going on at Robinhood that is pulling in more and more retail, and it's appealing to a certain demographic, which I think is exciting for the company.
- [31:44]
Frank Holland
All right, next up, we got Uber launching Blade helicopter rides next year through its Joby partnership. Jason, you do own this one. Uber shares actually pulling back right now, down about one and a half percent.
- [31:54]
Jason Snipe
Yeah, I mean, this Joby partnership is super interesting. I mean, the stock's up 56% this year. It's obviously been a great winner. I think it's been the year of partnerships and beta testing. Right. So they're, they're, they're testing autonomous vehicles in Munich, now, Germany, which I think is interesting in the kind of their US European expansion. International expansion. The deal with Lucid, I think, is accretive. You know, they have this kind of, this new deal that they announced with Sephora. You just think about makeup products and folks getting products from Uber. Interesting. So I just think that, you know, the platform continues to innovate and grow and expand, and it's just a name, I think, worth owning.
- [32:33]
Frank Holland
Interesting. If you ever go to Europe, in London, they have Uber boat. You can get on a boat with your Uber as well. All right, moving on. Looking at Amazon launching its own robo taxi called Zoox today in Las Vegas. You all own this one. Jim, I'm going to start with you. What do you make of this Amazon dipping its toe and what a lot of people like to call a toaster on wheels here with Zoox, not really like the traditional ride share vehicle, even on an autonomous one. No pedals, no steering wheel. You just got to jump in this one.
- [32:58]
Jim Lebenthal
Yeah, I mean this is not the reason that I'm in the stock. I'm not saying to somebody today that this is why you should own, own the stock. But it is emblematic of a company like Amazon, like Alphabet, that has multiple shots on goal. It's always trying new things and that's how it comes up with new ways to grow profit. So I don't know that this is particularly going to be the next Amazon Web Services and I'm certainly not saying that, but they continue to try new things.
- [33:22]
Frank Holland
All right, finally we got. You want to jump in on a.
- [33:24]
Joe Terranova
Touch real quick on the Netflix and Amazon partnership and the effect on advertising and trade. Debt desk and trade desk down once again today. It's almost as if that inclusion in The S&P 500 was the worst possible thing that could happen for that company. Yeah, and by the way, you don't buy it here.
- [33:43]
Frank Holland
Trade is down more than 9%, almost nine and a half percent. It's been one of the laggards in the pre market the last couple of days. So investors early and obviously during the trading day, shifting away from the trade desk. We got one more. I believe it was Qualcomm announcing some driverless tech with BMW. Jim, you were actually before the show talking to me about Qualcomm. We got to make it quick though.
- [34:01]
Jim Lebenthal
Because you got to. Look, I'm just going to say I'll make this quick. I think Qualcomm is another one of these names that when you think about what Oracle is doing today, it may take a couple of years, but Qualcomm is coming up in a lot of non smartphone applications, whether it's driverless tech or data centers. So just, just pay attention. This could be a sleeper.
- [34:18]
Frank Holland
There's another one of those. You didn't want to toot his horn but wanted to bring this up. All right, moving on. We're going to get to the headlines with our Contessa Brewer back at CNBC hq. Contessa, good afternoon.
- [34:27]
Skechers Advertiser
Hi there, Frank. Israel has launched a series of strikes on Yemen's capital and its northern province. Today the Israeli military said it hit military camps, the Houthi military media office and a fuel storage site in response to attacks the Houthis launched toward Israel territory. The strikes follow an Aug. 30 strike on the capital that killed the Houthis, the Prime Minister and several other top ministers. The Venezuelan boat the US Military hit last week reportedly altered its course before the attack because people on board noticed the military aircraft. That's according to the New York Times. American officials tell the Times the military hit that vessel repeatedly before it sank. President Trump said the boat was suspected of smuggling drugs. And Uber Eats is partnering up with fintech firm Pipe to help small businesses acquire capital. Pipe said starting this week, eligible restaurants will be able to see pre approved capital offers based on the business's revenue and cash flow on their Uber Eats restaurant manager app. And Pipe said that process does not require credit checks. Interesting.
- [35:33]
Frank Holland
Frank Contessa, Brewer live at CNBC hq. Contessa, great to see you as always. Thank you. Coming up next on halftime, we got Mike Santoli joining us with his midday work. But first, a look at the latest indication for Klarna's first trade, now 53 to 54 share, originally priced at 40 bucks. Halftime. Back in just a minute.
- [35:53]
Skechers Advertiser
Moms and dads, do you wish you could know where your kids shoes are at all times? Now you can with Skechers newest Apple Airtag compatible sneakers. Find My Skechers. There's a clever hidden Airtag compartment under the shoe's insole. It's sleek, secure and your child can't feel or see it. Then you can check where your kids shoes are on the Find My app. Plus, they're available for boys and girls. Get Find my sketchers@skechers.com, a Skechers store near you or wherever kids shoes are sold. Apple Airtag sold separately. For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn more@mycare.org.
- [36:40]
Frank Holland
And we are back on the HALFTIME report. Let's get to our Megan Casella in Washington with breaking news.
- [36:44]
Skechers Advertiser
Meghan Frank, breaking news out of the White House here that President Trump now says he is appealing the judge's recent decision to allow Lisa Cook to return to work while her case plays out. He's appealing that order that blocked him from firing Federal Reserve Governor Lisa Cook. It's a very short appeal. All we know is that the president's legal team has now fired it with the US District Court for the District of Columbia. Of course, this coming just a day after the judge said that Cook was allowed to return to work in the interim, saying the public interest in Federal Reserve independence weighed in favor of Cook's reinstatement. So, Frank, much more to come here, but the White House, of course, not taking this as the final step now saying they will appeal that decision. Frank?
- [37:25]
Frank Holland
I'm Megan Casella with the latest news out of D.C. meghan, thank you very much. We now want to turn to senior markets commentator Mike Santoli. He's joining us now with his MIDDAY word. Mike, I mean, I got to imagine it's Oracle AI something of that nature.
- [37:38]
Jim Lebenthal
Sure.
- [37:38]
Joe Terranova
Those all fit, Frank. And I think the bigger picture story is that investors have not been punished and maybe have been rewarded for looking on the bright side of kind of every major debate out there. You know, one would have been is the trade getting tired now? There's another wave coming through, it appears. Another, of course, would be is tariff inflation going to complicate the story for Fed rate cuts? Seems like it's not the case. So we benefited from a lot of those things breaking in favor of the bulls. That includes today. I would say, though, it's a mixed response. People are selling one thing to buy Oracle. It's not everything up. In fact, if anything, breadth has weakened over the course of the day. Apple down, all the rest of it. And the bond market, while the yields are at their lows, they're not making fresh lows after the softer pie. So I think that tells you we kind of already priced in a fair amount of this benign scenario. We'll see if the CPI has any reason to to jolt the bond market after this run it's had.
- [38:34]
Frank Holland
All right. Mike Sentoli with his MIDDAY word. Mike, thank you very much. Coming up next, we got our top calls the day, including an upgrade for one stock RBC says is in the middle of a turnaround. Joe owns this one. More halftime right after this. And welcome back to Halftime. It's time for the calls of the Day. We're going to start off with Newmont upgraded to outperform at RBC. Sure is up just about 3%. Joe, you own this one. In the Joe T ETF, there's an.
- [38:58]
Joe Terranova
Obvious correlation to rising gold prices. I think most of us understand that a lot of calls on the street for gold to see 4,000 very quickly. But for this company, they really have begun to manage the business a lot better, shedding non core assets, focusing on free cash flow. Stock is up 51% year to date. We own it. It's benefiting from multiple tailwinds.
- [39:20]
Frank Holland
All right, moving on. UnitedHealth reiterated to outperform at Morgan Stanley. Jason, you own this one. Shares actually pulling back our Mike's internally mentioned money's coming out of a lot of other Names into Oracle. Today we're looking at UnitedHealth pulling back about one and a third.
- [39:33]
Jason Snipe
Yeah, obviously it's been a very tough story most of the year, you know, since they. Since April. But, you know, stocks down 32%. You know, the bottom was around early part of August. It's obviously bumped then. You know, Buffett took a position in there. I think that was helpful to the stock. Hemsley is a known commodity who did well there in his last state there. So I think, I think the stock has a little bit of momentum here. I think Optum could continue to grow. They're managing medical costs, you know, so there's some things that they continue to just need to work out. But I think the stock could be a buy here.
- [40:07]
Frank Holland
Appaloosa also in it. Michael Burry stopped shorting it, buying into it. So a couple of tailwinds there. Also want to move on. Kenner Fitzgerald initiates Citizens Financial M and T Bank and Regions Financial is overweight. Joe, you're just talking about regional banks in the area a minute ago, and you own all three of these in the Jyoti.
- [40:23]
Joe Terranova
Let's keep that graphic up as I speak to it because we're seeing a little bit of divergence in terms of the performance for some of the regional banks right now. I would say the best that we have on our list is Citizens Financial. Regions Financial is right behind it. Other banks that we own, like m&t, fifth, third, they seem to be losing moderately their positive momentum.
- [40:48]
Frank Holland
Do you think that has anything to do with some of the labor weakness and like different regions? Because these, these regional banks, they obviously are very dependent on the local economy, local businesses, much more than the big banks that have things like, you know, capital markets to lean on.
- [41:00]
Joe Terranova
Yes, I think that that's fair. I think also you're calling into question the loan growth. And then the other element to it, as I said before, is you have had a little bit of rebuilding and positioning for some of the regional banks here over the last 45 to 60 days that might need to relieve some of the stress, if you would, that you find when you positioning gets a little bit over here.
- [41:23]
Frank Holland
You know, you mentioned you were bullish on financials more broadly outside of the banks, including insurance progressives. Price target raised to 347 from 344 at B of A. You also own this one in the.
- [41:32]
Joe Terranova
Joe T. So let me tell you exactly what we're seeing in the insurance industry because interestingly enough, I mentioned 23 being a frustrating period for myself, punitive for the strategy. But during that period in the financial sector we found ownership of insurance companies and it really was on the building inflationary story and who had pricing power. And clearly insurance companies had pricing power whether it was Allstate, Chubb or Progressive. Over the last six months these insurance companies have seen their momentum be neutralized. And along with that, they're beginning to see a little bit of weakening in the pricing power that they maintained over the last two years. So in the upcoming quarterly balance at the October, it'll be interesting to see what we do with the rules in terms of does it take the positions and move them to the sidelines or not. But it certainly is a weaker environment for insurance companies.
- [42:28]
Frank Holland
Progressive up just about 1, almost 1% right now. All right, coming up here on halftime, Morgan Stanley out with a new list of vintage value plays to hold in the year ahead. We got some ownership right here on the desk. We're also still awaiting the first first trade for Klarna. It's now indicated to open at 52 to 53 a share. Halftime is back in just two minutes. Welcome back to half. Morgan Stanley out with this vintage values list compiled of mid to large cap companies it says can deliver superior risk adjusted returns over the next 12 months. We're taking a look at some of the non mega cap names. Jason, you're one of the names you own on this list. I'm thinking about Eaton right here. You're actually talking about this earlier as a second level AI player. Your thoughts?
- [43:06]
Jason Snipe
Yeah, I mean they're kind of playing in that sandbox of all the megatrends, obviously. Power data center build out. The stock is up 4% today, you know, up 9 to 9% year to date. Operating margins continue to expand. I like this play in the whole all the stories we've been talking about.
- [43:22]
Frank Holland
Jimmy, is this a value list in your mind? Are these value stocks?
- [43:25]
Jim Lebenthal
No, it's not. I'm trying to figure out what to make of this. I mean, maybe I'm Rip Van Winkle, but I remember when value was certainly a lot less expensive than, you know, Palo Alto Networks or S and P Global. I don't want to look. They're trying. I get it. But also just a 12 month holding period doesn't exactly qualify you as the longest of long term investors. Good names here. I'm not taking shots at the names. It's just like this is neither vintage nor value.
- [43:50]
Frank Holland
To play off Joe's comments, where's the value? All right, stay with us. Final trade coming up on halftime. We'll Be right back. And we are back on half time. We are still waiting that first trade for Clarina. It's now indicated open up to at 52 to 53 a share. We're right here at post nine. We see a big gathering right to my left hand right now. CEOs over there. A number of board members hearing some hooting and hollering. That's the CEO right there. Putting on one of those trader jackets right now in the glasses again waiting for the first trade. A number of board members over there as well. We've seen this group kind of gather, make some noise. Getting excited right now. So again waiting for those trades right now. Price to trade at 52 to 53. We're just showing you the CEO just now. Want to move on to final trades. Jim Lebenthal, you're up first.
- [44:36]
Jim Lebenthal
Crh. This is not well known. This is the B side of a 45 if you will. Basically it's an aggregates company. Materials, they make cement, gravel, that sort of stuff. It's bigger than its well known competitors, Vulcan and Martin Marietta, but it's cheaper and I think it's got more room to run.
- [44:53]
Frank Holland
Yeah, their investor day coming up in about two weeks as well. Jason Snipe, you're up next.
- [44:57]
Jason Snipe
Lot of excitement around the cloud infrastructure play. I like Microsoft here is down about 5% in the last month. 39% Azure growth. I like this name.
- [45:06]
Frank Holland
Joe Terranova.
- [45:07]
Joe Terranova
Remember these are trades back in early August. I gave you the refiner trade. Valero, Philips and Marathon. We're going to take profit on half on the close today.
- [45:15]
Frank Holland
All right, still waiting for Clarence to trade right now at 52 to 53. Originally priced at 40. The exchange is going to be all over it. That does it for halftime.
- [45:24]
Joe Terranova
You've been listening to CNBC's Halftime Report.
- [45:26]
Frank Holland
The podcast you can always catch us.
- [45:29]
Joe Terranova
Live weekdays at 12 Eastern only on CNBC.
- [45:35]
Skechers Advertiser
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates and may have been previously disliked disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Moms and dads do you wish you could know where your kids shoes are at all times? Now you can with skechers newest Apple AirTag compatible sneakers. Find My Skechers There's a clever hidden airtag compartment under the shoe's insole. It's sleek, secure, and your child can't feel or see it. Then you can check where your kids shoes are on the Find My app. Plus, they're available for boys and girls. Get Find my skechers@skechers.com, a Skechers store near you or wherever kids shoes are sold. Apple AirTags sold separately.