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Halftime Report
Should You Buy the Tech Pullback? 5/15/26
00:44:27
Scott Wapner and the Investment Committee debate whether it's safe to buy the tech pullback. Plus, the desk share their latest portfolio moves. And later, we hit the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
A
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B
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. All right, Carl, thank you very much. Welcome to the Halftime Report this Friday. I'm Scott Wapner. Front and center this hour, the pullback following those parabolic moves in tech. We will discuss and debate these markets, the moving yields, oil and what all of it means for these markets going forward. Joining me for the hour today, Jenny Harrington, Brian Belsky, Kevin Simpson, Rob Seachen. We will check the markets as we get started. 12 noon in the east, we are red as you see across the board, Russell's getting hit the hardest. No surprise probably there given the move that we have seen in yields, NASDAQ and the S and P going for their seventh straight positive week. So that tells you the kind of run that we've been on the 10 year topping 450, the 30 year 510 highest since May of 25. So that's getting in the, I mean, look at the 10 years approaching 460. You just got to keep your eye on yields because that's a big story. On what is Chair Powell's final day as head of the Fed. BTIG's Jonathan Krinsky today says threatening key breaks, the NASDAQ yields and crude all near inflection points. Jenny, you feel like we're near inflection points in many parts of this market?
- [02:25]
C
Yeah, in the short term, I do. And a lot of, a lot of it's just how we got here. You know, I think if, if we got here slowly and methodically and we hadn't had such a crazy run up in the last few weeks, I'd feel a lot better about the absolute numbers. But it's been, there's been a sense of mania and a sense of euphoria and a sense of being totally disconnected with reality out there. So I think where we are now doesn't have a super strong foundation under it. And I've been thinking too that if you think about how strong the market was in 23 and 24 and 25, all three of those years had the two main pillars underpinning it. It had interest rates that were either lower, lowering or expected to go lower. And it had stronger strong earnings growth. All we've had this year is strong earnings growth. And at this point we don't even have the hope. We're losing the hope.
- [03:13]
B
That's pretty important.
- [03:14]
C
Yeah, yeah, yeah, no, no. Well, that's why we're here. Like it did it, you know. And so right now we're losing the hope, I think, of also having incrementally lower interest rates. So to date, you know, we're up about almost 10% on the S&P right now, or 10% on the nose at least as of last night. And that's 100% because of earnings. And those earnings have been spectacular. So what happens from here, you know, if we have, if the other leg of interest rates doesn't come about at all, could that start to soften the momentum and the tear that we see?
- [03:45]
B
I was going to give you when, when you said, yeah, we have some euphor to say, okay, I mean you can make the case for that. We've got some mania. I make the case for that. But then when you said kind of disconnected from reality, you lost me. Because this, this has all been based in, in the reality of how good as you, as you just said, earnings have been. The whole AI story, the capex build, etc, I mean that, that's sort of grounded in the reality of, of where we are and where many think we, we're going to go.
- [04:16]
C
Right. And this is always the challenge, right is the right now and then the looking forward. So up until this moment I can totally anticipate.
- [04:21]
B
Well, the market certainly looks forward, as
- [04:23]
C
you know it does. But if it's really looking forward, why isn't it anticipating really significantly higher inflation? That's possible, not probable, but it's possible. Why isn't it anticipating supply chain disruptions and aftershocks coming from the Strait of Hormuz?
- [04:38]
B
Because it'll believe it when it sees it. And the bigger stories, to be quite frank, are earnings and the AI and the AI build out. Those are bigger stories, Brian. Right now the only, well, that's all, the only thing that the market really cares about now is that justified. I love you, Jenny. I really do.
- [04:58]
C
Go for it, Alpha.
- [04:59]
D
But based in reality. The reality is the construct of the United States stock market is in the best position to be seen in decades. Earnings are going up at a pace that we didn't anticipate even going into this year. But I think that the key thing on all of this is that the market is a discounting mechanism. If the market was worried about, really worried about inflation and macro, it would be in a much more dire, much more dire spot. I understand it was a very exciting day yesterday. We have some other IPOs coming out, but the whole semblance of the AI trade has changed. It's doing a wonderful job rotating in and out of sectors within tech. It's not all concentrated. And now other areas of the market are showing earnings growth not just because of AI, but because the fundamental backing of it.
- [05:43]
B
So long though, with the idea that, that, you know, inflation getting a little bit away from us. Yes. Could be a major problem. Rates continuing to back up could be a problem. I mean, Michael Hartnett, bank of America today says bull capitulation into stocks and tech is likely to be fully complete in the next few weeks. Early June is ripe for some, for taking some off the table. Why? Because of inflation above 4%, he says on the CPI, that's where risk assets get twitchy. The past 100 years. Once the CPI crosses 4% on average, the S&P is down 4% over the next three months, down 7% over the next six. And if you, if you say that rising rates are certainly a hindrance for the growth trade because the growth trade has been the game, then you're even more susceptible to some upset within the market.
- [06:36]
D
If Jenny's right, we don't disagree for two points. Number one in earnings driven markets, markets more volatile. We talked about that yesterday on the network and so we do see a, a correction coming. There's going to one, there's going to be a correction coming. But if the market is only driving itself and going higher because of interest rates, whether or not they're going up or down, I don't think that's the right way to be thinking about it.
- [06:56]
C
No, it's obviously earnings. That was my whole point. Yeah, but if interest rates start to work against, you know, and not be neutral like they were, then you have some risk.
- [07:04]
E
Let me take both of these together because I think that is really you, you have a tug of war between the two. And we learned that this week with inflation because CPI led the charge and then we had a backup with pp. You've got higher inflation and phenomenal earnings. The challenge is where does this inflation go from here? Higher energy prices, I mean, they could be temporary. We could be looking at lower oil prices in two, three, four months. But it's all that ripple effect. This was the second month in a row where we took oil and put it into our inflation numbers. Everything else that moved higher is not that genie you could put back in the bottle. So energy prices can come down, but everything else that's been affected won't be. So I think inflation is the biggest problem.
- [07:46]
B
It's not like core is, is way lower. You, you, you do have a bit of an inflation problem above where target is. But to continue sort of the analogy of a, of a tug of war, I mean, people who are, are making Jenny's case or some of the points that she has made have been pulled into the mud pit by those who have made Belsky's case because the market's only been concerned with AI and earnings. If, if Jenny, now they've gotten out of the mud pit, they're like, wait a minute, now we're going to pull the rope back our way because rates are backing up, Inflation still sticky. Now you have a new Fed, one that could be highly contentious. So now the people on Jenny's side with the rope feel like they finally have some game.
- [08:28]
E
Yeah, the problem that I see is that we've got the next Fed futures number, talking about potentially a rate hike in March or some point between now and March. And all of us are like hoping for rate cuts.
- [08:39]
C
Right?
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E
And I'm just to Jenny's point specifically, if inflation is here, we can't cut rates no matter how badly worse may work.
- [08:46]
B
And maybe, you know, Kevin Warsh is going to have to, you know, get, get his, his feet on the ground in the Fed and take, take the temperature of what the room is like and where inflation's going. Rob? Sean, you know, this idea of being near an inflection point all over the place. How, how would you address that after what has been nothing short of parabolic moves all over the nasdaq?
- [09:11]
F
And as a result, Scott, there's no surprise that we're selling off today. The tape was screaming overbought. We had six straight up weeks, up 17%, the 11th best run since 195010 stocks doing it all. In an environment like that, you don't need a catalyst, you need an excuse. And we got one. Right. And I think what the bulls won't say out loud is that this rally has been dangerously, dangerously narrow. When you strip out the high hyperscalers and what, what's left in, in, in con contribution sits in three groups, semis, hardware and capital goods. And a third of this market is actually down 7%. That's not a, a, a, a concentrated, that's a concentrated trade and rally and it rallies clothing. So I'm not surprised And I don't think you should be chasing right now. I don't think this is that inflection point but I don't think you should chase. But if you zoom out longer term I'm leaning hitting an earnings boom in a melt up in the largest industry group in, in the index.
- [10:20]
B
Well, how can you hold on? I feel like you just gave me, I feel like I'm, I'm sorry to interrupt you but I feel like you just gave me conflicting things. Don't chase. But I'm leaning in. If you're thinking about the transformational.
- [10:33]
F
I said yeah, no, good point, good catch. I said if you zoom out meaning if you look with a broader lens, longer time horizon than right now.
- [10:44]
B
So we've had still say you're conflicted though because that, I think that's what, what we are talking about. Like if you are of a longer time horizon, would you, would you chase of what you term it a chase? What's the difference between a chase and a lean in? If your time horizon is, is long, you. I, I don't get that.
- [11:04]
F
No, no, no question. But you have people that have the margin all the time, Scott, are either overweight or underweight equities and you're thinking about what to do with the incremental dollar as it relates to equities. I think the AI infrastructure cycle is real. The earnings are showing up, but the playbook is one that rewards patience in taking advantage of volatility. And when you've had the type of move that we've had and obviously it's been pretty epic, you know, you have to sit back and see if this change which showed up in the form of higher rates, a new Fed, a new Fed chair, I think you can stay constructive. But I'm saying be disciplined on how you add it doesn't mean I'm going in there and selling everything. You know. It doesn't.
- [11:57]
B
No, but I, I got you. I mean look, every dip has been bought and the the question is whether Kev, this is going to be if this is a dip of anything beyond a day. I mean if one day doesn't mean anything if the diplomatic will be bought. Goldman Sachs, their trading desk today essentially makes the case to just keep holding on even in the face of parabolic moves. Maybe to Jenny's point, some euphoria, some mania. They say it's tempting but don't fight this. Dips have been extremely shallow because the long only community has been and will continue to be ready to pounce as buyers.
- [12:27]
E
Not only are they pounce as buyers, they're going to pounce on these big five names that are pulling back today. You know we looked at Micron and we talked about it last Friday. It's selling off quite a bit. But I think there was two days last week where maybe it was up 71 day, up 100 another day the dip buyers are going to come back. If we've learned nothing since COVID it's not to fight the retail tape and the and the buyers will come in and even we're sitting with cash. Scott, if we see a sell off of any consequence next week we'll go in and buy for sure.
- [12:54]
B
I mean there's been some parabolic stuff going on. I mean we almost made like a scorecard to go through some of it. The SMH has been up for six straight weeks now. It could snap that this week but it's been up for six straight. If you look at the smh, you pull it back over that time it's like up and to the right like kind of everything is the DRAM etf. All right. It began the week with six and a quarter billion dollars in assets under management. It finished yesterday at nine and a half billion. All right. It only began trading in early April at a time when some said you know what the launch looks like a top, a toppy move. Well, it only had 77 million in AUM a month ago. All right, to nine and a half billion as of yesterday. How about Nvidia? I know it reports next week. We'll talk about that in a minute. Seven straight up days up 20% over that time alone. I get that there's a lot of optimism. Market cap is now near $6 trillion. How about the NASDAQ 100 ETF? The Q's going up so much it would need to fall 12 and a half percent just to get back to the 50 day. So that's Brian, why people look at what's happened in this market and they're like now something's got to give.
- [13:59]
D
No going back to what Rob said. I think what Rob was trying to say is you're a disciplined investor, long term investor. The market's going to the market, you have to believe the market's going to pull back and we can't continue on with this pace. It's just number one, it's not healthy. Number two, we need to have some more buyers come in. If I could echo something that Kevin said as well. When we talk to our great platform clients at Humulous, all we hear is we have cash, we have cash, we have cash, we want to put it to work. So the high net worth investor wants to play on this but even then are not trying to chase this right now, today, after what's happened this week.
- [14:33]
B
I mean you look at the IPO yesterday, Cerebris goes, you know, up, up almost 70%. You could probably put that on the, the sort of parabolic scorecard that we did. Maybe that marked to some a sign up of 89% above the IPO price in the debut. Maybe that was a sign of sell the news at least in the short term for, for technology, you know, you get a cocktail of high oil and high rates and it just gives you a reason to do that. But you know, what do you make of these, these moves that have been nothing short of parabolic but juxtaposed against earnings that would as Tony Pascarello, Goldman Sachs writes about today. Yeah, you can hate on the narrowness of the market and how top heavy it is but you can't get away from the fact that earnings have matched the, the movement of, of what the S and P has done. And the big reason why it's a tech earnings are up 50% in the quarter.
- [15:28]
C
Right. Wild. So Cerebras and Intel have been my canaries in the coal mine, you know and I'm always looking at something that catches my eye and I think is representative of the growth and risk appetite that's out there. So between Cerebras, which made me a joke with a friend this morning, I'm like, you know, makes me want to party like it's 1999. And then I told her it smells like teen spirit too. But that's how I feel about Cerebra switches. It gives me flashbacks to the late 90s. It's not, I know it's a totally different playbook but it reminds you of that and what Intel's done on like still negative earnings and still very little revenues compared to their Bigger peers is kind of wild. So it says to me that there's a fringe element that's out there. And I did it. I did a. Interesting. I thought, at least for me, you probably don't think it's silly, but I did an interesting thing this week where I looked at all the stocks in the S&P 500 with over a 30 times multiple to get a sense of who is really, who is really rich. And then I, and then I looked at what their expected earnings growth is over the next three years to see is it accelerating to justify those multiples or is it declining. And so what you see is earnings growth rates are actually kind of flat for the richest stocks out there, which is why I don't think there's a huge problem in the rich segment of the market. But there are fringes and the intel, like intel spooks me, you know, there's nothing behind that other than people playing,
- [16:46]
B
I don't know, other than the United States government, the full faith and credit of the usa. There's nothing behind it.
- [16:51]
C
No, I think there's nothing behind it. I think there's nothing behind it. I don't think. You know what it's like. It's like to some degree you can joke. Haha.
- [16:58]
B
It's true though.
- [16:59]
C
Sure. But ultimately everything.
- [17:01]
F
Don't fight the White House.
- [17:02]
C
Here's the thing.
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B
It's true.
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C
Okay. You really think that their earnings in the next five to six years are going to justify that market cap? I don't think so. And when you look at things like
- [17:12]
F
you think that's the narrative, Jenny, that's driving the stock.
- [17:16]
C
Obviously it's not, but I wouldn't want to be buying it here. And you know what? You know what? Sorry, Rob. I know. Sorry about that. You know what, Rob? I know you're not buying intel stock either. There is no way. Because there's no functional valuation method that would get your company.
- [17:29]
B
Let me tell you something though. If you used to own this name, okay, in your growth portfolio, right, Nobody's more. What do they say if you, if you still had it now you got out? Because a lot of people were questioning whether this thing was even going to be something that we'd be talking about a year from now. If you still owned it, I think we both know you'd be holding it.
- [17:50]
C
Absolutely not. In fact, I'll give you like a little bit of personal. There's no holdings of it at Gilman Hill, but there I found it. I'd forgotten. I put it in my kids utma accounts. You know what I did last week? I sold it from my Kids Utma account. It was like 10 shares in each account, so it wasn't significant.
- [18:05]
B
Yeah, that's different than having, I don't
- [18:07]
E
know, we own more than 10 shares.
- [18:09]
B
Yeah, yeah.
- [18:09]
C
So what are you doing? Are you holding it here? Are you trimming it?
- [18:11]
E
We had covered calls that'll expire today. 121 calls when we were on last Friday, Scott, remember The stock was 131.
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B
Yeah.
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E
We were in the money. We made a nice profit. We're just keep printing option premium against this.
- [18:22]
C
Right? Against.
- [18:23]
E
But I don't think that we want to be sellers here because I don't think the enthusiasm for this trade is over. We saw that yesterday with Cerebras. I mean, anything having to do with this space is going to move higher.
- [18:35]
C
I don't know. I think if there's inflation. These are like these valuations right now. Rather these share prices right now are baited. Are dated. Sorry. Are based on long dated expectations for cash flow. Right. Because every stock ultimately trades at the present value of its net of its future cash flows.
- [18:52]
E
You can't discount what Scott said about the US government being not just a shareholder but also an influencer.
- [18:58]
C
Fine. But I just don't think the cash flows are going to get there to justify the current valuation for a very long time. And if we're in an inflationary environment, though, that present value shrinks. And so I think there's a lot more.
- [19:09]
B
I got a good one for you then. I got a good one for you. What are you doing with Cisco?
- [19:13]
C
Oh, Cisco or holding?
- [19:15]
B
Oh, you're holding.
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C
You want to hear why?
- [19:16]
B
Of course you're holding that.
- [19:17]
C
Of course. Because here's the valuation.
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B
Stock's coming off the best day since 2011. It's trying for its best week since 2001. On strong AI demand upgraded to a buyer. Now, you could call this an old tech, but now suddenly it's an AI story now. And you have no issue with what this stock has done.
- [19:38]
C
Okay.
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B
Or anything like that.
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C
Cisco trades at 25 times earnings. Cisco has a 4.
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B
That's an above market multiple.
- [19:44]
C
Barely. Cisco has a 4% free cash flow yield, which means they're actually cash flow generative. They have earnings, they have free cash flow. It's up 52% year to date. That's, that's, that's a fraction of what Intel's up. I can't even remember.
- [19:56]
B
But if Cisco had backstopped by the government, it'd be Up a lot more. It doesn't need.
- [20:01]
C
We don't know how much they're actually going to earn. There's no way to guess. And we also know that the government hasn't exactly been true to everything they've said. Hey, we're going to put money into and it's going to work. Who knows? Who knows how those earnings are going to play out. There's too much ambiguity. So on Cisco, interestingly, we originally added this in 2013, then again in 2021, and the investment thesis remains the same today. So you can say it's an AI play, but our thesis has always been.
- [20:24]
B
I'm not saying I play, but that's how the market's taking it as an AI play. The same way they're doing it with IBM.
- [20:30]
C
Let me just.
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B
IBM.
- [20:31]
C
IBM's down from like, I mean Intel.
- [20:33]
B
I mean Intel. Okay, I'm in Intel.
- [20:34]
C
No, that's just a euphoric, like, you know, meanie thing on Intel. It's gotten crazy. There's no actual valuation behind it, but I don't think you can compare. Are you just trying to get me going?
- [20:44]
B
No, you're trying.
- [20:47]
C
This is why they put me in the hot.
- [20:48]
B
There's a little bit of humor on this show from time to time, in case you haven't noticed any.
- [20:51]
C
Brings it a joy.
- [20:54]
B
Join the party from time to time.
- [20:56]
C
The bottom line is there's real fundamentals, there's a strong foundation in Cisco, there's a strong case, which is wherever technology goes, whatever happens with technology, you need Cisco's products to support that, whether it's AI or something else.
- [21:08]
B
Okay, let's talk about things that, like Rob. Like Microsoft. Okay. Microsoft's been down a bunch. Compelling enough to buy for one. Bill Ackman, who's Pershing Square, has taken a stake in that company, as he says he began building that position in Microsoft in February following the price decline. They were able to establish their position, he wrote, today, at a valuation of 21 times. Okay, so that's about where the market is. In our view, investors underestimate the resilience of the M365 franchise. We believe concerns regarding Azure's growth trajectory are simply similarly. Similarly. Excuse me, misplaced. What do you think about this?
- [21:50]
F
I think Microsoft's the highest quality tech name in the world. I agree with Percy Square. I agree with Bill Biased. Highest quality tech name in the world. The M365 is endemic in every ecosystem out there now. They're going through a transition phase because of what's happening. Around them. But if you look at the business they're the, they have the largest analyst upside in the Mag 7/36% to the median price target. Azure Capex has been raised to $190 billion. Ackman views the growth in is growth Capex, not maintenance Capex. No, he thinks it's going to drive future revenue generation.
- [22:39]
B
You're right.
- [22:40]
F
Correct. Its growth. It's growth Capex, not maintenance Capex. So what that means is he thinks they're going to monetize and it isn't whether the AI investment is right, it's whether the street is patient enough through the build out and Ackman like us is saying he is. And so I think it's pretty compelling. It's been a large holding for us
- [23:03]
E
for a long time.
- [23:04]
G
It's tough for us kind of to
- [23:06]
F
move away from it because of the embedded gain that we have in it. Obviously it's been a little more painful recently but the pricing has rerated and you've historically been rewarded when you're buying in really high quality names at discounted prices that are going through seminal changes in their business. And Azure is still growing at 40%. I mean this is a good business.
- [23:32]
B
I'm not gonna argue with a guy who's got like eight couches in his shot.
- [23:35]
D
Clearly.
- [23:35]
B
Right.
- [23:36]
D
No
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B
couch game.
- [23:39]
D
He can relax and think about his Microsoft. Right.
- [23:41]
B
Seriously, what do you think about this Ackman move and the commentary?
- [23:45]
D
It, I really like it because you know, we've owned the stock all the way through this spring where Microsoft was kind of baby in the bathwater with all the software stocks. Rob nailed it. In terms of the quality. I don't know if it's the highest quality but we're on the quality spectrum. Yes. Because of the cash flow and really the earnings discernibility. What we've always looked at at Microsoft is that they've really taught the street that they can monetize all these different properties that they brought in in all these different products. So I think it's only a matter of time before they really get this Azure 365 going the way that they want. So we really like it.
- [24:17]
B
So let's, let's use that as a segue to get to software real quick before we, before we get out of here because the IGV is in jeopardy of, of breaking that four week win streak. Right. Kev had this nice ramp back at still what's been a dreadful period for, for software names. You trimmed IBM which is down 26% year to date. Right. That, that makes the point of even with some comeback in this space, there are a lot of stocks that are still down a lot as other parts of tech have ripped.
- [24:43]
D
Yeah.
- [24:44]
E
A lot of the money we were putting actually into Microsoft over the past month. So that's the first time we've been able to buy it literally for the past decade. IBM isn't right sizing or just money management. It's a relative underperformer. The Stock's at a 52 week low today when so many other tech names are moving higher. And it was absolutely like Microsoft rerated with the software again or whatever the cool terminology you want to use. But we, we sat on this thing for many years where it was kind of in the penalty box. It gave us an amazing run for two years. We still own a position, Scott, but I wanted to free up some cash.
- [25:17]
B
Okay.
- [25:18]
E
Very specifically to put to work next week. To your point, we're going to be buyers.
- [25:21]
B
Oh, I thought you were going to say you wanted to free up some cash to, to put it into Palo Alto, which you did. I thought that's where you were going with that.
- [25:27]
E
Well, we, we, we had some extra cash and we made that move simultaneously. What's interesting about Palo Alto is we sat here a month ago and I said the street has this wrong. Like cybersecurity isn't going away. It's not going to be disintermediated. It's not going to be replaced by Anthropic or its applications. If anything, they're going to embrace it. So you can look at CrowdStrike. You can look at Palo Alto. We bought it at 158 on March 5th. We bought it again this week at 220. It's probably approaching 240 at the moment. And this is ahead of earnings next week that we're buying it. I think this is a story that's still in the beginning of the having to protect all of the things that AI is doing not being replaced by it.
- [26:06]
B
Well, up 46% in a month. That was a good call. The Target goes to 255 today. At RBC they reiterate their outperform rating. All right, we're gonna take a break. Coming up next, the IPO horse race heating up. We're gonna check on Cerebras's first full day of trading. Plus new reporting on the timeline for SpaceX. K. Rooney's follow up. The money on Anthropic's money and there's a lot of money and a lot of valuation. We're back after this.
- [26:37]
A
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- [27:07]
H
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- [28:14]
J
Foreign.
- [28:19]
B
We're watching shares of Cerebras. Obviously this is the full first day of trade, giving back a bit after that huge debut. Let's get to Christina Parts and Nevilles who's got more as you watched this all day yesterday, certainly highlighting the open and now. What do you make of this?
- [28:35]
I
Oh you. Yeah, a huge day yesterday. So selling off. Also you're seeing it just part of the broader tech stock, but the stock really closed at just just so much higher on Thursday after a 68 surge from IPO price, giving it a market value at one point of over $100 billion on a fully diluted basis, which includes options, warrants and just other securities. Investors though, as we know, are just really hungry for AI exposure. And Cerebras has a strong pitch. Its oversized chips run AI models at speed while sidestepping the networking complexity of connecting thousands of high end Nvidia processors since it's all on one particular chip. The valuation though is is maybe where we start to raise some questions.
- [29:17]
J
It's steep.
- [29:17]
I
Cerebrus is trading at roughly 134 times trailing revenue more than 5 times Nvidia's multiple as of yesterday's close, it does have about a 24, almost 25 billion dollar backlog. But 20 billion of that was a single deal with OpenAI, and only roughly about 3.7 billion is expected to be recognized in 2026 and 2027 combined. So that means that they really have to start diversifying, getting more customers in order to, you know, continue that trajectory of growth. The market, though, is pricing in years of flawless growth, no doubt.
- [29:52]
B
Yeah. All right, Christina, thank you. Well, I mean, we'll see what the tech trade now does into a new week and where rates go, because that could all be part of the mix. Now, we ready for SpaceX? Let's show you the timeline of what we think's gonna happen here. According to CNBC sources, we're anticipating a 70 to $75 billion listing May 18th to the 22nd. That's next week. You could see the S1 June 8th. You could get the roadshow and then you get the first trade in mid June. So we're, we're thinking a lot about that. We're also thinking about, of course, OpenAI and Anthropic. Anthropic, by the way, continues to raise a lot of capital. They're heading towards this monster offering of their own. Their valuation is climbing rapidly as Kate Rooney's been following as well and joins us now. Hi there.
- [30:39]
J
Hey, Scott. So that's what I'm hearing. Anthropic right now has agreed to a term sheet for a new $30 billion investment. This would value the AI giant at $900 billion in private markets. This is according to two people familiar with the matter. The company did decline to comment on this, Scott, but we did also report a couple weeks ago that this valuation was being floated. The papers were not signed yet. It was very much in the works. And I'm told it's getting a lot closer to this, getting over the finish line. With that term sheet being signed, it more than doubles Anthropic's last price tag and then notably eclipses the value of rival OpenAI, which is valued around $850 billion in private markets. It does come on the back of explosive revenue growth for this company. Got Claude Code, a major driver of that. There's a lot of intrigue around Mythos, the cybersecurity model that has helped add to buzz around this for investors. And then Anthropic also needs more compute at the end of the day to power all that demand. I'm told that is why they're out there raising Capital continue to fundraise ahead of what we're told could be an IPO as soon as the end of this year. Anthropic has topped from what I'm hearing, a $35 billion revenue run rate. That is again according to sources that would be up from 30 billion early this year and then it was $9 billion in revenue just at the end of last year. Got Sequoia. I'm hearing Altimeter Co leading the round. They are Also investors in OpenAI, Green Oaks, Dragony are participating as well. I'm told we should expect more investors to round out this funding, bring that total to 30 billion.
- [32:02]
B
Scott, a lot of demand still out there. Kate, thank you. It's Kate Rooney. So Rob, I mean I, I believe that you've been, you've been giving your investors access to these through, through private markets. Now what do you think as you start to get the parade in the public markets?
- [32:21]
F
Certainly been a melt up. I still think there's a lot of individual investor demand that did not get to participate in the private rounds, although they were broadly available for many of them. Some of it came later in the cycle. I think we're pretty proud of the access that we got early. There's some later rounds that we passed on because I think the upside becomes less asymmetric obviously the more you pay for these. But you almost have an evangelical style following behind a lot of these names that you're talking about, Scott And I do think there's probably more Runway even after they go public. You will see what we do once that happens for our clients. They're to be sitting on enormous gains. My bet is that that's going to weigh into their decision process on what to do from there. These are businesses that are changing the world. So I think it'll probably still be even after the ipo, a wait and see approach for most of these businesses.
- [33:27]
B
How do you think about this? Because I think think, you know, Rob's point is is well made and Brad Gerstner was talking about this yesterday with us as well. The idea that the upside is going to be much less asymmetric, especially for retail investors to consider because these companies have in his mind already IPO'd because they've done what they've done in the private market before they even get public.
- [33:50]
D
Exactly. This is a great example of how the private markets are, especially with something like this and OpenAI and SpaceX very different than what we went through in the late 90s, early 2000. These companies have revenues, they know the diversified set of investors already. And so you're not really looking for that oomph when they come out again. And I think that given the fact that both OpenAI and anthropic in their recent discussions in the press, their public comments started tail back a little bit. They're not a year ago or six months ago they were really, really bullish in terms of what's happening. They've kind of become a little bit more conservative, which tells us they're getting closer to that IPO pricing and getting out in the public market.
- [34:30]
B
You want to piece any of these when they, when they hit the market?
- [34:32]
D
Typically we. I've, I've historically waited a year to buy an IPO just to see how they, they react in the, in the twelve months and four quarters of, of, of pro. Of giving us information in the public square. But I may have to rethink that.
- [34:46]
B
Jenny, be quick. Good. I gotta go.
- [34:47]
C
Thanks. What I'm going to be watching for is where the funds come from to go into those IPOs. And it'll be interesting to see does it come from other sectors or does it come from within tech? One of the things I'm worrying about is compression evaluations.
- [34:59]
D
Yeah.
- [34:59]
C
And so if it from existing tech stocks into those because people are already capped out on their allocation to technology, that could actually be kind of negative for some of their peers. So I'm watching the flows.
- [35:09]
B
Unless there's just so much money sloshing around all over the world that wants exposure here that you're not going to get money like, you know, ringing the register on any of the Mega Cap names to take that and put it in here. There's just a lot of money. Right. Available to be invested.
- [35:23]
C
It'll just be interesting to see it.
- [35:24]
E
Yeah, well, you did see it. You saw it yesterday with Cerebras. It was like $185. There's a ton of ton of cash on the side, but you don't know
- [35:30]
C
where it came from.
- [35:31]
E
I think it came from cash.
- [35:32]
B
Let me get the, Let me get the headlines from Mackenzie Segalus. Hi there.
- [35:36]
J
Hey, Scott.
- [35:37]
I
The DOJ is reportedly planning to indict the former Cuban leader Raul Castro. That's according to Reuters, which says the potential indictment has yet to be approved by a grand jury, but that it relates to Cuba's downing of humanitarian aircraft in 1996. It follows a visit to Cuba by CIA Director John Ratcliffe yesterday. Yesterday where he offered assistance to Cuba in exchange for fundamental changes to its political regime. Germany's Chancellor Friedrich Mears is escalating his critiques of the Trump administration. He said earlier today that he would not recommend his children live in the US Due to the social climate. According to reports, Merz previously said the U.S. was being, quote, humiliated by Iran and war negotiations. And South Carolina's governor calling a special legislative session to redraw the state's congressional districts. The new map would likely eliminate the state's only majority minority district currently represented by powerful Democratic lawmaker Jim Clyburn.
- [36:29]
B
Scott, back to you. Okay, thanks so much for that, Mac. We'll see in a little bit. All right. Coming up, our calls of the day, several bullish names in the oil space today. You know oil's on the move. Plus one firm now positive on Spotify ahead of its investor day next week. We'll debate all of them next.
- [36:47]
H
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Oh no.
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- [38:28]
B
Let's do some some calls for the day. Belsky. I start with you. ConocoPhillips target to 136 from 128. That's at Argus who says today we favor those ENPs that are well positioned to manage a potentially long period of volatile, volatile oil and gas prices. We believe cop is one of those companies.
- [38:45]
D
Yeah, we've owned it for about five years. And our value portfolio Scott. And this is a stock that does very well. Exactly right with the volatility to wti. But it gets a little bit more of a kiss when WTI is higher. So we like it.
- [38:55]
B
Chevron reiterated by 220 at UBS. Kev.
- [39:00]
E
Yeah, for a lot of the same reasons. Brian said they generate enormous free cash flow. They care about shareholders. Incredible balance sheet. That 220 price target would be higher than the all time high. I think it's going there.
- [39:11]
B
Okay. Netflix overweight reiterated Morgan Stanley 115 they say Rob engagement fears are overblown and pricing power and the ads opportunity are underappreciated. You own the name? Name
- [39:27]
F
S. Scott, you cut out. I didn't hear, I didn't hear the call. Sorry.
- [39:31]
B
Netflix. You got me Netflix, can you hear me?
- [39:34]
C
Want me to find.
- [39:35]
F
Yeah, yeah, yeah.
- [39:36]
B
So Netflix got Netflix got a call today. That's okay. That's okay.
- [39:39]
E
You're probably watching strong buy here.
- [39:42]
B
System is stain on one of the couches feeding his pet line fixated items. Gotta clean that.
- [39:48]
C
I can take this for you if you want me to.
- [39:50]
B
No. Morgan Stanley. Morgan Stanley reiterates over weight. 115 is the price target. Engagement fears are overblown and pricing power and ads opportunity are underappreciated. I mean it is risky having like eight white couches. Right.
- [40:06]
D
You gotta fluff those.
- [40:07]
C
I don't think they're real backdrop totally
- [40:10]
B
mess that up easily.
- [40:11]
F
It's, it's, it's, it's a gathering space for the family Scott when they come to watch Netflix. We would, we would agree this he is. We would agree that the engagement fears are overblown. We see huge upside in sports for this business. We bought it when it became more reasonably priced and think this is a, is a business that we finally want to own after not owning it for a long period of time.
- [40:37]
B
Okay. We'll talk to Santoli next who joins us with his midday work. Senior markets commentator Overtime co anchor Michael Santoli is at post nine for his midday word. I see a lot, a lot of people obviously saying something's got to give and we wonder if higher rates are the give point.
- [41:16]
G
Yeah, I mean because all along the market has relied on the parts of the index that can be insulated from the macro and it was helped along by the fact that we did not break containment on, on rates. I think one thing that the move higher globally in yields is accentuating to everybody is the Absolutely massive open ended capital needs of this capex over consumer economy. The build out everything that's going on reminds you of the same thing which is that we need more capital and more real assets for everything and so the scarcity moves and all the rest of it. All that being said, I think it's also the situation where in the near term on a tactical basis, the nasdaq, the chips, the memory stocks had already by everybody's estimation reached a point where it needs a break. It needs to go looking for an excuse to pull back. We're going to correct. It's a matter of is it going to be the easy way or the hard way? The easy way being let the pressure out of the most extended areas of the market and have other things pick up the slack or is it going to be more of a holistic gut check?
- [42:16]
B
Maybe also a little bit of a message from the bond market. Not so fast, Mr. Warsh.
- [42:20]
G
Exactly. And as much as I sort of push back against the idea, oh, the market always tests a new Fed chair. I mean early 2006 Bernanke was not exactly an emergency moment. It was a year before the crack showed up. Even Yellen 2014. However, Powell's first day was Volmageddon Day in early 2018, which was not a major financial crisis. But it got your attention.
- [42:43]
B
Yeah. All right, we'll, we'll talk to you later, Mike. Thanks. It's Mike Santoli. Options actions next. Oliver Renick at the CBO in Chicago. He's flagging some big bets in the banks. He'll tell you exactly where next. All right, options action time. We're going to the CBO Global Markets in Chicago. Oliver Renick flagging some moves today. Tell us where you see some action.
- [43:27]
E
Scott. The options action in banks tells a notably more bearish story than the price action in today's session. More than twice as many puts are trading than calls in the XLF etf. Two bearish trades stood out. The first fairly straightforward put buying. Someone spent just shy of half a million dollars buying a 5,800 contracts of the 46 strike put expiring in mid September. A trade that needs the ETF to drop another 11% from here.
- [43:55]
B
The other trade was a straight up
- [43:57]
E
call sale of $400,000 of 50 strike calls expiring in January 2027. If that trader doesn't have the ETF underlying in their portfolio, it's a pretty risky trade as those contracts are currently in the money. Possibly a bold bet that the sector's going nowhere for the rest of the year.
- [44:17]
D
Interesting.
- [44:18]
B
Oliver, thank you very much. All right, Brian. Mr. Financials, what's the counter to that? I mean, okay, don't tell me higher rates are good for the banks because obviously if rates are moving up, banks are red today. I guess you get growth scare in play there. But what's your take is you were talking to me about this either yesterday or the day before. Yeah, yesterday and the day before that, the week before that, the year before
- [44:40]
D
that and then the decade before that.
- [44:42]
B
Yeah, it's true, that's true.
- [44:44]
D
So we really like certain stocks and financials because we like the theme of the scalable big money centers and we like the really small banks because of the relationship side of things.
- [44:53]
B
Like certain stocks. Yes. Okay, like Goldman, jpm, Morgan Stanley, Wells Fargo, Citi. Certain ones. How about all of them?
- [45:00]
D
So bank of America at 12 times earnings in a market where value actually was doing quite well in the first quarter of the year. We love the bank of America brand and franchise, especially the Merrill lynch side. So we're in it to win it. And we still think from a return on equity perspective, which we talked about yesterday, return on equity in these big banks, especially in bank of America and JP Morgan, Goldman is beginning to turn when you see when you want to be in these names.
- [45:25]
B
All right, we have another move from Kevin and it gets us into our setup for some earnings that are next week.
- [45:29]
D
We'll do it next.
- [45:46]
B
All right, let's do this move. As I said, we have from Kevin Simpson. You bought Free Port. Yeah.
- [45:50]
E
Scott, this is a new purchase for us. I think both of you guys have Freeport. This is the first time we've owned Agnico, Eagle for gold and Freeport for copper. We picked it up yesterday at 63 and a half. We bought more this morning. Scott, at the Open at 61 and a half. We're looking at the sell off in metals from a trading perspective. But I like the name long term more for the usage of copper in data centers, electrification, so many applications. So we're not trading this.
- [46:15]
B
This.
- [46:15]
E
We're in it as a long term investment.
- [46:17]
D
Yeah.
- [46:18]
B
Because I mean, normally if, if you were worried about an economic growth scare, you'd say, well, I want to stay clear from things like copper. But you're specifically talking about this massive data center build out which gets you into it nonetheless.
- [46:34]
E
Yeah. We also don't see a global recession coming. And one thing, one of the things we really like is the way management's cleaned up the balance sheet.
- [46:40]
B
Yep. All right, we'll Take a break. We'll come back with finals. Well, we're going to kill it at 3 o' clock with Jeremy Siegel, Ed Yardeni, Tom Lee Low, Tony Muhammad, El Erian, Warren Pies. Can I tell you? All right, let's do final trades. If I were you, Rob, I'd pick Restoration Hardware. But you tell me what you got. You tell me what you have.
- [47:03]
F
I'm gonna go with ebay, Scott. It's a bright spot in the discretionary space this year. Clearly attractive fundamentals and drawing outside interest.
- [47:12]
B
Good stuff, Kev. What do you got?
- [47:13]
E
Palo Alto Networks. We like the name. Heading into the earnings print next week.
- [47:17]
B
Who's Invesco?
- [47:18]
D
Invesco I am. Home of the QQQ. Is 2.4 trillion under management.
- [47:22]
B
All right, all right.
- [47:22]
C
Microchip preferred, 4.7% yield. Lots of price target increases this week.
- [47:26]
B
All right, Good stuff. Thanks, everybody. I'll see you at three. The exchange is now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 2012 Eastern only on CNBC.
- [47:42]
A
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 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 halftime reportdisclaimer Snoring, gasping during sleep?
- [48:19]
K
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