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Halftime Report
The Road Ahead for Stocks 8/26/25
00:44:10
Scott Wapner and the Investment Committee debate the markets, the future of the Fed, and some new reporting on Apple’s AI ambitions. The experts react to stock moves in Netflix, Uber, Eli Lilly, AT&T, and Oklo. The desk talks about the state of the restaurant trade. Josh Brown updates the viewers on his “Best Stocks in the Market.” The Setup is on Ulta Beauty ahead of earnings later this week. Investment Committee Disclosures
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Narrator/Announcer
What does it mean to live a rich life? It means brave first leaps, tearful goodbyes.
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Jenny Harrington
And everything in between.
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Narrator/Announcer
With over 100 years experience navigating the ups and downs of the market and of life, your Edward Jones financial advisor will be there to help you move ahead with confidence. Because with all you've done to find your rich, we'll do all we can to help you keep enjoying it. EDWARD Jones, Member, SIPC and now a.
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Scott Wapner
Next level moment from ATT Business.
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Josh Brown
Say you've sent out a gigantic shipment of pillows and they need to be.
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Scott Wapner
There in time for International Sleep day.
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Josh Brown
You've got AT and T5G so you're fully confident, but the vendor isn't responding.
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Scott Wapner
And International Sleep Day is tomorrow.
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Josh Brown
Luckily, AT&T 5G lets you deal with.
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Scott Wapner
Any issues with ease. So the pillows will get delivered and everyone can sleep soundly, especially you. ATT 5G requires a compatible plan and device. Coverage not available everywhere. Learn more@att.com 5G Network I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the markets, the future of the Fed and some new reporting on Apple's AI ambitions. We are trading all of it with the investment committee as usual. Joining me for the hour today, Josh Brown, Jenny Harrington, Malcolm Methbridge, Brian Belsky. As I said, we are following the market story today. We do have news, of course, the president moving to fire Fed Governor Lisa Cook, the cabinet meeting about to get underway. So there's a lot at play in Washington. We begin with our top story today, yet another report today that Apple executives have discussed the possibility of buying the AI startup Perplexity. This new one today from the information says Apple has not engaged with Perplexity's management about that idea. And the reporting also said that Apple executives have talked about buying the smaller player Mistral, based in France. So you have those developments, not to mention the fact that you do have an invitation that just dropped into my inbox. And I know Steve Kovacs as well. He's with us now on all things, I guess, Apple. So you want to deal with the invitation first since it literally just dropped in our inboxes about 30 seconds ago?
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Steve Kovac
Yeah, I think it's been about a minute here, Scott. I literally just got this. September 9th is the date. That's when we're expecting Apple to host this event. That's what the invitation says here. That's going to be in Cupertino. Same drill as always, right at that Steve Jobs theater. As far as what we're expecting on the announcement front, the big star of the show is this reported super thin version of the next iPhone model. People have been calling it the iPhone Air, kind of like the MacBook Air. And that's supposed to kind of kick off this new era of redesigns for the iPhone. As far as artificial intelligence stuff, you and I, Scott, we're over there at wwdc. Back in June they kind of got all the AI things out of the way. But we should be on alert at that event two weeks from today if there's any kind of unique AI things going on there. So that's what you see the right there all dropping is what they're calling it. So we'll be there in two weeks time. As far as the Perplexity stuff, you're right. That has been reported before that Apple was kind of eyeing it. We heard Apple services boss Eddie Q even talk about partnering with Perplexity, but since then and we have not seen any real action going on on the M and A front. Just a few weeks ago I was with Tim Cook down in Cupertino on the earnings report. I talked to him about M and A and how they're thinking about that in relation to AI. The answer that he gave me was actually very similar to the same answer he's given basically through his entire tenure as CEO about how they view acquisitions, which is if it makes sense, we'll do it. But for the most part we've just seen in action. They've been largely allergic to that. And this story from the information really just doubles down on that. There's been a push within Apple to perhaps think about making a bigger acquisition in AI in order to catch up, but that's been met with a lot more resistance internally. So while Apple has been talking about doing M and A, it really seems like they're going to try to build this thing themselves. Potentially partnering with OpenAI last week we learned potentially partnering with Google or partnering with Anthropic.
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Scott Wapner
Scott So part of this reporting, as I mentioned, also is about Mistral.
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Steve Kovac
Exactly.
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Scott Wapner
Smaller French based firm. I fully understand that. You know, not only has this been sort of reported by some others and talked about by you, me and many others on our very desk, including, you know, some who some of our guests who've come on, you know, the street has bandied about, about this perplex idea. Do we, do we take in any way the continued reporting that what was a little bit of smoke seems to be gathering into a potential fire?
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Steve Kovac
Not. Well, not really, because these reports are also saying these discussions are internal. And so yes, of course Apple's going to kick the tires around. Anything that could make sense, that could fit in. Mistral is an interesting one because it's an open source model. That would be a way for them to kind of buy a model themselves and bring that in and then build on top of that. But it just doesn't sound like that's the direction they're going because at the same time, Scott, we're getting these reports that they want to license a large language model from one of the leaders, whether that's ChatGPT or OpenAI, whether that's anthropic, whether that's Google, and figure out a good one that they can build on top of there. So instead of buying Perplexity, which does build on top of those models, why not just license it just like Perplexity does? Instead of buying Perplexity, just do just pool Perplexity, so to speak, and do it yourself. So it seems to be that's the direction they're moving. Tim Cook, also, Scott, hinted a little bit at that on the earnings call a few weeks ago, saying he was asked, do you think these models have become commoditized? He didn't say, yes, in so many words. But he did say if I talk more about that, it's going to kind of give away our strategy. I read into that that they really are looking to partner rather than build or acquire.
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Scott Wapner
Yeah, Steve, thanks for the insight. It's. We've been following, I mean, the stock has obviously had a nice move. It's up 9% month to date. So there's been, you know, we've talked about the detente between Tim Cook, CEO of Apple, of course, and the president. If that's in fact what was needed, it's only been beneficial to the shares. If you take a look at the month to date move there, Malcolm, that's Steve Kovac. Of course, Malcolm, you own the stock.
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Malcolm Methbridge
Yep.
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Scott Wapner
We've had this conversation before about Perplexity. You want this to happen.
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Malcolm Methbridge
I want this to happen. But I'm not as excited as some others are probably feeling right now listening to that headline. I think that my unpopular opinion, the reporting that we got last month, that JP Morgan Chase and Apple are a lot closer now than they were before to solidifying a partnership to replace Goldman in their credit Card business is more additive to Apple's earnings over the next 12 months than acquiring Perplexity. If they were to get that deal done today, it's going to take 12, 24, 36 months for Apple's designers and perplexities engineers to get on the same page and decide what it actually means when they incorporate their search engine into Apple's products. We just saw the Botched rollout with Chad GPT5. We saw OpenAI have to walk that back and bring previous versions back into existence because it just didn't work right. Some people wanted to think deeply. Other people want a quick answer. So this is not going to be an open and shut thing where suddenly Apple just takes the lead and leapfrogs everybody else. It'll be great when it finally gets there, but it's going to take some time.
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Scott Wapner
Josh Dan Ives said, you know, I mentioned the Wall street commentary around this idea. The clock has struck midnight on Apple's AI strategy. Perplexity is the answer. Bank of America in the past, in our opinion, any such deal would likely be positive for shares. UBS paints this as a defensive move in nature and not a positive catalyst. That seems to be a bit of an outlier perspective. You know, yes, they may have missed the AI boat so to speak, but if you jump back into in such a big way, I'm wondering what you think this could mean for the stock that you own.
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Josh Brown
I think, I think if they do it, you get a new all time high in Apple the day they announce it. I think this is what everyone who is holding shares of Apple and believes that this will remain a relevant company for the next 10 years into the AI generation wants them to do. And not only that, they want the founder of Perplexity under the wing of Tim Cook could even be like a potential successor after a number of years running the AI business. If we truly believe that AI is going to be the most important technological revolution since electricity, which is effectively I think, the house view of Silicon Valley, then you want one of the earliest and most talented entrepreneurs in the space. The other alternative judge is to like piecemeal, jump into people's DMs like Mark Zuckerberg and do like one off like let's, let's buy small stakes or big stakes in all these different startups. Let's recruit people away from other companies. This is a case where buying it makes more sense than building it and might actually even end up being cheaper in the long run. Perplexity is right now said to be looking to raise around in the $20 billion valuation area. I want to point out that Apple has 130/ somewhat billion dollars in cash on their balance sheet and yes, I understand they also have debt. A lot of that is just strategic the way they're managing their money. I'm sure they're earning something on all that cash. That's fine. The Street's not giving them credit for that. The street doesn't care about that. We already know this company is capable of generating oceans and oceans of dollars. The last thing I would say is I'm okay with a partnership too. As a long term Apple shareholder having Google pay them $50 billion to be the default browser on iOS devices was a masterstroke and I think up until recently it worked out well for both companies. There is a world where Apple finds a really great partnership. The problem is the people they have partnered with so far open AI are already in deep with Microsoft. So I like Apple doing something like this. I don't predict that they will. They tend not to do deals as as Kovac just pointed out but the world makes an all time high if they do it.
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Scott Wapner
The world's changed right. What what they didn't traditionally do they may be forced to do. It's a good segue for us to in video earnings Brian which are tomorrow that stock's on pace for its fifth straight positive month. The FTSE I think paints this pretty well today Nvidia earnings set to test Wall Street's faith in the AI boom At a time when I think it's fair to suggest that there is a fair amount of AI anxiety happening in the markets right now. Not only if you look at the stock performances month to date of many of these names you take Apple out of the mix I don't think think that people would consider them in the same way they do the other hyperscalers of the Metas which debt shares are down, Microsoft's down, Amazon's down. We can show you a wall we made to show you what we're talking about with the anxiety around AI. Sam Altman OpenAI investors quote overexcited by AI he recently said MIT 95% of gen AI pilots failing Meta reorganizes their AI unit again and also freezes its AI hiring so that's the backdrop that we paint for you as we head into this critical earnings report.
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Brian Belsky
Yeah, I think that's right. Especially if you see how these big companies in the Magnificent Seven have been trading August versus July. It makes sense to me that Apple has been outperforming Especially considering market cap and size, Nvidia is at the top of the mountain in terms of its product, where the earnings are going and where the growth is going. I think the bigger discussion is what's underneath Nvidia, the other two semiconductor sides. I think the meta news in terms of what they're doing with AI in the Sam Altman news with respect to a bubble, I think in our view, we've always said that to have a bubble in a particular asset, Scott, you need to have financials involved in terms of lots of IPOs, lots of secondaries, lots of M and A activity and we haven't seen that quite yet. But what we're hearing today and more and more about Apple, in our view, we would much rather see a partnership versus them buying an asset. The stock's going to go up regardless. But again, the more we start to see more gobbling up quote unquote of these AI properties, I think the more we're going to have that.
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Scott Wapner
Do you think we. We add to the anxiety? Do we, do we have the risk of adding to the anxiety with these earnings from Nvidia tomorrow or due? We subdue them for a bit. If this report turns out to be what many think it will be, I.
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Brian Belsky
Think we subdue it because again, Nvidia's at the top of the mountain. I think the earnings are going to be good, the cash flow is going to be amazing. And I think, more importantly, I think Jensen is going to talk about guidance and what's going to happen into 2026, especially considering everything that's happening with chips and the like. And I think this is going to be a major, major call event with respect to AI overall.
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Scott Wapner
Jenny, how do you, how do you see all this? The idea. There's obviously a lot of exuberance. Yeah, that's not a dirty word if you want to put it irrational in front of it. You have a different level of conversation, of course, but what do you make of it as we head into this critical earnings report tomorrow?
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Jenny Harrington
Yeah, so I think there is, there is a lot of over enthusiasm and when we're talking about Apple and then leading into Nvidia, we're kind of talking too narrowly because I think Apple and perplexity, like that's one thing, but we need to expand that conversation because what does perplexity do? I actually looked it up on Grok, so I could give a good answer. But they aim to be a faster, more reliable alternative to traditional search engines. So we should be talking about that as a major competitive threat. To Grok, chatgpt, Gemini, Claude and you know, it almost throws back to the 90s when we had Net Scape and AOL. Right. And, and Google was just coming up.
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Brian Belsky
Totally.
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Jenny Harrington
There's a lot, there's a lot out there and it's going to start to get diluted. And then we lead into Sam's comments about there being too much hype there. I don't think it's possible to have too much hype with respect to AI as a business, as a tool. Like I'm super excited about it and you know, I get excited, but it's.
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Scott Wapner
A question of, you know, you as a person or you as an investor.
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Mike Santoli
Totally.
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Scott Wapner
I thought, and I don't know if we have the capability. Excuse me, me one second. To do this in the control room. But yesterday on closing bell, I thought Dan Greenhouse brought a really interesting chart to us and if we can get it, let's pull it up. It basically shows the path of the NASDAQ during the IPO of Netscape versus the path of the NASDAQ after the release of Chat GPT. And they are in eerily similar chart patterns around these two major events. Not to make the leap and say, well, what was one bubble automatically means there's another. But through moments of intense hype about a new and burgeoning technology, I thought that it was interesting. Are we getting it there, guys?
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Jenny Harrington
Awesome.
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Scott Wapner
Thank you for doing that. So that's what I'm talking about. Right. He just sort of picked these two releases. But there are seminal moments obviously in the conversation about the Internet and then the conversation about the proliferation of this AI technology and this transformational thing that we are all trying to get our arms around both as human beings and investors.
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Jenny Harrington
Right. And that's exactly where I was going to. Which is. So you can be as excited as you want. From a technology life altering perspective perspective. For an investment perspective, there are definitely pockets where valuations make no sense. Collectively the market's kind of okay, right? Trading at what are we at? 23 times. That's okay. But then there's pockets where you have things like 150 times earnings, 200 times earnings. Nvidia might be okay. I do not remember what it was at 30ish times right now. That seems fair for the growth it has ahead.
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Scott Wapner
Probably cheaper. Actually on a historical basis that it's been.
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Jenny Harrington
Yeah.
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Scott Wapner
Relative to.
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Josh Brown
To what it's earning, what stock is 200 times earnings?
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Jenny Harrington
I think Palantir is trading at about 100 times. I think Palantir.
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Josh Brown
How many of Those, how many of those are, how many of those are there?
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Jenny Harrington
You're the investor, P.D. brown, you tell me. There's, there's a bunch.
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Josh Brown
I don't think a lot. So I would say my point is a lot of excite. No, it's okay.
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Jenny Harrington
There's some that have point. Yeah, but here's.
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Josh Brown
It's a good point. But it's a point that people have been making since 2023. And I would just say I don't think that's representative and I don't think you think this of the overall market. The average stock does not look like the Valentine, the Palantir valuation. And I really even think of like more than a few.
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Jenny Harrington
Right. But there's more. There are guys, you see, rather than.
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Scott Wapner
Talk over each other, I'm going to just go down to the cabinet meeting. We said that the seventh cabinet meeting is underway at the White House. We'll listen in to the President.
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Josh Brown
They're going up.
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President (White House)
A lot of them are going up now. I don't know that big actually Mark is building four of them and others are building similar places. And when these things open up, I'll tell you what, our country, we're leading China now in AI. Substantially leading China. And the reason is because we're letting them build their own electrical facilities. We would need double the energy that we. If you take all of the electricity that we produce right now in this country, you'd have to multiply it times two or maybe three, three times. So three times more than we have right now for everything to operate your toaster and everything else. Okay, three times more. And the way we are able to succeed because China goes out and builds these massive plants, they're right now building 58 coal, in this case almost all coal fired plants. And coal is back with this country too, by the way. You know, there's a reason they use it because it's good, it works for them. And we call it clean coal. We don't call it coal, we call it clean, even very clean coal. But we have coal going up. We have nuclear going up. Nuclear is very much in vogue now. It's safe and inexpensive and great. We don't allow windmills. We're not allowing any windmills to go up. I mean, unless there's a legal situation where somebody committed to it a long time ago. We don't allow windmills and we don't want the solar panels that I was speaking with the secretary about because they take up, you know, thousands of acres of our farmland. You see these big Ugly patches of black plastic that comes from China. And the solar is, you know, I like solar in some ways but for firing up your big plants, it doesn't work. It's very unstable. But it really takes up your farm. The farmers are saying, you know, they're building these massive blotches in the middle of the fields all over the country. It's so crazy. It's so crazy. So we're not heavy into that at all. And windmills, we're just not going to allow them. They ruin our, they're ruining our country. They're ruining everyone. If you look at, I hate to mention countries but you look at the UK what's happened at UK they have energy costs have gone through the roof because of when they want to do everything close up.
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Scott Wapner
We'll continue to monitor the cabinet meeting down there at the White House. Bring you anything? Certainly we're looking to hear commentary about the President's move to fire Fed Governor Lisa Cook and if he does begin his remarks on that topic, we'll go back there. There also of course was a story about the government's stake in intel and the Commerce Secretary on this very network earlier today with Howard Lutnick suggesting that the President and the Pentagon are quote thinking about taking equity stakes in defense contractors. So a of lot monitor all of that as it relates to the markets and the investments that you may or may not have. Let's get back to part of this conversation as we assess really what Nvidia is going to mean. Malcolm, to, to this market, the stocks had a huge run into the print. Does that raise the bar to a degree or not?
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Malcolm Methbridge
I don't think so. So historically Nvidia shares pairs don't do a ton the week their earnings come out. Right. On average, the last four earnings from them we saw something like a 3% move. But I do think it's interesting that the options market is now expecting about a six and a half percent move after this particular earnings print by the end of the week. So that could be an all time high above 191 on Nvidia shares if that actually comes to fruition. But then obviously that cuts the other way if the earnings disappoint. We're now talking about a slide and so I think that it's important, it probably is going to reaffirm what we already knew about the trade just based on the fact that Amazon, Microsoft and Alphabet all reported that they're going to continue their CapEx through the remainder of this year that they committed to back in January So that has to bode well for Nvidia since they control 80% of the global chip market.
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Scott Wapner
I'll tell you what, the other big one, I know, Nvidia sucks, sucks the oxygen out of the room, but CrowdStrike, Josh, is tomorrow after the bell. I think at the given moment, I'm not suggesting it's more important, less important, whatever it is, but given the conversation around software versus semis and whether AI is quote, killing software, and there's a fair amount of commentary that we've had about that topic, CrowdStrike seems important to me.
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Josh Brown
I think you're right, Scott, and I think you're asking the right question. Is that, is that gloom hanging over some of the SAS names going to carry through into cybersecurity? My answer to that is no. And actually I think I make cybersecurity even more vital than it already is. I think it's the one line item on most technology budgets amongst governments and Fortune 500s that literally can't be tampered with and probably has to go higher over time. So I don't think that CrowdStrike will face the same issue as, let's say a human resources SAS company or something like that. Let's just talk about the expectations quickly. 1.1 billion in revenue for the quarter. That would be 19% year over year growth earnings per share of 83 cents. The big number that everyone wants is subscription gross margin. I mean, that's gone over the last six years from 55% to 80%. And that's why these companies have the valuations that they, that they've had since they've come public. As long as they can continue to chug along with, you know, 20% ish growth year over year, I think the stock is fine. I want to remain long here. It's well off the highs as you can see in this chart. But I think this is the best company in its industry in the whole world. And I'm going to stay long regardless.
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Scott Wapner
There are others that are important too. Brian. Octa Target gets raised ahead of its earnings. It's a buy at Canaccord. It's set to report too.
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Brian Belsky
Yeah, we love this name. We've owned it for a while on our SMID portfolio, this stock's kind of tripped a little bit on the last couple quarters. But for revenue growth and the addressable market in terms of where they're going, I think this is a great name to be in that hasn't had this big run like CrowdStrike. Clearly CrowdStrike's corrected here a little bit. I mean, you may want to start taking a look at that again. But Okta has been one of these names that have been kind of muddling here a little bit. We really like it.
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Scott Wapner
Anybody thinking about Salesforce?
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Jenny Harrington
Yeah, I am.
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Scott Wapner
You are?
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Jenny Harrington
Yeah.
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Scott Wapner
Because that seems to me to be the one with the biggest question mark around it. If you look at that performance of the stock versus some of the others, for example, that chart pretty much tells you a story. Year to date, down 27% the target today, a stock that's 244, it's cut to 325 from 350. At B of A, they still say you should buy it, but their enthusiasm is tempered a bit. What, what catches your eye about this one? The underperformance alone?
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Jenny Harrington
No, I'm not thinking of it in a positive light. I'm just thinking about it and I'm thinking about it from the broader perspective and the statement that it makes on software. So one of the biggest thoughts about threats from AI to software is that there will be fewer corporate employees, which means fewer licenses. And when you think about a Palo Alto or crowdstrike, there is exactly how Josh said, no end in sight for the demand that's needed. It's not based on how many employees you have. But if I think about a firm like Gilman Hill, if I was operating 10 or 15 years ago, I would need 20 or 30 people to do what 10 people can do today. And that means we don't, by the way, we don't use Salesforce. But if we did, I would need 10 licenses today and probably my growth over the next several years will be a much smaller headcount escalation than than it would have been even three years ago before I started taking over so much. So I think about stocks like that and think actually I don't want to touch it. I think there's a lot of risk when it's a subscription based software company. Okay, so the down 26% is justified. I think it's a hot potato.
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Scott Wapner
All right, let's, let's squeeze a break in. We come back, we've got a bunch of calls, calls to go over with ownership on the desk. I got one on Netflix in front of me as well as Uber and the price target jumping even further. We'll tell you the number. And later, Josh Brown best stocks in the market list. We'll discuss that too.
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Narrator/Announcer
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- [27:10]
Josh Brown
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- [27:38]
Scott Wapner
Welcome back. Let's talk about some of these moves. Netflix today reiterated outperformed Bernstein making that call today. The elephant in the room is getting bigger. While Netflix remains the undisputed leader in long form content, YouTube increased its share of streaming by 2% while Netflix's total US engagement share declined by a percent. We expect Netflix to continue to diversify its content to widen its reach. Josh Brown on Netflix.
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Josh Brown
I'm going to give you my prediction here. By the end of the year, I think Netflix is going to roll out something either user generated or something where YouTube creators are being incentivized to move over to the Netflix platform. And they have to do it because YouTube is now full on competing for the battle of the living room. I don't even think most people realize this. YouTube viewership on a television set, not a phone, not a computer, is 16% of all YouTube views, but accounts for 42% of total watch time. Which means the next generation is utilizing YouTube in the same way that they use Disney plus or Netflix and Netflix has to respond. So there are a lot of amazing creators on YouTube. Netflix historically has not done podcasts. They've not gone after these people. I think that's going to change and I think Wall street is going to like it when it happens.
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Scott Wapner
All right, Jenny. Uber target goes to 110 from 105 buy at Loop Capital. Long run of strong execution has become expected by investors, this firm says, and valuation has been rising throughout the year. A lack of controversy is perhaps somewhat boring as far as the secular growth story can often be. Stock stock has been especially rewarding to investors. It is up 58% year to date. S and P, as we know, is only up 10. We hope Uber remains a boring stock from here. They say what about you?
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Jenny Harrington
So we do cheek. We've actually joked for years at Gilman Hill that there's nothing we love more than boring stocks. And our worry is that actually Uber doesn't stay boring and that Waymo becomes way more competitive and that the landscape really does start to change. So where you stand today is stocks up 60% year to date, trading at 28 times. But it still has a 5% free cash flow yield. So it still makes sense for our discipline growth strategy. Earnings, by the way, are expected to grow in the high 20% for the next range for the next 20 couple of years. But we have a four and a quarter percent position in our growth portfolio. That's a little bit rich for us, so we'll probably end up trimming some.
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Scott Wapner
Brian, Lilly's a nice winner today. Let's show those shares, please. Their weight loss pill cleared latest trot and last I saw was up 4 or 5%. Is that where we are? Yeah. There we go. That is Lilly. You own it.
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Brian Belsky
Yeah. Lilly's one of the only farmer stocks we own these days, basically because of the product line. And they've done a really great job in terms of managing that. I think there's still some risk in big pharma overall, but we really like what Lily's been able to do. And I think too that the longer we kind of go through with respect to worrying about tech, Scott, I think healthcare is gonna become more of a contrarian call.
- [30:44]
Scott Wapner
Let's kick up at the. Also they're going to buy some Spectrum licenses from EchoStar. $23 billion. John Stankey was on Squawk said the deal is, quote, a win all the way around. It was added this week to Citi's positive catalyst Watch. Brian Belsky, you own AT&T. Give me something quick. And then Jenny's got some derivative moves off of this today, too.
- [31:06]
Brian Belsky
Part of our barbell, you know, Google and Netflix. But in AT&T, on the other side of the Communication services. They've gone back to their broadband business, going back to their core business and that's really, really positive longer term.
- [31:16]
Scott Wapner
Jenny, you were flagging something for me.
- [31:18]
Jenny Harrington
So it's interesting because the tower stocks, Crown Castle, AMT and SBA are all down 2 to 3% on this news. And my initial was to think that this would be good for them. Right. AT&T just acquired 23 whatever billion dollars worth of new spectrum licenses and you would think that the leases would increase. But realistically it's bad for the tower stocks because AMT gets 4% of their revenues from EchoStar, Crown Castle 5, SBA 3. So they're probably not going to renew those leases. It ends up being a 50 to 100 point basis point headwind on revenues for those companies. They'll dig out. But it's, you know, it's got these knock on effects that aren't necessarily positive.
- [31:56]
Scott Wapner
For the real quick, Brian, on oclo, which was a new buy for you within the last few weeks, I think it's initiated today with a buy 92 bucks to Target at B of A powering the air with next Next gen nuclear. I heard the president in the cabinet meeting just now talking about this very issue.
- [32:12]
Brian Belsky
Yeah, I love the theme of this company because we bought it a couple of months ago and obviously with a nuclear tailwind, but two years off from now they're going to have these separate nuclear basic platforms that companies can buy that will basically power a company. So this technology is amazing and I think it's going to make it easier and easier to to use nuclear power.
- [32:36]
Scott Wapner
All right, Silvana now has the headlines for us. Hi, Silvana.
- [32:39]
Narrator/Announcer
Hey, Scott. Good afternoon. The CDC cut a monitoring program for foodborne illnesses in the beginning of July. The agency telling NBC News the federal and state partnership reduced its surveillance for just two pathogens, Salmonella and E. Coli, instead of the usual eight, which include those that could be fatal. Food experts say the move could make it harder for public health officials to track and respond to outbreaks. Australia has expelled Iran's ambassador over the Iranian government's involvement in two anti Semitic arson attacks in the past year. Australia's prime minister said today the country's security agency found enough credible intelligence that Iran planned the attacks following an investigation into dozens of anti Semitic incidents across the country. Iran's foreign ministry said that it was weighing its response. And a slow moving dust storm called a haboob grounded flights and left thousands of Arizona residents without power Monday. Power outage US reported more than 40,000 customers lost power while the heavy winds and rains that followed the storm also caused delays at Phoenix Sky Harbor International Airport. Scott.
- [33:53]
Josh Brown
Wow.
- [33:53]
Scott Wapner
All right, Silvana, thank you very much for that. Silvana Head. Now coming up next, table talk. We'll debate what's been eating the restaurant stocks lately. Morgan Stanley's talking about them and we will next.
- [34:10]
Josh Brown
My name is Josh Brown. I'm a financial advisor, I'm a wealth manager and I'm a dad. Everyone needs to invest. Best stocks in the market is going to be fun for Pro subscribers. We're gonna take you behind the scenes and tell you the stories that are driving some of the most exciting names on your quote screen. We're gonna show you exactly where the best stocks are and what's happening with them in real time. Join pro for exclusive access to Josh Brown's best stocks in the market@cnbc.combestst.
- [34:52]
Scott Wapner
We are back. We said Morgan Stanley's talking about restaurant stocks today. A little table talk, if you will. That's what they call it. McDonald's is on their list. They like it. They like the extra value meals. Ryan Belsky, you have it. They prefer WingStop, Chipotle and McDonald's. Near term risk reward improving for Domino's and Brinker. I think we saw what happened with Brinker.
- [35:12]
Brian Belsky
Yeah.
- [35:13]
Scott Wapner
Was it last week? Right?
- [35:15]
Brian Belsky
Yep.
- [35:15]
Scott Wapner
Chili's just killed it and there's been, I think some unevenness in the restaurant space. McDonald's is yours. What do you think?
- [35:22]
Brian Belsky
There's some really tough stocks. They're tough companies to buy, just like some of the smaller mid cap retailers. And if you're looking at consumer discretionary, McDonald's just been a steady Eddie this year. We were talking off camera that I.
- [35:35]
Scott Wapner
Think I could use. Brinker and Darden, by the way. But that's me.
- [35:38]
Brian Belsky
That's all right. McDonald's is the comfort food shake shacks, the momentum, the exciting one right now. But you know, we've owned McDonald's for a long time in our value portfolio and it's been a great performer.
- [35:49]
Jenny Harrington
And it's delicious.
- [35:50]
Brian Belsky
And it's delicious.
- [35:52]
Scott Wapner
You own Starbucks? Yep. That's great. They say that Starbucks quote faces a moment of truth. The time for top line improvement is at hand or else the stock could face hurdles. You agree?
- [36:03]
Brian Belsky
I do agree. I think we're through three or four innings and the fourth inning into this operational turnaround. We need a few more endings to see if they can actually put this together. It's on our official watch side of things. But they need to get this operationally Right. I think they do. They can, especially as they kind of cut down capacity in terms of their product line.
- [36:21]
Scott Wapner
Chili's is Brinker, by the way. I've confused myself twice now, just for the record. I'm keeping score on myself.
- [36:27]
Jenny Harrington
But you're making a good point, actually.
- [36:29]
Scott Wapner
I've probably confused everybody else, too.
- [36:31]
Jenny Harrington
Yeah. But it's the bigger point, which is there's so many of them and they're all interchangeable.
- [36:35]
Brian Belsky
Where do you get.
- [36:35]
Jenny Harrington
Where you get the competitive advantage?
- [36:37]
Scott Wapner
They are Shake Shack, perhaps Garner more. Should garner more attention. Post results on Shack. Josh. They say, quote, burger segment competition and beef inflation give us some pause. How about that?
- [36:52]
Josh Brown
Yeah. So it's always going to be something. So I've held the stock through the pandemic when 100% of their records restaurants were physically closed. So I'm not going to worry so much about that. I think with Shock, you basically have an expansionary story where you've got 500 units that could go to a thousand and then maybe 2000. And that is probably why there is a premium valuation here. I wouldn't say it's cheap, but they're expecting 50% earnings growth this year. So, like the premium is warranted. Most of these other companies we're about talking that would be happy with 3% growth. But my favorite pick in the space is Toast. It's a $42 stock, I think within a few years could be 65 or 70. And toast is not a bet on one particular restaurant or another. It's a bet that these are no longer discretionary businesses. It's actually more expensive to go to the supermarket in some parts of the country and fill a basket than it is to eat out three, four times a week. And so Toast is going to to power the payment function. And not only that, in an inflationary environment where everyone needs to be more efficient, Toast is the company that comes in and enables restaurant owners and chains to get way more efficient as they move into the digital era. And, you know, it's the biggest player in the space at this point standalone, and I think it goes higher. So I like Toast near term better than Shaq. 36 pence, in my opinion. Warranted.
- [38:18]
Scott Wapner
All right. We still have Josh Brown's best stocks in the market to get to on CNBC Pro. And Mike Santoli, he's next with midday work.
- [38:53]
Brian Belsky
We are back.
- [38:53]
Scott Wapner
Senior markets commentator Mike Santoli is here at the desk. I mean, trying to fire, you know, Fed governor doesn't really do much to the market. I guess it's going to be in video like we're going to just wait and see what happens and then the market's going to figure out which way it wants to go.
- [39:08]
Mike Santoli
I mean around the edges you could see the market is not finding a lot of reason to rethink the conclusions of Friday. Right. So post Powell. The idea that you're likely to get lower rates into an economy that's hanging in their durable goods looked okay today. So it's still I think the general framework works. One reason, I mean look the market is not going to look four steps down the line and say what are the implications of this potential firing and because we already are on a dovish bias in the current committee. So it's not as if this is going to be 180 degree swing if somehow it's the deck is stacked in that direction. You do have a little more treasury yield curve steepening. So I think it's again just marginal moves in this rotational grind that is the default mode of this market between catalysts and so yes Nvidia the next thing to at least either dictate some direction or just clear out of the way and have the market be able to do what it was otherwise going to do. So when you have a 6% implied move for Nvidia on the number that means almost a half percent potential move from that alone in the s and P500. That's why I think you have people waiting and holding in reserve whatever they were otherwise going to do.
- [40:25]
Scott Wapner
You have a quick thought on the peel back in Bitcoin.
- [40:27]
Mike Santoli
Yeah, I think that's, I definitely have that on the monitor this.
- [40:31]
Scott Wapner
Yeah.
- [40:32]
Mike Santoli
Because it often does have a lead, you know role in terms of what stocks do. So some of the stuff has come off the boil. You have the crypto related stocks. Palantir is obviously well off the highs. So I don't know if that's just a little bit of a stutter step in the kind of retail and a risk seeking trade but it's worth being mindful of it.
- [40:52]
Scott Wapner
All right, good stuff. I'll see you in a couple hours. On closing bell, that's Mike Sentoli. Coming up next, Josh Brown. He calls this one of the quote best long term charts he's ever seen. We'll show you what it is is.
- [41:01]
Narrator/Announcer
Next.
- [41:08]
Scott Wapner
Josh Brown's best stocks in the market list wants to talk about three. No new additions today but you have flagged three I would assume for a specific reason.
- [41:18]
Josh Brown
Yeah. So we, we took a look at the cheapest stocks that are on the Best stocks in the market list because over the last, let's call it two weeks but really accelerating since Friday there's been this rotation into value. We do tend to talk about higher price stocks just because those tend to be the better companies because the market's not stupid. But in this case we'll talk about some cheap ones. The first one is O'Reilly. As you mentioned in the tease, this is one of the best long time long term charts I think I've ever seen. It's basically very basic. It's, it's auto parts. So it's not AI but it's substantially cheaper than it ought to be given how well they've executed. And what's happening here is it's a cannibal company. It's eating itself. They have bought back about $26 billion worth of stock since 2011. They continue to shrink the float while growing earnings and you could see the success for yourself. These are the types of stocks that really started to move on the heels of Jackson Hole in a way that they haven't in a long time. Scott. They've been left out of this market. I like this name and as a long term risk management tool I would be using a 50 week moving average. Right now it's about 86. If it violates and stays below it tells you that something has changed with the way the buyers feel about this name. I'll do the other three months much more quickly. Synchrony Financial is syf. This is credit cards. Ultra low pe. Eight and a half times earnings. The Bears would say with good reason. I like a low volume pullback in this theme to about 70. I pull the trigger right there. But it has already broken out. I want to retest. H.I.G. is the Hartford Insurance Group. Same story value stock 11 and a half times earnings. I think you want to own it above the 130 level. That's where it's really looking for a new range higher. And lastly is all state. When was the last time we talked about this name on the show? 9.6 times earnings. Repeated failure. Give me a one year chart. Repeated failure to get above 215. If it can take that level out convincingly on good volume. I don't know if there's anyone else left to sell so I would wait for that breakout but I think it's very likely. Likely.
- [43:38]
Scott Wapner
All right, good stuff. I appreciate all that. We'll take a break. We'll come back. We'll do a setup for you while we have you. We wanted to hit you on Ulta Beauty, it reports later this week. You own the stock. You have high expectations. The stock stock is up 40 plus percent in six months.
- [44:07]
Brian Belsky
Yeah, Alta had a really tough year in 2024, Scott, based on really tough comparisons in 23. But they've really kind of turned it around. Excuse me. Here's a stock that's 20 times earnings. And we talked earlier about the consumer discretionary sector, trying to find companies in there that actually are operating quite well with steady earnings in this company. 23 billion dollar market cap again, 20 times earnings, continues to do very well. And I think the guidance is going to be really strong. And it's in one of those sweet spots in consumer discretion. I think it's going to continue to grow.
- [44:38]
Scott Wapner
Okay, we shall see a quickie and then finals are next.
- [44:47]
Josh Brown
Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime Podcast now.
- [45:02]
Scott Wapner
I hope you join me. Closing bell, three o' clock Eastern today. Tom Lee will be with us and Cantro will be with us as well. That's Alex Cantrowicz. And we'll hear from Kovac, too. We'll try and advance the ball a little further on that Apple story we talked about at the very top of our program today. It was an interesting one for sure. Josh Brown, your final trade is what?
- [45:22]
Josh Brown
Remain long toast bullish into the end of the year.
- [45:25]
Scott Wapner
Who's got Key Corp?
- [45:26]
Brian Belsky
I do. Key Corp. K e y that one. Mid Cap Regional Bank, 4% dividend yield. Think it's going to play on deregulation.
- [45:34]
Scott Wapner
Okay, nice move today. Who's got the cybersecurity etf?
- [45:38]
Malcolm Methbridge
That's me. There's still a wave of consolidation coming within the cyberspace. The deal between Palo Alto and Cyberark won't be the last.
- [45:45]
Scott Wapner
Okay, as we talked about Crowdstrike a little bit earlier, those earnings are looming large, too. That was the point of that conversation. Marriott must be Jenny, that's me.
- [45:54]
Jenny Harrington
Stocks down 4% year to date because of fears about US travel. Numbers are coming in better than expected. 4% free cash flow yield 24 times earnings. 13% earnings growth ahead.
- [46:03]
Scott Wapner
All right, I'll see you on the bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at at 12 Eastern only on CNBC.
- [46:17]
Narrator/Announcer
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 cnbc make.
- [46:57]
Josh Brown
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Brian Belsky
There's no time like now to start.
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Steve Kovac
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Josh Brown
Register now@cnbcmakeit.com Personal Brand.