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Halftime Report
The Great Wait for Nvidia Earnings 5/20/26
00:43:33
Scott Wapner and the Investment Committee debate whether Nvidia earnings can reignite the AI trade and how you should position your portfolio ahead of the report tonight. Plus, Josh Brown highlights the cybersecurity sector in his "Best Stocks in the Market." And later, we look ahead to some retail earnings this week. Investment Committee Disclosures
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- [00:00]
Commercial Narrator
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Scott Walker
Carl thank you. Welcome to the Halftime Report. I'm Scott Walker. Front and center this hour, the great wait for Nvidia earnings and whether that report reignites this trade. Got a pretty decent market to show you. We discuss and debate the markets with the investment committee. Joining me for the hour, Joe Terranova, Steve Weiss, Jim Laventhal, Josh Brown show you what we're doing here. Nice little snapback from a few days of selling. Dow is good for about 1%. The Nasdaq is one of the leaders today. But look at the Russell, you know, yields get a little bit of relief, oil gets some relief and the Russell and those small cap stocks are looking pretty good. So we're going to wait and we are going to anticipate Nvidia, which is up almost 10%, Josh, in one month. Stock, not all the time, trades all that well after earnings. But how are you thinking about this report today? I think it's, I don't think it makes much sense to go around the horn and say, hey, what are you expecting? Because everybody expects it's going to be a good report. But how are you thinking about what's going to happen this evening and what it might mean?
- [02:01]
Josh Brown
Well, it's 80% year over year revenue growth from an all time high in revenue. So there's actually no analog to anything like this having happened ever in history. So like all of the normal superlatives that we use to discuss in video in quarters past over the last, I don't know, 11 years I'm in the stock, like this is perhaps the most incredibly superlative of all of all of them. 119% year over year, earnings per share growth, gross margins of 75%. How about the fact they're going to announce 73.2 billion in data center revenue three years ago? 36 months ago that business was 4 billion. So we've never seen anything like it. The one thing I would say is the multiple for Nvidia at 25 times may not be because people are worried about future growth. It may just be that if this stock were to get the same multiple expansion that a smaller company with a similar growth rate would get, it would effectively be like 30% of the S&P 500. Like there's people say the law of large numbers but they misuse the term. It's not what people think it means. But there is like a law governing how big a company could possibly get. I think the road to 250 is easier than the road to 200 could. Obviously I could be wrong. I also think part of the thing with Nvidia that everyone needs to remember is this stock doesn't necessarily rally after earnings no matter how good they are because it rallies on its customers earnings which happened two to three weeks before.
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Scott Walker
Good point.
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Josh Brown
So I don't think that this is a great post earnings stock to trade, but I do think it's going to be an incredible report. And I can't imagine any of the secular megatrends that we talk about on the show every day are in any way going to be put in jeopardy by Jensen's remarks after the number.
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Scott Walker
We would agree with that. Right. I mean you get the tell that as I said, I think it was yesterday. I can't remember another name where there's as much to draw from other earnings reports.
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Michael Santoli
Yes.
- [04:18]
Scott Walker
As there is with this one. You get the two weeks or three weeks prior. Three weeks or so prior and then you're like okay, well we know Nvidia is going to be good.
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Joe Terranova
Yes. So to that point, 93% of the semiconductor companies that have reported this earnings season have beaten estimates. Intel, Texas Instruments, amd, all double digit performance post earnings. So Josh points out the fact that over the last three quarters the next day, even with a good earnings report, we've seen in video price action move lower. So I don't think it's specifically about Nvidia's price action. And look, Nvidia has done its job so far year to date it's contributed 20% of the overall S and P gain year to date. In in addition to that, it's the semi we did this on Monday. It's the semiconductor story that's really powering The S&P 500 so far, year to date, 78% of the price appreciation is attributable to the semis. So look, it's the opportunity to kind of push back against, you know, yields and oil. And as it relates that we know the Trump put is alive and well today in isolation. You get to hear today about the AI story. And I think what's most important after today is I think you're going to walk away tonight and have confidence that this is not going to end anytime soon, that the growth story related to AI is not just going to be a 2026 moment, it's going to be 2728 and can extend for multiple years.
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Scott Walker
That's a, that's, that's the story, right. Judge smells. That's the story tonight that Weiss obviously, hopefully you get the reference. It's kind of obvious. Does the results tonight reignite if it needs reignition of this AI trade, does it just remind everybody, as Joe said, the Runway is really long. They're not going to surprise us tonight. They're going to confirm us for us tonight. Is that how you see it?
- [06:21]
Steve Weiss
I do see it that way, but I think we get confirmation from Jensen Huang on a on a weekly basis as he speaks at various different forums and interviews. So I don't expect anything new. I think that in a they typically, and I say typically, I haven't looked at every single quarter, but I'd say it's reasonable to assume over the last year, year and a half that they've sold off in the quarter despite great quarters, as the whisper numbers always exceeded
- [06:46]
Scott Walker
and as the run up into the print is what it is, right?
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Steve Weiss
Correct. Correct. Absolutely. So it's going to depend on the market personality tomorrow if we see reversal in bonds, unless they have an exceptionally great quarter far above the whisper quarter, I think you'll see the stock sell off. So my point is that today is not controlled by the tech tape. It's not controlled by the oil tape. It's controlled by bonds, partially by the oil tape because apparently more ships are moving through the strait, but not enough to change the world. So, so look, I think it's correct to say that the spend is going to continue for at least two years, maybe three. That's not the point. The point is it's too early make call when is the peak and when do we see cutback in cap spending that's going to impact right now? It really is. Party on. Party on. I said yesterday that some are pulling it forward, the end of the cycle or decline the cycle. I still think that debate's going to go on. Today's a bounce back day.
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Scott Walker
Yeah. You've had, you've had a party pause. You haven't had a party end to, to Weiss's point, you just needed to just get yields off the burner for a minute.
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Josh Brown
Right.
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Scott Walker
And they feel like they are, at least for a day. And the market can get its arms around that. The President's post on, on, on Truth earlier about, you know, closer to the end of the war, etc. You know, we'll see what happens with that. But this, this isn't the end of the party. It just needed a little bit of a breather. We needed to drink some water. We were, we were, we were, we were crushing some drinks.
- [08:16]
Jim Laventhal
Yes. You know how I feel about water. I want to draw a distinction though because the three of us were on the show yesterday, we were talking about Micron. We all remember that. We were talking about the multiple there, which we said at a high single digits level was maybe even expensive. So how can all of us, all four of us justify Nvidia at a mid to high 20s multiple? And there's two reasons why it deserves that multiple and maybe even higher. One is the ecosystem within the architecture that Nvidia has created. So this is the various chips that go together, Vera and Ruben, and it's the underlying software system of CUDA that is a distinctive ecosystem that is a moat to the business. It's a moat to competition for Nvidia that merits a higher multiple. The other thing is quite frankly the multiple investments that Nvidia has made in the overall artificial intelligence ecosystem, whether it's OpenAI or anthropic. And those are things we've seen in this first quarter earnings season. We've seen massive earnings beats from the likes of Alphabet and Amazon on the back of those investments that they've made and which we should see again from in video today. So let's not, let's not draw a comparison and I'm certainly not, I'm drawing the distinction between something that is more commoditized like Micron, and something that's more specialized.
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Scott Walker
Like we thought it would be really helpful to go to Oliver Renick to today at the CBOE in Chicago for a closer look at any options activity that he might be seeing ahead of the the print. We're expecting around a 6% swing based on implied volatility, but nonetheless, I'm curious. It's good to have you as always, what you might be seeing in terms of specific Trades where the options action is telling a story about what sentiment seems to be.
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Oliver Renick
That's right, Scott. Obviously, as you guys have talked about here, just an enormous amount of pressure on this company. But in the past, options traders have gotten a little bit over their skis. 14 of the past 20 quarters, Nvidia has moved less than the options pricing and as you guys mentioned, also some general weak performance after earnings. The stock has dropped five out of the past seven and as you mentioned today, implied volatility. Volatility points to under a 6% move, which is a bit more in line with those muted swings of the past. So perhaps some progress being made there. But the interesting quirk in today's setup is that traders are paying notably more for calls than puts. It's a pricing skew that's been increasing while Nvidia has made new highs. That was before traders got burned in the two day dip around Friday expiry. But safe to say based on what we're seeing so far, they have reloaded. And a deep sell off here would be particularly painful given how much folks are paying for those calls. You're looking for a trade, Scott. There's a big one here for the bulls today. The biggest trade in Nvidia was a clean cut call spread for about $8 million. Someone bought 30,000 of the 235 strikes expiring Friday and they sold the 255 against it. So that's looking for about a 6% pop from here into the weekend. Certainly would help the market would not hurt.
- [11:23]
Scott Walker
Yeah, it's a really good setup for us. I appreciate that, Oliver. Thank you. I'll see you later. On closing bell, Oliver Renick, I mean, it shows you there's a lot of optimism. There is not just about Nvidia clearly, but the whole thing. What's interesting, according to bank of America's client flows, you had the first outflows in three weeks driven by hedge fund funds. Tech saw the biggest outflows, record sales by hedge funds. I thought that was pretty interesting to note. And today was one of those days on this network that you remember for a while because Andrew Ross Sorkin sat down with Jeff Bezos, which is an extraordinary moment to be able to do that and hear from somebody that frankly you just don't hear from all that often, especially at this moment in time. Among the topics that they discussed, similarities between now and then now and the later stages of the dot com boom of which Mr. Bezos obviously had a front row seat. We look at the parabolic moves that we've seen in the market today. Are there signs of euphoria? Is it reminiscent? Here's what he said.
- [12:29]
Josh Brown
We're in a phase where every experiment is getting funded.
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Scott Walker
So what that means is the good ideas are getting funded and the bad ideas are getting funded. And it's because investors in this, at this moment, haven't learned yet how to
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Josh Brown
discriminate between good ideas and bad ideas. And that's okay because the good ideas will pay for all of the losers. So from a point of view of
- [12:57]
Scott Walker
civilization, of society, these kind of industrial
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Josh Brown
cycles can actually be very healthy because
- [13:06]
Scott Walker
they drive the technology forward.
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Michael Santoli
We shouldn't worry about being in a bubble.
- [13:10]
Scott Walker
No, even if it does turn out
- [13:12]
Josh Brown
to be a bubble, you shouldn't worry about it because the bubble is driving
- [13:18]
Scott Walker
investment and a lot of the investment
- [13:19]
Josh Brown
is going to turn out to be very healthy.
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Scott Walker
Thought that was a really interesting exchange, Josh. Of course there's a difference between investment and stock market reaction. Stocks can obviously have a correction, while the investment themselves in this burgeoning technology can still be worthwhile and pay great dividends for society at large. I'm wondering what your takeaway was from that Bezos comment.
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Josh Brown
So I started on Wall street in the late 90s, and part of me has always felt that maybe I would have been better off not having had that experience, given how different things have been since that dot com bubble. It's the thing that everyone, my generation is almost hopelessly anchored to and we can't help but see signs of it everywhere we look. A lot of the people talking about AI as a bubble, we're also talking about billion dollar pre IPO startups as a bubble, talking about cloud computing as a bubble. It's just, it's like, it's like somebody with a hammer. Everything looks like a nail. Without a doubt, there are bad ideas amidst all this spending. There are projects that will not be profitable. There are companies that will come and then disappear. There are things that we'll look back in five years and say, remember we all thought X, Y, Z and we'll laugh. But I think there's a difference between a bubble and a wave. I think in a bubble we have this idea that like everything that was built just vanishes after or is so worthless that it becomes a punchline. That really is not an accurate characterization of the Web 1.0 build out, although it is an accurate characterization of a lot of the stocks that came public back then and we paid for it. I think in this particular case we're not talking about an Equity funded bubble in datacenter build. These are companies that are the largest, most powerful, most profitable companies on earth and they're using their own cash flow. They're not relying on an IPO to then take that cash and hand it over to Dell and EMC for a bunch of servers. So I think we think about this like a wave. It doesn't mean stock prices won't get ahead of themselves, it doesn't mean certain projects won't look stupid in hindsight. But if we just look at everything and say, oh it's 1999 all over again. I think like if we've done that for the last three years, we've missed a lot of gains and I think if we're doing that now, it's sort of a little bit childish. It's a little bit too Sesame street. This thing looks like that thing. I just don't think it's that simple this time. And I prefer to think of it as an investment wave rather than a complete speculative maniacal bubble.
- [15:58]
Scott Walker
Sure. It's. I mean it's look, PTSD has shelf life and people. We've done the same thing with 08. You know, some of the blow ups that we've had in the markets or certain things that have scared us, we have likened to, well is this the next 08, is this 07? You know, leading into that, that period he did, I thought was interesting, temper some of the euphoria around the idea of data centers in space. Big believer in it as you heard obviously with Andrew, but on the timing of it was a little more uncertain and maybe not as soon as some would like to believe that that sort of thing can happen. I can tell you at 3:00 clock on closing bell we'll have a conversation about what Mr. Bezos had to say about the future of work and the displacement fears around AI which he tried to dispel this morning, which I thought was quite interesting too. So we'll get into a little bit of that later. It just leads me to the semis because that's been the area where the euphoria has felt the richest. Right where the stocks have gone straight up and to the right and you've had a nice little rebound here. I'm not sure whether what you make of what Bezos had to say in general, but this is the first place that I thought of. Well, we need to discuss off of those comments because this is case study number one of how it's felt.
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Joe Terranova
So. So a couple of things. First of all to his strong point about the timeline for delivering data centers in space being longer than we anticipate. I think utilities and the industrial sector were breathing a sigh of relief in that regard because if you think about moving the location for data centers now into space, well, you have this significant buildout that's underway in supporting utilities and industrials. So I think there was some relief there. I think semiconductors have a much longer, a much more longer duration when you think about even moving the data centers into space. So the semiconductor story is really about the overall environment. Tonight you're going to hear from Nvidia and you said this really elegantly at the top of the show.
- [18:12]
Scott Walker
Hang on just two seconds. Just so people understand what the Lincoln International IPO just opened. That's why you heard a few bell rings on the floor that the management teams here and you heard from, I believe it was the CEO in the last hour with, with Carl and Sarah. So just keeping you, keeping us honest on what that was.
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Joe Terranova
You said this elegantly at the top of the show. Just about really. It's not the price reaction from Nvidia, but Nvidia is going to define the environment for us better than any other metric we've been afforded over the last 15, 20 years. I have people, people that, you know, come at me all the time and say, oh, you're bullish. Well, what about the case Shiller statistics? What about the M2 money supply? No, it's about the condition of the environment related to the semiconductor industry. And think about this for a second. The market cap of Nvidia is nearly $5.5 trillion. That's bigger than the health care sector, that's bigger than the financial sector. It is moving in such a way that it is such a force that it really is the economic bellwether more than any other industry in the world and the one that we have to watch. And right now that environment is giving you the green light.
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Scott Walker
Will you look, Hang on. Were you looking for more? If you were looking for more weakness, for example, in the, in, in Micron and some of the DRAM related names before you know, that space found its footing once again. It obviously hasn't taken long for, for DIP buyers to come in because they came in yesterday and they come in today.
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Joe Terranova
Look, we cited, we cited the DRAM etf. You had four consecutive days of inflows into the DRAM ETF the last two days. I have said I'm in the ready position. I'm aware of what's going on with yields. I want to be careful ahead of Nvidia's earnings because I think that could reverse all the sentiment related to this. The momentum factor, without question, it's in the hundredth percentile in terms of positioning relative to the last five years. Years that statistics comes from the desk of Goldman Sachs. So yes, the momentum factor needs a correction, but it's cyclical. I don't think it's secular. I don't think this is ending anytime soon.
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Steve Weiss
So some give you a different take. What Bezos is referring to, I talked to his family office every once in a while was more the private markets in, in 2000 all those private market stocks were public companies. So you saw mass a failure in terms of the semis. We're not going to see permanent losses of capital. These companies that are trading publicly aren't going away like the Internet stocks did. Okay. They're just going to suffer a valuation reset at some point in time. In terms of the private market like he's invested in one company. Figure AI. He put $100 million into it. Figure AI makes robots. The last round he invested at 2.5 billion billion valuation. Last round was at 30, 36 billion. They still don't have any real revenues. Right. So that's where you're going to see the damage done to people's pocketbooks. Fortunately, the broad, fortunately and unfortunately, you know, the broad investing public that we talked to doesn't play in the private markets except in vehicles that allow them access to space.
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Scott Walker
But they, they get the, they can get the wrong side of it, if you will for, you know, for. Let's just take OpenAI as an example. Okay. Just for the sake of this conversation, the valuation has. Is enormous.
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Steve Weiss
Enormous.
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Scott Walker
Right. The private market investors are the ones who are going to do extraordinarily well the fastest. As Brad Gerstner made the point here. In many respects companies like that have already ipod. Is the valuation a bubble? I don't know. Remains to be seen.
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Steve Weiss
None of us know.
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Scott Walker
They've made an extraordinary, extraordinary number of, of revenue expectations and, and promises, if you even want to go as far as that, on how they're going to deploy the capital that they believe that they're going to achieve on the comp still. Right?
- [22:10]
Steve Weiss
Right.
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Scott Walker
Is it going to happen? We don't know. So you could say that he is simply referring more to the private than the public. But one bleeds into the other because this company is going to go public at some point. The private investors will have done the best. The public investors, the folks, a lot of folks watching this show are going to be tempted to buy it. They could be the ones who are left holding the bag, so to speak. Because the greatest gains in the nearest term have already been achieved before the company even goes public.
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Steve Weiss
Yeah, and that's, I'm trying to keep in mind that the statistic is that 90% of all VC early stage companies fail. So he's talking about the 10% which far outstripped the losses in it for those investors. But here's what I'd say. I'd say that OpenAI has too many stakeholders at this point to fail. I see literally 10 AI software Software companies a week in the private markets. I'd say 10 of those are going to fail generally. Right? Nine. Well, because they can't possibly. We see the CapEx. They can't possibly, you know, raise that CapEx CapEx to compete because it's changed so quickly. So that's where you have to be
- [23:21]
Jim Laventhal
careful is also highly likely to be added to the indices very quickly. And that's going to be a major supportive factor.
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Scott Walker
I'll use that conversation not to, to discuss OpenAI directly and specifically, but just as an example of if you're talking about prospective bubbles in both private and public. Here's a company that has an incredibly large valuation, big promises and expectations to go with it and we'll see whether it lives up to all of that. Because the system, the whole AI trade is so heavily reliant on on it that it better and to the point
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Jim Laventhal
that is what our viewers are mainly, not all of them, but our average viewer is going to access this overall artificial intelligence trade right now through the semiconductors. And as much as all four of us are saying that we think that the fundamentals are intact and I will pound the table on that. I do want to point out a technical factor which is that the number of leveraged ETFs on the semiconductor space has absolutely exploded. The money flows into to these levered ETFs has also exploded and that may amplify the moves up and down. So when we're talking about how quickly money has flown back into these stocks after a two day pause, that is at least the part one just has to be aware in the public markets that those sort of technical factors can create volatility that sometimes overrides the fundamental basis which all four of us agree on.
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Scott Walker
All right, let's squeeze a break in. We're following the money. Speaking of IPOs, private companies about to go public space X record breaking IPO coming up. Leslie Picker standing by with more some new reporting and Josh Brown. He is back. Best stocks in the market list coming up as well.
- [25:09]
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Josh Brown
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- [26:39]
Scott Walker
on Space X's record breaking ipo, which is coming up Leslie Becker following the Money with the very latest on her new reporting. What do we know?
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Commercial Narrator
Hey Scott. Yeah, after months of speculation about which bank will serve as Space X's lead underwriter, Elon Musk's reusable rocket company chose Goldman Sachs. That's according to three sources close to the matter. I'm told that when the prospectus flips public as soon as today, it will show Goldman in the lead left spot on the COVID That is typically the role that speaks spearheads the ultimate share allocations, the pricing, the valuation. I'm told Morgan Stanley has also done a lot of work for this deal and will be second in the list of underwriters on the S1. Following those two will be bank of America, Citigroup and JP Morgan, those three in alphabetical order. Space X didn't return our request for comment, but invariably, Scott, this will be a record breaking ipo. I'm told the final offering size will be at least double Alibaba's, which raised $25 billion in 2014, the most ever for a U.S. listed issuance. Typically on large deals, banks will generate fees worth more than 1% of the offering size. In this case, that could be upwards of half a billion dollars.
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Scott Walker
SCOTT all right, Leslie, thank you. It's good to be good to be Goldman, sure to be Morgan Stanley's, Good
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Joe Terranova
to be possibly a billion $1 billion in fees, given the size of this item, IPO for Goldman Sachs.
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Scott Walker
But by the way, the Wall Street Journal just dropped an exclusive that OpenAI is preparing to file for an IPO very soon. So that we'll have more on that in a moment. But that's a really interesting thing for a variety of reasons. But as you think about this, I mean, that amount of fees on an on ipos this size, this is such a boon for these, for these firms and unprecedented, unprecedented.
- [28:24]
Steve Weiss
And when you go back to the Bezos conversation, he brought up that, yeah, he's considering taking in outside investors. It's not a coincidence. That interview was given Today when the S1 for Space X was expected to drop. It's hey, save some money for me because I'm coming public next, so so I think you'll see more of these. And what that does, it legitimizes the industry, doesn't need to be legitimized, but does for a lot of others. So I would expect to see Rocket Lab that also is leo like like blue origin mean low, low Earth orbit to work out.
- [28:57]
Scott Walker
So you said something very interesting, this, this idea of save some money for me as we have this race to go public from these companies who want to make sure that there's enough demand for the amount of supply that's going to be coming on the market in rapid fire. Yep, theoretically, with, you know, the one, you know, cerebrus that we just had, and then Space X is going to go next. It matters to these companies and to these founders and leadership teams who goes next. There was a belief in the market that that and we got Mackenzie Segallos, who's joining us now, so I'm going to bring her into the conversation. So let me ask you, Mac, it's good to have you. Thanks for, thanks for doing this for us. What do you make of this, this reporting that they're preparing to file for an IPO very soon? I think the conventional thought here was maybe not so soon. How would you read this?
- [29:53]
Mackenzie Segallos
Potentially as soon as Friday. According to the Wall Street Journal, they are citing people familiar with the matter. OpenAI not commenting on it at this point, but the time frame, as soon as Friday, potentially a few weeks from now. But really it comes down to the fact that they've just cleared this major legal, legal overhang in that case with Elon Musk. And that really opened the door to be able to pursue this. Apparently, according to the Wall Street Journal, they are working with bankers from Goldman Sachs and Morgan Stanley to prepare their prospectus. And that the Wall Street Journal also pointing to the fact that they could list as soon as September, which would put them ahead of that October timeline that Anthropic was reportedly looking at. And so in terms of how we look at this June, we're looking at a space X ipo. And then really the next question was, which of the Frontier Labs is going to be straight, like first out the gate? Because, you know, at a certain point you hit fatigue and you really want to make sure you have enough interest going into that. So it would be interesting to see if they try to front run Anthropic on this. Scott.
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Scott Walker
Yeah, well, Mac, thank you. I mean, that's up 5%. Yeah, yeah. But see, this is what I was alluding to, right? This idea that, that it matters to Sam Altman or Dario Mode, who goes next, right? There was, there was the idea that Anthropic was going to be next and that, you know, was OpenAI even going to get in calendar 26? Josh, I'd love your thoughts on this. I think there was, you know, I don't know if expectation is too strong of a word, but certainly a at least soft belief that we'd be maybe lucky to get OpenAI in 20, 20, 26 at anthropic was going to be next. They've sort of sucked a lot of the oxygen out of the room on, on optimism around these, these companies. Now, Open AI, I feel like, is trying to say, not so fast, Everybody.
- [31:45]
Josh Brown
Yeah, so OpenAI knows that it's very strong in consumer LLM use, but not as strong as anthropology. Tropic is on code. And this is sort of where the battleground has shifted, especially for enterprise customers. Court is also doing incredibly well with the consumer, but specifically talking about the code side of this, and I think what ends up happening is it's a little bit of jiu jitsu. It's like, no, we're not in a rush. We don't need to go public this year. We have plenty of capital. We've raised tons of capital. We have all sorts of revenue. Wait a minute, they're going to go public faster? Okay. Actually, maybe we need to beat them and go public first. So I'm not suggesting that will be the order in how these things transpire, but I have to tell you listening to Dario casually, in the midst of like a stage conversation, drop the fact that they're at a $30 billion annual run rate for revenue when that number was 9 billion as of the end of December, and then hearing the whispers from all the Silicon Valley Podcasts saying 30 is probably understating it. It looks more like 50 billion. That's a wake up call to everybody in the space that was thinking about going public, was maybe going to do another round. It said, it's like, all right, wait a minute now. The stakes are that much higher, the expectations are higher. We have to act like we actually want to win this race. We can't do this thing where we pretend we're not in any rush. There is urgency. We are going to do it. And I think there is some element of that. Have not having spoken to anybody there, but just my personal take.
- [33:23]
Steve Weiss
Can I give you one more point on this?
- [33:24]
Scott Walker
Yeah.
- [33:25]
Steve Weiss
I priced hundreds of deals with Valve, hundreds of deals when I was at Lehman and Solomon. And what the management wants to do is they want to be the first one out in generally their industry, because otherwise their performance is somewhat reliant upon how the IPOs did before them, number one, and number two, as the soaking up of capital. So in this world, you know, you're somewhat looking at Space X and OpenAI Anthropic as the same animal, a large tech company, because that's what Space X is, after all. That is going to have to perform well for that size so that the next one up can perform well.
- [34:06]
Scott Walker
So it's a critical. But there's also, it's. There's a unmistakable battle of ego, without a doubt, within this complex. Okay. And you can't miss that there. There have also been more recently, more questions about OpenAI than anthropic. You've had stories about maybe differences of, of opinion on, you know, when they should go public, whether they're meeting their targets or not. Between the CFO Sarah Fryer and Sam Altman is Sam Altman, is it more important to him to go faster, to go public faster than some of the others because he wants to get ahead of Anthropic? I feel like the, the personality story here matters too.
- [34:53]
Steve Weiss
It does, but say they were different banks. Say Anthropic was handled by Morgan Stanley and OpenAI was by Goldman. Right. If I'm the anthropic banker at Morgan Stanley, I want to get my S1 out there in the market the same time that Open Air is. If I feel I'm the better company. Right. Because I want people to put their money in my, you know, company, in my ipo, not theirs. So there's so many, you know, so many different things, thoughts and conversations going on behind the scenes. And also if you're an anthropic company, do you really want to be banked by Goldman and wonder where their allegiance is? Now they'll put up a wall and it'll be a separate banker generally on each and they'll say we're not going to and they have high integrity. So they have to give that kind of advice separately. But those, that's what goes on behind the scenes. So much more than who's actually the better company than it is with the strategy is I think there's three.
- [35:48]
Scott Walker
No, we don't. I'm sorry. I'm sorry. Angelica Peoples has our news update. Hi there.
- [35:53]
Mackenzie Segallos
Hey, Scott. Russian President Vladimir Putin has departed Beijing after his summit with Chinese leader Xi Jinping. During their meeting just days after President Trump's visit, Putin and Xi signed more than 40 cooperation agreements on the war in Iran. Xi stressed the need for ending hostilities, according to Chinese state media. Taiwan was also a central issue with Xi met with Trump, but the issue wasn't mentioned during talks with Putin. The Sandy fire in Simi Valley, California that broke out on Monday has grown to nearly 1700 acres and is 15% contained as of this morning. More than 17,000 people were under evacuation yesterday and at least one home has been destroyed. Schools in the area remain closed today and an emergency shelter is open for overnight stay. And James Murdoch, son of industry titan Rupert Murdoch, is acquiring roughly half of Vox Media. The deal includes Vox, Fox's podcast network and New York magazine. A separate company under a new name will form to take over the company's other brands, including Popsugar, Eater and the Verge box. CEO Jim Bankoff said that he expect the transaction to close in four to six weeks. Scott, back over to you.
- [37:04]
Scott Walker
Okay, Angelica, thank you. Angelica Peebles. Coming up next, Josh has his best stocks in the market.
- [37:08]
Josh Brown
We'll do it next.
- [37:15]
Commercial Narrator
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Josh Brown
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Joe Terranova
benefit to AHS members with select plans.
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Josh Brown
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- [39:00]
Scott Walker
All right, Josh Brown's best stocks in the market. I like that the spotlight is on cyber today because the stocks have rebounded back and they've really helped the software trade recover.
- [39:12]
Josh Brown
Yeah, I think this is one of the things that this show should be the most proud of. I think every single one of us knew how ludicrous the proposition of these companies being disrupted out of business by an employee at a Fortune 500 vibe coding their own security patches. Like we, we looked at that and we said, you know what, that's where it's too far. Like I'll understand. Salesforce, Adobe, blah blah blah. I get it. Cybersecurity, come on. It's the most ridiculous thing. And if you listen to the executives at these companies, companies, George Kurtz especially, they pounded the table. More AI means more cyber threats, not less. Therefore better for business. That's literally what these companies have just told us in their reports. Let's take fortnet ft beat on the top, beat on the bottom. Revenue growth 20% year over year. Earnings per share growth double that 40%. The Cybersecurity Networking segment of Fortinet, which is about 66% of all billings, was up 32% year over year, accelerating. It's a parabolic move now. So what you have to do to risk manage the position, you have to move from a 200 day to at least a 50 day. And for people who are a little bit tighter in their trading window we're talking about 10 day trailing. Stop. It's precarious. We're talking about it now. Not a great entry. A stock with an RSI between 80 and 90. So I'm telling people, if you missed this one, give it a minute, it'll be okay. Palo Alto, we wrote about this. Positively same column. 1550 customers on their platform spending 19% more this year than last year. Subscription business growing 33%. I would use the 10 day to 15 as my line in the sand if I'm riding the stock higher again, parabolic RSI almost 90. Last one, CrowdStrike. I own this one personally. It got into the low 300s during the SAS apocalypse a month and a half ago. It is now knocking on 650, probably on its way higher. Also Parabolic. But for the people who came along on CrowdStrike from our previous columns on the name, what we're saying is 540 to 550 is where this breakout started. I know it's very far from where the price is today, but that is the rational place to say, okay, maybe this, maybe this move is over. Maybe that's where I want to draw a little bit of a line in the sand. I'm not telling people run out and buy stocks with charts that look like this. We've talked about these stocks for almost a year in best stocks in the market. And I'm giving people that took place those trades and update.
- [42:01]
Scott Walker
Too bad your rules dictated that you had to get out of these names. That's one of the problems. You want to use the word problem?
- [42:09]
Joe Terranova
Yeah. I mean you could make an argument that you should rebalance on a monthly basis, but that's a little bit too much turnover for me. We rebalance on April 30. I took a look at Crowdstrike, which is really interesting just as the move started. Think about this. Crowdstrike today on a one year basis is up 45%. CrowdStrike strike, rather, since we rebalanced on April 30th is up 44 and a half percent.
- [42:32]
Scott Walker
That's my point.
- [42:33]
Joe Terranova
That's a staggering price appreciation.
- [42:36]
Scott Walker
That's my.
- [42:37]
Joe Terranova
Such a very short period of time,
- [42:38]
Scott Walker
you know, so I got, I got to go.
- [42:41]
Josh Brown
They haven't even reported yet.
- [42:43]
Joe Terranova
Yeah, even if you're going to rebalance on a monthly basis, you still wouldn't be able to capture that momentum. Move that fast enough. Just don't rebalance.
- [42:54]
Scott Walker
All right, Central is next. All right, senior markets commentator and overtime co anchor Michael Santoli is here. Post nine. So what do you think about this bounce back today?
- [43:06]
Michael Santoli
Interesting actually the cadence of the day in particular as well because initially it was let's continue yesterday's comeback in the semis and that was all that mattered this morning and it was taking the indexes higher. 10:30 yesterday, yesterday afternoon. Yesterday morning is when it started and then they start to rip. This morning we got a 10% peak to Trump intraday pullback in the semis and that was enough. Now over the course of the day after we got the reports about possible progress in Iran, the rest of the market starts to come back. The trade semis peak at that exact moment on a relative basis. So I think that gives you a little bit of a micro microcosm of how things might happen if the Straits opened up which is rotation back out of AI into other stuff. Bigger picture though, because of all the IPO chatter because of Nvidia coming tonight, it's just unthinkable that the semi centric AI trade is not going to be kept front and center until they get these deals done. It's got to be the second moment I said this before. I really don't think you're looking at kind of a culmination of that unless and until we get these deals out the door.
- [44:09]
Scott Walker
Yeah, and you had that buying yesterday in the microns and buying again. Follow through today. They're not going to let them go. They're going to.
- [44:16]
Michael Santoli
No, I mean it's going to be
- [44:17]
Scott Walker
right through the door.
- [44:18]
Michael Santoli
It's twitchy to get back in whether that's right or not. You know, as I said, these things overshoot all the time. See if that's happening.
- [44:24]
Scott Walker
All right, I'll see it. Three, that's Mike Santoli. Coming up, the state of retail. We have some big names reporting this week. We'll find out how the committee's position next. Let's see TJX, thank you. There it is. 6% best day since August of 24. They raised their full year outlook. Their earnings were up Joe, 29%. You own the stock.
- [44:46]
Joe Terranova
Two things matter in retail right now. It's the cost conscious consumer and the ability to actually benefit from the inflationary pressures because you have scale. Walmart and Costco fit in that category. And then we heard from TJX today which was challenging. The 200 day moving average has had a significant reversal back higher and appears as though it wants to go to the April 9th all time high at 165. Why? Because they are serving the cost conscious consumer with TJ Maxx and Marshalls okay,
- [45:15]
Scott Walker
show me Ross, please. Because that stock thought was down. No, it's up. I'm sorry. It's up 3%. They report tomorrow. Yeah, same. It's same now.
- [45:25]
Joe Terranova
Same issue, same narrative. Benefiting, I believe, from what we heard from TJ X this morning as well. I like TJX a little bit more than Ross. We've maintained position in TJX since January of 2020.
- [45:37]
Scott Walker
Yeah, my bad. I was. I was thinking something else. Wal Mart real quick, because they're tomorrow too.
- [45:41]
Joe Terranova
At. At scale, it's similar to what Costco has been delivering. Inflationary pressures. More people actually go to Wal Mart. They capture market share.
- [45:49]
Scott Walker
All right, we'll do finals after this break. All right, closing bell. Doug Clinton, Bryn Talkington, Stacey Raskin, Malcolm Etheridge, Jeff DeGraff Young, you mob, Brian Levitt, Alex Cantowitz and more. Because we're going to follow that reporting about the open air ipo. Big news. That's your final trades. Josh, what do you have?
- [46:13]
Josh Brown
Staying long in video into the print once again. Let's see what happens.
- [46:17]
Scott Walker
Yeah, we will. We'll lead you right into that, too. On the bell. Farmer Jim in the Atari tie. Go ahead.
- [46:24]
Jim Laventhal
Delta Airlines. Someday this war is going to end.
- [46:27]
Scott Walker
All right, Mr. Caddyshack, look, I'm not
- [46:29]
Steve Weiss
going to cry about, you know, there's a pill for allergies to fashion. I'm not going to cry about this being off the highs. But news last two days, I think you have to own it.
- [46:37]
Joe Terranova
All right, Goldman Sachs.
- [46:38]
Scott Walker
All right. With the news earlier, too. All right, I'll see you at 3.
- [46:42]
Commercial Narrator
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 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 halftimereportdisclaimer@Strayer University, we help students like you go from will I To why not? For over 130 years, we've been innovating higher education to make it more affordable, accessible and attainable so you can reach your goals. Go from thinking can I? To yes, I can and keep striving. Visit Strayer. Edu to learn more. Strayer University is certified to operate in Virginia by Chev and its many campuses, including at 2121 15th Street north in Arlington, Virginia.