← Halftime Report
Halftime Report
The AI Stock Surge 1/22/25
00:47:19
Scott Wapner and the Investment Committee debate the AI stock surge and what it means for your money. Plus, Steve Weiss making some major portfolio moves, he shares the details of his trades. And later, the Committee discuss the latest Calls of the Day in Royal Caribbean and Costco. Investment Committee Disclosures
Loading summary
Transcript156 lines
- [00:00]
Capella University Ad
At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
- [00:16]
CNBC AI Course Ad
Learn how to use AI to be.
- [00:18]
CNBC Host
More successful with cnbc.
- [00:20]
CNBC AI Course Ad
Make it's new online course.
- [00:22]
CNBC Contributor
We'll give you examples that can help you master AI tools.
- [00:26]
CNBC AI Course Ad
Go to CNBCmakeit.com AI and register now.
- [00:32]
Scott Wapner
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, Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, all about AI. Stocks in that area are surging today. S and P just hitting a record high. We'll trade the biggest winners as Mega cap earnings are about a week away.
- [01:01]
CNBC Host
Sorry.
- [01:01]
Scott Wapner
Joining me for the hour today, Joe Terranova, Shannon Sokotia, Steve Weiss. I saw that Weiss was on. I got a little tripped up for a minute. Yeah, I was hoping somehow people get flustered. I was hoping somehow he disappeared before the welcome, but nonetheless he's here, as you see. We'll get to some of his moves coming up. But it's all about AI today, Joe. And it's all about 6100 on the S&P 500. We have a new high and look.
- [01:27]
CNBC AI Course Ad
It'S been, it's been a really good week in terms of yields coming down in terms of earnings. And then you've got this announcements surrounding Stargate and the effect that you're seeing here, not just on the AI names that we already know, but it's really, it's expanding beyond that. It's expanding into networking, it's expanding into connectors. One of the names that I own is T connectivity, ticker symbol tl. That's up nicely today on the back of this. So this is positive. This, this is about spending and supporting the infrastructure, the infrastructure of artificial intelligence.
- [02:01]
Scott Wapner
These moves, I mean, goes beyond these moves. Sorry to interrupt you here. I mean, are these moves astounding to you? Oracle, Best two day move in three years. Can we show. Let's cycle through these again. I mean, I saw Arista was up a lot today. There's Palantir up 4.5%, Dell Technologies up 5. A lot of stocks that we've been talking about more lately because you own a lot of them are just ripping today.
- [02:25]
CNBC AI Course Ad
Arista's up 6% Amphenol, 8Amphenol. If you could pull up Amphenol, that's up APH. That's about 6%. They've got names like Corning, GLW. That's up I think somewhere around 5% today. So it comes on the back of what's been the last several days some positive momentum in the market. So I think that's, that's adding a little bit of a catalyst effect here that's taking us to new all time highs. And look, the last several days we've talked about this market broadening out. That's not the case today. You're reaching new highs today with bad breath, you're reaching new highs with a very narrow set of technologies leading the way.
- [03:03]
Scott Wapner
Weiss, you asked the bank robber why they keep robbing the bank and they're like, well that's where the money is. You ask the investor why they keep buying the stocks because that's where the money is. And that doesn't seem to be changing anytime soon, nor should it.
- [03:17]
Steve Weiss
And the reason why that's where the money is because these stocks have been recession resistant. They haven't depended upon the equity markets or the credit markets for funding. They're self funding despite their massive capex. And that is where the puck is, where it's been and where it's going talk in terms that Joe understands, hockey terms. So that's going to keep happening and I've been fairly consistent and that's where I want to be for all those reasons. Again, I has the largest uptake, the largest in any technology, including the web and that was free. So you're going to continue to see more and more dollars going there because the benefits to business are huge. So, so that's why I'm staying where I am.
- [04:03]
Scott Wapner
I mean Shan, there are other areas of the market that are working and we'll talk about some of those later. But this remains the most dominant story in the market. As I said, the S and P is at a record high, record closing high about 6100. It was 6090. So we're a little bit above that. And we'll see how the rest of the day transpires as we take you through the last stretch on closing bell obviously, but this story seems like it's going to be dominating for the near future again.
- [04:31]
Joe Terranova
Well, I wouldn't, I would be shocked if we didn't. In upcoming earnings season for a lot of companies outside of technology, for them to still be talking about how not only do they plan to adopt AI but perhaps more importantly, Scott, how they have already done so. So I think the difference with Oracle, for instance, is that they weren't on the tip of the spear in terms of the hyperscalers and talking about all the things they were going to do with AI. Instead they did some things with AI and then they came out and said, look, we're monetizing it. And so I think what you're seeing now is you're seeing this, this commitment, if you will, in terms of continued investment in AI outside of the hyperscalers. And so that's why you're also seeing it broaden outside to all those other names that you talked about that Joe just mentioned that are adjacent, that are complementary to what has happened in the hyperscalers. And so there's still going to be questions in terms of what is this capital expenditure, how does that translate to monetization for the hyperscalers? Those questions aren't going to come till later this year and into 27 and in the OR 26. Excuse me. And in the interim, what you're going to see is that all of these earnings reports that have come this quarter, next quarter, the third quarter. I agree with Steve. I think that companies are really looking from financials to industrials, even down to energy and materials companies looking for ways to increase productivity, which we're seeing by the way, in the macro numbers we're seeing this increase in productivity and that's helping to be driven by AI. So if you can monetize it, I think that there's no reason why investors wouldn't want to be in it. But I think it's also expanding from a breadth perspective the ways that you can play AI over 25.
- [06:00]
Steve Weiss
What I'd say is that this is not new news, that other companies are involved. I don't know why the market, frankly, is waking up to in such a flurry today.
- [06:09]
Scott Wapner
But you know what's interesting now, let me say this real quick. I do think it's interesting that a lot of these companies got a halo effect on expectations of what they might do, but mostly based on what others were doing, right? This is actual tangible stuff that you can wrap your arms around and say, well, okay, Oracle's doing this with so and so and such and such, and all these other companies that are on the periphery, you know, now have a little more skin in the game. So they're like Avertive, for example. Vertiv's. Vertiv is one of these stocks of yours that's up, that's up today. It's up 4% today, it's up 10% this week, it's up 180% over the last 12 months.
- [06:49]
Steve Weiss
And I was buying it. It sold off in the, in the 112, 115 range just a few weeks ago. And that's to my point. This is not a new story. Well, when you have $80 billion cap budgets dedicated just to AI from the hyperscalers, it's not all going to in video, it's not going to engineers, it's not all going to investments in open air, which is not.
- [07:12]
Scott Wapner
Of course not. But now we get to actually see where the money's going.
- [07:14]
Steve Weiss
Right. Because people are doing their work now whereas they hadn't before, number one. And number two, the valuations they're arguing are excess of where they are. So what are they doing? They're going to the smaller stocks, but guess what, their valuations are more excessive.
- [07:27]
Scott Wapner
What's this on this name vrt? Can we, can we pull that up?
- [07:31]
Steve Weiss
I think it's about 47 times currency.
- [07:35]
CNBC AI Course Ad
On Vertiv is 98. We hold it in the Jyoti ETF. I'm just wondering when you think about trailing, I'm just wondering when you think about all of this, if in fact this is part of the Trump trade. Because now, yes, we knew that companies like Microsoft were spending on artificial intelligence, but now the new administration's coming in and they have this affinity for crypto. They seem to have a very similar affinity now for artificial intelligence. And this is about helping build out that infrastructure. So I agree with you, Scott. I think this is a little bit more than what we previously knew about the thematic investing surrounding and it goes.
- [08:10]
Joe Terranova
Well beyond, you would agree, like whatever dollar amount was bandied about today. Right. This is a, this is a commitment from a technology perspect perspective that we're not going to stand in the way. Not only are we not going to stand in the way from a deregulation standpoint of progress, but perhaps we're even going to shove it forward and take a more, maybe from a policy perspective, a more explicit role in this transformation.
- [08:34]
Scott Wapner
Did I just get a license today to buy these stocks again? If I thought that Palantir, for example, ran up too much before and the stock came back down to earth. Arista Networks. Do I just need to make sure that I have a good enough position in these names again?
- [08:52]
CNBC AI Course Ad
I also think earnings have to support the story. I think that that's very critical and we're in the part of the profit process right now. So in the case of let's say Amphenol, you've got the earnings that are actually supporting it, I believe they reported earlier. So that's critical in this story. Do you ultimately have a free pass to reach for stocks that are rallying to all time highs on a degree of exuberance in the interim? That might be a little bit of a challenging endeavor over the long run. I think you'll be okay.
- [09:21]
Scott Wapner
I mean I don't have anybody on the desk today who owns Dell. I don't have anybody who owns, I've been looking at arm, why she don't own Supermicro or Arista. You don't own Broadcom, which is another winner today. Do you need to sort of expand your horizons of the AI trade here?
- [09:37]
Steve Weiss
Well, there's a practical aspect of that and the practical aspect of it is that I've got a huge waiting and I run a concentrated book. So I've got you know, 12 to 15 names, sometimes 10 to 12 names. So. And they have big gains in them. So what am I going to do? Am I going to sell some of my meta, pay taxes on it and then hope to have, you know, hope that an risk network catches up when in my view a risk networks is good in a moment in time, maybe year, maybe three years. Whereas I know that if a matter or Microsoft or Netflix, if the valuation gets ahead of itself that eventually they'll go into it. So I'm not talking ever about permanent loss of capital. I'm only talking about the timing of the loss that eventually be a gain. So that's why I don't feel that I have to go chess, you know, chase the next shiny object because it happens to be a momentum chart today I don't have room in the portfolio, I'd have to sell something to do it.
- [10:38]
Scott Wapner
I mean there still is a fair amount of optimism around, around all these names. I mean there is a question from yesterday which I think people are trying to figure out is the future of Microsoft's relationship with with OpenAI. Because it also came out yesterday that Microsoft is losing that exclusivity with OpenAI. And as its cloud provider Satya Nadella addressed it this morning with Andrew Ross Sorkin in Davos.
- [11:01]
CNBC AI Course Ad
Listen, our partnership continues, we'll be a tech partner to Stargate. But more importantly our partnership with OpenAI. You talked about exclusivity. OpenAI APIs are exclusive to Azure going forward. Even so nothing changes there. IP access to Microsoft continues and in fact because of this there will be more IP and So therefore we'll benefit and we have rev share arrangements that are great. And also OpenAI committed in a very significant way to Azure consumption. And so we're very thrilled about that as well. So all up as far as I'm concerned.
- [11:38]
Scott Wapner
All right, so that's Satya Nadella with Andrew and Davos, Steve Kovacs following that story for us. Is this just spin or are things really all good? The market today suggests they're all good because the Stock Microsoft is up 4%.
- [11:53]
CNBC Host
Yeah, it's, let's call it spin by a mission. How about that? Because, Scott, what we're hearing from Satya just now in that clip that you played is, yes, the Open Air partnership continues. Yes, Microsoft is going to get access to those Open Air technology and models before anyone else. Yes, they're going to be able to use it in its own products before anyone else. What he did not talk about though is the how Microsoft is kind of losing its grip that it had an Open Air. It's losing its exclusive rights to be the sole cloud provider through Azure for OpenAI. And that means, at the end of the day, kind of less revenue or potential new revenue growth from opening. I just keep in mind, Scott, all the Open Air stuff running on Azure, the more activity that happens with OpenAI on Azure, the more money Microsoft makes. And Microsoft has gotten to this point where they literally don't have the capacity to support, support all the growth from OpenAI. That's why last year you saw them kind of offload some of that to Oracle. That's why yesterday Microsoft said, we renegotiated our contract with OpenAI. And instead of being the sole provider, OpenAI has to come to us first and say, here's what we need. Microsoft, can you provide it for us? And Microsoft can now say, no, you need to go somewhere else. You need to go to Oracle. This also opens up to other cloud providers too. If I'm Google, if I'm Amazon, if I'm hp, if I'm Dell, I'm also excited about this. The potential to work with OpenAI to help OpenAI train its models. And of course it's great for Nvidia, which is going to be collecting. There's big numbers that we saw throwing out yesterday. 100 billion, 500 billion. That is all cash for Nvidia, or large part of that is for Nvidia. Keep in mind, Scott, what Satya Nadella said last year and throughout the last year that they just don't have the capacity to meet all the artificial intelligence demand that they're seeing it's not just open air. They have a lot of open source and third party models, their own models running on Azure. And so they've had to kind of offload some of that. And that's why you see them spending $80 billion this fiscal year to continue to accelerate and build out their capacity to support all this stuff. But OpenAI has just gotten way too big and they cannot support it. And that's why you're seeing them kind of loosen their grip, say, okay, opening eye. You can go off and work with Oracle on some of this stuff. We still get to keep you, we still get to own almost 50% of you, we still get to use all your technology first. But the other cloud providers, the other cloud hyperscalers, where all the money is, they're going to get a taste of open air too now. And that is not exactly the best thing for Microsoft right now because most of its AI revenue is. And revenue growth, by the way, is coming from OpenAI and that tight relationship these two have. Nadella is right. What he told Andrew, that yes, the partnership continues and they're getting access to this, they're going to have the best stuff. But at the same time on the cloud part where all the revenue is today, there's potential for them to miss out on that growth.
- [14:47]
Scott Wapner
Yeah. Good reality check from you, Steve. I appreciate your insights very much. That Steve Kovac, Microsoft reports a week from today. There's obviously a lot of optimism. Morgan Stanley's bullish on it. They do trim their price target today slightly to 540 from 548.
- [15:04]
Steve Weiss
Right.
- [15:05]
Scott Wapner
Jefferies is bullish on on both Metta and Microsoft coming into earnings. They're confident in Azure's reacceleration. They've got 550. So they're in the ballpark around that number as well. You own the stock?
- [15:16]
Steve Weiss
I do and I'd love to. The last time that the analyst came that close to executing our price targets. Ridiculous. Lowering it by eight bucks, that kind of base. But that aside, Microsoft has a team of 200 people. You know what these 200 people are doing? They're going out to the smaller and the medium sized and larger companies and they are offering some of their tools for free if you commit to putting your cloud business to Azure Asia. So what I'd say is that, sure, you know, open AI, they got a right of first refusal here. But open AI is a big customer. They don't have as much negotiating power with them either. So why tie up so much of your capacity to one large partner who can bid you down and lower your profit. Profit margins go to smaller companies that don't have the same wherewithal. So that's an investment in today for the future. So I actually think it's a brilliant move and I think it's counter Steve's argument there that you're losing some growth. But I don't know what this quarter is going to be. I don't care what this quarter is going to be. I own it for the next quarter's and next quarter's next quarter.
- [16:23]
CNBC AI Course Ad
Yeah, the stock, the stock had been a relative underperformer versus the other mag 7 I don't know. I'm just, just wondering out loud does this maybe help the argument against that the relationship is anti competitive? Because that's not going away. Elon Musk is going to continue to have the bullhorn on that and there, there are going to be regulatory bodies that are going to address that. I don't know if it goes away but I'm just wondering maybe it offers part of it but maybe it offers some relief to that anti competitive conversation.
- [16:52]
Joe Terranova
Yeah, yeah, I think it was bound to evolve and I think I actually agree with Steve. I think that this gives Microsoft a little bit more latitude in terms of having to fund everything for open air. Gives them some, some flexibility if you will to kind of pick and choose what makes best sense for them knowing that that relationship is going to evolve over time.
- [17:09]
Steve Weiss
And by the way, Google has the same type of team going out. You know one of our portfolio companies, they made a deal with them in the Middle east because their presence, Google's presence in the Middle east isn't as they think it should be. So they're hosting them for free if they use put all their cloud on Google by the way.
- [17:27]
Scott Wapner
I'm sorry, go ahead.
- [17:29]
CNBC AI Course Ad
OpenAI as a public company it would make it so much easier to understand all of these relationships. The price transparency would do that for us.
- [17:37]
Scott Wapner
Yes, that's right. Google making a fresh investment of more than a billion by the way in anthropic that's according to the ftse. So they're very much a big player in this game and I wanted to make sure you had that news. If there's a, I don't know if there's negative sentiment around anything going into Mega Cap next week it's Apple. I mean what else is it? Everybody else. Price target raises, reiterate, outperform, etc. Etc. Etc. Barclays today they reiterate their underperform where we have two downgrades yesterday on the stock. We had one last week or a couple weeks ago. There seem to be real questions about iPhone demand in this upgrade cycle. So nobody owns the stock on the desk today. Kevin Simpson just bought more of it though. He joins us now to talk more about that. So did you buy it now because you feel like the sell off in the shares is overdone? What's the story here?
- [18:34]
Kevin Simpson
Yeah, well, as you remember, we got out of the position in mid December around $242. And then of course by Christmas it was almost 260 because, you know, why wouldn't it be? Is the, is the selling over, Scott? I don't think so. We really thought anywhere between 200 and 230 would be a good reaccumulation phase. So on Thursday we picked up a few shares at 230. Yesterday we bought a little bit more at 220. I don't know that we're ever able to get the exact bottoms or the exact tops. But here in the two twenties and all the way down to 200 will continue to reaccumulate the position. And my thesis on it is kind of old school. You know, we often dismiss the share buybacks. We take it as a for granted. But they declared $110 billion back in May for share buybacks this year. And what that does is it absolutely helps earnings per share. So their growth might be 11% this year, 12% next year. More of a service model, more of a utility type thing. Another criticism against it, but when you look at the, the cloud and you look at Apple Music, Apple tv, when you look at the App Store and revenue stream, you're talking about $110 billion of free cash flow. That might be boring, but that's the kind of boring we like. So what's the criticism? Well, the criticism is their hardware innovation isn't there and the, and the Apple intelligence rollouts been a little bit of a dud, but I don't think they overhyped it or oversold it. One thing we do know about Apple is when they get something right, eventually the masses are attracted to it. So if we miss a super cycle for the Apple 1616, I would expect that we would see it for the iPhone 17. This is a stock that everyone hates. That's when we buy it, when everyone loves it, we sell it. I feel pretty confident that we'll be able to generate a lot of call premium as we see volatility on this name because the quarter should disappoint but we're looking at far beyond that.
- [20:20]
Scott Wapner
Thank you for the update. I appreciate you. Kevin Simpson, thank you. We'll see you soon. Chart of the day today is Netflix. No surprise probably to all of you, given what happened with the earnings last night and the move that we're witnessing today. And the follow through on shares. Look at that. Up almost 11%. They beat subs. Great. Raising prices record high. I would go to Weiss versus on this like I know he wants me.
- [20:45]
CNBC AI Course Ad
To because let's just you and I talk about it.
- [20:48]
Scott Wapner
You've owned it longer.
- [20:49]
Steve Weiss
Joe's list to me, very owned it.
- [20:50]
Scott Wapner
A lot longer than you. As much of a victory lap as you were trying to take on the texting last night. I'm going to Joe first. Sorry.
- [20:58]
CNBC AI Course Ad
So Steve made a great call saying that was going to approach a thousand kudos.
- [21:02]
Scott Wapner
He did.
- [21:03]
CNBC AI Course Ad
I hope he's happy wherever he is right now. But look, this was an absolutely phenomenal quarter. I mean, this was the largest quarterly subscriber growth at 18.9 million. This is more than they did during the pandemic the first quarter of 2020. So 300 million global subscribers right now. We talked about the price hike. I think now it's up to 17, 1999. Of course people are going to pay that. Live entertainment, the Tyson fight apparently was really what drove a lot of that subscriber growth. And I thought Josh yesterday made some really excellent points and it kind of resolves some of the challenges that they have as it relates to Churn. So I was concerned yesterday about positioning and the bullishness of, you know, the extreme nature of that positioning. But when you have this type of earnings report and subsequent to that, the stock's up 10%, I think to a certain extent that alleviates some of that concern.
- [21:59]
Scott Wapner
We'll give you credit, Weiss, for the great call you made. It looks like it said, it looks like this one singularly, it looks like it's heading to 1,000 bucks. What do you do? What do you do with the stock? Because you bought more. You bought more last week.
- [22:13]
Steve Weiss
I did. I did. And the stock had sold off. It got near this level a number of weeks ago and sold off to like 830 or 835. It's a great opportunity. Buy. Look, here's what, what people don't talk about, which is that the other video services can't compete with them yet a number of them more expensive. Why can't they compete? Well, Netflix, what I love about it, you talk to people. What others love about it is they Drop an entire season on one day. And the reason why the others can't compete is because they don't have the dollars, they don't have the capital to keep putting out product. So they're putting out product is let's put out episode two in a week, episode three in a week. So you're going to go to that more robust content. I would tell you that, that just as a guess that Netflix puts out more content than all the other, you know, meaningful streaming services combined. So that's what's going to drive it. And as I mentioned last week, that they keep putting out more and more non English language series. So they're growing their international to a very large extent. If you go to your feed, you'll see Spanish, you'll see more Swedish, you'll see, just pick a language, it's all there. So to me, it's going on all cylinders and they still have pricing flexibility to go.
- [23:29]
CNBC AI Course Ad
So let's take the bear argument for one second. Let's say, in fact, you know, the valuation is high, the price, the price is reached to a certain extent, a parabolic level. What do you do with your position? The stock should not go back below yesterday's close, plain and simple. So 8, 869, I think, was yesterday's close. You put a price stop at 869 if you're long, you should not see that stock below there because it invalidates all of the positive effect of today's earning from what yesterday's earnings.
- [23:58]
Steve Weiss
Does it invalidate it? Well, invalidate just for the next few weeks, for the next few months, because the fundamentals are still there and that's different. Our trading strategies, your strategy, which I'm big believer in because I am investing in Jyoti, is one way to play it. The way I prefer to play it is as long as there's positive momentum in the fundamentals, right? And that positive momentum doesn't have to be a beat. It could be meeting expectations, could be a few metrics working and a couple others don't. I don't care. As long as that keeps going, I will suffer through the volatility and use the volatility not as risk, but use it as opportunity, as I have on this and Meta and others. Because I think that's the way you play.
- [24:38]
CNBC AI Course Ad
Remember, I come from a futures background. So you're always thinking about how you're reshaping risk. You're always thinking about if you're in a position where potentially could I be wrong? And I was, I was Tutored and learned at a very young age that you have to utilize those price stops. If it goes below there, it should retreat even lower. It doesn't change your bias or perspective that it could be a fundamentally strong company and you look to reenter it.
- [25:04]
Steve Weiss
That I made more money though longer term.
- [25:06]
CNBC AI Course Ad
Are you bragging? Right.
- [25:07]
Steve Weiss
By buying, buying great fundamentals when there's been a momentary dislocation in the stock price.
- [25:14]
CNBC AI Course Ad
You're invested in a momentum etf.
- [25:16]
Scott Wapner
I know I made a lot of money. Joe's a self described prodigy. Prodigy, exactly. In futures trading. Shane, you got anything you want to join?
- [25:25]
Joe Terranova
I mean, you know, I, you know, I've also lost promotional activity happening here.
- [25:32]
Scott Wapner
As humble and as likable as ever.
- [25:34]
Steve Weiss
You have to find that word for me. Humble sort of escapes my vernacular.
- [25:37]
Scott Wapner
Let's do one more thing before we take a break because industrials are near new highs too. Second best sector this year. You bought more Uber. Tell me quickly about that, please.
- [25:47]
Steve Weiss
It's a little Uber. And look, I have some concerns about, I still have concerns about for example, you know, Uber eats restaurants have low margins and so competitive there. So you're going to see margins being hacked away. Also their, their labor pool. Now in 16 states, undocumented can own license, can get a driver's license and drive anywhere in the country. However, Uber does have checks on that in terms of you have to have the, have a, you know, a visa and a right to work in the US but it does give me some concerns there in terms of you lose, you lose the undocumented workforce in other areas. Do you lose Uber drivers to go there for others that may pay more? So, so I think it's the future is not that certain. But I don't expect him to miss another quarter and you could argue whether he missed it or not. Stock traded down, so he missed it.
- [26:39]
Scott Wapner
All right, so you have another. A new buy. And we will take a break. We'll talk about that. On the other side, a new stock that Weiss has added to his portfolio. We have a number of committee stocks on the move as well. We are back right after this.
- [26:56]
Capella University Ad
At Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.
- [27:12]
CNBC AI Course Ad
Learn how to use AI to be.
- [27:14]
CNBC Host
More successful with cnbc.
- [27:16]
CNBC AI Course Ad
Make it's new online course.
- [27:18]
CNBC Contributor
We'll give you examples that can help you master AI tools.
- [27:21]
CNBC AI Course Ad
Go to CNBCmakeit.com AI and register now.
- [27:28]
Scott Wapner
All right, let's document that move I mentioned we had. It's Booz Allen Hamilton and this is a new buy for you. Why?
- [27:34]
Steve Weiss
So you know, I've been looking at the stock peaked at about 190 in mid November. And then when Doge came out, all these defense contracts including Leidos and you know, as I've talked about Leidos often, I've been a buyer of theirs because 30% of Leidos workforce is embedded in the government and in the dod. And the reason why they like that is because the reason why the government likes it is because they don't want to deal with unions when they want to get rid of people. And that in fact is what's happening with Doge. So what was thought of to be a negative with Doge is actually being read as a positive for these companies, these government contractors. Now they talk about the modernization of the technology in Department of Defense. That's not new. That's Jad C2 which the air Force has where they're modernized technology and you need more of that. And that's what Leidos does in addition to their health care business, other business and that's what Booz Allen does. So I thought as a defense contractor that's part of the new defense, which is not the heavy metal benders that they will do quite well. Stocks so beaten up and I just want to add to it, it's a very high quality name.
- [28:42]
Scott Wapner
All right, some stocks on the move, Travelers, Joe, they had a strong earnings beat record level of net written premiums.
- [28:50]
CNBC AI Course Ad
Net income up 28%. Insurance premiums higher. Anyone surprised by that?
- [28:56]
Scott Wapner
Nope.
- [28:57]
CNBC AI Course Ad
Policy sales higher, Investment income higher. They spoke about the horrific events in Los Angeles with the wirefires, their exposure. There is some, first of all they've stepped back from California to begin with. They really don't insure the high net worth home. They're not really in that $5 million market. They're more in more of the higher worth business type of properties and then at the lower end of home. So the inference was that they have less exposure than potentially some of the other insurance names. And it's being reflected here with strong price performance and the ability to look at this earnings report and say wow, this is a really strong one.
- [29:42]
Scott Wapner
New record high for interactive brokers.
- [29:44]
CNBC AI Course Ad
Look, I've been talking about this stock for literally the last two years on the show. I've owned it. Personally, I don't understand why.
- [29:51]
Scott Wapner
Don't hurt your back Pat.
- [29:52]
CNBC AI Course Ad
I Don't understand why anyone the heck is going on any would own any other. Well, listen, we're on the show with you, so we got to make ourselves.
- [30:00]
Steve Weiss
I gotta move over. His head's really expanding as I'm sitting.
- [30:02]
CNBC AI Course Ad
Why would you own any other brokerage name or any other brokerage name you literally on Interactive Brokers could transact on whether it's futures, options, crypto equities. Its customer service is phenomenal. The execution, the management team, they do just an awesome job. The volume, the liquidity is there. I just think the stock is by far in the financial sector. One of the clear core holdings that you have to have.
- [30:34]
Scott Wapner
United Airlines is a new record high today. I know you own that, Joe, but I can't resist going to Weiss because I hope he repeats the line that he gave to our production staff because I just want to hear it. Yeah, you know what you told them. Well, I've been too ignorant. I'm not airlines, frankly.
- [30:49]
Steve Weiss
Say what I. Are you referring to my comments?
- [30:52]
Scott Wapner
You've been too ignorant on the airlines because United Airlines was a double last year. Delta's ripped. You buy them now.
- [30:59]
Steve Weiss
I mean, now look. I mean airlines shouldn't trade at this multiple. They historically don't sustain this kind of multiple. If they get to it, they've done a great job. The consumer. What I had thought was that the fire hose of demand coming post Covid would peter out, but we've not seen it peter out in, in a lot of areas other than what you paid for staffing of nurses and, and docs and so forth. So. So look, I missed it some. You're going to miss, you know, as much as you think I'm perfect, Scott, I'm not, you know, so this is one I just had a miss.
- [31:33]
Scott Wapner
All right. Bertha Coombs has the headlines for us. Hi, Bertha.
- [31:35]
I
Hey, Scott. Just days after President Trump ordered a ramp up in military presence at the southern border, the US Military is sending more troops. Sources tell NBC News about 1,000 active duty troops will be sent this week to help support U.S. customs and Border Protection with tasks such as detection and monitoring, as well as as assisting air operations. Officials say this is the first phase of a larger military presence there. The Trump administration has told federal health agencies to pause communications such as scientific reports and health advisory updates on websites. The Washington Post reporting staff at the agencies, including the fda, CDC and the National Institutes of Health, were notified, but were not provided guidance on what was exactly covered or how long the pause would be. And baseball great Ichiro Suzuki is now the first Japanese player ever chosen to be inducted for the Baseball hall of Fame. Suzuki has a two time American League batting championship and 10 time All Star and Golden Glove out fielder. He will be inducted in July alongside pitchers Cece Sabathia and Billy Wagner. Scott, back to you.
- [32:58]
Scott Wapner
All right. Most hits ever too. If you combine both of his careers in Japan and the United States. Amazing Bertha. Thank you, Bertha Coombs. Up next, our calls of the day. Three bullish calls on three committee stocks. Which is why we will trade. Up next.
- [33:14]
Capella University Ad
At Capella University. Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu.
- [33:31]
CNBC AI Course Ad
Learn how to use AI to be.
- [33:33]
CNBC Host
More successful with cnbc.
- [33:35]
CNBC AI Course Ad
Make it's new online course.
- [33:36]
CNBC Contributor
We'll give you examples that can help you master AI tools.
- [33:40]
CNBC AI Course Ad
Go to CNBCmakeit.com AI and register now.
- [34:00]
Scott Wapner
Welcome back. Calls of the Day. Royal Caribbean reiterated overweight today at JP Morgan. Joe T. You own this one. They see it as best in class.
- [34:08]
CNBC AI Course Ad
So I believe they report earnings next week. Look, most of the stocks we're going to talk about in calls of the day, really the story is about revenue growth. You could have an opinion. You get a better bias, you get a feel. I did Royal Caribbean. When Royal Caribbean first went into the etf, I was skeptical. I said to myself, oh, you know, cruise ships, how much strength can we actually see in terms of the revenue growth? But the revenue growth there is real. They're doing 17% revenue growth in the prior quarter. They're doing 15% revenue growth in the last eight quarters, are down two and.
- [34:43]
Scott Wapner
A half percent today.
- [34:44]
CNBC AI Course Ad
It's, it's, you've got earnings that are coming up and I think ahead of earnings you see a lot of squaring in terms of positioning. I wouldn't read too much into that.
- [34:52]
Scott Wapner
Costco outperform Bernstein again, where is the revenue growth?
- [34:56]
CNBC AI Course Ad
This is a consumer staple name. Consumer staple name that over the last three years gives you 9% revenue growth. Very hard to find that type of revenue growth from a company.
- [35:07]
Scott Wapner
You pay up for it, don't you? Why take is it's too expensive? Yeah.
- [35:12]
Steve Weiss
Well, it's so it's been too expensive. It's just too expensive for me to buy it.
- [35:17]
CNBC AI Course Ad
You make the same claim with Wal Mart that.
- [35:19]
Steve Weiss
Because they know that's absolutely correct. I mean, I just think they're too expensive. They've executed. So we're just in such, it's a, comments in the market really is that the focus is on fundamentals, it's not on valuation. You talk, look at, you know, 500 stocks like that. But my question is, Joe, what did you say to yourself on this one, since you're talking to third person today?
- [35:40]
CNBC AI Course Ad
So you're, you're talking about execution. This is the interesting thing on a serious note, both of these companies have the ability to utilize artificial intelligence. And we're beginning to see the early stages of that where these hyperscalers are able to make the experience better for the consumer with the utilization of the.
- [36:01]
Steve Weiss
Technological which goes back to my comment on tools. That's exactly what it is. The tools that, that Microsoft is giving to them, that Google's giving to them, but that is helping their business.
- [36:10]
CNBC Contributor
That just exactly right.
- [36:12]
Joe Terranova
So this is like, this is a way to buy part of your portfolio, to build out a Staples allocation in your portfolio that is also benefiting from the technological innovation that we're seeing.
- [36:24]
Scott Wapner
Let me, let me interrupt because we're getting new exclusive details on what led up to that massive AI infrastructure announcement a day ago ago at the White House. Our Kate Rooney has been doing reporting on it and joins us now with what she's learned.
- [36:37]
J
Kate?
- [36:39]
CNBC Contributor
Hi, Scott. So I'm told by a source that OpenAI CEO Sam Altman had a, quote, lengthy phone call with President Trump on Friday. It did focus on AI's potential. They walked through what this technology is really capable of and certain parts of the infrastructure plan that was laid out yesterday. The source here asked not to be named because these discussions were confidential. But they did say it was productive. They described it as amicable. And Trump publicly yesterday, really calling Altman at the White House the leading expert on AI. And then on that call Friday, I mentioned President Trump, according to this person who was in the room, said they were, he was most animated about Trump was most animated about the actual building aspect here and the importance of this happening in the US and not happening in China, what it signaled for confidence in the country under his administration and then the potential job creation. That was also mentioned yesterday. I am told that the OpenAI team first met with the Trump team back in June. This was in Las Vegas to do a demonstration of the technology. It was through the CEO of the company, Brad Lightcap and Greg Brockman, who is the OpenAI President. I am also hearing that Altman's ties to Larry Ellison, a longtime Trump supporter and founder of Oracle, have helped his standing with the Trump team. He also has the support and financial backing, importantly, of Masayoshi Son, the SoftBank founder. Those two are increasingly close. That relationship has gotten stronger and Masa san has already committed, you'll remember, $100 billion to invest in the US ahead of this Stargate announcement that came yesterday. Those ties to Ellison and Son are really important, guys. It's given him what appears to be a halo effect, which so far has been outweighing the beef that Sam Altman has with another key Trump ally, Elon Musk. There had been some questions in this administration on how Altman was going to fare. Musk, of course, the co founder of Tesla, a variety of companies, and also a co founder of OpenAI, still suing OpenAI over its nonprofit status. Altman, responding to Musk's post on social media, kind of ragging on this deal, he responded saying, wrong. As you surely know, this is great for the country. He says, I realize what's great for the country isn't always what's optimal for your companies, but I hope you'll mostly put America or the USA emoji first. So Altman publicly fighting back as well. Scott, back to you.
- [38:58]
Scott Wapner
Let me ask you more about that because there was a little bit more that has since come out and I want you to sort of opine on that. After OpenAI announced the Stargate project on social media, Musk responded, quote, they don't actually have the money, which I believe he later clarified and suggested he was talking about SoftBank. You tell me if that's correct or not. Sam Altman then responded saying, quote, I genuinely respect your accomplishments and think you are the most inspiring entrepreneur of our time. You want to shed some more light on that exchange?
- [39:36]
CNBC Contributor
Yes, and I think you're right where that comment was specifically about SoftBank. But this really aligns with some of the public rhetoric we've heard between Sam Altman and Elon Musk. So far, Altman has said what's best for the country should supersede any sort of personal animosity. And he said all of this publicly in interviews. He sort of went over this in DealBook as well. And so it aligns with sort of his stance on Musk, which he's called him publicly a bully. He's sort of subtly hit back. But I think the last couple of days we've really seen proof that the Musk animosity, at least so far, is not getting in the way of his relationship with the Trump administration, his ability to be a big part of these deals and the symbolism of him being up there with Larry Ellison, with Masazan. It's just such a win for Altman as CEO of OpenAI and at a time when it was really under question if he would have any sort of role, if he would be able to get a seat at the table at some of these big infrastructure deals which are key to the success of this $157 billion company at this point.
- [40:38]
Scott Wapner
I mean, it's interesting, as you said in your reporting, that the president called Sam Altman, the leading expert on AI given the proximity of Musk to him and this whole story with X AI.
- [40:51]
CNBC Contributor
Yeah.
- [40:52]
Scott Wapner
So watch further to watch further to save. I think we're going to be talking a lot about this, Kate. I appreciate your reporting.
- [40:58]
Joe Terranova
Thank you.
- [40:59]
CNBC Contributor
I think so. I think so.
- [41:00]
Scott Wapner
It's Kate Rooney Santoli. He's next with his midday word. We're back with senior markets commentator Mike Santoli at the desk. How do you read today's trade?
- [41:27]
J
Well, after six days of very, very strong breath, we really had the majority of stocks doing a lot of the work on the upside. Probably needed a rest. You have the banks that were on an upward sprint. They're down 1%. The way you get to the old record highs in the S and P is to have the AI trade just kick back in again. So it's almost like you would draw it up in terms of trading off strength, allowing parts of the market to cool off a little bit. So that's been, I think, a net positive. I don't think you have a real economic message in the fact that market breadth is negative today, except that it was just been very strong for a while. But also yields ticking higher. That's been where the yield story has really played out has been in terms of the average stock as opposed to the index. So as to whether, you know, this is kind of a last little lunge higher to get to the old highs. And now we have the real test. I'm not really sure. The market seems back in gear. We did have a good downward reset in optimism that I think can be rebuilt or is being rebuilt from here.
- [42:22]
Scott Wapner
We do risk to some degree another ramp into all of these earnings next week. Right. So, okay, now you better put up to justify what we just witnessed.
- [42:32]
J
Have a potential ramp into the Fed meeting. And I don't think any, I don't think the stakes are really that high in terms of the economy. But when they don't cut rates and you have a president that probably wanted them to cut rates or at least wants to make that declaration, I Don't think that the market should get upset about that. But if it's looking for an excuse, if it's kind of out on, on a, on a distant perch and needs to come back, that might be something to keep in mind.
- [42:55]
Scott Wapner
All right, I'll see you on closing bell. That's Mike Santoli, our senior markets commentator. We now have, we have another move from Weiss to document today. We'll take a quickie and we'll come back and we'll tell you what it is. Hey, Shannon, interesting note today. Bank of America, its client flows 11th week of buying in stocks, record health care inflow. What do you think of that space in this year ahead? It's been such a disappointment, such a disappointment.
- [43:40]
Joe Terranova
We love health care. You know, we really liked it last year. We were overweight for the whole year. I think, Scott, it's, you know, there's two areas that are a little still a little challenging in health care. Obviously, pharma. You talk about everything that's going to be deregulatory now, regulation on drug prices and you also have, you know, managed care. Really struggling to figure out what that medical loss ratio is going to look like. Outside of that, though, Scott, you've got biotech, you've got services, you have increased procedure volume and you have a demographic tailwind. So I think and valuation is, you know, this is where you can find, you know, some really cheap value quality stocks.
- [44:12]
Scott Wapner
All right. Weiss, you bought more? Unh.
- [44:14]
Steve Weiss
I did. Still a small position, but the stock guide hit it as tech moves up and it's down today. So part of it is that I believe it's cheap. I believe they will figure it out and are the leader in health care. Health care is not going to do well without UNH doing well. They do have to get their MLR medical loss ratio under control. Took hit last quarter. That's to be expected with the V28 regulations came in last year and this year. So bottom line is I think it's cheap stock that has been a permanent compounder. I don't see that changing. And I also it's a hedge, frankly, against my technology portfolio.
- [44:49]
Scott Wapner
Intuitive, surgical. Speaking of, you know, the broader space. Reports tomorrow record high today.
- [44:54]
CNBC AI Course Ad
You want artificial intelligence playing a role here. You need to see profit margins well into the upper 60s. Talking about revenue somewhere around 2.26 billion.
- [45:04]
Scott Wapner
American Express also reports tomorrow. You on that.
- [45:08]
CNBC AI Course Ad
High expectations for sure on this name. EPS growth mid double digits 15, 16%. Street's expecting revenue coming in somewhere around 10%. Credit Card Environment's a good one.
- [45:21]
Scott Wapner
What do you think about amex?
- [45:23]
Steve Weiss
I think it's been a phenomenal story when you talked about the perks they lost, like the mileage perks, which we used it for all the others and yet they've just grown and grown and grown. So management team, the new management team, the old management team do a tremendous job and you have no reason to believe it's not going to be a good quarter giving the spending for the top half of the consumers, which we've seen some of the retailers that reported already.
- [45:46]
Scott Wapner
All right. We will take a break. We'll come back with finals. We'll do it next.
- [45:56]
CNBC AI Course Ad
Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast now.
- [46:09]
Scott Wapner
All right, 3:00 Eastern Time. Closing bell. Adam Parker, Lori Calvacina, Chris Harvey and Stephanie Link will join me talk more about this move in the markets over the last couple of days, which is led today again by the Nasdaq, which is up one and a half percent. You want to talk about something?
- [46:25]
J
Yeah.
- [46:26]
CNBC AI Course Ad
Just keep your eye on yields while we're doing the show. Yields are bumping up a little back to 461 for a 10 year. So not necessarily out of the woods there just yet.
- [46:34]
Scott Wapner
Well, that's not good for the broadening story.
- [46:36]
CNBC AI Course Ad
No.
- [46:36]
Scott Wapner
Right. Which is why is as Mike Santoli was talking about again, breadth in the market not so great, top heavy again with tech as all this money continues.
- [46:45]
CNBC AI Course Ad
To go higher as well. Go back with it.
- [46:47]
Scott Wapner
Yeah. I mean and that's sort of the prevailing thought, right. Is that dollar is going to remain strong and yields are going to remain a little more elevated for a little longer than people had once expected, correct?
- [46:57]
Joe Terranova
Yeah, absolutely. I mean that's and that's you're going to see stocks continue to trade on that risk even though there's probably a ceiling of 5% for the 10 year in this range.
- [47:05]
Scott Wapner
Let's do some finals. You got something on Applovin, Joe?
- [47:08]
CNBC AI Course Ad
Yeah, let's talk about that. Last Wednesday I gave as my final trade Applovin. I said that for a trade I believed you could buy the stock. It was at 336 at the time I said use a stop at $300. Here we are at 360, 365 ish. You have to raise the stop to the entry price. There is no way that you should lose money on this trade. You're either making money or you're scratching the trade out.
- [47:33]
Scott Wapner
Okay, Shannon, what you got for us.
- [47:35]
Joe Terranova
We're a little bit more constructive on discretionary here, especially with the potential ceiling on energy prices, gas prices, and then the expansion of real wage growth, which we think could result from small business optimism and spending capital expenditure. So we think that's a good spot.
- [47:49]
Scott Wapner
All right, Consumer discretionary and Weiss, last but certainly not least Never Ibit Look.
- [47:55]
Steve Weiss
2% volatility either way each day, but I still think it's going to work out.
- [48:00]
Scott Wapner
Thank you everybody. I'll see you on closing bell. You've been listening to CNBC Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [48:14]
Capella University Ad
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 an 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@ Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.