Halftime Report: The Return of Big Tech (December 11, 2024)

Hosted by Scott Wapner with insights from CNBC’s top investors, the December 11, 2024, episode of Halftime Report dives deep into the resurgence of Big Tech, the Nasdaq hitting a historic milestone, and the implications for investors moving into 2025. Below is a comprehensive summary capturing all key discussions, insights, and conclusions from the episode.

1. Market Milestones: Nasdaq Surges to 20,000

The episode kicks off with an exhilarating update on the stock market's performance. Scott Wapner announces, “[...] Nasdaq hitting 20k for the first time ever. It is right there right now” ([00:57]). This milestone underscores a significant bullish trend in the tech sector, with the Nasdaq Index surging by over 300 points and the S&P rising nearly 1%, while the Dow remains relatively stagnant.

2. The Resurgence of Big Tech: MAG7 in Focus

Central to the discussion is the impressive performance of the MAG7—a group of seven mega-cap technology stocks, including Apple, Alphabet, Amazon, Meta, Microsoft, Tesla, and Nvidia. These stocks are not only reaching record highs but also driving the broader market momentum.

• Rob Sechen highlights the core importance of these equities, stating, “These are core equity holdings in portfolios for certainly for retail investors and institutional investors as well” ([04:01]).

• Scott Wapner elaborates on Apple's sustained rise, noting, “Apple has hit a record high, has been on this streak” ([02:57]). Despite challenges like projected deceleration in earnings growth, these tech giants continue to demonstrate resilience and growth potential.

3. Earnings Growth Projections and Market Dynamics

The panel delves into the projected earnings growth for MAG7, with Stephanie Link providing a detailed analysis:

• “The biggest challenge to overcome is the projected deceleration in earnings growth for these names. [...] MAG7 earnings are projected to decelerate from 55% to 25% in ’25” ([02:03]).

Despite this, there is optimism that other sectors within the market will compensate, allowing the MAG7 to maintain their strong performance through selective investment strategies.

4. Investment Strategies: To Buy or Not to Buy MAG7 Stocks

A significant portion of the discussion revolves around whether investors should add to their holdings in these mega-cap stocks amid their current performance.

• Scott Wapner advises caution, stating, “There's probably still some vulnerability at these levels. So I don't, I wouldn't say I would necessarily be adding here” ([07:06]).

• Conversely, Rob Sechen argues for selective investments, especially when considering regulatory overhangs and monetization abilities unique to each company ([07:33]).

• Bertha Coombs shares her strategy on Amazon, highlighting its strong fundamentals and growth prospects despite an impressive stock price increase: “They do have the numbers. Actually... if you believe operating margins have upside from Retail International, well guess what, they also have upside from AI” ([09:40]).

5. Policy Influences and Regulatory Environment

The episode examines the impact of political developments on Big Tech, particularly the appointment of Andrew Ferguson to the FTC and the potential influence of President Elect Trump on AI policies.

• Rob Sechen connects Ferguson's nomination to the MAG7 rally, suggesting regulatory optimism as a driving factor ([13:36]).

• Scott Wapner discusses how policy uncertainty, especially around the CHIPS Act and infrastructure bills, can shape investment landscapes: “...anticipation of a deceleration of growth and anticipation that we won't see an industrial impulse in 2025” ([16:05]).

6. Momentum Trades and Broader Market Implications

The conversation shifts to momentum trades outside of the MAG7, including small caps and other technology sectors.

• Bertha Coombs emphasizes the importance of not limiting investment to just the MAG7, advocating for diversification within the tech sector: “There are so many opportunities out there that I think will be positive for overall the earnings picture” ([17:42]).

• Shannon Sakosha discusses how momentum in larger stocks sustains the overall market despite weaker performances in smaller momentum trades ([17:42]).

7. Sector-Specific Stock Movements and Investment Opportunities

The panel reviews notable stock movements and potential investment opportunities in various sectors:

• GE Vernova and GE Aerospace: Bertha Coombs praises GE Vernova’s strategic reshoring initiatives and margin improvements, while discussing GE Aerospace’s focus on services and future production ramps ([32:40]).

• Netflix: Rob Sechen supports a target price increase to $10, citing strong fundamentals and leadership in streaming: “I think you buy more. I think you could buy it right here out of an all time high” ([35:48]).

• Lilly: Addressing concerns about peaked momentum, Rob Sechen and Stephanie Link debate Lilly’s position, with Link emphasizing strong earnings growth and AI monetization efforts ([29:51], [31:47]).

• Home Depot: Bertha Coombs highlights Home Depot’s potential despite eight consecutive quarters of negative comps, citing strong execution and improved profitability as reasons to hold for 2025 ([38:40]).

8. Healthcare Sector and Legislative Impacts

A significant news alert covers the introduction of the Patients Before Monopolies (PBM) Act, aimed at curbing conflicts of interest by prohibiting joint ownership of PBMs and pharmacies.

• Bertha Coombs discusses the potential fallout for large insurers and pharmacy benefit managers (PBMs), including required divestitures and revenue redistribution to harmed communities ([25:35]).

• Stephanie Link notes the increased regulatory scrutiny on healthcare companies, prompting a need to reassess equity positions within the sector ([28:36]).

9. Closing Remarks and Forward Look to 2025

In concluding the episode, Scott Wapner and the panel reflect on the strong economic environment propelled by consumer-focused stimuli and anticipate continued growth driven by AI advancements and diversified industrial policies.

• Scott Wapner states, “there is a clear potential for that... we have agenda I which could potentially lift the boats that Stephanie was talking about earlier outside of the MAG7” ([15:09]).

• The panel looks forward to further discussions on strategic positions and market outlooks in upcoming segments, including insights from Tom Lee on the 2025 outlook for the S&P.

Notable Quotes

• Stephanie Link on earnings projections: “[...] weighted MAG7 earnings are projected to decelerate from 55% to 25% in ’25” ([02:03]).

• Rob Sechen on GE Vernova’s performance: “They talk about reshoring being a $10 trillion total addressable market in the United States” ([32:40]).

• Bertha Coombs on healthcare regulations: “All healthcare companies [...] are going to be under some regulatory scrutiny and pressure” ([28:36]).

• Scott Wapner on policy uncertainty: “anticipation of a deceleration of growth and anticipation that we won't see an industrial impulse in 2025” ([16:05]).

Conclusion

The December 11 episode of Halftime Report presents a bullish outlook on Big Tech’s resurgence, underpinned by strong performances from the MAG7 and strategic policy developments. While acknowledging projected earnings deceleration, the panel remains optimistic about selective investments within mega-cap stocks and broader market diversification. Legislative actions, particularly in the healthcare sector, introduce new dynamics that investors must navigate. As the Nasdaq reaches unprecedented heights, the episode sets a forward-looking agenda, positioning 2025 as a pivotal year for continued growth and strategic investment.

For listeners seeking deeper insights, tuning into the live broadcast on CNBC weekdays from 12-1 PM ET or accessing the podcast archives will provide comprehensive market analysis and expert commentary.