← Halftime Report
Halftime Report
The Nvidia Comeback 1/6/25
00:49:22
Scott Wapner and the Investment Committee debate Nvidia’s comeback as the stock surges to start the new year. Plus, the desk making some major moves in their portfolios, they reveal them all. Investment Committee Disclosures
Loading summary
Transcript127 lines
- [00:01]
Edward Jones
What does it mean to be rich? Maybe it's less about reaching a magic number and more about discovering the magic in life. At Edward Jones, our dedicated financial advisors are the people you can count on for financial strategies that help support a life you love. Because the key to being rich is knowing what counts. Learn more about our comprehensive approach to planning@edwardjones.com findyourrich Edward Jones member SIPC and now a next level moment from ATT Business.
- [00:34]
Scott Wapner
Say you've sent out a gigantic shipment.
- [00:36]
Edward Jones
Of pillows and they need to be.
- [00:37]
Scott Wapner
There in time for International Sleep day.
- [00:39]
Edward Jones
You've got AT and T5G so you're fully confident. But the vendor isn't responding.
- [00:44]
Scott Wapner
And International Sleep Day is tomorrow.
- [00:46]
Edward Jones
Luckily, AT&T 5G lets you deal with any issues with ease. So the pillows will get delivered and.
- [00:51]
Scott Wapner
Everyone can sleep soundly, especially you.
- [00:53]
Edward Jones
ATT 5G requires a compatible plan and device.
- [00:56]
Jim Laventhal
5G is not available everywhere.
- [00:57]
Edward Jones
See att.com 5g4u for details.
- [01:02]
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. All right, Carl, thanks so much. Welcome to Halftime Report. I'm Scott Wapner. Front and center this hour, the Nvidia comeback. That stock surging to start this new year. Now all eyes on Vegas where CEO Jensen Huang speaks tonight at ces. We're going to trade it with the investment committee committee. Joining me for the hour today, Joe Terranova, Steve Weiss, Jim Laventhal and Bryn talking to. Good to see everybody. We will check the markets. It's green across the board. Tech is leading. Nvidia is a big reason why today stock up near 5%. Joe, one of the biggest questions in the market has been centering around Nvidia whether it is going to get jump started once again. Now of late it has and Jensen Huang usually delivers and we'll see if he does. Tonight out in Vegas. 6:30 Eastern Time is the big keynote that we are all watching. Everybody on the show today by the way owns this stock.
- [02:05]
Joe Terranova
Good.
- [02:05]
Bryn Talkington
I'm glad that they do because it's going to continue to go higher. It's going to take out the all time high at 1:5289. That's certainly where it's heading. The news that we heard last evening from Foxconn surrounding revenue growth being stronger than expected that obviously speaks towards strong demand and data centers and it speaks towards a ramp up in Blackwell. So I expect nothing Short of a very optimistic address this evening from Jensen Huang, I think that will power the stock higher. And I think what's good about what we've witnessed here today is that we're seeing other semiconductor names finally participate. Because let's remember, they fell asleep except for Broadcom and Nvidia. They sat out the end of 2024 on the sidelines and now they've come back once again.
- [02:51]
Scott Wapner
Well, Bryn, they're strong because of Foxconn today and those record revenues. So we are getting a big day from the chips. If you look more recently though, if we're talking about, you know, what Nvidia is capable of doing in this early part of the new year, the way that it finished 24 would leave a lot to be desired. I mean, certainly when you put it next to a Broadcom, for example, if you say in the last two months, Nvidia up 4% over that period of time, Broadcom up 31 now of late, it's obviously been a different story. As Joe was talking about, Nvidia is poised to close above 150 for the first time since November. It's erased the 13% drawdown that it had in November and December. And oh, by the way, for a story that we talk so much about market cap wise, with Nvidia and Apple. And Apple on the doorstep of 4 trillion. Well, don't look now, but Nvidia is right on the heels once again of Apple when it comes to market cap.
- [03:52]
Steve Weiss
Yeah, well, I mean if you stretch your chart out and go back just one year, Nvidia is up 200% and Broadcom's up 122. So I think just that moment in time, the last six months, yeah, it hasn't done anything. But if you look back just a year, it's up to a two bagger. And so I think that, you know, what you're seeing is you continue to see both Broadcom and Nvidia really attract so much investor capital. I think that's going to continue, I think within the mag 7 I was saying this last week, the one name that there's clear line of sight for earnings this year is Nvidia. I mean you can say that with, for Broadcom as well. But we're talking about Nvidia. And I think where people forget is we call Nvidia Chip Company. This is a technology ecosystem. They do hardware, they do software, they do Infiniband. And so it's like the whole collective within this ecosystem. And then you have, you know, Microsoft coming out last week doing an $80 billion spending. And then you have Jensen tonight. I just think the stars are lining up where you had a company with digestion the last six months. But I think the numbers are going to be strong. And so I think the people that got shaken out of the name because it didn't do anything for a few months are probably going to regret that.
- [05:02]
Scott Wapner
Not much new Weiss when you talk about like this kind of an event. Jensen speaking at ces, the keynote bank of America has taken a look back at what normally happens to the stock when he speaks at ces. They call it a quote, monstrous Monday. So it was up 6.4% last year going into the speech. It rallied on Tuesday and Wednesday following. And here we find ourselves once again with all these questions about Nvidia, whether it can continue to live up to the tremendous hype that's around the name. Does he remind us tonight that oh yes it can and this is a place you want to continue to be and be big?
- [05:37]
Joe Terranova
Yeah. So the answer is yes, I think he can. And that's been the pattern. No reason to believe that it won't happen. Look, the canary in the coal mine is competition coming. But that's not today. So while we're seeing massive spend on building competitive chip so that Microsoft, Apple matter, you name it, not, not entirely dependent on video and eventually that will bring down costs, they're not going to stop this iteration of the chip. But that's tomorrow's news. And by when I say tomorrow, I mean much longer than tomorrow. Maybe it's next year, maybe the year after. Because in addition to developing the chip, you also have to have capacity and that capacity would have to come from Taiwan semi and they don't have the capacity. So there's no reason not to believe with the growth in AI, which again is the fastest adopted technology in the history of the world, that that growth won't continue. So you had a nice reset in video and I do think it continue to work. And basically I think all tech that worked last year can work this year.
- [06:42]
Scott Wapner
Well, especially Jimmy, when you, when you have expectations, for example of you know, CNBC's own reporting of Microsoft expected to spend 80 billion on data centers in fiscal 25. All of the hyperscalers are spending tripping over themselves to spend as much as they can on data center to buy these chips the likes of which Nvidia sells, that doesn't look to be slowing anytime soon to any meaningful degree. And even if it does slow, you're still slowing from such dramatically high Levels that by the time it filters down to all of the other competitors that are alleged to exist and will theoretically at some point threaten the dominance of Nvidia, at least to some degree. That seems to be roads off, ways off.
- [07:25]
Jim Laventhal
I completely agree, Scott. You know, this coming year, this coming fiscal year, it looks like Nvidia, at least if you trust the analyst as compiled by FactSet, is going to earn $107 billion in net income. So just to put that into perspective, that's a Micron. That's what they're going to earn this year. Now we can play the numbers game all along, but what you're saying is absolutely right. The growth rate shows no sign of slowing. The estimates are predicting multi year growth of 42%. I don't think that will last, that you'll get 42% over the next three years, but at a 42% growth rate. Are you with us? You need to take a break. You good?
- [07:57]
Scott Wapner
He's getting a phone call coming in.
- [07:59]
Jim Laventhal
Yeah, it's Jensen Wong. Anyway, look, the PEG ratio on Nvidia is 0.8. So people who are looking at this from a valuation perspective and saying I don't want to own it at 32 times forward earnings, you're really missing the picture that that is actually cheap relative to the growth rate that's there. I also want to point out, Scott, because you brought up the hyperscalers, it's absolutely appropriate. 80 billion is a lot of money and that's just Microsoft. Michael Semblis did this analysis last week of all of the incremental spend that's going into data centers right now. In order for the hyperscalers to get their traditional margins on that, they're going to have to increase revenue 400 to hundred billion. And the top five have about 100 billion right now in revenues from those data centers. So that's, I think what we're seeing here is that in the immediate sense in video is the beneficiary of AI, not the hyperscalers. That will come later.
- [08:47]
Scott Wapner
Are we done with the chip worries at this point? I mean we had such a rollover in that space, especially relative to software. But given what Foxconn had to say, we can show again the performance today of the run on effect of what Foxconn. There it is. Right. Look at that. That's today. Micron's up near 12%. ASML up 8.5%. And you see Teradyne. But it's the chip material names Applied Materials, Lam kla. You have Applied and KLA so to.
- [09:17]
Bryn Talkington
Answer your question, you can't really rely on fundamentals because we don't have earnings just yet for a lot of these tertiary semiconductor names.
- [09:25]
Scott Wapner
So what do you rely on?
- [09:26]
Bryn Talkington
I think you're relying on technical forces. And I really believe this has been today and Friday, a seminal moment for the Nasdaq, a seminal moment for the semiconductors. If you look at the charts and pull everything back, we had a breakdown after the Federal reserve meeting on December 18, a breakdown at all risk assets. And risk assets now have risen right back towards that level, whether it's the, the Nasdaq, whether it's some of the Mag 7, the S& P, or Bitcoin itself. So we've come right back once again and I think the answer to your question is yes, I do think we've, we've alleviated some of the concerns surrounding the semiconductor universe and a lot of it is based on the technical forces. Two names I would point out for the viewers. Cadence Designs. That has had a very strong snapback. That's been one of my favorite names for years. We've held it in the ETF for a large majority of the four years that the ETF has been in existence. We don't have it now. Very strong momentum. Then you mentioned Teradyne. I know you like Tearadyne, Steve. That's a semi equipment name. A very low risk trade lines up right here. You could be long versus 125. You have a nice gap higher. I think you're going to see this name continue to build.
- [10:34]
Joe Terranova
I have a slightly different take on that. So all semiconductors not created equal. Micron just reported not that long ago and here we're seeing it up 12% based upon this news. The mobile phone, right. Cell phones, they're not back yet. And it remains to be seen whether they will be back. We're still in a down period for them. So ones that are highly dependent on cell phones, on autos, for example. I don't think that's where you necessarily want to be right now. Today. The market's not discriminating. And frankly, 10 years ago, before indices were almost 60% of every company, it would have mattered more. I still think pick and choose. You'll get better performance by being select.
- [11:16]
Scott Wapner
But I mean, are you, are you saying that you don't want to be in the Qualcomms of the world? Because you know, Stacey Raskin over at Bernstein has that among his top picks today, along with the, along with the obvious of Nvidia and Broadcom. And even he Says while it's been admittedly a bit disappointing, they're sticking with it because they, they believe in the content narrative of AI, the adjacency story to that inexpensive valuation, excluding the Apple overhang, which they think is close to being resolved anyway. But you have that stock.
- [11:49]
Jim Laventhal
Yeah. Look, the question here is enough bad news priced into the stock at roughly 14 times this year's earnings there on a September 30th fiscal year. So already into the fiscal year, I would say at 14 times it is. Now, you've got to understand what is the plus and what is the negative of the stock. The plus is not smartphones. I mean, it's nice if the smartphone cycle picks up, but the plus here is the diversification in Qualcomm away from smartphones into the Internet of Things. That's, by the way, is why it's up today, is they're announcing some applications for PCs and tablets as well as into automotive, which, Steve, you're right, it has been punk in automotive, but it is showing signs of picking up. You're seeing sales of autos pick up, as they should. We're well underserved as far as demand goes for the. Since the pandemic. So there should be a pickup in automotive. The real negative on Qualcomm, if you don't know what it is, in my opinion, it's not cell phones, it's the China aspect. It's the fact that China could turn Qualcomm into a pawn in the trade wars. I do think that's priced in at a 14 times Malaysia multiple and a 2.1% dividend.
- [12:49]
Scott Wapner
Yeah, I want to hit some other. I want to hit some other stock because there are a few calls today that call into question, if you will, the direction of some very popular names, Palantir among them. Bryn, you told us last week that you were trimming this stock. Joe, I know you own it too, but I want to get Bryn's take first. It was initiated today. Underweight at Morgan Stanley, they're basically looking for a plus 20% decline. Yes, they acknowledge the strong execution. Yes, they acknowledge the momentum. We've all seen it. We all know what the stock has done. They say it's more than priced in, though. At the current premium, their $60 is the price target. Excuse me. As I said, underweight.
- [13:33]
Steve Weiss
Yeah, I mean, what, $175 billion market cap? They'll do 2.5 billion in sales, maybe 2.6 billion in sales this year. So you can do the math. It's a very, very Expensive stock. And so I think that for all of the great things they've done and will continue to do, not only on the government side but on the corporate side, I just think valuations do matter. When you have just such a parabolic run that we had in 2024, it would just make sense for it to sell off. It just can't go. Continue to go nosebleed. So I reduced just because I thought that was a smart thing to do. It had run so much. And I just do think when they come out with numbers, unless they're just so out of anyone's expectations, I think this stock trades down going into earnings this quarter.
- [14:20]
Scott Wapner
Joe, how do we, how do we look at this?
- [14:22]
Bryn Talkington
You know, if you don't own it, you don't reach for it. I've said that over the last several weeks. I don't believe you reach for it right here. One of the things you could look at is just the dramatic difference between current price and the moving averages. The 200 day moving averages is at 200 day moving averages at 37.
- [14:37]
Scott Wapner
The stock right now is 76 stocks up almost 400%.
- [14:41]
Bryn Talkington
But you respect that difference. That gives you a little bit of an insight of how stretched it is. Doesn't mean I dislike the name. We own the name. We'll continue to own the name. But if you don't own the name, I don't want you reaching for it.
- [14:53]
Scott Wapner
Right. Where do you then decide that the dip is worth buying at what kind of price? If you say you gave what the moving average is. When do I want to buy a dip?
- [15:02]
Bryn Talkington
Somewhere in the upper 50s to the low 60s. I think that's the right spot. 100 day moving average is at 50. I think in that area. There was also a breakout there. I think that's generally the spot. I'd like to.
- [15:12]
Scott Wapner
Two more names on my mind. Salesforce, Palo Alto. Both were downgraded, by the way, to sell today, which is Rare at Guggenheim. CRM. Contrary to the positive investment narrative around Gen AI's impact on traditional applications, we believe the category may be the most at risk in some cases. We don't think CRM is an exception. Let's hit that one first. You have that, Joe.
- [15:34]
Bryn Talkington
I have that. I disagree with this call. I think CRM has done an excellent job in integrating a lot of the acquisitions over the last several years. They've also been very disciplined in terms of spending money. Their. Their spend has not been what it has been in prior years. And that's allowing them the opportunity to elevate their AI platforms and have it be realized. I disagree with this call. Palo Alto.
- [15:57]
Scott Wapner
I agree with that. You agree with that call?
- [15:58]
Bryn Talkington
I agree with that.
- [15:59]
Scott Wapner
Palo Alto is next part of it. They say there's been from their own field checks, but maybe you can just look at the market, you don't need a field check and say that there's been a subtle softening in momentum over the past year. What do you think about that? That's a long period of time that they suggest that momentum has been softening.
- [16:16]
Bryn Talkington
Without question, they're correct. Look, Palo Alto has talked a lot about platform and in that regard the question is how much margin are they giving up? Are they giving away a lot of that for free? So that's the concern that you have. I think it's reflected in the relative underperformance that this stock has versus Fortinet and CrowdStrike. You've got the cybersecurity theme for all three of these names. And unfortunately for Palo Alto, it seems as though they've had several missteps in earnings reports over the last 18 months. And in addition to that, just in terms of price performance, it's certainly underperforming what we're seeing from CrowdStrike and Fortinet.
- [16:58]
Scott Wapner
Now here we spend almost 16 minutes talking about all things related to tech, whether it's in video or these adjacent names through AI spending, in some cases software names, in some cases names that really ran a lot over the last 12 months. Which leads me to want to discuss the idea of the market broadening out in the first quarter, which Raymond James continues to make the case that it will do that if yields are able to come down. I show you the 10 year right now it was what, 462, 463, something like that. There it is at 461. Back in September it was like 360 or 361. So you know about Brin, the big rise that we've seen in yields as we try and figure out what this equity market's going to return in 2025 after a couple back to back amazing years. Is it all about yields? Is that what matters most?
- [17:54]
Steve Weiss
I think yields are a component. If yields at the long part of the yield curve settles in around here, I think we're good. If something were to and I think, I think yields are going to be really more around the administration and what happens with Doge, what happens in Congress, etc. But I think about the market breadth. What's important to know is like for Q4, we're looking for the MAG7 to grow earnings in aggregate around 23% for the Q4. For the other 493 the market's looking at 8%. But what's important about that is you had really anemic growth with the other 493. And in Q3 it was about 1% year over year. And so the other 493 are expected to grow 8% year over year in Q4 and then continue to go higher around 10 to 12% for the year. So if we actually get that to occur, you're definitely going to see a broadening out where they can both do well. Where you can still have the magic seven are growing at 20% which in video dominates that number by the way. But the, but the earnings growth in the other 497, I'm looking for that to come through because we obviously own RSP the equal weight where you would get a broadening out. And I don't think yields really matter to RSP as large cap. It's really that small cap name where you're going to get the yields sloshing around the small cap etf.
- [19:17]
Scott Wapner
The thing is, you know Jimmy Morgan Stanley today says the 10 years the most important variable to watch in 2025 that as rate sensitive as equities have proven to be, certainly when you push through 450 as we have, they say in order to see the return of a good is good backdrop where hotter economic data drives upsides in stocks even as rates rise, we likely need to see more convincing evidence that animal spirits are inflecting and translating into stronger economic activity. In other words, you better have rates going up for for the real right reason that economic activity continues to go up because animal spirits have returned in such a dramatic way in anticipation of what the new administration is going to mean for the economy and then the markets absent of that, you have a problem. So in and of itself the rise in yields is not a deal killer. It just has to be for really the right reason.
- [20:13]
Jim Laventhal
That's exactly right. I mean the wrong reason is because inflation is picking up. Now we've seen in the first quarter of last year there was a pickup inflation inflation that turned out to be short lived. December's inflation numbers gave everybody a little bit of a reason for pause. But let's just see how inflation goes through the first quarter. If it turns out, and I'll dare to use the word that it's transitory and the Fed can cut another couple of times this year. I think that the 10 year yield will come down with that. But that's going to take some time to play out. That's the wrong reason for yields to be high. Meaning that if inflation is higher than we expected. On the other hand, if it's what you were just alluding to, Scott, and I'm going to take animal spirits and I'm going going to equate that to a stronger than trend economy. If we can continue to grow real GDP at 3%, if we can continue to have initial jobless claims below 225,000 a week, those are big ifs. But if we get that, and that's the reason you're at 4.6% on the 10 year, I think the rest of the market can rally because those are the conditions in which earnings will follow the ten year.
- [21:11]
Scott Wapner
All right, so the other issue is going to be tariffs. Clearly unknowns around that. Washington Post out with a report today that says universal tariffs are coming, but only on critical industries, at least for the start. Not as bad as initially feared. The president elect refutes that on a social post. I don't really want to play that game of this, that or the other. We can just talk about the stocks that are moving and react to that. I think it's more productive. General Motors, I do that because I want to talk about that. Stocks up more than 4% today. Why on this report?
- [21:44]
Jim Laventhal
Yeah.
- [21:44]
Scott Wapner
Leads me to think, well, did you sell it too soon?
- [21:47]
Jim Laventhal
Not by the numbers. I sold it at 57. But let's dance with what you're talking about. Should we get back into gm? Because that's, look, I want to get back into gm. You know, I like the company. I liked it a lot.
- [21:56]
Scott Wapner
Should you ever have gotten out of something based on an initial. Well, tariffs are coming. Oh, I got to sell. Well, which is what you did.
- [22:03]
Jim Laventhal
Yeah. And I think the answer is yes. But I had experience, remember, I'd been in General Motors through the first Trump administration.
- [22:08]
Scott Wapner
You had ptsd.
- [22:10]
Jim Laventhal
Indeed I did, Scott. I mean, no question about it. Look, supply chains for the automotive sector run throughout the globe. And I think we can agree that tariffs are coming in one way or the other. Maybe it's not going to be 25% on Mexico, but GM gets a lot of its production from Mexico and its operating margins aren't 25%. So if you put that on, it's basically going to eat into its profit. Now, I want to, I want to say, you know, I want to get back into General Motors. What I'm going to do here is I'm going to wait, number one, until the administration is in place. Number two, see what the tariffs are. And importantly, I want to see the fourth quarter earnings results because GM may or may not have kitchen sinked it this quarter. We know they took a big write down in China. We know they also took a big write down or will be taking a big write down on cruise, which they're exiting. Let's just see what the trajectory looks like now that the slate is clean on those two things. I'm going to wait and see before I get back in.
- [23:02]
Scott Wapner
All right. Another Trump trade, if you will. Bitcoin. It's at 100k again. We can show that. I wanted to do that. Because you bought more.
- [23:10]
Joe Terranova
I did.
- [23:11]
Scott Wapner
Of the ibit.
- [23:12]
Joe Terranova
Yep.
- [23:13]
Scott Wapner
So you're still on this. You're still playing for a continued run as some have this thing going to 200, 250k this year.
- [23:20]
Joe Terranova
Yeah, for me it's a directional trade. I don't have a single point. I don't know how you can say the intrinsic value of Bitcoin is worth 200, 250 or, or 50 right now. It's purely momentum.
- [23:32]
Scott Wapner
Yeah, but you don't even care. You don't even, you don't even think that it's necessarily worth 101, 100 on an intrinsic basis.
- [23:37]
Joe Terranova
I don't.
- [23:38]
Scott Wapner
You're just, you've been on a momentum trade.
- [23:40]
Joe Terranova
Exactly, exactly.
- [23:42]
Scott Wapner
Do you think you'll be on that for the foreseeable future?
- [23:44]
Joe Terranova
Yes, I do, I do, which is why I keep adding it. It's a very big position. It's not a speculative trade at this point. So look, until we know more, you've got to believe what the administration's telling us, whether it's tariffs or whether it's bitcoin. And guess what? They put in very bitcoin friendly people, including the new head of the sec. So why would I be there? The volatility is to be expected that we have. We talked about potential loss of momentum. I wouldn't call that a loss of momentum in it, in an, in an entity, an asset class, which it is, that's known for volatility. So I take the opportunity below 100, which I truly think is now support as opposed to resistance. I've been saying that to buy more. So I choose to ibit, which really reflects the, the move in bitcoin and it's just much more liquid in case I change my mind.
- [24:37]
Scott Wapner
I mean, Brian, you really have had a sea change in terms of acceptance broadly, even among financial institutions. Which are now offering it to, you know, their wealth, clients, support on Capitol Hill. We know from what we said and what we expect is only going to be greater and more open.
- [24:57]
Steve Weiss
Yeah, I mean, I think BlackRock really BlackRock with Larry Fink coming out with I bet was just a game changer. And you know the marketing pieces they do around that, the options that now you can sell calls. I'm a seller of calls. They're not our buyer of calls. I think the institutionalization from an asset allocation perspective, I bet most institutions still own zero. And I think over the next three, five years that's going to change. And so I think you're going to get continued broad adoption from more traditional asset allocators than you have ever before. So it looks like there's going to be a bid under this. But don't forget it's going to be volatile. There'll be something that occurs. Right. I don't, I don't think this bitcoin strategic reserve is reality. They can't do it legally. You'd have to have Congress. Jay Powell said he's not for it. So I just think that's more of a narrative right now than a reality. That being said, that institutional adoption, especially from around I bet, I think is the real deal.
- [25:55]
Scott Wapner
Well, I mean, you could make the argument that this whole thing is about a narrative.
- [25:59]
Joe Terranova
It's all about the narrative in my view. But, and I agree with Britain, this is not going to be a reserve currency. But let's not also forget what the halvings that occur, you cut back the capacity it's available to invest in. So it's just natural that it's going to lift it higher.
- [26:16]
Scott Wapner
Okay, we'll take a quick break and then we will talk about a big pop for one stock that Bryn just bought more of last week. We got the name for you coming up. And later, new trades for the new year. Bill Baruch making a bunch of moves to kick off this year. He's going to join us with a trade update coming up as well.
- [26:39]
Edward Jones
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. Weekdays at 5am Be first on world markets. First to the global business conversation. Get a jump on the investing day.
- [27:02]
Frank Holland
Every day with Frank Holland.
- [27:04]
Edward Jones
Success starts early. Worldwide exchange, 5am Eastern. CNBC.
- [27:12]
Scott Wapner
We're back. Committee names on the move include Uber $1.5 billion accelerated BuyB target raise in 96. Reiterated a top 2025 pick at B of A Brin. You bought more of this last week. Also added to Wedbush's best ideas list. This thing has not traded all that well to finish 25, 24 are better things ahead?
- [27:36]
Steve Weiss
Yeah, I think for sure. So I talked about last week the stock buyback that they had just barely gotten started. They announced it in February of 2024. And so they say, they said in their note, our stock is undervalued relative to the strength in our business. And so I have continued to reiterate, I think this long Tesla, short, Uber or even vice versa earlier when that iRobot day day came out. It doesn't hold any water. They're two distinct businesses. Robotaxis aren't coming out for a long time and Uber continues to get stronger and stronger. You know, I buy good CEOs, buy great CEOs. You know, Dar is one of the best in the business. So I still think it's cheap. And the stock could easily have a nine handle by the end of the year.
- [28:18]
Scott Wapner
Wow, Joe.
- [28:19]
Bryn Talkington
No, I think it can also look. I think a lot of people, when they see the buyback and Brian is correct that they did reference the value of the business relative to what they believe it should be. But I think when you think about a buyback, people say, okay, they think their stock is cheap. I think the way you have to look at this buy buyback as they are confident about the mobility business and the mobility business deriving and generating free cash flow. And I think that's been the challenge and the question for some investors over the last year is will you see the acceleration in the free cash flow? Because you see it at times and then at other times it seems to disappear. So I think this gives you confidence. I was a seller personally of the stock in the low 70s, not buying it back here. I'm going to allow this to breathe a little bit, but I would look to get back in. Personally, I have the comfort of knowing it's in the ETF as well.
- [29:12]
Scott Wapner
So I'm on a nice day today. Weiss, what do you want to say on this? Yeah, we made a big call. I mean, could have a nine handle.
- [29:18]
Joe Terranova
Yeah. So I've actually been looking at it. I sold it about this level, you know, a while ago. Here's what I like about it. I do think that the work from home experiment is thinning out. So as more people go back to the office will be more Ubers. Going to meetings, etc. In the cities, number one. However, what I've got to balance that against, and this is what I'm thinking through, is that Uber Eats is a commodity business. There are so many at the trough here that are looking to, you know, for the home delivery of food, etc. And I don't know, I got to do some work on figuring out how important that is because the restaurants are rebelling against it. They are saying, you've got to cut prices. We can't afford this. So that's the issue.
- [30:03]
Scott Wapner
Likely to buy it Jimmy, Disney's up one and a quarter percent today merging Hulu Plus Live into Fubu Fubo. Excuse me, that stock was up a ton. But there's Disney with a nice gain today. What do you think about this as you hold this stock?
- [30:15]
Jim Laventhal
I feel like the narrative has changed here. I think it changed at the last earnings report and I think if they confirmed the growth rate that they put out at the last earnings report on the next earnings report, it really will pick up speed. Now, what are, what is that earnings growth going to come from? Primarily from the experiences from the theme parks and the cruise businesses into which Disney is leaning massively. Additionally, though, let's not forget the streaming business, which has a high profit margin. It is now profitable. I think there's a lot of room for the estimates on that to go higher. There's still some questions out there. What will the succession plan look like? I'll bet in the first half of this year we get that cleaned up, that we get an announcement of who it is and that we get this ready to turn over in the next at the beginning of the next year. And then of course, there is still a payment to be made, most likely from Disney to Comcast for the Hulu segment that it's buying from Comcast. They've already put down almost $9 billion. If they have to put another three, $4 billion, that's actually going to be a drop in the bucket compared to what the profitability of that business should be.
- [31:13]
Scott Wapner
Weiss Vertiv bought more on Friday. I did you continue to make the case on this program. Why you like the stock? Morgan Stanley is too. They initiated today overweight. 150 is the price target. They say it's too attractive to ignore.
- [31:27]
Joe Terranova
Yeah, look, the stock had traded into the 140s and then settled back down. I think may have touched 110, 111. And that was because fears of like, why are they only growing at 90% the gal ridiculous. That is 90%. What we're seeing Capex in data centers grow at a multiple of that. And the answer is you've got to wait for the structure to be up so there's a natural lag before you put the power and the energy solutions into the data centers. So to me, this is a pure play, the purest play in the market for data centers, aside from, you know, a pure data center play, which is a reit. So this will give the port. So I like this quite a bit, I think, goes through the old highs which would get it to 150 and keeps going from there.
- [32:12]
Scott Wapner
Big winner today for sure.
- [32:13]
Joe Terranova
Yeah.
- [32:13]
Scott Wapner
Contessa Brewer has the headlines for us. Hi, Contessa.
- [32:16]
Steve Weiss
Hi there, Scott. The Justice Department said today a lead prosecutor who worked on Donald Trump's criminal case over classified documents has just retired from the department. Jay Bratt played a crucial role in the investigation, helping to secure an indictment and led the prosecution at several court hearings before Judge Eileen Cannon. At a meeting with South Korea's acting president earlier today, Secretary of State Antony Blinken said the U.S. is confident in South Korea's handling of the political crisis surrounding President Yoon's brief martial law declaration. South Korean investigators have requested an extension of an arrest warrant of impeached President Yoon. He's under investigation for possible insurrection. And Costco is recalling its cold and flu medication because it could be contaminated with foreign material. The recall affects the Kirkland signature severe cold and flu plus congestion medication purchased between October and November of last year. So far, we've not seen any reports that the medication itself has made anyone sick. Scott, that's the news.
- [33:17]
Scott Wapner
All right, Contesta, appreciate that. Thank you. Contessa Brewer. Straight ahead, the explosion of single stock ETFs. Bob Pizzani looking at that big money today and the big risks for one of the hottest trends in the ETF market. We're back after this.
- [33:32]
Edward Jones
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 courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella eduardo. Weekdays at 5am Be first on world markets, first to the global business conversation. Get a jump on the investing day.
- [33:56]
Frank Holland
Every day with Frank Holland.
- [33:58]
Edward Jones
Success starts early. Worldwide exchange, 5:00am Eastern, CNBC.
- [34:04]
Scott Wapner
All right, we are back. Bob Pisani has today's ETF Edge. What do you got for us?
- [34:08]
Frank Holland
Bob, Good to see you again, Scott. Retail traders worldwide are turning to ETFs to get access to what they want the most that is US tech stocks. I'm talking Nvidia, Palantir, Coinbase, Tesla, MicroStrategy. Since the SEC approved the first single stock ETFs in July 2022, this category has exploded. There's 60 single stock ETFs now trading in the US combined assets $18 billion. Mostly long versions that trade with two times leverage. So let's talk with Will Ryan, founder and CEO of Granite Shares. He runs the whole thing. The largest single suite of single stock ETFs. Your Nvidia 2X long ETF. This is the big leader. $6 billion in assets. Congrats. Who owns, tell us just who is owning these and what are they doing with them? The key is the word just mentioned worldwide. This has become a worldwide phenomena of everybody from retail traders or retail investors through to the largest, most sophisticated hedge funds, proprietary trading firms and institutions in the world. So then we think about this. It's much more about global and global audience. Well, most of the money going into ETFs, I mean we had record year last year. It still goes into plain vanilla index funds. But there is this increasing retail component I keep seeing showing up in terms of flows. They want to trade volatile tech stocks despite the fees and the risk. You call it retailization. What? Who are all these international people that are buying all this stuff? What? Explain this a little more. Yeah, so this is again a global phenomenon whereby if you think about it from a super high level, you've got investors in markets around the world, Asian markets, which perhaps haven't performed very well. They're looking to the US Market, they're looking to Tesla, they know Elon Musk, they know Tesla, they know Nvidia. They're trying to get access to the same kind of performance that US Investors have enjoyed. So it's coming from global markets. And single stocks are really the phenomenon. So there's two objections to this. We've gone over this many times to these price. First, you have very high fees. That's a major problem that you're charging over 1% for this right now. And the second is this daily reset. So investors holding this more than a day don't necessarily get the leverage or inverse coverage indicated. How do you respond to these objections? They've been around for a while and they're very persistent. Yeah, I mean the fee, the fees are very inexpensive. When you compare it to the cost of owning margin, a traditional brokerage account. The fact that these are short term products, they're not long term buy and hold means people are paying less than one basis point, well under one basis point or one hundredth of a percent per day to hold it. In regards to reset, the counter to the reset is you get two times leverage every day and you don't get margin calls. A lot of people lose money in traditional leverage investing because they get margin called these don't have that. Yeah. And this is what's driving by the way, all of this interest in 24 hour trading, specifically 24 hour trading of US tech stocks. That's what we're going to be talking about. Much more about this is coming up on the increasing growth of the international investor and demand for US Tech stocks. That's what's behind all this. That's coming up on the ETF edge 1:10pm Eastern Time. We'll be we'll be joined by Ben Johnson. He is the head of client solutions over at Morningstar. It's a fascinating topic, global growth of ETF and tech stocks. That's ETF edge.cnbc.com Scott, back to you.
- [37:28]
Scott Wapner
All right, Bob, appreciate you. Thanks. Bob Pizzani. Coming up, tracking the trades, Bill Baruch he adding to a handful of new names in his portfolio. He just trimmed a couple of names as well. We'll go through them next. We are back. We do have a trade alert. Bill Baruch is joining us now. Just wanted to document a few things, Bill, that you've done. Thanks for joining us. And I'm going to ask you to I'm going to beg your pardon as well if I have to break away from this to go to D.C. for some news that we are expecting momentarily. So if I have to do that, forgive me, but you trimmed Apple. Let's talk about that. As you suggest that momentum has stalled.
- [38:20]
Bill Baruch
Yeah, listen, we came down position Apple down 5% well, but here's the problem though. We leaned into Apple in quarter four with our Mag 7 breakout thesis and it played out and melted up with the 278 price targets what we're looking at, we took it out from 6% to a 5% as we're raising cash and able to rotate around a little bit. We still like this name but there was a lot of fears around the refresh cycle in quarter four that I think they were wrong. But overall there's some fears warranted around sales growth projections and I'm okay owning it a little less than the benchmark right now.
- [38:57]
Scott Wapner
So you bought mobileye and Marathon Petroleum, both of those are new positions. Do I have that right?
- [39:04]
Bill Baruch
Yeah, mobileye is a new position. Marathon Petroleum is named that we've throttled in and out for over quite a while. But I'll start with Mobile. I think they're right in the thick of the autonomous race here. Their technology is, is a great, great piece to be competitive in what's going to be taking place and in the overall environment. Now the interesting thing with mobileye, it was beaten down hugely over the past year. It's now regained the 200 day moving average. It's now back above that gap that broke down from now intel is an 88% owner of this name and so the only fear around it here would be if they shake up and intel does sell some of their shares. But otherwise mobileye as I think autonomous driving, I mean they're going to be right here in the thick of it with all this, with the competition. This stock has a lot of room to the upside.
- [39:52]
Scott Wapner
Yeah. Why did you sell T Mobile?
- [39:56]
Bill Baruch
You know, T Mobile I think momentum wise. So this is a lot of portfolio management momentum wise. T Mobile. We had some price triggers that came out about two weeks ago. We wanted to see as we got through the new, the new calendar year and then some downgrades today. So like Apple taking down positions there took down position in T Mobile. That way we're able to buy back in names like this and Mobilye. We're able to put the cash into Marathon Petroleum again. Refiners very bullish seasonally in January and we have some other buys as well.
- [40:26]
Scott Wapner
I see that you bought more Uber which we were just discussing Brin suggesting could have a 9 handle on it by the end of this year. There seems to be a suggestion here that you could have momentum return to this name as they announced that accelerated share buyback today.
- [40:44]
Bill Baruch
Exactly. The free cash flow and the profitability around Uber, this name was almost left for dead in an autonomous driving race. I don't think that that's the case at all. And last time I was on the show and distinct December I was talking about the $60 area as being support it's held that we added to this day, the first day of the year and it's starting to already pay off. I think the profitability here is going to continue to expand and I like that target with the nine handle that Bryn mentioned earlier.
- [41:12]
Scott Wapner
And you bought amd. We were having a conversation earlier about whether the chip trade was about to get, you know, some sort of resurgence. Maybe Foxconn is the thing to do it. Jensen Huang tonight in Vegas. Maybe he's the thing to ignite it in some respects. Nvidia has already looked like it wants to break out yet again. Why AMD here you go back to.
- [41:33]
Bill Baruch
December, you know as we continue to move around a little bit we did raise up small cash and Nvidia and Micron ahead of Micron's earnings. So our whole plan was here to rotate a little bit tactically especially here in AMD being down left for dead like Uber almost as additionally a tax loss harvest selling in AMD I think overblown the downside we take a step back look at and look at AI and the profitability the free cash flow that AMD can generate from AI 164% year over year free cash flow is what they're looking for. I think that this thing is way overdone to the downside at least tactically right now we see some great upside here but we may it may be a name we find ourselves holding all year.
- [42:11]
Scott Wapner
Okay, good stuff Bill. Thank you. I appreciate you Bill Baruch with those trade updates for all of you really not just us. You guys have questions here comments on on some of these moves. We don't need to do Uber again but trimming Apple still a big position but nonetheless I did last week I.
- [42:28]
Joe Terranova
Trimmed a little last week. It was never a big position unfortunately but I'm not that focused on momentum. What I'm focused on is that such a large business for them of course is phones and I think the uptake on the new phones with AI is is uncertain at this point so so that's why now they've missed plenty of quarters. It has an impact the stock of long term not sure will impact now it's just that I had better places to put my capital.
- [42:55]
Scott Wapner
Mike Sentoli sitting down here to our senior markets commentator has his midday words. Good to see you. So what are you thinking about here and what you know we have a shortened trading week obviously because of the day of morning we do have a jobs report report on Friday yields a bit elevated still and that's going to be the overhang over this market for.
- [43:13]
Frank Holland
You could sort of see it in the in the slightly weaker breadth numbers under the surface of a very good rally Otherwise I mean 70% of the volumes to the upside. It's not as if we're really struggling below the surface but the index is being flattered by this move in in video and and maybe to a lesser degree in Microsoft and Tesla.
- [43:29]
Jim Laventhal
I do think the market wants confirmation.
- [43:31]
Frank Holland
Through the jobs number that this remains an intact expansion even though we know the Fed put is in there somewhere at Some level. If labor markets soften up a lot, we don't want to necessarily see that. Arguably the benign way of looking at the recent action is December was a bit of a pull forward of the expected January payback.
- [43:50]
Jim Laventhal
The average stock's down 6%, 7 or.
- [43:52]
Frank Holland
8% for the cyclical. So we're now feeding off the oversold conditions. But maybe it's a little bit less than meets the eye in terms of the index move today. Stock stuck around 6,000 for the moment.
- [44:02]
Scott Wapner
It's interesting that, you know, some are suggesting that, well, you know, maybe Apple is running out of momentum. And let's not forget Apple had been running up as in video was running in place. Exactly. And here we have. Okay, if Apple is going to run in place for a little bit, if Nvidia picks up that slack, then you're just right where we were.
- [44:22]
Frank Holland
One of the biggest assets of the market most of last year was the divergence among Mag 7 type stocks where you had some of them given a chance to rest and reload while others took took the baton. By the way, Apple, in years when it has had a strong run in the fourth quarter and through December, it had a minimum first quarter drawdown of 9% in the last three to four years.
- [44:46]
Scott Wapner
Well, you got a big day. Obviously Tech is leading the way. NASDAQ's up near 300. That's all one and a half percent. Mike, thank you. We'll take a quick break. We'll come back right after this. I'm going to welcome you out of break here and take you down to the capitol in Washington, D.C. live pictures there of the electoral ballot boxes in Statuary hall heading for certification of the 2024 election. We bring in Eamon Javers, obviously a different scene than what we saw four years ago, to say the least. And this is all happening as well, Eamon, during a major Snowstorm in Washington, D.C. in and of itself. What can you tell us here about what we should expect to see from here forward?
- [45:56]
I
Well, such strikingly different scenes in WASHINGTON on this January 6, Scott, as we just saw, Kamala Harris making her way through Statuary hall after her election loss to Donald Trump. She, because she is the vice president of the United States and president of the US Senate for a couple more days. She will be presiding over this electoral College vote count in the House of Representatives in just a couple of moments. And she will have the honor or political indignity, as you might say, from her perspective, of presiding over the counting of the ballots to certify the election of her rival Donald Trump as president of the United States. Four years ago, we saw Mike Pence in that role. Under excruciating pressure politically from Donald Trump to refuse to certify the US Election, Pence ignored his then boss, Donald Trump, and went ahead with the certification, arguing that he did not have authority under the Constitution to refuse to certify a legal election. Kamala Harris has said she will certify this election. There will be no drama about this today. This is a much different day than we saw, as we said four years ago, in the midst of a pandemic, in the midst of a contest, contested election fallout, Donald Trump crying foul over the election results four years ago today, none of that. We saw Joe Biden writing an op ed in the Washington Post yesterday, making a point that he is not contesting the election results, his party is not contesting the election results here, and this will be a smooth transition of power. So sort of a return to normalcy in Washington here. Scott as we see this event become much more of the sort of pro forma event that it has been in so many past years. As you look at some of the senators gathering there in Statuary hall, we're also seeing the Electoral College votes now being presented on the House floor. That's the floor of the House of Representatives there. And you see the Electoral College votes making their way to the podium where Speaker Mike Johnson is already in the chair. We'll see if Kamala Harris herself has taken her position besides him. But this is, you know, two politicians who are as at odds as they can be, Mike Johnson and Kamala Harris, but yet they will preside over this moment in democracy in which we see a peaceful transition. And there you see Kamala Harris now taking the stairs to join Mike Johnson presiding over the House of Representatives here. And we will see this peaceful transition, transition play out here over the next few minutes. We expect the entire ceremony to take just about an hour's time. SCOTT and we don't expect any objections to any of the states being certified, but we'll see if anybody decides to shout out their objection here as we go along. Nonetheless, none of that expected to determine the outcome here. This outcome was set by the Electoral College votes, which have already taken place and is now being solemnified, we should say, in the House of Representatives.
- [48:53]
Scott Wapner
SCOTT yeah, the handshake there between the vice president and the speaker of the House as well. Eamon, thank you very much. That's Eamon Jabbers reporting for us live in Washington. As we expect the gavel in in about 90 seconds and then the official process of certifying the election and we will follow all of that for you as well. I'll see you at 3:00. Of course today Adam Parker on Closing Bell is going to give his outlook for for the year. So you don't want to miss that. Cameron Dawson is going to be with me as well. So we have a big show coming up as we take you through the final stretch of trade. We'll do final trades here now. Bryn Talkington, what do you have for us?
- [49:26]
Steve Weiss
Dell. Dell's Infrastructure Solutions Group grew 34% in Q3. I think the setup in February earnings is just the same. I like this as a pure play on the data center growth in 2025.
- [49:38]
Scott Wapner
All right, thank you, Weiss. Real quick. Unh. You want to do that real quick. You bought a little unh United?
- [49:43]
Joe Terranova
I did. I started position and now there are major changes going on with V28. Won't get into it, but it's designed by Medicaid and Medicare to cut back on their coating, which means less revenue. But I think the stock's very cheap here. So I started position. Wait for this quarter to hear what they have to say to add to it.
- [50:00]
Scott Wapner
Let's have that as your final trade then as you update on that from from your perspective. Jim Leventhal, what do you got for Transocean?
- [50:07]
Jim Laventhal
It got bare mauled during tax loss harvesting in December. It's snapping back now. It should. There's stability in oil prices and hopefully this is the year in which some of their cold stacked rigs come back into production.
- [50:18]
Scott Wapner
Okay, Joe T. Teradine mentioned it early.
- [50:21]
Bryn Talkington
I'm going to be taking the position with you. We're going to use a stop below 125.
- [50:25]
Scott Wapner
All right, good stuff. I'm going to see you on closing bell in a couple hours time. Pretty big day shaping up for the markets here on this Monday. Do have the Nasdaq leading the way today up near 300 exchanges. Now you've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [50:47]
Edward Jones
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 is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu.