CNBC’s Halftime Report: Rethinking the AI Trade

Episode Date: September 10, 2025
Host: Frank Holland (in for Scott Wapner)
Panel: Joe Terranova, Jason Snipe, Jim Lebenthal

Overview

This engaging episode of CNBC’s Halftime Report centers on the explosive AI trade, with a spotlight on Oracle’s blockbuster earnings and what that means for AI, tech, and the broader market. The investment committee discusses whether it’s time to double down on AI giants, look for second-derivative plays, or exercise caution amid surging valuations. The panel also covers recent moves in Big Tech (Apple, Microsoft), market leadership, and the evolving narrative around small caps and value stocks.

Key Discussion Points and Insights

1. Oracle’s Blowout Quarter and Implications for the AI Trade

[01:16-09:52]

• Oracle’s Record Run:

  • Oracle shares soared over 41% after surpassing expectations and issuing bullish guidance, attributed to huge demand and multi-year contracts.
  • Frank Holland: “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.” [01:16]

• Committee Takeaways:

  • Joe Terranova:
    • Don't overthink a parabolic move. “This is very clear. You should not be outthinking yourself. The AI trade has been the dominant trade for the last several years.” [02:30]
    • Suggests to either participate or wait—don’t short.
    • Oracle added to ETF in July 2024 at $139 due to quality and momentum factors.
    • Expected Oracle’s cloud infrastructure growth: $10B to $140B over five years.
    • “If you have been there...this report says [the inflection point] is not coming anytime soon.” [03:24]
  • Jason Snipe:
    • Notes Oracle’s RPO at $455B, up 359% year-over-year—a “glaring theme…capacity constraints.” [05:11]
    • Overflow demand signals strength for the entire AI theme.
    • Selectivity, rather than indiscriminate buying, is key.
  • Jim Lebenthal:
    • Takes a victory lap; bought Oracle at $86 two and a half years ago. [06:34]
    • Emphasizes not all AI stocks surge at the same time—suggests finding the “next Oracle.”
    • Recommends looking at Cisco, comparing its potential trajectory to Oracle’s 2–3 years ago. “Cisco has a lot of the same drivers...[in] a nascent phase.” [07:45]

• Second-Derivative & Ecosystem Impact:

  • Broadcom, Nvidia, Palantir, utilities, and infrastructure plays benefit from the AI build-out (power, data centers).
  • Jim: “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.” [09:52]

2. Riding the AI Wave or Sitting It Out?

[10:19-13:16]

• How to Play the AI Momentum:

  • Joe Terranova underscores judicious positioning: “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.” [11:04]
  • Momentum still rules; tactical money flows may come in and out, but no near-term signs of reversal.

• Risks and Concerns:

  • Discussion over whether overflow contracts from hyperscalers (Amazon, Google, Microsoft) to Oracle signal bullishness for all or raise profitability concerns, as these can be low-margin.
  • Joe: “There’s this stealth force surrounding the AI trade and that’s OpenAI...it’s difficult to understand exactly what that income statement might ultimately look like.” [14:59]
  • Microsoft’s shifting AI partnerships (towards Anthropic, away from OpenAI) could alter the landscape. [15:37]

3. Apple: Fading Excitement?

[15:43-20:51]

• Apple Event Reaction:

  • General consensus: The iPhone 17 launch was incremental, not transformational.
  • Jim: “It moves the needle a little bit, but it doesn’t move it a lot...do I think it’s going to do something like an Oracle is doing today? I really don’t, not anytime soon.” [16:17]
  • Joe: “Where’s the beef? They want the AI and I think the street didn’t deliver.” [17:09]

• Valuation and Fundamentals:

  • Apple trades at 29x forward earnings—rich by historical standards.
  • Joe: “There is a degree of skepticism that along with that high valuation, they’re not delivering you the growth that they have delivered in years prior.” [18:52]
  • Jason highlights recent strong results (revenue +10%, EPS +12%), with China a relative bright spot, but tariffs and slowing product cycle are headwinds. [20:16]

4. Broader Market Outlook and Rate Cut Dynamics

[20:51-25:54]

• Bullish into Year-End?

  • Committee generally sees the calendar as a tailwind due to potential “performance chase” and possible rate cuts in September.
  • Joe: “The calendar works in the favor of the market...the chase for performance...” [21:19]

• Risks for 2026:

  • Cautions that catalysts may fade in 2026, with midterm elections potentially creating volatility.
    • “While the calendar might be your friend towards the end of the year...as you move into ‘26 could be your enemy.” [21:19]
  • Rate cuts may be mostly priced in; prospect of disappointment if the Fed moves slower than expected.
    • Jim: “What if you just get the three rate cuts and they’re already priced in?” [23:27]

• Style Rotation Observed:

  • Barclays upgrade of high volatility, downgrade of quality.
  • Joe: “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.” [24:11]

5. Small Caps and Biotech: Are They the Next Leg?

[25:54-27:47]

• Joe: Less skeptical than six months ago; notes small caps and biotech as sectors with the greatest opportunity for “rebuilding positioning.” [27:02–27:14]
• Jason: “Rate cutting cycle is a catalyst for the small cap name.” [27:39]
• Jim prefers individual stocks within small caps over ETFs: “Too many macroeconomic forces. I want company-specific names.” [27:47]

6. Committee Stocks on the Move: Robinhood, Uber, Amazon, Trade Desk, Qualcomm

[29:54-34:18]

• Robinhood:

  • Launching short selling and a social network, integrating AI-led stock screening.
  • Joe: “Company is obviously maturing...it still has the stigma of being crypto-oriented, but it is much more than that.” [30:11]
  • Jason: “A lot of innovation going on...appealing to a certain demographic.” [31:29]

• Uber:

  • Announcing helicopter rides and global expansion.
  • Jason: “The platform continues to innovate and grow and expand, and it’s just a name, I think, worth owning.” [31:53]

• Amazon (Zoox Robo Taxi):

  • Jim: “Not the reason I’m in the stock...but emblematic of a company that has multiple shots on goal. That’s how it comes up with new ways to grow profit.” [32:57]

• Trade Desk:

  • Down over 9% post-S&P 500 inclusion; shifting investor appetite.

• Qualcomm:

  • Partnering with BMW on driverless tech, aiming for long-term diversification beyond smartphones.

7. Market and Policy Headlines

[36:39-37:24]

• Megan Casella reports President Trump is appealing a decision on Fed Gov. Lisa Cook’s job status, highlighting ongoing political and policy risk.

Notable Quotes & Memorable Moments

• Joe Terranova:

  • “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.” [02:30]
  • “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.” [04:27]
  • “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.” [11:04]

• Jim Lebenthal:

  • “I don’t want to toot my own horn, but beep.” [09:14]
  • Comparing Apple’s product cycle to yesteryear: “It’s not like there’s some critical loss here.” [18:22]
  • On the value/value debate: “This is neither vintage nor value.” [43:25]

• Frank Holland (host):

  • “By the way, Jim Leevon of all saying, I don’t want to toot my own horn, but beep.” [09:14]
  • On Apple: “If I had an iPhone 17 in my hand right now, would you even know?” [17:45]

Timestamps for Important Segments

• Oracle’s AI Surge & Strategy [01:16–09:52]
• Second-Order AI Plays & Ecosystem [09:14–13:16]
• Apple Event and Valuation Debate [15:43–20:51]
• Broader Market/Macro & Rate Cuts [20:51–25:54]
• Small Caps/Biotech Outlook [25:54–27:47]
• Stock Spotlights: Robinhood, Uber, Amazon, Trade Desk, Qualcomm [29:54–34:18]
• Policy & D.C. News [36:39–37:24]
• Final Trades & Wrap [44:36–45:14]

Final Trades

• Jim Lebenthal: CRH (materials/aggregates)
• Jason Snipe: Microsoft (“39% Azure growth, I like this name”)
• Joe Terranova: Refiners (Valero, Phillips, Marathon—taking profit on half)

Summary Takeaways

• The AI party is still rolling hard, with Oracle’s results extracting incredible enthusiasm and prompting price target hikes, but value and timing matter.
• Participate wisely or risk missing out; however, don’t chase blindly at nosebleed levels.
• Second-derivative plays (utilities, infrastructure), and overlooked names like Cisco or Eaton, are having a moment.
• Apple’s cycle lacks ‘beef,’ and its valuation is drawing skepticism, though ecosystem stickiness is still valued.
• Momentum (not quality or value) is king, but small caps and biotech might be developing new leadership.
• Remain flexible: the year-end looks bullish with a risk of 2026 disappointment if current expectations aren’t managed.

This episode is a must for investors looking for actionable insight on the dominant AI trend, the future of tech, and where the next pockets of market opportunity might arise.