Halftime Report: Stocks Extend Record Highs (July 24, 2025)
Host: Scott Wapner
Guests: Josh Brown, Jim Lebenthal, Malcolm Etheridge, Kevin Simpson
Release Date: July 24, 2025

Introduction

In this episode of CNBC's Halftime Report, host Scott Wapner delves into the dynamic landscape of the stock market as it continues to break records. The discussion primarily centers around Alphabet's (Google) robust performance amidst the ongoing AI arms race, the implications for other tech giants, and notable movements in various sectors, including automotive and airlines. The panel comprising Josh Brown, Jim Lebenthal, Malcolm Etheridge, and Kevin Simpson provides deep insights into these developments, offering both bullish and bearish perspectives.

Alphabet (Google) and the AI Arms Race

Market Performance and Strategic Moves:

Alphabet is at the forefront of the conversation, with its stock maintaining a steady increase of +1.3% on the day, pushing the company towards record highs. Scott Wapner highlights Alphabet's recent earnings beat, attributing it to a significant increase in capital expenditures (CapEx up by $10 billion to $85 billion) and strong performance in its search metrics.

Jim Lebenthal provides a nuanced view, stating:

"This is a company that has a very good services business in the cloud infrastructure that it's building. YouTube is hitting on all cylinders... I continue to say that this is a stock that's undervalued." [02:16]

Lebenthal emphasizes Alphabet's diversified revenue streams beyond search, including cloud services and YouTube, asserting that despite competitive pressures, the stock remains undervalued with projected earnings multiples of 15-16x next year's earnings.

Kevin Simpson concurs, highlighting Alphabet's strategic positioning in AI:

"I don't use ChatGPT on my phone. I'm almost exclusively Google... Gemini is going to come back into the picture." [03:39]

Malcolm Etheridge offers a counterpoint, suggesting that Alphabet's AI tools, particularly on Samsung devices, are currently a key factor keeping the stock relevant:

"The AI conversation is moving to mobile. It's unrealistic to think that they're not going to have this lull for quite a while." [04:09]

Despite differing views, the consensus leans towards Alphabet being a strong hold, with significant investments in AI expected to pay off in the long term.

AI Developments and OpenAI's ChatGPT-5

The panel discusses the competitive landscape of AI, notably the impending release of ChatGPT-5 by OpenAI. Steve Kovac reports:

"ChatGPT version 5 is supposed to launch in August... It's a melding together of all these disparate models that OpenAI already has." [15:06]

Josh Brown adds skepticism regarding the true capabilities of AI reasoning:

"We're not at the reasoning stage. They are still word calculators... This is more of an iterative update." [16:25]

The discussion underscores that while AI advancements are significant, the expectations surrounding them, particularly notions of artificial general intelligence (AGI), may be tempered compared to earlier projections.

Tesla’s Performance and Future Prospects

Tesla faced challenges with a top and bottom miss in earnings, leading to a 9% drop in stock price. Elon Musk anticipates "a few rough quarters," focusing on the long-term vision of autonomous vehicles and robotics as trillion-dollar opportunities.

Kevin Simpson remarks:

"We're not looking for this as an automobile company over the next three months, it's can they deliver on full self-driving autonomous vehicles, robotaxis and robotics." [19:34]

The panel debates whether Tesla's current struggles are temporary setbacks on the path to transformative innovations or indicative of deeper issues within the company. While some view the stock's volatility as an opportunity for strategies like covered calls, others remain cautious about the immediate prospects.

Other Stock Movements and Sector Insights

Otis Worldwide:
Josh Brown expresses confidence in Otis Worldwide despite a slight disappointment in new elevator sales, emphasizing the strength of its service and maintenance contracts:

"It's recession-proof... There's a ton of room to gain market share." [28:46]

Cheniere Energy:
Jim Lebenthal shares a strategy of trimming winners like Cheniere to manage portfolio risk:

"I've been trimming some of the winners... Building a little bit of cash." [29:36]

Raytheon and Other Trades:
Kevin Simpson discusses writing covered calls on Raytheon and other stocks to capitalize on volatility and earnings reports, showcasing tactical trading approaches within the panel.

Airline Industry:
The panel touches upon the recent profit forecast cuts by American Airlines and Southwest, analyzing their impact on the broader industry. Jim Lebenthal attributes American Airlines' struggles to internal missteps rather than systemic industry issues:

"There is business to be had here... The better two companies, Delta and United, are squeezing the profits from the rest." [25:38]

NFL and ESPN Deal

A significant development discussed is the potential deal between the NFL and ESPN, where the NFL may acquire a 10% stake in ESPN. Alex Sherman reports:

"The league taking a stake in a media company raises questions about preferential treatment and conflicts of interest." [40:20]

This move could reshape media rights negotiations and secure ESPN's position in future NFL broadcast agreements, offering mutual benefits but also introducing complexities regarding media impartiality.

Notable Stock Recommendations and Trades

Josh Brown's Best Stock - CBOE:
Highlighted as one of the best-performing stocks, CBOE benefits from soaring options trading volumes. Josh Brown recommends:

"CBOE is an amazing name and should be on everyone's screen." [34:43]

Spotify Upgrade:
Spotify was upgraded to an outperform rating with a price target of $800, citing strong subscriber growth and effective monetization strategies. Malcolm Etheridge anticipates continued subscriber conversion from free to paid tiers:

"Investors are loving it. Still got room to go." [38:26]

Chevron:
Boosted by news that the Trump administration is allowing Chevron to resume oil pumping in Venezuela, Josh Brown maintains a positive stance:

"It's the best energy company in America and I'm happy to hold it." [39:48]

Honeywell and Digital Realty:
End-of-show trades include Honeywell, praised for solid earnings and growth prospects, and Digital Realty, expected to perform well based on backlog contracts:

"Buy the stock." — Kevin Simpson [44:10]
"Should be a good night." — Malcolm Etheridge [44:18]

Conclusion and Market Outlook

The panel concludes with an optimistic view on the market's resilience, despite individual stock volatilities and sector-specific challenges. The ongoing AI arms race, particularly spearheaded by Alphabet, is seen as a pivotal factor driving long-term growth and market confidence. Strategic investments, coupled with tactical trading approaches, are recommended to navigate the current financial climate effectively.

Jim Lebenthal encapsulates the sentiment:

"There were a lot of things that went right here... Those other businesses need to grow rapidly, but I think they can." [08:39]

Overall, the episode underscores the importance of diversification, strategic foresight, and adaptability in exploiting market opportunities amidst evolving technological landscapes.

Notable Quotes:

• Jim Lebenthal on Alphabet's positioning:

  "It is not a monopoly anymore... This is a stock that's undervalued." [02:16]

• Kevin Simpson on ChatGPT usage:

  "I don't use ChatGPT on my phone. I'm almost exclusively Google." [03:39]

• Malcolm Etheridge on Alphabet's AI focus:

  "The AI conversation is moving to mobile." [04:09]

• Josh Brown on CBOE performance:

  "CBOE is a fantastic company and this is one of the best charts in the market." [34:43]

This comprehensive summary captures the key discussions, insights, and strategic viewpoints presented in the July 24, 2025 episode of Halftime Report, providing valuable information for investors and market enthusiasts alike.