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The State of the AI Trade 11/17/25
00:44:12
The State of the AI Trade. Scott Wapner and the Investment Committee debate the AI trade as hyperscaler spending surges in the sector. Plus, the desk share their latest portfolio moves. And later, we hit the latest Calls of the Day. Investment Committee Disclosures
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- [00:00]
A
A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities and even another passenger or three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, Member, SIPC with stays under $250 a night, VRBO makes it easy to celebrate sweater weather. Book a cabin with leaf views or a home with a fire pit for nights with friends. With stays under $250 a night, find a home for your exact needs. Book now@vrbo.com I'm Scott Wapner, and you're.
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B
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 THE Halftime report. I'm Scott Wapner, front and center this hour, this big week ahead in video earnings. Yes, they are looming especially large, the markets in the air, trade more volatile lately. We will debate the road ahead with the investment committee. Joining me for the hour today, Joe Terranova, Shannon Coast Surat, SETI and Steve Weiss. There's your picture on on this Monday. So the NASDAQ is the best of the major averages today. You still have a lot of the mega caps that are down, obviously. Okay. Nvidia reporting on Wednesday. There's a lot at stake. We're going to get to that in a minute. Alphabet, thank you very much. Because without Alphabet, the NASDAQ wouldn't look nearly like it looks right now. Microsoft is trying to go positive, Tesla's positive, but Alphabet's the big winner. Joe, on the back of this new Berkshire stake, which some are calling a surprise, four, almost four and a half billion dollars worth of Alphabet stock. It's their 10th largest holding. What do we think?
- [02:04]
C
Well, I think with in the case of Alphabet, it's an accumulation of positioning that we're seeing going on across the financial services industry. And it's reversing a lot of the negative sentiment that we came into the year with. And I think what we're seeing with Berkshire, really, when you look at the net effect, keep in mind they sold about 9.4 billion worth of Apple and buying, you know, 4 billion and also selling bank of America.
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B
So there's still a net seller. Yeah, but this is a big deal.
- [02:35]
C
This is a big deal.
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B
We need to just sit back and Give props to Farmer Jim. Do I need to be the one to do it?
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C
We've already given him props. I know, but let's, let's.
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B
But I feel like he deserves props again.
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C
Let's stay on the.
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B
You guys were saying the sky was falling. He was saying, I'm buying. Okay. And here we go. I mean, now I don't.
- [02:53]
C
Would this be for the last time that we do it?
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B
Well, I mean, if there's a reason to do it, we'll continue to do it.
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D
All right.
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C
Jim, you did a great job back in May. I was wrong. Josh was wrong. You were right. This is why. Okay, today, today, what we're seeing in Alphabet, what we're seeing in the smh, if you could pull up the SMH as I'm speaking, that is now higher. I think that's why you don't get too bearish. I know a lot of people this morning when we saw the S and p futures down 50 handles below where they are now just 45 minutes ago. We've rallied 50 handles in the last 45 minutes. And it's because of Alphabet, it's because of technology. It's because of the SMH and the mega caps. And I think that's why you don't want to get too bearish here. Maybe you don't get an extension of the momentum trade, the aggressive nature of it that we've seen the last three months. That makes sense with the jobs report with Nvidia coming. But I think this is evidence of just kind of stay even keeled. Stay with the technology positions. They're working and I like what the team here at Berkshire is doing.
- [03:53]
D
Yeah. Yes.
- [03:54]
B
Shen last week was definitely more volatile than we had seen of late. Tony Pescarello at Goldman says his baseline view still net positive. I'm not convinced this is the start of something rotten, in part because capital flows continue to go towards tech. Yes, I know the market has broadened out more, but the capex from Tech is enough in many people's eyes to keep this thing going for a while. You don't need to hit Alphabet specifically, but we're on the cusp of what is a very big week. With Nvidia reporting midweek. Many of these stocks are off double digits from their 52 week highs. So there's a lot to. There's a lot to watch this week on how these things perform in what is the last of the most important reports of earnings season, simply because it's Nvidia.
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A
And I think if you were concerned, potentially over the last couple of weeks and waiting for that next shoe to drop. In terms of opportunity, I think Nvidia is likely to give you that catalyst to get a little bit more comfortable. I think the challenge here for investors is that every time we get some weakness in these Scott, the stocks, Scott, the valuations look a little less stretched, they look a little bit better. And the idea that we have to base the potential unwind of the trade on all of the more speculative names within the universe, I think that there is something to be said for that. I think that at this juncture what you're really looking at is where is the capex going to be monetized? Are these companies going to continue to drive what is essentially going to be a continued multi year thematic tailwind win? And if you're going to be in this space, Scott, I think you want to be in these higher quality names. And so therefore, even if we get a little bit of potential pressure or tension over the next few weeks on some of the speculative names, I still think people are going to use any excuse in this environment whenever these sell off to potentially add to.
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B
It's too soon. It's too soon to know whether you're overbuilding or overspending and you're not going to have the answers to those questions for probably we're talking years, not months like you're laying down the railroad. Are we laying down too much railroad track? Well, I don't know. We're going to lay it down and see what happens in the country. Are we laying down too much fiber and the whole Internet blowout? I don't know. Did you know that in 96?
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D
No.
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B
Did you figure it in 2000? Yeah. All right, so where are we in that cycle now? A lot of people are talking about it. The Journal goes in today big time on the AI trade and the data center build out. I hope everybody read the piece because it was a pretty substantial piece. Oracle's role in it, private equity's role in financing it, some of the circularity and the deals around it. So yeah, we're all talking about it, we're all thinking about it, but maybe people are worried about it too much.
- [06:47]
D
Yeah, and I think they are. And that's to Shannon's point. The high quality companies that have the cash flow, funding it are where we think you want to be in. Because if you are saying we're going to pull back at some point, those companies still have enough cash flow to move forward and reinvest in their businesses where it gets a little hairy Is like you said, some of these off balance sheet vehicles starting to show up, you know, is it, is it negative cash flow? Are we really producing enough to cover the costs? That's kind of that 8th 9th inning on some of these companies.
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B
But what do you mean 8th 9th inning on some of these companies? What does that mean? You make a statement like that, you've got to back it up.
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D
What do you mean if they don't? So take Oracle, which I like, but if Oracle does not show positive cash flow in a couple of years and is now going back to the debt markets again in 2029 and 30, or.
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B
I mean surround, how can we possibly. It's 2025, Scott, what I'm saying is.
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D
You have to bifurcate the two stocks. I'm not saying I'm selling, I own Oracle.
- [07:49]
B
No, I know, but I mean, if you're talking about, well, let's see how things pan out in 2029, how does that help an investor, including yourself?
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D
I said be careful that you don't have all your eggs in one basket. Stay with the Googles and the other ones that have true cash flow. When you were in the Oracles, you know, that's a little more speculative.
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B
You care about any of the companies that you own that are, that are raising debt. Amazon, for example, $12 billion from, from a bond sale, it's their first such in US Dollars in about three years. You own the stock, you care.
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D
Not with Amazon, not with Google, I don't because I think they have enough cash flow going forward and they can actually see. And actually Nvidia is going to be interesting Wednesday because they're going to actually say who's still buying and who's not. And if their growth is still going, then you know that these companies are still buying to grow.
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B
So they don't even have to tell us who's buying and who's not. The, the hyperscalers have already told us.
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D
Agreed. But what I'm saying is they're just going to reconfirm and that's what the market's going to look for.
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B
What do you think?
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E
So look in video, we know what they're going to tell us. With what Jensen Huang told us, every quarter, air spending is growing, it's going to continue to grow. So there's going to be nothing new out there in terms of when I take a look and I'm not positive in Oracle because of their cash flow situation and their bot and their borrowing and we don't know if they will get a return on it but if you take a look at Meta, which has been the most maligned stocks down over 20% in a bear market for the stock. So let's let your scenario play. If, if they don't benefit from AI, if they're spending too much, what does it matter Right now Earnings because of capex, that's my. Are at a low.
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B
That's why I'm agreeing with you.
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D
That's.
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B
That's sort of the overarching point.
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D
Exactly.
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B
Too soon to know.
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E
Well, it's too soon to know and it doesn't really, if you step back, it's going to be somewhat controversial. It doesn't matter because if they're spending too much, they'll put the brakes on the spending and earnings go up. Right now what I've got, even with that capex spending, I've got a company selling upon the estimate that's valued at between 18 to 20 times earnings. So I'm very positive on it. I think it's great buying opportunity. Opportunity here. And the trick is you can't wait to spend. That's the thing. So this is more than an insurance policy. If you wait till all the use cases come to effect, then you're late and you're out of the market.
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B
The CEOs have already voted. They have voted with their dollars and they know what they are willing. Well, I mean if theoretically you have.
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E
To have faith to know what they're doing.
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B
But you always do. You had faith in 06, in 07 that everybody knew what they were doing until the party came to an end, the house of cards came down and every turned out everybody didn't really know what they were doing.
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E
This is a little different because. Because their product companies are not financial companies, number one. And number two, not that mortgages aren't products, but these are products that are driving revenue now and what they're spending will augment increase that revenue dramatically. And they are developing the use cases. Sure.
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B
But it's one thing when you are taking your your mountains of cash and you're deploying it. It's another thing when you start raising piles of debt.
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C
It's different though.
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E
You're not raising piles of debt on a relative basis. Oracle you are, but you're not with Amazon, you're not with Alphabet, you're not with Metta. These are odd lots. They sound like big numbers. 12 billion big numbers. But the cash flow generation is monstrous. The levers they can pull are significant.
- [11:19]
C
As simply as you could state it, it's investment grade paper in the case of Alphabet, in the case of Amazon, in the case of Metta, case of Oracle, it's high Yield Paper. It's 550% debt to Equity Amazon, a 40 year offering which is the longest duration on this $12 billion proposed sale. You're talking about 115 basis points over Treasuries going to be remarkably strong demand for that. Now we I'm long Oracle via the Jyoti. I'm not happy about it because to your point, I don't like what Oracle's doing because I don't like their debt position and a lot of people have been long Oracle based on momentum we'll deal it at the next upcoming rebalance. But that's the one name I don't think you universally say just because we see all this debt issuance it's a problem.
- [12:03]
B
No, but you have, you have a tremendous amount of volume or certainly a dramatic pickup in volume of credit default swaps. Certainly some tied to Oracle as people. According to one article I read our traders are searching for cover because they are concerned hsbc big tech debt. Big tech debt is the new canary in the coal mine as it relates to Nvidia. Goldman today says Nvidia earnings could set off another tech led pullback. Any weakness in revenues or margins is likely to generate a setback in that space. We still have. You know, you may not have the ultimate answer about whether the hundreds of billions you're you're laying out are going to come to reward you. And you may not get the answers for a while but there are nearer term things that you need to see. Whatever pickup in revenues you want to protect your margins. That's why Nvidia, when we think we know a lot, we still need to see what they say.
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A
Yeah, I think that the, the, the challenge here is that Nvidia is both a beneficiary from this trade but also a key cog in this trade. And so therefore the any sense of weakness in terms of Nvidia's results are going to very materially spread through the rest of this ecosystem. We talked about vendor financing. You've, you've mentioned it, Scott, you talk about the credit market. I think that what Nvidia's earnings are likely to do if they come even close to expectations are likely to provide that foundation. But I don't think it necessarily alleviates some of these credit concerns. I think it nearly kicks the can down the road a little bit on the equity side. I still think that going into 2026 you're going to continue to get some questions about the quality of the credit universe around technology because you haven't had to ask those questions at all. And I think that that's an important piece is that Nvidia will help steady this equity trade and likely catalyze some continued buying into the end of the year. But I think into 2026 we're going to be talking about this a lot more on the credit side than we are on the equity side.
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E
You know, in videos could be so interesting. Right. Because they are going to have a good quarter. That's never the question. Each of the last few quarters they've had they've missed the whisper number. And so is the market going to make a stand and sell tech if they miss the whisper number? But yet earnings are still growing at 60% and they're all sold out for the next year or so. That's the weird thing about the market. That's why it's critical if you're a long term holder not to get shaken out. Because in video trade and what you're.
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D
Seeing in the stock, I mean it's off to 10. So you're already down about 10%.
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E
Well everything went up.
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B
Everything open air.
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D
But what's interesting is sometimes when they run up before then you have to be a little more. Even more cautious.
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B
Yep. There is the issue of. And you're going to hear more about it because some of the biggest voices around the overstating earnings and depreciation issue like Michael Burry's back again and he's been on a non stop storm of social media posts where he shows again a chart of capex and depreciation. And he has already teased November 25th something's coming down. Something's going down on November 25th. Do you is this issue to you much ado about about nothing or what?
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E
It's much to do about nothing that.
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B
The channel is talking about it too.
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E
So you've got two short sellers looking at Chanos is talking. I think he's really exclusively on core.
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B
We on core of core weave.
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E
Sorry Core. We've core weave. I don't understand why it went up. You know when pre. Right. Immediately pre IPO had one customer. It's all debt. I've looked at shorting it but I just don't short return really anymore because that is built on debt. That's a mountain.
- [15:46]
B
I understand like when you say well it's two short sellers but if you do recall there was a guy named David Einhorn who was asking some of the earliest questions about one of the investment banks. I'm not, you know, I'm saying that ended up being the canary in the coal mine.
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E
I'm not dismissing them. All I'm saying is what they're hanging on is not what I believe is critical to the performance of the shares. Because these are two massive companies that generally you've got to look at their coverage ratios and their coverage ratios are coverage ratios that any company on the face of this earth would want to have. They're just monstrous. So until those cover ratio coverage ratios fall down, till they go into junk status like Oracle, then I just don't, I think it's much about, about nothing in terms of depreciation. Depreciation is a definite byline of what shorts look at. They're saying too much because it's accounting. So look, I just don't think there's really any there there, you know, so. Well, that's just my view.
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B
The other there's a stock broadly on Core Weave.
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E
There is an Oracle. Yeah, I could see that. But on the others, no, I don't think so.
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B
There is news today on another name we've certainly talked about from, from time to time. It is a Morgan Stanley call on Dell. They've double downgraded that name. You don't get double downgrades all that often. Usually you don't get downgrades to sell very often, but you did 110 is the new target from 144. They say the memory quote super cycle increasingly poses a downside risk to hardware earnings heading into 2026. Bryn Talkington owns the stock which is. We wanted to come on and talk about this for obvious reasons. What do you think about this double downgrade?
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A
I mean a double downgrade. I mean I double, I double dare them to upgrade. So I actually read the report, it was a very good report. And so for the viewers that don't have access to the report, in summary is this is memory chips. Memory is increasing exponentially and they have a chart in there that shows that DRAM, and there's a specific DRAM called DDR5 is up over 200% in the 260% in the last two months. And so that is for a variety of reasons, but you're seeing memory prices, you know, outperforming gold. And so I think that for these companies like dell with their PCs, Acer was in the report, HP was in the report. Specifically think about laptops and PCs. I mean this is in the crosshairs of that. And so they're saying in the short term we think they're going to have margin compression. That seems very likely. Looking at the dramatic increase in these DRAM prices and memory prices, I think that a lot of this now is part, is reflected in the name. And so what I look at it and what I've been seeing all quarter, if you remember, I think two weeks ago smci, Super Micro had their earnings which were not good. I believe Dell is taking market share in that data center area from Super Micro. And so I think this, this, this non PC part of Dell called the Infrastructure Services Group, which is really in the heart of all the data center buildout, is going to continue to gain share. And so yes, over the short term I think this, this piece was spot on. I mean you would think that all these companies would have margin compression. But I think once it's settled down and after earnings come out next week, that'll give us more clarity and potentially a buy. But I would also say you could buy Micron as in the shorter term because the chart looks great. There's in the crosshairs of dram. So you could buy Micron. While you're waiting for this to pass through over Dell, give me a quick.
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B
Thought before I let you go on Nvidia, since you own the stock you have for such a long time, you're one of the most identified on the show with that name. What do you think it's going to.
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A
Come down to the Q and A? I think they're going to get some good tough questions about the circular financing, about Open Air, Open Air, all of those very fair questions. I will say, say this. I've always said Jensen was a showman, but he delivers the goods time and time again. And so we know to Steve's point, it's going to be a great number. But I think the Q and A is going to decide whether the stock trades up or down.
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B
Okay, we'll talk to you, I know, during the week. We'll see. Bryn, thanks for joining us. That's Bryn Talkington. So we blew past a name that I want to get to because I don't want to just blow it off. You know, this idea that the FTSE was talking about over the weekend that Apple isn't intensifying its succession planning for Tim Cook. We talk about it because it's a sexy headline and all that, but it's even more relevant, I suppose because in what you talked about Berkshire continuing to sell down their Apple position and you've trimmed it too.
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C
Well, I trimmed it personally, yeah.
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B
So why did you do that? Well, to me, that's an even bigger statement that you trimmed it personally because you have no, you can't do anything unless you're in the time period to do something with the etf. So if you do something in your personal position, to me that, that screams louder, frankly, than the other moves. So why did you do that?
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C
Okay, so let's, let's be clear on this. In August, the ETF did not own Apple. And at that time, Apple was trading around 205, 206. And I thought they had a moment in which you were going to see a rebuilding of positioning. And that proved to be right. I took a position as it moved higher, I kept buying more and more. Now I own it personally and I also own it in the etf. And I think from a risk management perspective, it's prudent not to own it in both places. So I wanted to buy more xpi. I just did not want to put more cash into the market. I want it to be a neutral effect. I pulled some cash out of Apple, bought more of the xpi, which continues to be break out. I think you got to be careful here on the news, both with Tim Cook and the news with Berkshire selling Apple, because there's a lot of resiliency right now in Apple stock. The fact that it's down only one and a quarter percent today, I think that speaks to the resiliency. And remember, you are now in a period where the blackout window on buybacks has reopened. You don't know what Apple is sitting there doing with the ability to buybacks significant amount of stock.
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B
Well, I mean. What do you mean? It's only down one and a quarter percent. It's showing resiliency. Resiliency against what?
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C
Well, I would have thought that the stock would have been down more than one and a quarter percent with some of the news that we had over the weekend.
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B
On Berkshire.
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C
Yeah, on Berkshire and then also surrounding Tim Cook as well.
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B
Maybe the Tim Cook thing. But it's not.
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C
I think it's been a consistent.
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B
Has been a consistency from that company, from that firm for, for a time. Long, long time. If it was the first time we were learning that, you know, all of a sudden they're taking down their Apple stake, I would agree with you.
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C
Well, Scott, I don't think you'd say on one hand we're all excited because they're buying Alphabet, and then on the other hand they're selling Apple. So we dismissed that. Like, you have to have it both ways. Yeah, you could be excited about buying Apple Alphabet rather.
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B
But you also that is new that the trimming Apple Apple again is not new. In fact it's, it's like all right, well they obviously had made a statement many, many months ago on what they were doing with that position.
- [22:48]
C
But, but their net action is still they're selling more Apple than they're actually buying of. Of Alphabet. We're getting caught up on Berkshire. I think the Tim Cook effect of it and I think overall the market environment, the way we came in today, in a very heavy mood selling in technology. I think, I think it's pretty resilient. See the stock right now you said you.
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B
I don't want this to get glossed over either. You said you bought more XPI in what you know the health care trade month to date is by far and away the best. That as a sector it's up more than 5%. The next closest materials up 1.3.
- [23:22]
C
Pure momentum trade for XPI. I mean that's why I'm buying it. I'm buying a five year breakout. I've talked about that since I started buying it at 102. And as it continues to move higher I'm going to buy more and more of it because I think the stock has a lot of room. I think near term it goes to 125.
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B
So you have a lot of exposure here.
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D
We do and it's finally coming back. I mean it was down for flat for quite a bit. It's up 10% for the year. And I think biotech is coming back, medical products coming back, big pharma is coming back and slowly the earnings there will show.
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A
Shan, you like, like health care. I think also if we continue to get weight in terms of investors being concerned about the Fed not being accommodative, you could actually see this unwind a little bit in the short term and then that would be an opportunity to add here because I think that there is a little bit of a narrative that the Fed's not going to go in December.
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B
We think wise.
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E
Look I think on biotech would always kill the. The move higher is supply coming on the market and the IPO markets just aren't open yet really to any degree. So you're not going to see that supply come on. So I think it's probably still a safe bet here.
- [24:24]
A
Definitely not in health care. I mean nobody's, nobody's running to the IPO market in health care, right?
- [24:29]
D
Not at all.
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E
The other way.
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C
The other health care name. If I could real quick that's breaking out I did a bad job on this. I bought it, I sold out of it after earnings. That's Merck. If you could throw up a chart, it's back up to 94. Now it looks like it wants to press towards 1 or 2. 97, which would be a 52 week high.
- [24:43]
B
All right, lastly, bitcoin. What is happening, Weiss? With Bitcoin, it's at 94,000. I mean you, you own Ibit, so you're the only one here who has any exposure to that. As far as that. Well, you have Strategy and Coinbase. I want to hear from you too. Actually, you know what, hold your thought because I want to hear from you first on what's happened with strategy. What's up with that?
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C
So it's a rules based strategy that we run and it's interesting because show.
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B
A bigger guys, a bigger thing to show the decline.
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C
When I saw strategy come into the etf, I honestly said to myself, I wish I had the ability to say no on this position and I don't. Strategy qualifies for the S&P 500. It's not in the S&P 500. For whatever their reasons might be. If I had that same discretion, strategy would not be in our universe. Now is that something that I could address in the future? Yes, it is. But for those of you out there that know how you control struct an ETF that comes with significant SEC paperwork in front of it. I said several weeks to you, Scott. I think that our entry into crypto was late. I've felt that all along. And it's proving itself out. I think that very clearly. We found a peak in the market on October 6th. I think it began with the dollar reversing in September. The dollars moved higher, then it moved to crypto. So then it's moved to gold. So all these macro momentum assets are rolling over and I see that's what's going on right now at Bitcoin. I don't expect it to stop anytime soon.
- [26:19]
B
Weiss RBC says it's a red flag for markets. The trend is more concerning and it's been fairly well correlated with the S and P over the past few years. What do you think about that?
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E
Yeah, so look, I sold some more last week, so I have barely a position left. And that wasn't brilliant. It was actually a mistake on my part because I've been very clear. I don't see any use case here. I've never seen anybody, including a squash box day when somebody came on, he's talking about, he likes apples so you know if they go down is like them less. Bottom line is there is no use case. It's strictly a trading vehicle and I bought it and owned Custom Momentum. Where I made the mistake frankly is when the momentum died, I didn't sell all of it. And the reason I didn't is that I, number one, I violated my discipline and number two, I was hoping there would be some news to drive it higher and didn't come out. So I still don't see anything other than the trading vehicle. It's not a store of value. We're seeing that it's not a hedge. We're seeing that it's a pure risk on asset. So I have other places where I prefer to lose money, not feel so stupid. Not that I've lost money here. I've made some pretty good money trading it. But on the Mark 2 market over the last few weeks, you know, it's not been great. So I see no reason to step in here. You only buy when the momentum is turned up. Clearly.
- [27:36]
C
The other thing that's troubling and the reason why I think it moves lower is this administration is arguably the the most pro crypto administration we've had. And bitcoin on the year is basically unchanged.
- [27:47]
E
That's why it's holding on to it because not only the administration, the people.
- [27:51]
C
Behind the but that's telling you. So that's telling you it looks like it's going lower.
- [27:55]
B
All right, we're going up next. Calls of the day Two price target hikes for two big cyber names, one of them reporting earnings this week. We'll debate that next. Your commute. Day in and day out. The same old route, but also the perfect time to hear what's new in blockchain and crypto. Level up your commute and join Ripple for conversations with some of the best in the business on how institutions around the globe are being reshaped and revolutionized with blockchain crypto. From digital asset infrastructure to payments custody and even our stablecoin rlusd. Listen to special commuter editions of Blockstars, the podcast hosted by David Schwartz. It's happening with Ripple, the heaviest metal credit card of all time, rumored to be one of only 18 in existence, plated with the very same tungsten that forged the international space Station.
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B
All right, calls of the day. Let's talk about CrowdStrike because Stifel's raised the price target now to 600 bucks from 515. They reiterate by Joe, you own this.
- [29:35]
C
Personally reports on December 2nd. I expect it to be a good quarter. You've seen an acceleration, a reacceleration, I should say, in the growth. We're also managing the balance sheet remarkably well and that's an environment where there's strong demand for the diversified suite of products.
- [29:50]
B
All right, Palo Alto is getting love to today from Cantor Overweight reiterated there to 50. Yeah. News price target was 223 I think.
- [29:58]
C
To a certain extent. And they've reported earnings.
- [30:02]
B
They report Wednesday after the bell.
- [30:04]
C
Yeah, so they.
- [30:06]
B
This Wednesday?
- [30:07]
C
Yes, they report this Wednesday after.
- [30:09]
B
Yeah, I know you said they reported already.
- [30:11]
C
So I think.
- [30:11]
B
Did he say it?
- [30:12]
C
I did say that.
- [30:13]
B
I'm looking at our executive producers nodding his head like yes. That means yes.
- [30:16]
C
They report Wednesday after the bell. In the last earnings report, as I started to say incorrectly in the last earnings report you saw that they had made the turn surrounding what had been previously some questionable quarters and that's where there was questions surrounding were they losing market share. In fact they proved to the investment base that they are not losing market share. I think you can make the stroke own argument that CrowdStrike and Palo Alto are actually capturing market share from all others like the Fortinets, the checkpoints, the Z scalers. And I think these two are becoming the dominant forces in cybersecurity.
- [30:55]
B
Okay, let's talk Salesforce. The target gets lowered to 305 from 325. B of A still likes it. Obviously they reiterate their buy. They say demands in a holding pattern but that better growth is coming into view. They lower their target due to pure multiple compression. Surat.
- [31:17]
D
Yeah, as a multiple, the software stocks have really compressed. Salesforce had their analyst day just about a month ago and they talked about 10% growth for the next three to five years. So they're working on that. I think that's what we like in them. It's a high cash flow machine and you get any type of growth back double digits. I think the stock will re rate and multiples will expand.
- [31:36]
B
So what do you think of American Tower? Target got cut to 203 from 251@ Barclays.
- [31:42]
D
So it's a great business. What's happened is it's also very interest rate sensitive because it's a REIT. And one of the things with REITs is if rates do go lower, you'll see a pop in the stock. But right now it's not defensive. Money's flowing elsewhere. But it's a great business and I think it has a lot of barriers to entry.
- [32:00]
B
Let's take a look at expediters of Washington. Expediters International got upgraded to a buy today. It was neutral. It is by stocks up 3%. Joe, you own this in the Jyoti new record high today, by the way.
- [32:11]
C
It is global logistics managing the tariff environment remarkably well. In the report that came out today, they talked about lower ocean rates and the ability to overcome that. You've seen that obviously represented not only only in the price but in the most recent earnings report where they had profit margin expansion looking at nearly 33% right now.
- [32:33]
B
All right. Christina Parzonovalos has the news headlines for us. Hi, Christina.
- [32:37]
A
Hi, Scott. Well, we have a federal magistrate judge who has ordered the DoJ to turn over grand jury materials to former FBI Director James Comey and said the criminal indictment against him could actually be dismissed. Judge William Fitzpatrick cited potential government misconduct by a prosecutor in the order saying, quote, grounds may exist to dismiss the indictment because of a matter that occurred before the grand jury. He has ordered the grand jury materials to be turned over to Comey by the end of the day. Meantime, former Prime Minister of Bangladesh Sheikh Hasina has been sentenced to death over her response to last year's student uprising in the country that eventually led to the end of her rule. She fled to India last year, which has so far declined to extradite her back to Bangladesh. And Jeff Bezos has launched a new AI startup called Project Prometheus, according to a report from the New York Times. The Times says the company will focus on AI for quote, the engineering and manufacturing of computers, automobiles and spacecraft and currently has $2.6 billion in funding, of course, partially from Bezos himself. Scott, back over to you.
- [33:42]
B
All right, Christina, thank you very much. Christina Parzonovos, we take a quick break. Coming up, the most oversold stocks poised for a comeback. We have a special look at that. And Tom Lee coming Up next in ETF Edge.
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And wielded.
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A
We're back on Halftime report. I'm Leslie Picker with today's ETF Edge. The bitcoin death cross has been stealing the headlines. But Ethereum, the second largest crypto is also down almost 30% within the last three months. Joining me now is Thomas Lee Fundstrack Global Advisors, managing partner, head of research and CNBC contributor on why he is still bullish nonetheless. So Tom, tell us that you've got these monthly fluctuations as you say, Ethereum is in a super cycle. What makes you stay bullish?
- [35:21]
B
Well, there's the story of building on Ethereum and we know that there is a lot taking place. There are stablecoin creations, Larry Fink and Blackrock and Wall street want to tokenize assets, you know, bring stocks, bonds, real estate onto the blockchain and they have to find a neutral 100% uptime blockchain. That's Ethereum and that's the fundamental story. The price of course for Ethereum will fluctuate because crypto is hypervolatile. In fact, it's kind of the, it's, it's sort of a feature of the blockchain itself. And, and I think we've been in a downtrend. Unfortunately a lot of folks are kind of questioning if we're in a four year cycle for bitcoin. So we talk about that in the chairman's message we published this morning that you know, the, the most correlated factor to bitcoin prices when you see it at bitcoin at a peak actually is the ism. So I, I think we're still in the a correction phase of crypto. You know, crypto suffered from that liquidation event on October 10th. But because the fundamental story is intact and crypto discounts the future, that's why it's volatile. But it still looks pretty attractive here. And personally I think that pretty close.
- [36:36]
A
To bottoming this point in time for Ethereum because you've got this general market risk off mentality. So what are some of the idiosyncratic elements that we should be thinking about as it pertains to Etherium in The meantime?
- [36:51]
B
Well, Ethereum kind of has several ways that establishes a floor. One is that the value of all the assets locked onto the blockchain and that number is growing. But historically Ethereum bottoms when that ratio is about 50%. So we're, I'd say we're pretty close to that level. That's why I think Ethereum probably is bottoming this week. But the other way to look at Ethereum is really its price ratio or even its network value ratio to Bitcoin. It currently sits at this number is 0.032. The long term average, like the eight year average, if we were just to trade to that eight year average would put Ethereum at around 12,000. So I think Ethereum is undervalued because number one, the story is gaining relative to Bitcoin this year. But two, we're getting this sort of intrinsic floor because of the value that the assets locked onto the Ethereum blockchain.
- [37:43]
A
All right, Tom Lee saying that Ethereum is bottoming this week. We will see. And we are actually going to continue the conversation over at ETF edge.cnbc.com Tom will be joined by Matt Haugen, CIO.
- [37:56]
C
At Bitwise Asset Management.
- [37:58]
A
Scott, I'll send it back to you.
- [37:59]
B
All right, Leslie, thank you very much. Leslie Picker, Straight ahead, we're going bargain hunting. A new list of some of the most oversold stocks in the market. CNBC Pro did a screen, got it in front of me. Tell you what it is next. All right, welcome back. So CNBC Pro ran a screen on the most oversold stocks in the market that could be primed for a comeback. I have them in front of me. We will go through some of the names that are on the list that are owned by the committee. Lamb, Weston, Surat was down almost 9% last week, has an RSI of 28.8. You own that name?
- [38:48]
D
I do. And it's a maker of french fries. The stock ran after earnings, did very well and now I think some profit sharing. We still like the company. It's a core holding. So I would be buying the weakness.
- [38:58]
B
Do you buy it because you like french fries?
- [39:00]
D
I love French fries. Fry.
- [39:01]
B
Scott, thank you. Block is down 6.8% last week, 26.8 the RSI. Joe, you own that. You own Super Micro, which is on the list. You own Axon, which is on the list.
- [39:14]
C
So put Block and Supermicro in the same category. Technically they look awful. They're also seeing a little bit of deceleration in revenue growth, profit margin, not really expanding to the degree I would like it to. Axon, that's in more of the category of momentum winners. Like an app Loven, like a Palantir. That needs to work off an extreme valuation at certain point. I believe it will. At that point you'll see the double digit revenue growth gains come back into play. You'll see the very strong ecosystem as it relates to law enforcement and the usage of technology. I think that one has an opportunity, but it's probably a little further down the line.
- [39:51]
B
Block's target got cut today to 45 from 60. Reiterated sell at Rothschild. So they do not agree with this screen that it's poised for a comeback obviously.
- [40:03]
C
Nor do I based on what I said about that Super Micro. I think they look the charts and both look awful.
- [40:09]
B
So Iron Mountain's on the list. Molina Healthcare, Charter Communications, Alexandria Real Estate and Surat. Your Oracle is on this list poised for a comeback according to the 10.5% decline last week and an RSI of 24.4.
- [40:28]
D
I mean Oracle is the only one that I own on those.
- [40:33]
B
Let me ask you a question, Scott. When I brought up Oracle, I looked over at you and I don't think the camera had cut over to you and you had this look on your face like you had just put the tee shot in the water. I mean, do you feel like you, you want to go, do you want to go to the Circle and then ret and like go for the drop? You just want to like go back to the clubhouse and get a drink? What do you want to do?
- [40:52]
D
When we were going over 300, I sold some of it, so I brought it down to half the position size. Now it is the speculative play in my portfolio to say, hey, if it works, it works. But I've still guarded it with the others, the Amazons, Google's Matters of the.
- [41:07]
C
World, they report in early December. That's going to be a very interesting earnings report port and probably have an effect on the market overall.
- [41:15]
D
Absolutely.
- [41:15]
C
Oracle, did you, did you, you called.
- [41:18]
B
It a speculative play. Did you always feel like this was a speculative value play at 14? But that's why, like when you said that I'm like speculative play. People don't think of Oracle as a speculative.
- [41:28]
D
Is that it's multiple. If you look at its multiple compared to kind of where it was and also are they going to execute for the next couple of quarters, couple of years?
- [41:37]
B
Like now you're like, you got to take out your three wood. You're like, you're like 250 out and you got a big thing of water in front of you.
- [41:45]
E
And you're going.
- [41:45]
B
Over the trees also into the trees.
- [41:49]
D
But I'm there. It's, you know, the idea is that I've still had a good round at the point. So I can do that and take the risk.
- [41:56]
B
But that can blow your whole round.
- [41:58]
D
Yeah, but I wouldn't do that in over water. I wouldn't take once. Okay, so to your point, I would not put my whole portfolio at risk with one shot. And I wouldn't do it one stock. It is a small position in an overall portfolio.
- [42:10]
B
All right, good stuff. Santoli's next.
- [42:30]
C
All right.
- [42:30]
B
Welcome back. Michael Santoli, our senior markets commentator, is joining us now for his midday word. You asked the question today. Did the bull pass its latest gut check? You're a tough grader, but how would you answer that, teacher?
- [42:43]
C
I think it's pending. I think at this point you would say it's working on it and at least it's done nothing to suggest that the trend has been broken or the fundamental underpinning of what's gotten us here are suddenly suspect. But I do think we have this ongoing questioning process. Most of all, you know, we get to cycle high valuations. The NASDAQ 100 kind of overshot the ceiling of its valuation range coming into this last several weeks. And now we're all asking, are we capitalizing AI excessively and unwisely. I think that kind of captures the general state of the debate there. And it's, you know, tbd, I think that front. And then is the Fed setting us up for a potential error if it does not cut and we don't really know if the economy is solid. Those are the two main things, I think, that explain why the market has hesitated here. We've held support a couple of times at the index level. It seems fine. But there are these kind of unnerving rotations happening in some portfolio stress, whether it's Bitcoin, whether it's crypto related, whether it's private credit related. That I do think is making it further feel worse than the index would suggest right now as we purge crowded position.
- [43:50]
B
How would you characterize the importance of the Nvidia call? Forget the earnings. Yeah, the call.
- [43:56]
C
I think it's pretty important for them to express confidence that persuades investors, like through next year. At this point, it's about the duration, not, you know, the magnitude of like next quarter's revenue guidance or something like that. So we'll see. I think Nvidia earnings just have to get past it and then figure out what the market really is working with. It's to me, not necessarily something that launches the market up or breaks it down. It kind of gets out of the way so we can really have a clearer view of of what we have to for us the rest of the year.
- [44:27]
B
All right, good stuff. I'll see you in a couple of hours, Mike. Thank you. Mike Santoli. Finals are next. Today marks five years since the Jyoti ETF was launched. Since its inception, it is up 69%. Joe sat down. Look at that mug right there. Look how happy he is. He sat down with CNBC Pro to talk about the fund's performance and of course, his strategy. And you can scan the QR code right on your screen or you can go to cnbc.com joetprotalks either way, be sure to check it out. I mean, look at that face.
- [45:05]
C
Thank you for that.
- [45:06]
E
This is great.
- [45:07]
B
Five years. Congratulations.
- [45:08]
C
Thank you, Scott.
- [45:09]
B
I can't believe it's been five years.
- [45:10]
C
It's been five years. Thank you very much. Thank you to the network. Great conversation. Dom and I had just talking about momentum, the various factors, how investors should be thinking about it, and overall the ETFs uses as a core of 69%.
- [45:24]
B
Over that period of time. Which is why Weiss, who doesn't smile for many people, would smile for you.
- [45:29]
E
I've been there from day one.
- [45:30]
C
Thank you.
- [45:31]
E
And despite Joe's picture.
- [45:33]
B
Give me your final trade, Weiss.
- [45:35]
E
My final trade is not health care. I'm not really positive in the market right here. I think volatility continues and there's safety there.
- [45:41]
B
All right.
- [45:42]
D
Sarat Thermo Fisher, I think you're seeing more acquisitions. Medical products companies got some tailwind.
- [45:48]
B
All right. Good stuff. Shan.
- [45:49]
A
Health care, we think there's going to be some resolution at the government level over the next few weeks, which should be a catalyst.
- [45:53]
B
All right, well, that's been the big winner.
- [45:55]
C
And Jyoti consumer staple name Monster Beverage, 52 week high.
- [46:00]
B
Is that in the tea? That's in the tea. All right. Better be.
- [46:03]
C
Of course.
- [46:03]
B
I gave you all that love. My God.
- [46:05]
D
Thank you.
- [46:05]
B
All right. Good stuff. We'll see you at 3. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:19]
A
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 halftimereportdisclaimer.
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