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Stocks Surge on Iran Deal Hopes: Your Next Move 5/6/26
00:46:29
Scott Wapner and the Investment Committee debate the surge in stocks as hopes for an Iran deal grows. They detail their next steps. Plus, the Committee share their latest portfolio moves. And later, Josh Brown calls in with an update on Flex in his "Best Stocks in the Market."
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- [00:01]
A
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. Okay, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour. Stocks are surging on hopes for that Iran deal. Oil plunging, rates lower and the chips, they continue to rip. What else is new? We'll discuss and debate all of it with the investment committee. Joining me for the hour, Joe Terranova, Bryn Talkington, Jenny Harrington and Shannon Sokosha. We will check the markets where we have a great day going yet again, extending those record highs. NASDAQ is the winner today, but we're pretty solid across the board, as you see. You have a record week for equity ETF inflows. Brin, there are, and it's great to have you here in person. There are a lot of believers out there and I think I can count you among them. Right.
- [01:00]
B
You gotta believe it.
- [01:01]
A
Yeah, right.
- [01:02]
B
You gotta believe it. I mean, I think that the market, the risk right now is the market is the risk is to the upside. And we talk a lot about downside risk, but to me, you clearly see it in flows, you see it in individual names like really going just like hyperbolic on the upside. But the risk remains to the upside. And I think that, you know, China needs oil, Asia needs oil, and I think that ultimately we were going to get a ceasefire here because other countries outside of the US need that oil. And I still think that with earnings becoming being very strong, that the risk is to the upside as people are under exposed to, I think a lot of smaller AI names as well. And we're seeing catch up today.
- [01:43]
A
Jenny, are you a believer, you believer in this market? Because it's sort of a loaded question. I, I kind of ask it with a little bit of a smile and a smirk, but you know, and you know why.
- [01:53]
C
But no. Yeah. So here, here's where I am, which is I'm not a believer in the continuation of the pace of growth and upside to this market. So if we're up about what are we up 7% ish. On the year right now? If we're up about 7% right now, do I think we're going to just haul and have another up 7% for the next four months? Probably not. But do I think we can sustain these levels and not have a bear market? Because the economy is remarkably strong, earnings have been remarkably strong, the consumer remarkably holds up so well. Do I think we can sustain these levels without something negative coming. Yeah, I do. So I'm like, I'm a believer in the market at these levels. I just don't trust the pace continuing into the next.
- [02:31]
A
Well, look, I'm not sure, Shan, that, you know, people would think we're going to explode to the upside, to the rate that we did from the, from the lows in March, like March 30 or whatever it was. But they're believers in the story as Jenny was talking about because it's kind of hard not to be right. If you're going to get a ceasefire like a real one and the war in Iran for real is, is going to end and then you can just bank on their earnings story and the AI story, then why wouldn't you be a believer?
- [03:02]
D
We are certainly a believer. We, we, you know, we increased our view on US large caps at the beginning of the quarter. We went overweight for the first time in over a year and a half. And that was really based on what we see as a broadening out of the acceleration of earnings growth. So we're not calling for a return to a 7 versus 493 trade in the S&P 500. On the other hand, what we're looking at is technology and communication services poised to deliver significant earnings growth this year, but also energy, materials, small caps. There's also a relative trade happening here for many people. They diversified into particularly ex U S stocks last year. We've seen a reversal with some concerns about a potential policy mistake in Europe. And so you're seeing some of those flows, Scott, come back to the US From Europe in particular. You're also seeing it in small and mid cap stocks poised to deliver strong earnings growth through the back of this year and into 27. So that idea of, to Bryn's point, finding other areas to play some of these megatrends, this momentum, I think that that is, you know, it relies on stock selection, it relies on a disciplined and prescriptive approach. But it also is very much allowing for a myriad of opportunities in sectors that many investors are underexposed to.
- [04:13]
A
Well, chips Gone wild remains the story of this market, right? And AMD is the latest example of that. On the back of the earnings report there it is 17%. It's like if you're a chip name and you deliver any level of positive news, your chart looks like that it's no longer like up 4%, it's up 17%, which certainly has people watching and wondering what it all means. Goldman today upgrades that name, they nearly double their price target. That, see that's where we're at. People, they double their, they almost doubled their price target. That's where expectations have gone to 450 at Goldman was 280 to 525 at Bernstein it was 265. Joe, you own the name and but that really to me is the epicenter of the whole conversation in this market.
- [05:06]
E
We added it to the ETF back in October. 256. Scott, sentiment is a powerful force. And to Bryn's point, when she says the risk is to the upside, you have to always measure where is sentiment. Look at yesterday, the conversation we had surrounding Palantir. They missed by $9 million in, in commercial revenue, $9 million in the stock felt why the sentiment is awful. The valuation is perceived to be extremely high. Now you get the revenue growth today from AMD and it was a good quarter. But was the revenue growth that much stronger than the estimate? It was 38% versus 33%. What was embedded in the stock is this powerful force called sentiment. It's reflected in everything related to semiconductors, to growth, to technology itself. In the month of April we have seen a dramatic paradigm shift between value to growth. Since April 1, you now have growth up 18% relative to value up only 6%. That is a staggering factor reversal and it's all being catalyzed by these remarkable earnings. And you know, Jenny said before she doesn't know if the rate of appreciation can continue. She may be 100% correct in that the question you first have to ask yourself is can the rate of earnings growth continue through 26?
- [06:26]
A
You could. To Jenny's point, the other side of that is you could get this blow off top which can go on for a long period of time. I'm not suggesting that it's like over a month time you, you get a, a blow off top and what's happening in these shifts? But how about this statistical. This is according to bespoke, the market cap of semis in the semiconductor index. Okay, the Sox is now 22% of the S&P 500 market cap. It was just 6% a year ago. April of 25. Jonathan Krinsky is talking about blow off action in the semis and that it's underway now. If you look at the top 10 performing NASDAQ stocks in 1999, he says they were up an average of 559%. The top 10 in the year leading up to March 24th of 2000 were up an average of 622%. He's trying to make an analog. Between then and now, the top 10 NASDAQ names over the last year now are up an average of 784%, beating both of those dot com periods that I just read to you. Now he makes the distinction and he's right. Fundamentals are clearly better today. Right back in 2000, you had companies trading at like 10 million times of no earnings. Now you actually have legitimate businesses and earnings and revenue growth and on and on and on. However, he suggests that you could see a near 25 to 30% correction in those names. That would only leave the sox at its 50 day moving average. The question is, are these names getting increasingly more vulnerable or is this move completely justified based on the level of compute that is still needed and the amount of money that the hyperscalers pledge they're still going to spend?
- [08:19]
E
So I feel from a secular perspective, the fundamentals are still in play. Everything begins for AI infrastructure with semiconductor chips. I just want to caution on Jonathan's note, he does phenomenal work and he might be right. We might have to be at the beginning stages of a parabolic move higher that signals a peak. Be careful with that today on May 6th, because you haven't heard from Nvidia.
- [08:44]
A
No, I know.
- [08:45]
E
And you have not heard from Broadcom yet. And you'll hear from Broadcom on June 3rd, I believe. Nvidia is May 20th. So I'm not necessarily sure I want to take action in front of those two semiconductor behemoths reporting their.
- [08:57]
A
Oh, I don't think anybody is even suggesting investing, taking any action.
- [09:01]
E
I think there's a lot of people,
- [09:02]
A
I think there's a lot of people. Maybe you could, you can, you can trim some of these massive winners. Micron. The, the problem is, is that if you trim a Micron and you know, the, the stock did have a rollover like a month ago. For a minute if you got nervous and you trimmed it, you're like, okay, that's the top. That, that's the top for this name. You've been gut punched by another massive run that you're like, oh, why did I do that? There was a lot of momentum still here. Then I, and I missed out on it.
- [09:32]
C
You didn't miss out if you only trimmed.
- [09:34]
B
But here you go. I think the sizing, I think this is where to put some context around Krinsky's note. SanDisk is up 4,000% in one year. Western Digital up 933. And Seagate up 724 Micron's only up 696. So these are massive returns. And so you can say, yeah, their earnings are growing as well. But I think that this is where if you own these types of baskets of names, you're never going to get the top. But to say I've earned X return on these, maybe it's time for a trim, I think that's just responsible. But I also think, though, if you go back to the early days of the Internet, which I was here, I think most of you, you guys are here as well. People are conflating. We're early days in AI buildout, but we're not early days of the stock market pulling forward said build out. And I think people are conflating those. And to me, that's where I read Jonathan's note twice. I think people heed that acknowledgement that there is some similarities with a certain basket of names that look very 98, 99ish, but there's a basket of names, not all names.
- [10:34]
A
The question is whether some of these companies are over earning today. Right. If there's double ordering and stuff like that, that you're pulling forward such a dramatic level of growth that we're making assumptions about the future that can't be lived up to because you've, you're doing it all now.
- [10:51]
B
Right.
- [10:51]
D
But we talked about that being an oversupply issue with some of the hyperscalers. Scott. And so there has been underinvestment in this hardware cycle. And so there could be some over ordering, but there's also going to be a broader set, whether it's processors, memory, logic chips, those optics, those all are going to be incredibly important over the course of the next two to three years. And there could be a broader cycle where these benefits do not purely accrete to the names in the semi side that have already benefited. But you can't turn away from the hardware trade because there has been underinvestment here.
- [11:24]
A
Now, to the point of, you know, when I say, well, no one's suggesting like getting out. Yeah. What I mean, I think more specifically is what Renaissance Macro is talking about, that the SOX has hit what they call their bubble watch threshold. Okay. The last one was in December of 2021. And at the same time when they publish what they call their weekly survival guide, they say it's a signal for sizing to Brin's point.
- [11:49]
E
Yes.
- [11:50]
A
Not for shorting.
- [11:51]
E
Yes.
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A
Right. So you're not expecting like a massive rollover anytime soon, but just be prudent about the size of the positions that you have in names that have Go1 parabolic.
- [12:02]
E
Absolutely. Let's extrapolate that a little bit further here. When you talk about Micron, and we own micron in the ETF.
- [12:08]
A
It's the 13th largest S P500 company now. And okay, you're above $750 billion in market cap. I don't know where it was a year ago, but it wasn't near that.
- [12:19]
E
So there's several derivatives that concern me more than the semiconductors do. When you use the word bubble, first of all, the ewy Shannon, you know, obviously geographically it's the best place to be. Right now it's South Korea because of Sam Sung, because of SK Hynex. You're talking about a year to date gain of 85%. But this was staggering to me. It came across my desk yesterday afternoon. Britt, I don't know, Jenny, if you follow this, but there's an ETF Dram Dram. That was just Jonathan.
- [12:48]
A
So Jonathan Krinsky, the day that the DRAM ETF came out, if you recall, he put a note out that day suggesting that that move in and of itself was the sign of the top. And I asked him when he was on yesterday about it and he's like, well, I mean, you know, we won't get everything right. But he literally tried to suggest. And then, you know, I'm not sort of hanging this on him. He was like, okay, this is one of those things. Now they come out with a DRAM ETF after these stocks have made this parabolic move. It's gotta be a sign of something. And all it turned out to be was a sign of just increasing momentum behind. There it is.
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E
Yeah.
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A
So right there, let's quarter to date, it's up 74%.
- [13:26]
E
Let's dig a little deeper. No disrespect to Round Hill and Dave Mazda. They're doing a great job, God bless them that they rolled this out. They gathered $3.3 billion in AUM since the beginning of April. So you can't look at the memory trade right now and not acknowledge that there is excessive speculation. And it just goes back to what you said. It's a degree of ownership. It almost feels like crypto when it
- [13:50]
A
was marching to 125,000 there. Excess exuberance. Now, I'm not even saying I didn't use the word irrational because I don't necessarily submit it that it would be irrational. There's a lot of enthusiasm for the right reasons. The fundamentals, as we. We talked about, have Lined up in many respects for, for what's happening. However, you know when you get to an Ed Yardeni note and he says to infinity and beyond, and he talks about, you know, the, all of the data that we have and will will only increase the demand for compute, it further increases, he says, the demand for memory because all data must be stored indefinitely unless it's voluntarily deleted. All right, we go understand that. Then he says, this is our Buzz Lightyear theory BLT of AI, which is taking the data revolution to infinity and beyond. It's even more exciting and bullish than our roaring 2020s scenario. So has sentiment gotten a little too excessive?
- [14:52]
B
But I do think, though, what's interesting, I mean, Brad Gerstner was on last week and he owns Micron, and he's like, we're going to talk to the Micron CEO. He would say it's still cheap. A lot of people think Micron can double from here. And I know that, like people hang their hat on some of these multiples are like a five or a six. I will say with, with DRAM, that ETF, what's, what's unique about it is prior to DRAM, the only way to own SK, Hynix and Samsung was EW Y and SK, Hynix and Samsung are 50% of that ETF. Whereas as a U.S. investor, if you want explicit exposure, that DRAM gives you 50% of those two companies which are the largest and like SanDisk is only a 5% weighting. And so it is. It may be toppish, but it is a unique way for US investors to own those two big companies.
- [15:36]
A
This isn't a conversation at all, by the way, about trying to call a top in any of these names. It's trying to have a thoughtful conversation to try, attempt to do a service to the viewers who are in these names and are trying to figure out whether they should continue at the size that they have now in whatever positions they do have to keep building them larger because the momentum feels like it has a Runway. I'm not never going to say infinite, but a Runway that is clearly longer than some would like to believe based on the moves that we've already had.
- [16:12]
D
Yeah, I think being disciplined about those position sizes, you always want to be trimming back. But the point on data, Scott, is that we have a bunch of S&P 500 companies that haven't yet figured out how to integrate AI. They're not going to be deleting any of their data until they figure out how to use that to be able to monetize. And so I think that there is going to be a different, a different cohort of companies that are going to have to increase their compute and their storage in order to figure out how they are going to use AI over the next 10 years. It goes way beyond tech.
- [16:42]
A
Yeah, but, well, look, all of these companies, as you know, as a Robert Smith would, would say from Vista Equity Group, as he pretty much did the other day, you know, all of these companies are, are looking to identify the way that they do their businesses. That that's not. That that's only at the beginning. They're all trying to figure out how to do it to an even greater magnitude. Which is why as Goldman today talks about agentic AI, now's the time then they call it an economic inflection point for the hyperscalers. Why they like the Broadcoms and the nvidias and the AMDs and the alphabets and the Amazons, the Microsofts, the Cloudflares and the Accenture. All the companies that are going to be at the forefront of this. We're only in the early innings of even trying to figure out how this is all going to work.
- [17:31]
B
I think that, and this is just my opinion, I relate over the next 18 months, everyone, all these companies are going to have agents, okay? And I relate them to 2010, when the App Store came about 2009, 2010, all these companies created their apps and apps were so fantastic. At the end of the day, everybody has an app, everyone will have an agent. What it comes down to are two discrete users. The consumer. On my iPhone, I'm going to have that agent. And at enterprise level within my company, I'm going to have that agent. I think everything else is just going to be the equivalent of an app. But that's going to, you know, where you could go back and say, hey, Maybe we're in 1997, 1998, because we still have all of this technology, I think, coming to us. And so I think as an investor, the way I look at like sizing is like, I think we're in a 97, 98. So I don't want to be waiting for 99.
- [18:24]
A
By the way, it's a different conversation altogether around what all this is going to mean for our jobs versus what it's going to mean for the profits from the best companies in the world and their margins and their productivity and their efficiencies and all of these things that are going to increase earnings and keep stock prices. The bulls would believe, at any rate, to be to be quite robust. I do want to hit on a couple of things. Our chart of the day. I want to call attention to Corning today. It's surging because it's partnering with Nvidia. And if you have a partnership with Nvidia and you announce it and you look at the stock price does that, it's up 11%. So, by the way, the Corning CEO and Jensen Wong of Nvidia are going to be on Mad Money tomorrow. You don't want to miss that. So they're going to talk about that. You have both of these names.
- [19:15]
E
So without question, Corning is in the sweet spot because there is. There is no way you could complete the infrastructure of AI without the optic fiber cabling. So the relationship with Nvidia now allows them to increase that production by nearly 50%. They already have a preexisting relationship with Meta. $6 billion through 2030. And that's the reason why, personally, I bought it on February 2nd at $109. I sold it this morning. We ring a 65% personal gain on the trade. It is still maintained in Jyoti. And I am not advocating for anyone to sell it. But understand Brin, it's called the Texas Hedge. You have it in basically both places. That's not good. I can't own a Stock that's up 12% today personally and also owning the joke.
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A
So you're making a personal, hedging, personal move right now. You're not worried about the momentum leaving anytime soon? Because that would be a different conversation altogether, right?
- [20:18]
E
No, the momentum's not leaving anytime soon. And I keep talking to you about this. The momentum is the single most dominant factor in the market right now. It is up 2% today. If you want to identify when the semis and when memory is going to peak, first look at momentum. Momentum. You'll come in one day. It's down three and a half, 4%. You know, that's the beginning.
- [20:37]
A
So wait, so. So just to be clear, for any viewer who may have followed you into the name, you're not saying they should also.
- [20:43]
E
No, we own it out.
- [20:44]
A
You own it in the T. I know, but you can't make. You just did a rebalance. I get it. But you can't make as nimble moves in. In your.
- [20:50]
E
No, you're staying with it. Optifi.
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A
To hedge yourself.
- [20:54]
E
No, the. The optifi. Fiber cabling is so critical in AI infrastructure. And then, oh, by the way, guess what? Apple, iPhones, the glass all comes from Corning.
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A
Yeah, well, you bought more Apple today.
- [21:05]
E
I did initially.
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A
Keep doing that.
- [21:07]
E
I bought it. Buy high, sell higher. Bought it March 24th at 252 against the 200 day moving average. Bought it on April 25th at 268. Bought it again today at 285. I think the breakout is coming towards $300. Could I be wrong? Absolutely. I've been wrong thousands of times in the past. But if you want to make an omelette, as I always say, you got to crack some eggs and I think
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A
this is the right strategy. How about some of these market caps Jenny, of these big tech companies and where they've gone? I, I did, I did the micron one for all of you. But how about. So Nvidia is knocking on the door of 5 trillion. Alphabet is just about there as well. Apple's back above four. Microsoft at three. Amazon, we'll call that three. And the one that's not on the list is the one that I came to you about which is Meta, which you know there, there seem to be questions yet again around the spend and where this is all getting us. And that market cap is a trillion and a half. I mean I'm not suggesting that that's not anything to be respected but relative to the others, it shows you what those other names have done at the expense in some respects of this one because the money continues to go I think more so towards those other names.
- [22:22]
C
That's only this year. You know, you need to take a very short term timeframe to like pick on Meta for not keeping up with its peers. But when you showed that, that shot of the market caps, this brings me back to exactly what Bryn said a little bit earlier, which he said, I think we're early in the business of these, but we're late in the financial, in the fund flows into these stocks. And when I see those market caps and I think about the conversation that we've had, what I think is, has been talked about is we've talked about the words infinity and speculative and sentiment and all of that, but we haven't talked about numbers. And when I see those market caps, I'll tell you what makes me really nervous this year. And the huge run ups in the semis that we talked about and those huge market caps that we just saw, those are all predicated on the hyperscaler spending. 800 billion this year, let's presume that goes to 2 trillion next year. 2 trillion is a lot of money. US GDP is 30 trillion. So we're talking about a huge percent of GDP and these stocks have run up as if these inflows will continue kind of to infinity and beyond where I don't think they can. I don't think that much of GDP can be spent in such a narrow area and have a healthy economy for long. But it is this year. It is this year and the next year. But you know what, Scott?
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A
It's not going to be hedging yourself, as you say, it's not going to
- [23:39]
C
be in 10 years. And these are long when you think about that. When you think about growth stock.
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A
I don't think anybody's saying that in 10 years you're going to be spending at the rate that you're spending now. But you know, nobody believes that.
- [23:48]
C
You know what is saying that? Those valuations, when you see a stock up 2000% and 900%, they are presuming like those are long dated growth assets to have those valuations. They need to presume that that level of growth continues for a very long time. I don't think it can. And this goes to your comment before. We're not even talking about job loss. We're not even talking about the broader economy. So those make me nervous because to me they've done exactly what Bren said. They pulled forward so many investment dollars, presuming these enormous 800 billion probably growing to 2 trillion are going to continue for a very long time where I don't think they can. One other thing on this too, like I don't know if you guys have talked about it and I just missed it, but I've read three times in the past week about, about the big like Google and Meta and Amazon trying to get the data centers into space or trying to get data centers onto boats. There is so much inefficiency here from the chip cost to the fuel usage to clean water. The biggest players are desperately trying to find ways to make this more efficient. What is more efficient mean? It means fewer chips, lower chips, lower energy costs. So I'm not sure like everything's priced in as if this level and this kind of spending in this direction of spending is going to continue. I'm not sure it will. I think the conclusion of that is is valuation compression. I don't think it's fall off a cliff. I don't think it's black swan. But again, this goes back to my first comment which is I don't think this pace continues. I don't think this pace continues in the semis or the mega cap stocks.
- [25:17]
A
So by the way, we looked it up so Micron's market cap was 90 billion last year, 750 billion. So if that doesn't tell you what this market has done, thanks for that, Finn, then I don't know what does. But we've got some news coming out of the Anthropic developer conference out in San Francisco. Arcade Rooney is there and has the headlines for us. What do we learn?
- [25:41]
F
Hey Scott, so a couple different headlines out of Anthropic today. First, we are at that developer conference, the company launching a suite of updates they say that's going to help manage multiple AI agents. I know you guys were just talking about the power of agents. That's a big theme here. The updates they just unveiled today are going to make it easier for these AI agents to work autonomously, to check and then correct some of their own work independently. All of this is really to help the AI work without a human autonomously. When we talk about AI agents, of course this is when the technology can actually take actions, do your work on your behalf, just versus just acting as any sort of chatbot. So Anthropic of course has been a leader in this slice of the market, especially in coding, unveiling some of these updates at the Claude Code event where we are today in San Francisco. Developers are flocking, about a thousand of them, hearing around 700 people got here today and are at that keynote right now. Anthropic says this is the latest version of what they call self improving AI. It captures what each agent is actually learning as it works and then helps refine and share those across different agents. So it lets a team, they say, of agents work together more seamlessly. The feature that they unveiled is called dreaming. Anthropic says that's going to help them tackle, quote, the hardest parts of running agents in production, which is keeping them accurate and then keeping them learning, keeping them from becoming what they call a bottleneck on complex work. Guys. So these developer conferences, they tend to be sort of the tip of the spear for what we should actually expect in overall. AI tends to be a leading indicator on what we can expect from other companies, including the mega cap companies out there for this technology. Anthropic, again a leader in coding, although rival OpenAI has been sprinting to catch up in this arena and the enterprise business. And Scott, finally we did just get some news headlines out that SpaceX and Xai did sign a deal with Anthropic to provide even more compute capacity, which is really the engine of all of these updates. They say as part of that deal, Anthropic did express interest in multiple gigawatts of orbital AI Compute, meaning essentially data centers in space. It comes as SpaceX, of course, looks to go public. Scott.
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A
Becca, which, which we were just chatting about. Kate, thank you very much. It's Kate Rooney at the Anthropic Developers Conference. Coming up, another we have a new buy from Joe Terranova. We'll tell you the name. Plus we got a call in from Josh Brown as a flash update to one of his stocks on the list of his best stocks in the market. We're back after this. All right, welcome back. Take a look at Disney because that stock was moving on the back of its earnings report. The the first under the new CEO. The streaming and parks drive the driving the revenue beat. The stock's up 7%. Obviously the street, Jenny likes what they heard, right?
- [28:24]
C
So I mean, you know, it's kind of, even though it's a good report, it's kind of the same argument. There's nothing changed to my investment thesis. And the investment thesis is the following trades at 14 times earnings. It has double digit growth ahead. This is a business that a huge part of its revenues, parks can't be replaced by AI. And as I, as I think through everything, I'm like, all right, what does a potentially weakening consumer do to the stock? What does AI do to disrupt the stock, the company, with respect to the consumer? This is the, you know, the upside to having a K shaped economy. There are still a lot of people who can afford Disney and love Disney and are going with respect to AI and we heard Josh d' Amaro on just before this show and he was saying, hey, technology and AI should be very helpful for us. It should create efficiencies. We can bring things under one roof together. So we see that starting to happen. And you know, when you have a stock trading at 14 times, you've got a huge margin of safety. It doesn't take much to beat and surprise. So they were up 7% on revenues, 5% on income. It was being priced as if it was going to be flat and kind of dead forever. So it's a great business.
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A
So our viewers obviously know about the bet that Jenny and Josh.
- [29:31]
C
Josh initiated that.
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A
Well, I'm just saying our viewers know about that by the end of the year. Bigger total return from like a month ago for Disney or Netflix. And I bring that up because you just bought Netflix.
- [29:43]
E
Yes.
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A
Personally.
- [29:44]
E
Yes. Okay. Got back into Netflix. Look, maybe you could call this sentimental. Viewers of the show know that I have actively traded Netflix for many, many years. Now I liquidated Netflix, unfortunately, personally, at what I think was a poor level. And if you look back, obviously it was in the upper 70s. But once the late February announcement came out that Netflix was walking away from Warner Brothers, you saw a significant spike. And now Netflix post earnings has retreated right back into that gap. If you could lengthen that chart as I speak, maybe back three months, you'll see it's right back in the, in the gap. So I believe in the Netflix story, I believe in the streaming story. I actually think I would have liked to have seen Jenny give more emphasis on the streaming from Disney because I think that was the real thing to take comfort in. Streaming was really strong. The value of ESPN is there for Disney. And I think the same thing applies as it relates to Netflix. If you can execute on streaming, you will have shareholders pay a premium for your stock price.
- [30:50]
C
And this is where, this is exactly why I don't care that much about streaming right now. So just from a, from a return perspective, parks experiences are $2.6 billion of their profit. That's over 50% of their profit. That grew at 5% streaming and sports, that's like those grew collectively a little bit flat. Like 6% on entertainment, negative 5% on sports. But here's the thing, Joe. When I think through Disney versus Netflix, I really think Netflix, like AI is destructive to Netflix because with AI, their competitive barriers are lowered. It is much easier to compete on content creation. It's much easier to compete on making movies and making TV shows. And I think Netflix's competitive barrier is being broken down. Whereas when we think about this $2.6 billion of profit on parks, like I said, well over 50% of Disney's revenue, that's impenetrable by AI. Like you can't create a new cruise ship, you can't create a new theme park just using AI. All it can do, all AI can do for those is enhance that.
- [31:51]
A
You're saying that AI generated content is gonna, is gonna compete with content that Netflix.
- [31:57]
C
Absolutely. And I'll tell you. Sorry, hold on, hold on.
- [31:59]
A
Why do they have the price of power?
- [32:02]
C
AI, not AI generated content. People will be able to create new content more easily, more cheaply, thanks to AI.
- [32:11]
A
What are they going to do?
- [32:13]
C
You know, who knows what they're going to start. They're going to create like if I'm a, if I'm a young kid, say I'm like a 28 year old kid.
- [32:19]
A
Jenny Harrington plus is like a new streaming service you're going to do obviously
- [32:23]
C
like way Too old and Scottish.
- [32:24]
A
What are you going to charge for that?
- [32:25]
C
Scott, you know as well as I do, if you're a 28 year old kid and you're out of work and you are a film major and you want to make a film and you want to do something really cool, you have a much higher ability to do that.
- [32:35]
A
And you're going to compete with Netflix by doing, doing that.
- [32:37]
C
You can sell it to Netflix, you can create content. Maybe you're going to put something up on YouTube and someone's going to say, hey, there's this really cool movie.
- [32:43]
A
But if you sell it to Netflix
- [32:44]
C
or fraction of the price.
- [32:45]
A
If you sell it to Netflix and they pay a fraction of the price.
- [32:49]
C
Conversation. Yeah, guys, there are competitive barriers to entry that are now made lower, not gone, that are now made lower and easier to compete with because of AI. If I.
- [32:59]
A
How's that, how's that a negative for Netflix?
- [33:02]
C
Because now they have more competition. It's easy.
- [33:04]
A
From who? From anyone who wants the average Joe making a film?
- [33:08]
C
No, from anyone who actually has skills, who actually wants to create a movie today. They can do that more easily and more cheap.
- [33:16]
A
How? I. So how is that a competitor to Netflix?
- [33:19]
C
Because now what does Netflix do? All Netflix wants are your eyeballs, right? They're in competition for your eyeballs. Now there's more competition for your eyeballs if you're a young kid or like whatever, any person, like I said.
- [33:31]
A
So they're going to. This young kid who creates this thing through AI is going to then start a streaming service.
- [33:37]
C
Scott, you're missing the point. They're going to take your eyeballs. It doesn't matter where they put it. They don't, they're not, they're not. They don't need to start a streaming service. They don't need to create their own
- [33:45]
A
Netflix, but they're going to take eyeballs from Netflix.
- [33:48]
C
Think about where the eyeballs are going.
- [33:50]
B
If you think, though, for a second, Netflix just bought Ben Affleck's AI tool making kit. I think it's called Interact. But no, this Netflix, it doesn't hurt Netflix.
- [34:00]
C
It actually helps everything.
- [34:02]
B
It actually helps Netflix because then young, young filmmakers can easily build content to put on Netflix. And so ultimately AI is going to be amazing for Netflix. And I'll say with Netflix, if you have $20 to spend, are you going to have Netflix over Disney? You're going to have Netflix. Netflix has without a doubt the best platform. I think they're going to continue to grow their market share because they just have such good content. I think AI is a benefit is absolute beneficial to Netflix and their ability to grow content.
- [34:31]
C
I think it decreases competitive barriers. But let's take the show. Let's just take this show for one second. Like.
- [34:36]
A
Okay, Tells me it's longer than one second.
- [34:39]
C
Fine, go ahead.
- [34:40]
A
You're on a roll.
- [34:41]
C
Okay. Let's just go for 20 minutes. So back in the day, right, when we were all growing up because we're old now, we had, like, abc, NBC, cbs, bbs, we had a few channels. Think about this show alone, who you're competing with eyeballs for in this moment. You're competing with YouTube, you're competing with all the game apps. You're competing with everything. That's what I'm saying. Netflix now is going to have more competition from everywhere because AI is going to make it easier to create content that'll draw eyes away from just now.
- [35:07]
E
Jenny, the mistake you're making is believing that both can't succeed in streaming.
- [35:11]
C
I believe.
- [35:12]
E
Okay, so be excited about the fact that streaming was a strength in the Disney report. That's a reason to own it. But that doesn't mean that Netflix is going to lose their streaming strength as a result of that.
- [35:25]
C
Both can win, be corroded. The competitive barriers are lowering their strength. And Monopoly will be okay. Not quite. Monopoly will be corroded. He hates it when I get into competitive barriers.
- [35:35]
A
Are we. Are we doing this next thing now? Are we taking a break and having, like, a martini? What are we doing?
- [35:42]
C
You're welcome.
- [35:42]
A
We're doing it here. Okay. Thank you. Kevin Flynn, ladies and gentlemen. We have a flash update, as we told you about, to Josh's best stocks in the market. Maybe his head would have exploded if it was part of the last segment. So please, let's not go there. Let's just stay here on this stock of yours that is breaking out, which is what
- [36:08]
G
are we talk. Are we talking about Flex today?
- [36:10]
A
Is that we are. Yes. Please stay on the tracks with that.
- [36:14]
G
No, I. I apologize. My brain is broken from listening to Jenny tell me that. That AI is going to recreate the NFL and. All right, fine.
- [36:25]
A
Please just keep the train on the track. Okay, go ahead.
- [36:29]
G
Flex is. Flex is making a huge announcement. This is a name that's been on the best stocks in the market list. We've done multiple segments about it on the show, and it's important to talk about today because they are going to be spinning off the units that are catering to electrification of data centers, cooling, etc. This is a massive growth business for them. They reported insane numbers today and the current CEO of Flex will be the CEO of the SpinCo, which again, the Spinco will take all of Flex's business related to data center and create that as a separate entity. Shareholders love it. Stock is exploding up 30% on the day as I'm talking and the main point, Judge, that I want to make here, the purpose of best stocks in the market. When we talk about AMD and Micron and Flex and Sienna and the move that Corning made, which I know you guys covered, none of those moves are happening from all time lows or 52 week lows or 20% drawdowns in stocks. These are happening from all time highs, which is why I work so hard to spotlight these names for the viewers, hopefully in advance of this type of activity.
- [37:44]
A
I wish we had more time. We'll do it next time. Right? We gotta go. Right? We gotta go, we gotta go. We'll see you back on the desk, I think tomorrow. So we'll look forward to that. So come prepared. I'm prepared for what? I have no idea. We're back after this martini.
- [38:08]
H
We are back on halftime. I'm Brandon Gomez with your CNBC news update. The FBI has launched a criminal leak investigation on the Atlantic magazine journalist who wrote a detailed account on Cast Patel, director of the FBI's behavior, including accusations of his excess alcohol consumption. That's according to Ms. Now citing sources familiar. The journalist Sarah Fitzpatrick quoted two dozen anonymous sources in her article. Leak investigations typically focus on government officials, not journalists. Patel sued the Atlantic for $250 million following the report claiming defamation. North Korea, meantime, has revised its constitution to abandon the the aim of reunifying with South Korea. The revised text does not make reference to South Korea in any hostile terms, but marks the first time North Korea has added a territorial clause to its constitution. And a group of Magnum investors has criticized the ice cream maker for curtailing Ben and Jerry's social activism and board independence. That's according to a shareholder letter viewed by Reuters. The shareholders, led by Northstar Asset Management say Magnum has dismantled the brand's social mission, which is its brand equity. More halftime and a judge after this.
- [39:17]
A
All right, let's take a look at Uber. There it is, up 8%. Like if you wow the street, obviously these days with your earnings, your stock's popping as this one is. They issued higher than expected bookings guidance. And you bought the name.
- [39:29]
E
I did. Again, another name that I have traded around. This one I got out of in the mid-80s, back into it. This is an excellent report. I love the strength in delivery, up 34% on the revenue growth. And I really like what they're doing with the balance sheet here. The free cash flow generation is remarkably strong. If you look at their credit profile, they're probably going to jump from Triple B to Single A at some point in the next couple of months.
- [39:52]
A
I just. AI just gave me a business plan for a rideshare thing. I'm launching it, and we're going to compete with Uber. Oh, I'm starting tomorrow.
- [40:00]
E
I got to sell my business.
- [40:01]
A
I'm starting tomorrow.
- [40:01]
C
You know, that's a ridiculous thing to say. It's a ridiculous thing to say.
- [40:04]
A
It is?
- [40:05]
C
Yes. Because the barriers to entry.
- [40:06]
A
No, we're starting tomorrow. Have the car.
- [40:08]
C
You know perfectly well the barriers to entry on creating a new Uber are very difficult.
- [40:12]
A
Well, I have a car and I have AI.
- [40:14]
C
Well, then, you know what? You should go drive for Uber.
- [40:16]
A
Well, I just said I'm going to start a business that's going to.
- [40:18]
C
No, but if you have a car, you should drive just to re. To replicate the Uber platform. And this actually goes to the earnings. To replicate the Uber platform is very difficult. There's pipes, there's people, there's logistics, as
- [40:31]
A
is replicating the Netflix platform.
- [40:33]
C
I didn't say replicate the Netflix platform. I said it's easier to make a move. It's easier to make a movie.
- [40:38]
A
Dig.
- [40:39]
C
You're digging your own hole.
- [40:40]
D
No, no.
- [40:41]
C
It's easier to make a movie that's going to steal some eyeballs. And you steal a bunch of eyeballs here and a bunch of eyeballs there, and the incremental eyeballs add up. It's hard to create an Uber.
- [40:49]
A
I just got Kevin Flynn, our ep. He's. Now he's driving for me. My AI plan.
- [40:55]
C
Kevin would never drive for you, Scott.
- [40:57]
A
He likes the company. I just created it.
- [40:59]
E
I got bad news for you. Everyone's picking on the wrong.
- [41:01]
A
Shan's looking for a side hustle. She's. She's.
- [41:04]
D
No, I'm looking for those burger and fries delivered to me here at the Hat.
- [41:07]
A
Well, we'll deliver them with the new company that I have.
- [41:09]
C
All right, you know what? You were trying to get away from this. Don't blame me for going back into the argument.
- [41:13]
A
What do you got?
- [41:14]
C
Oh, wait, don't I get the real industry? Since I paid 22?
- [41:17]
E
Your thesis, your thesis of disruption is most going to be felt right here. Financial services industry. Look at the stocks of factset. Look at S P Global. Look at Moody's exactly what you're speaking towards. It's not happening in Netflix. No, Joe, I'm not arguing Netflix again.
- [41:35]
C
Do you want to join the Jenny Josh bet? Because so far, by the way, I'm
- [41:38]
E
20%, I have less than zero interest.
- [41:40]
C
Okay.
- [41:40]
E
Stock set, Moody's S and P Global Watch, those three names.
- [41:44]
C
We'll do that. Do you want to talk more about Uber?
- [41:46]
A
Okay, we're gonna take a break and we're gonna check in on the crypto trade because Bitcoin's been on the move back as well, sort of following that. I don't know, maybe it's trading in tandem with the chip. Back up to this.
- [42:04]
I
We are back on the halftime report. I'm Leslie Picker with your ETF Edge cryptos headlined by Bitcoin and Ethereum are down year to date. But while many investors attention has been elsewhere, they've seen a solid rally during the past month. Joining me now is Matthew Siegel, head of Digital assets research at Vaneck Funds. Matt, what's driving this more recent action here to the upside?
- [42:26]
J
Yeah, Leslie, I mean, bitcoin going up for us is the base case. We think this asset's going to reach a million dollars over the next several years, but it's a very cyclical asset. There's no bailouts in bitcoin, so it's going to be cycles along the way. Right now, Bitcoin's correlation with the NASDAQ has actually reached a five year high. So a lot of this is a macro move. And what keeps us encouraged, even at current levels is that we're not seeing the froth in the derivatives markets. If you look at the options markets, the futures markets, to us it still looks like this is a short covering rally, which means positioning is negative. And so we're feeling pretty constructive. The big move is really in the miners today. Those are the stocks that are up, you know, 5% plus hut 8 is up 30%. That's a Bitcoin miner who's pivoting to AI. There's a really virtuous cycle going on right now between the convergence of AI and Bitcoin. So that's where we're really trying to play with our node etf, which has had a good run.
- [43:24]
I
You said a million dollars in bitcoin, which is at 80k now.
- [43:28]
J
Yeah. I mean, it's going to take some number of years.
- [43:31]
I
How many years for that?
- [43:33]
J
Maybe half a decade, I think is is possible five years.
- [43:36]
A
Yeah.
- [43:37]
J
When you look at the demographic trends and the intentions of young investors, to allocate to Bitcoin. It's going to be like the video game industry where 30 years ago it was just kids playing video games. Now Elon Musk plays video games. People don't quit. They also don't quit Bitcoin. And we now have the first central bank buying Bitcoin for its reserves. So this is a megatrend, but it's going to be very volatile along the way and we're trying to smooth out some of that volatility.
- [44:03]
I
Okay, that's a big jump, but we'll see. Five years time. Matt, appreciate it. We're going to continue the conversation@etfedge.cnbc.com Matt will be joined by Saul Gibberti, President and CEO of Tukuram Trading. Back to you.
- [44:18]
A
Okay, Les, thank you. That's Leslie Picker. Coming up, we'll have more on Netflix. I'm just kidding. Please, I'm just kidding. Final trades are next. Closing bell, three o' clock Eastern time. Tom Lee, Alicia Levine, Brian Belsky, Robert Kaplan, rick Heitzman, Samantha McLemore. This market continues to rip 1% gains across the board today, led once again by the NASDAQ AMD, some of these other chip names. We'll continue to discuss everything you need to know about what's been happening there. Let's do some finals if we could. You know, Jenny, I'm going to come to you first. I'm going to come to you.
- [44:59]
C
You know what I'm going to do.
- [45:00]
A
And if you say the name of that stock, it could be your final final trade.
- [45:04]
C
I'm going to bring the temp. Wow. Why are you so jealous of it?
- [45:07]
A
It could be your final final trade. Think wisely.
- [45:11]
E
30 seconds.
- [45:13]
C
You're just trying to.
- [45:13]
A
What do you got?
- [45:14]
C
I've got thermo. Fisher, I'm bringing the temperature down. It's trading at 18 times earnings. It has 10% earnings growth add hasn't been this cheap since 2018. It's in our growth portfolio.
- [45:22]
A
Let me type in how do I create the perfect medical device? Okay, I got it. I got something up my sleeve.
- [45:29]
D
Shan Energy earnings estimates do not reflect higher for longer prices. And there are flows coming in blue.
- [45:35]
B
Al OTF earnings come out tonight.
- [45:37]
E
Morgan Stanley, 52 week high.
- [45:39]
A
All right, good stuff, everybody. I'll see you on the closing bell of the exchanges.
- [45:41]
G
Now
- [45:44]
A
you've been listening to CNBC's Halftime Report, the podcast you can always catch us live. Weekdays at 12 Eastern only on CNBC.
- [45:55]
K
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 Report Disclaimer.