CNBC Halftime Report – "Rethinking the AI Trade" (Sept 5, 2025)

Host: Frank Holland (in for Scott Wapner)
Panel: Stephanie Link, Jim Leventhal, Malcolm Etheridge, Kevin Simpson
Theme: A high-impact, real-time discussion on the implications of Broadcom’s blowout results, Nvidia’s pullback, and what’s next in the AI, semiconductor, and broader market trade.

Episode Overview

This episode focuses on the evolving landscape of the AI-driven chip sector, with Broadcom’s surprise results and new customer deal shifting attention away from Nvidia. The panel dissects whether the AI trade is due for a rethink, explores economic signals from bonds/jobs data, and examines key opportunities and risks in the market. Additional topics include rate cut prospects, sector rotations, retail struggles, and new trades in financials and healthcare.

Key Discussion Points & Insights

1. Market Backdrop & Economic Data

• [01:01–02:32] Frank Holland sets the stage: major indices are off all-time highs, bonds rally after a weaker nonfarm payroll report.

• Jobs Report: Concern over the weak payrolls (22,000 actual vs. 75,000 expected) triggers discussions about potential Fed rate cuts and market confidence.

  "We entered this phase a couple of weeks ago of bad news is good news and I hate it... We got the lousy jobs report and now the odds of rate cuts are going up. Looks like maybe even three this year."
  — Jim Leventhal [02:32]

  • Leventhal emphasizes continued GDP growth and low unemployment as reasons not to panic.
  • Stephanie Link notes the service economy’s strength, robust business investment, and a potential housing multiplier from lower rates.

2. Mixed Signals in Manufacturing & Services

• [06:08–07:07] Service sector remains strong (ISM services up), though manufacturing lags.

  "It's in contraction, but slow progress. I think there’s pockets of manufacturing that are doing quite well... The onshoring, reshoring, AI datacenter, power grid, that’s all combined together and those areas are doing very, very well."
  — Stephanie Link [06:22]

  • Broad theme: manufacturing is mixed, but long-term electrification and reshoring underpin optimism.

3. Rate Cut Expectations & Investor Behavior

• [07:07–09:24]
  • Malcolm Etheridge: Questions the assumption that rate cuts are purely market positive; unemployment’s uptick gives investors pause.
  • Kevin Simpson: Notes retail cash inflows as evidence investors may be growing cautious — possibly presaging a 'buy-the-dip' moment.

4. The AI Chip Shakeup: Broadcom vs. Nvidia

Broadcom Blows the Doors Off

• [09:38–13:18]

  • Broadcom soars (+9%) after announcing a major new AI customer (widely reported as OpenAI), ongoing 60% growth, and CEO Hock Tan’s contract extension.
  • Potential shift: OpenAI betting on custom Broadcom chips over Nvidia’s GPUs signals major diversification in AI compute supply.

  "OpenAI is making a pretty clear break yet from Nvidia’s ecosystem. And this could threaten the margins behind Nvidia’s run as Wall Street’s most valuable chip company."
  — Christina Partsinevelos [09:38]

• Stephanie Link:

  "[Hock Tan] is excellent at doing M&A... it’s not just AI, but also software... They could get to $100 billion in AI revenue by 2027."
  — Stephanie Link [11:27]

• Kevin Simpson:

  "This is what we were expecting to see from Nvidia... It was the guidance that really took this stock up... So why is Nvidia down and Broadcom up? Is this the death of Nvidia? I don’t think so."
  — Kevin Simpson [13:18]

Is Nvidia Vulnerable?

• [14:35–19:41]
  • Jim Leventhal and Malcolm Etheridge both own Nvidia. They see plenty of room for Broadcom and Nvidia — Nvidia is still supply constrained and has strong fundamentals.
  • Etheridge raises concentration risk: “Nvidia’s biggest issue was that it has four customers that make up the lion’s share of its revenue. If one of those stopped spending... that definitely is concerning."
  • Etheridge and Leventhal both expect Nvidia’s recent pullback (down 9% from highs) to be a buy-the-dip opportunity, not a major threat. Nvidia routinely has 20%+ drawdowns.

5. The Semiconductor Ecosystem: ASML

• [19:45–21:00]
  • ASML (chipmaking equipment): Etheridge likes owning the “bottom of the supply chain” as demand for smaller, more advanced chips accelerates across networks and devices.

6. AI Everywhere: Software & Cybersecurity Plays

• [21:00–25:05]
  • Stephanie Link picks up Snowflake after a post-earnings dip, citing strong growth, operating leverage potential, and unique positioning in data/cloud AI.
  • Malcolm Etheridge rotates from the CIBR ETF into a purer-play cybersecurity ETF (BUG), wanting direct exposure to M&A-driven consolidation in the sector.

7. Tesla: Musk's Massive Incentive

• [25:08–27:13]
  • News: Tesla’s board proposes a monster performance-based pay package for Elon Musk (up to $975 billion if Tesla reaches $8.5T market cap).
  • Link and Simpson say it’s critical to keep Musk “focused”; Simpson will vote yes, viewing it as an investment in Tesla’s futuristic roadmap.

8. Critique of the Fed

• [27:25–31:08]
  • Treasury Secretary Scott Bessant publishes a sharp critique of Fed independence and its regulatory role as replacement interviews loom.
  • Leventhal warns:

    "Removing Fed independence is a bad idea. It will lead to higher interest rates, higher inflation..."
    — Jim Leventhal [29:59]

Sector Moves & Trade Ideas

Retail: Lululemon & Home Depot

• [34:00–36:01]
  • Lululemon falls 18% on weak outlook; Stephanie Link blames product misfires and fierce new competition, says it’s company-specific, not industry-wide.
  • Kevin Simpson details a Home Depot buy as a rate-cut/housing trade, expecting pent-up consumer and commercial upgrades.

Financials: Capital One, Goldman Sachs

• [40:59–43:08]
  • Stephanie Link buys Capital One, citing Discover deal synergies, consumer resiliency, and buyback potential.
  • Simpson discusses Goldman’s $1B investment in T. Rowe Price (private equity access for 401ks), calling it savvy for Goldman, lukewarm for retail investors.

Healthcare: GE Healthcare, Pharmaceuticals

• [43:42–45:42]
  • Link rotates into GE Healthcare after a 21% drop, attracted by improving fundamentals and the focus of a post-spinout management team.
  • Leventhal points out that while the sector is lagging (dragged by Eli Lilly, UnitedHealthcare), careful stock picking (AbbVie, AstraZeneca) yields outperformance.

Memorable Quotes & Moments (with Timestamps)

• "We want good news to be good news. But we are where we are."
  — Jim Leventhal on markets cheering weak data, [02:32]

• "[The services economy] is cooling, but it's not collapsing... there are other parts of this economy that are actually very solid."
  — Stephanie Link [04:19]

• "OpenAI is making a clear break from Nvidia's ecosystem."
  — Christina Partsinevelos [09:38]

• "Hock Tan staying is absolutely critical for this company to deliver and to execute..."
  — Stephanie Link on Broadcom [11:27]

• "If you're a portfolio manager and you have a ton of Nvidia and nobody Broadcom... you're going to be rotating."
  — Kevin Simpson [14:19]

• "If one of [Nvidia’s] big customers stopped spending... that definitely is concerning as an Nvidia shareholder."
  — Malcolm Etheridge [16:42]

• "The winner here is likely to keep on winning more than cede too much ground..."
  — Malcolm Etheridge [17:58]

• "This is what we were expecting to see from Nvidia and to a large extent we did... It was the guidance that took this stock up."
  — Kevin Simpson [13:18]

• "Removing Fed independence is a bad idea. It will lead to higher interest rates, higher inflation."
  — Jim Leventhal [29:59]

• "I think Lulu has missed the mark on product, product quality, reliability, pricing... there's a competitive environment that was never there prior to the last three or four years."
  — Stephanie Link [34:00]

Key Timestamps for Important Segments

• Market Overview, Jobs & Bonds: [01:01–06:08]
• AI Trade: Broadcom, Nvidia News: [09:38–19:41]
• Sector Opportunities: ASML, Snowflake: [19:45–22:29]
• Tesla/Musk Pay Discussion: [25:08–27:13]
• Fed Critique: [27:25–31:08]
• Retail & Home Depot: [34:00–36:01]
• Financials: Capital One, Goldman: [40:59–43:08]
• Healthcare Picks: [43:42–45:42]
• Final Trades: [46:12–47:01]

Final Trades (Rapid-Fire Wrap, [46:12])

• Stephanie Link: Uber — Dominant player, expanding addressable market.
• Kevin Simpson: Home Depot — Perpetual compounder, lower rate beneficiary.
• Malcolm Etheridge: Rocket Companies — Benefiting from approved deal (Mr. Cooper), rates tailwind.
• Jim Leventhal: Citigroup — Relative value, attractive on pullback.

Summary Takeaways

• Broadcom’s surge & OpenAI deal mark a potential inflection point in AI hardware, raising competitive threats for Nvidia.
• Investors see both opportunity and risk in sector rotation; cash on the sidelines increases, and 'buy the dip' mentality persists.
• Consensus: There is room for both Broadcom and Nvidia in the massive AI TAM, but the narrative is getting more nuanced.
• Retail and healthcare show mixed signals, highlighting the need for selectivity and adaptation.
• Fed independence and policy shifts remain in focus heading into election season.