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Halftime Report
The State of the AI Trade 5/29/25
00:44:14
Scott Wapner and the Investment Committee debate the state of the AI trade following Nvidia’s earnings report showing strong demand. Plus, the Committee share their latest portfolio moves. And later, Josh Brown shares a stock that made it to his “Best Stocks in the Market” list. Investment Committee Disclosures
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- [00:00]
Scott Wapner
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 Are you still.
- [00:32]
Josh Brown
Quoting 30 year old movies? Have you said cool beans in the past 90 days?
- [00:37]
Bryn Talkington
Do you think Discover isn't widely accepted?
- [00:39]
Josh Brown
If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places.
- [00:45]
Bryn Talkington
That take credit cards nationwide.
- [00:47]
Josh Brown
And every time you make a purchase.
- [00:48]
Scott Wapner
With your card, you automatically earn cash back.
- [00:50]
Josh Brown
Welcome to the now it pays to Discover. Learn more@discover.com CreditCard Based on the February 2024 Nelson Report.
- [01:00]
Bryn Talkington
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, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour, surging in video shares higher today after the company's earnings show. Demand is still very strong for AI the rest of the markets. We will trade that too, with the investment committee. Joining me for the hour today, Josh Brown, Jenny Harrington, Bill Baruch and Bryn talking to. We will go to the markets here. We are mixed and NASDAQ's off its best level too, and many stocks that were nicely green have peeled back a bit. The Dow's off 1/2 of 1%. Josh, we obviously overnight were reacting to the trade court ruling. It's really hard to trade that though, because it's far, far from the the end of it. No one knows what really the next step is going to be, which is why we're going to focus on Nvidia. It's the biggest story in the market moving higher, obviously after their earnings it had reached. It has retaken the spot as the most valuable company in the markets, up 4%. Your take on the quarter and what to do with the stock now is what?
- [02:13]
Josh Brown
Look, I think in video we talked about this going into the print earlier this week. It's just in this really singular position and everybody is aware of that. The multiple is not crazy given how popular the theme is and given how badly people want to be allocated to it. So I wouldn't say like it's like this outrage, just multiple on expectations. There Are tons of stocks like that and this isn't one of them. Obviously the growth rate is decelerating. It's still incredible. It's still the most important company in the entire theme. It probably will be for years and years to come. We all agree with that. But like, what are you looking for? So they guided to $45 billion in revenue for Q2. The estimate was 45.9 billion. Some of that you can blame the chips not being able to be sold in China. Fine. We all understand that the analysts have long ago pulled all of that out of their estimates. In the end, if they can hit that number, it's great. It's just not what in video was doing a year ago, two years ago. So I think the stock coming back to this old high, stalling out a little bit makes sense. I'm along, I'm not going anywhere. Everything that I heard discussed in the Q and A section of the call is exactly what I would have wanted to hear as a continuing long term shareholder. This, this company is just absolutely on fire.
- [03:32]
Bryn Talkington
Brian, you know, going in, we talked to you yesterday on Clos Housing Bell ahead of the print and you suggested, you know, the market was going to be pretty careful about letting this stock go higher from where it was because it had such a great run here. We find ourselves even higher. We're not that far away from a new high.
- [03:51]
Scott Wapner
So we talked about it yesterday. The options market I think was pretty spot on. A plus minus 6% move. Overnight it was up plus 6 or about 4. And I think ultimately between the run up, but also to Josh's point where it is right now trading close to an all time high. I think to punch above that, you're going to need clarity around China. And whereas Jensen is really clear. I think this is the first call I've ever heard him read a script. First of all, very, I mean he didn't have one extemporaneous word. It was all very scripted out. Think they're definitely treading lightly.
- [04:25]
Bryn Talkington
Is that a problem? I mean, I saw you're not the only one who's mentioned that there was an analyst notation today that the call felt closer to an Apple call than an Nvidia one for that same reason. Does that, does that even matter?
- [04:40]
Scott Wapner
I think if it were, if it were a consistent, a consistent quarterly call that he's reading off a script, yes, it would matter because Jensen's always so vibrant and so off the cuff. And so I think right now, you know, he obviously owes a debt of gratitude to, to Trump for Negotiating, you know, with the Saudi and uae. I mean that was definitely has, has the president's hand, handprints are, you know, all over it, which is great. And so I think that it's appropriate right now. There's a lot going on, a lot of conversations. I think China, he was really clear and I thought threaded the needle really well that half of, half of the AI researchers are in China $50 billion market and effectively they're cut out right now. And so I think he's really asking the president when he says he's on the call, do we want the globe to be a US tech stack or a Chinese tech stack. And I think we're hopeful that it's a US Tech stack. And so I think that there's really good upside if you actually got as part of the Trump China negotiations, this reuse of the H20s, which right now are only good in China. So I think that the stock, like I said yesterday, I think it's capped out close to this level. I think you have to be patient. But once again, this is a great name to add to your portfolio this year. It's a cheap stock. They're going to continue to billions in revenue. And between Jensen and Colette, it's like Satya and Amy Hood. It's like to me one of the best one to, you know, CEO, CFOs out there.
- [06:07]
Bryn Talkington
Yeah, Bill, I mean these, these guys have laid it out well. China issues well known, which is why it really became what does demand look like? X China. That's what the market was keyed on. Jensen Huang saying, quote, Global demand for Nvidia's AI infrastructure is incredibly strong. And as AI agents become mainstream, the demand for AI computing will accelerate. And that's what everybody really has tried to push back, especially on the deep seek reaction was this is going to cause more compute, not less. And he really reiterated that 14 price target increases, two upgrades to buy mostly unknown shops that did that. But nonetheless, those are the calls you get. You own the stock too.
- [06:48]
Bill Baruch
It is our largest position at this moment here. I really like what we heard from Jensen, scripted or not. I mean if there's time to script out the call, this would be the sort of a treacherous sort of time here, charging off the H20s, everything that's going on geopolitically. But to your point, they highlighted, he highlighted Microsoft deploying tens of thousands right now, the GPUs and it's going to turn into hundreds of thousands of the black wells. And at that point to all of these hyperscalers they are going to have to follow. I think some of the price targets, raise, raising, you know, they're trying to just beat people to it. Yeah, I would, to Josh's point, consolidate. I think it's fair to expect that right here. Maybe, you know, giving back some of this 135 to 155 consolidation. But I now think a month ago you asked me about 180. I now think 180 is the next stop up here as it consolidates. Let's talk about something else. Free cash flow. Free cash flow. $26 billion this quarter. 72 billion the last 12 months. 13 billion they are returning to shareholders and buybacks right now. 40 billion buybacks trailing 12 months this they're returning cash to shareholders and that's powering the stock as well. I expect that to continue. The fact they were able to meet that expectation of revenue, 45 billion tells you that free cash flow is coming.
- [08:01]
Bryn Talkington
Still certainly helps the semis trade which has been on fire in the month of May after sucking wind for a while. It's the best month since May of 23. So two years for the SMH winners across the board, not just in video, obviously. Micron's 26 microchip, which you have the preferred Zen, it's Broadcom which reports next week reiterated by today 205@ Deutsche Banks the price target there. Taiwan, Semi, Lam and amd.
- [08:27]
Scott Wapner
Right.
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Jenny Harrington
But I think, I think we need to be careful when saying hey, this is a great month. I had a client ask me the other day, they said why is the microchip preferred that you bought for me a month and Change ago up 40 plus percent. And I said because it shouldn't have been down 60%. So there is that really just like air. All the air was sucked out of the room in early April and it reset those prices. So a lot of these huge upward moves are really not because their stories have changed, I don't think, but just because the share prices are a month and change ago, we're down too much.
- [08:55]
Josh Brown
That's a Good point. The SMH itself, the index is only 13% off of 52 week highs. But the median stock in the SMH ETF is 36% below its 52 week high. So the benefit of the SMH is that 40% of it is the top three names. It's in video, it's Taiwan, Semi and it's Broadcom and the other 60%. They've rallied obviously with the overall market. They're nowhere near those old cycle highs. I don't know if they get back but it's almost not that important to the NASDAQ because they're just not big enough. There's only one stock in the SMH that's below its 50 day moving average. Can you tell me what it is?
- [09:37]
Jenny Harrington
Microchip Intel. Intel. Sorry, I blocked out the entire, that.
- [09:42]
Josh Brown
I blocked it out the entire. Talking about, you know, you've never heard of it.
- [09:46]
Bryn Talkington
Tell us.
- [09:46]
Josh Brown
Never heard of the entire index. The entire index short term is rallying. But those big three are really the critical names in the space and they look good.
- [09:56]
Bryn Talkington
This is a helper if nothing else, Brin to the overall big cap tech trade. You couldn't have in video do anything, you know, to question demand. You would see many of those stocks down today and they're not having the greatest day. However, the NASDAQ has just been a ripper this month up 10%. The Mag7 ETF which is known as the Mags best month ever since the inception as many of those names have just absolutely ripped this month.
- [10:29]
Scott Wapner
Yeah, well, I mean I think besides, you know, Jenny's very, very accurate point about a mean reversion trade. I think what you're seeing, I think going back to the call with Jensen, he's like AI diffusion is off the table. We're not seeing these hallucinations, these AI reasoning models are coming and so it's like we're getting these very large step functions up versus more linear, incremental. And then you heard Microsoft talk about it and Jensen about these tokens, but all these tokens getting used and the cost of the tokens coming down. And so I just think you're really seeing this not only adoption but I think it's important, important ultimately this return, return on equity which, which at some point we see the return on equity in video, but I think Microsoft talked about it as well. They're doing really well. And so I think these names are tough not to own because of the free cash flow of the growth of the opportunities going forward.
- [11:23]
Bryn Talkington
Yeah, Bill, I think, you know, I think people get that, agree with it, know it tough to, tough not to own. You think they're tough not to add to even. I guess that's the way I'd put it. Even at these levels with these kinds of gains. You bought more Alphabet earlier this week.
- [11:40]
Bill Baruch
Yeah, I did buy more Alphabet to my point. When the S and P did go to 5700 for that first time, we were trying to raise a little bit of cash. We dialed Alphabet back just a little bit I talked about on the show but you know, there were some concerns where is the search going to go? And after comments from Apple. But where when we saw the event, the IO event last week or two weeks ago. I mean what they unveiled with Vay03 and what they're able to accomplish, they are putting their data set to work and you need the data though no one has more data than Alphabet as well as Metta and being able to implement it. I think that this is something here that we want to be make sure that we're at above market weight on and own and look at I think in the market in general you talk about a lot of people worried about that it's not going to catch up the max 7. There's been a lot of outflows and in the SMH, I think this is very similar to what we saw in 2019 where there was a lot, there was almost historical outflows in the first half of 2019 as the market rallied. But guess what happened in the back half of 2019? It rallied even more.
- [12:46]
Bryn Talkington
You were skeptical of the Eddy Q. So to speak, sell off. Yes, right. That day that we all remember because we covered it so heavily as it was unfolding. You know, he's in a courtroom, makes a comment that, you know, Google searches on their browser, on Apple's browser, we're down for the first time. And you're like, okay, is this an existential issue here for what people have feared because of generative AI?
- [13:12]
Josh Brown
I think it's.
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Bryn Talkington
Well, let's get to that in a minute.
- [13:15]
Josh Brown
It's only going to get worse. Sorry.
- [13:17]
Bryn Talkington
Bill was one of those saying you guys are overplaying that the market's overdoing it. And sure enough, the stock had rallied back and eclipsed the sell off and then some. So you're firm in your belief despite what they're going to argue counter to you in just a moment?
- [13:33]
Bill Baruch
Yeah, I am firm in my belief. At that time we trimmed it, we got a little lucky. We did it before that comment and now we're able to take a step back and reevaluate the situation. And I think, and not only that, again I look at fundamentals flows, the way the market reacted, the NASDAQ as a whole after that IO event, there was levitation. This was acting, it was almost like the trade was, was a reminder that it's still alive and the market was, was gravitating higher on that. So I think from a flow standpoint, from a technical standpoint, I think that there's A lot of room that we can see this run. Yes searches 56, 57% of it of their revenue and that could take a bit that's going to take a hit to them if it starts to, it starts to come down. But the thing to think about to go back to Apple and as they, the product revenue starts coming down, services revenue picks up. There's they, if Alphabet they have running the DOJ problems. If they actually are forced to break this company up, I think that that is a positive. There is so much value that can be unlocked in this company even by, by breaking it up.
- [14:32]
Bryn Talkington
But nothing is as valuable and important as search.
- [14:39]
Bill Baruch
But it's not what you're doing for me now. It's been tech. It's what you're going to do for me in the future.
- [14:45]
Bryn Talkington
These guys are going to make the point right now that you know what, what is a maybe slow decline now is you're not going to be able to turn the spigot off that it's just going to keep dripping and dripping and dripping.
- [14:57]
Jenny Harrington
And I think that's the problem when you say what are you going to do for me in the future? Let's say Google does do AI for you in the future better than any of the other AI components competitors. But the thing is we don't know how profitable it's going to be relative to search. It's an expensive, it's an expensive tool to run and we don't know what the monetization is going to really look like. So I know just taking myself as a cherry picked example, I'm going to bet you that my search on Google is down 50% in the last month because I'm using Chat, GPT, Grok, Claude and I'm using, using them all the time and I'm getting much better results. I think I'm a little ahead of the curve on that but that's going to trickle any everywhere and I'm not seeing any advertising on those. So even if I use Gemini like that's not profitable for Google in the way that it was.
- [15:39]
Bill Baruch
Great results, great results. But when you look at, have you seen the videos that are coming out of Vayo 3? I mean, I mean yeah, this is, this is Tom Cruise's last Mission Impossible movie but with, with this video construction you could. There's going to be Mission Impossible 30. I mean with, I mean this is.
- [15:53]
Bryn Talkington
Guys, hold your thought for a, hold your thought for a second. I want to get to Julia Boorstin who has a news alert regarding matter which just Today, Julia, Mark Zuckerberg said they have 1 billion monthly actives in Metta. Ise related to that or we have something new?
- [16:06]
Jenny Harrington
No, this is new. That was news coming out of the.
- [16:08]
Bill Baruch
Annual shareholder meeting yesterday. But today Met is announcing its partnering with defense tech company Anduril Industries. Now, Metta will design and build a range of integrated XR products. That means probably wearable glasses and the like, which they say will provide war fighters with enhanced perception and enable intuitive control of autonomous platforms on the battlefield. Now, here's what's so interesting here. Palmer Leckie, who's the founder and CEO of Anduril, also founded Oculus, the VR headset maker, which he sold to Metta. Palmer Luckey was then pushed out from from Meta and Oculus. So now they are collaborating again and it all comes full circle, Mark Zuckerberg says, saying that they are proud to partner with Andrew to help bring these technologies to American service members to protect our interests at home and abroad. We have seen a real surge in investment in this defense tech space and Andrew is really at the center of it. Back over to you, Julia.
- [17:04]
Bryn Talkington
Thank you very much. Julia Borson. Perfect segue to what we just told you going in that came out at the shareholder meeting to Jenny. 1 billion monthly actives for Metta.
- [17:12]
Jenny Harrington
Right. And so in addition to that, right. Facebook's got a $68 average revenue revenue per user. They are minting it. So when we think about Facebook or Meta and monetize monetizing their AI versus Google, that's like all to me, that's all whipped cream and cherry on top for Meta, whereas for Google it could be a little bit of cannibalization of the other business. So I look at this and I'm like, wow, that's great. AI is just more money, more profitability. Google, I'm not sure it is. It's a tough one. So when, when Bryn said before you have to own or, you know, I can see owning the mag Sevens, I'm not sure that you really want to own all seven. I think it's still going to be a time where maybe you want to own three of them or five of them or a few of them, but I'm not sure you want to own.
- [17:56]
Bill Baruch
All seven or just weight them underweight significantly and overweight significantly and you're going to. And if they really perform.
- [18:02]
Jenny Harrington
But here's the thing. If you're going to, from a portfolio management perspective, if you're going to underweight something, then why bother owning it?
- [18:08]
Josh Brown
What would, what would happen to Google's market cap. If and when OpenAI files for an IPO, where is the shareholder base for that stock in the public markets coming from? It's a $300 billion valuation. Those are people selling Alphabet to buy open AI, which many perceive to be the next wave of how consumers find what they're looking for on the Web. Google's off. They have amazing technologies. They have huge investments in things like Waymo. They're going to be big in quantum computing. Nobody is saying that Alphabet is not well positioned for the future. But in this particular business, which accounts for half their revenue, they have never, ever had to fight with one hand tied behind their back the way that they have to fight now. And when I talk to people about ChatGPT, you have people paying 20, $20 a month. They don't even know how to use it.
- [19:01]
Jenny Harrington
Right.
- [19:02]
Josh Brown
You go on someone's phone and say, go in settings, personalization, turn on memory. Why don't you have your memory turned on? You're using it like Google. The thing is not getting to know you. Have you introduced yourself to your chatgpt yet? Have you literally gone in and said, hi, I'm Scott Wapner. I host a show on CNBC about stocks. And that way the thing knows how to help you. I know that Gemini is not a total also ran. It's just not where it needs to be. And from a monetization standpoint, it's all Wall street cares about. Wall street doesn't care about Tom Cruise. Wall street wants to know, will they ever make as much money in this as they used to make when they had a monopoly in search? I think the answer is probably not.
- [19:45]
Bryn Talkington
We want to move and talk about cyber because if you were watching our program yesterday, things did get a little bit spicy. Here on the Halftime Report, a debate about Palo Alto Networks. Stephanie Link long the name and has been buying more Malcolm Etheridge selling it and telling us why.
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Bill Baruch
When you look at a company like palo Alto where 50 to 60% of their revenues comes from the federal sector, that's scary to me.
- [20:11]
Scott Wapner
There's no way this administration is cutting anything in cybersecurity.
- [20:14]
Bill Baruch
They were just on Congress spending their stance to cut the budget.
- [20:18]
Scott Wapner
They can't afford to. They can't afford to. There's no way they'll find other places.
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Bill Baruch
I agree with you that they should.
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Josh Brown
Not, but I believe that in the meantime, I like.
- [20:27]
Bryn Talkington
All right, well, I like that. Well, you can. I don't know what you're gonna think about this. Oh, Palo Alto CEO Nikesh Arora he saw that debate, he responded and refuted Malcolm's key claim in a post last night on LinkedIn saying quote, I don't care if people sell our stock, but please ensure your guests know their facts. We are not 50% reliant on the Fed House. 5% have discussed DE risking our Fed business in both earnings calls. We're not only on prem, we crossed 5 billion in next generation security, all delivered through the cloud. One of our fastest growing businesses is Zero Trust. We might know a thing or two. We are platformizing our way not just into customers hearts, also into their cybersecurity budgets. Our largest deal this quarter was 90 million. Here's the key point to be made and where I think we had some issues with what Malcolm had to say. 50% of government spending on cyber goes to Palo Alto. 50% of what the government spends on cyber goes to Palo Alto. Not that Palo Alto itself relies on the government for 50 to 60% of its billings. What percentage of Palo Alto's total billings come from government? In Q3, the company reported single digits and you saw what Nikesh Arora himself said in his own words was 5%. Yes, there have been concerns about slowdowns in buildings in prior quarters, including from the government. But the numbers were way off and the facts matter. They matter to you, matter to us, matter to the companies we talk about. And I wanted to get that cleared up all of that as I go to Bryn to talk about the cyber etf. We don't have to talk about Palo Alto because you don't own it individually, but you do like these stocks.
- [22:29]
Scott Wapner
Oh yeah. So, so Steph one on that, one on that little debate. So good stuff. Yeah, I think this is a secular grower and it's that if you look at areas, you have AI, you have cybersecurity. Where else are you going to get this consistent secular growth rate, cybersecurity. So I just think this is a global trend. It's not slowing down. And so I like owning the basket of names because like CrowdStrike will do well. Okta had a bad day the other day, but then Palo Alto will run a runabout so I can own, I feel like a larger size position because I own the basket. But this is a secular, secular growing trend. That's not, that's not going away. So I just think by the basket, let it run in your portfolio and call it a day.
- [23:15]
Josh Brown
On my best stocks in the market list. We talked about Zscaler a couple of weeks back. Stock still looks phenomenal. It's hanging High right by 52 week highs right now. And of course the name that I own that I think is the dominant player in the space for years to come, CrowdStrike, which just made a new record high yesterday and seems to be doing that a lot lately. There's like a lot of different ways to win. I agree with Bryn. I've just chosen to pick the one that I think is going to basically be the biggest name in the space and not changing that strategy.
- [23:47]
Bryn Talkington
Okay, let's talk about before we take a break, momentum, because the mtum, I mean, what was it six months ago? Maybe even more. We were talking about that as a factor doing so well and then it had a major, major rollover. It did hit a record high. And in May, names like applovin are up 43%. Constellation 36, Robinhood 31, Carvana 30, Tesla 28. Vertif 26, Robot Blocks 26. That's a smattering of names from that index. Brin, you are trimming Palantir, you are trimming Robinhood and you are trimming Tesla. You want to tell us why?
- [24:27]
Scott Wapner
Well, so to be clear, all of those positions got called away last Friday because my options expired and they were. The stock was above the expiration point. And so to me it's like a great way to have an exit on a stock. So I think it's hard to know when to sell Palantir, I've continued to sell down that position. This got called away because I do think it's in the nosebleed from a valuation perspective. I still own some but that to me is a great discipline of it forces me to sell because the stock gets called away. I never buy my calls back early to keep the stock. I just let that process work.
- [25:01]
Bryn Talkington
All right, we'll take a break. We're going to come back. We have committee moves to talk about from Britt. She has some other names out of the retail space that you, you're going to be very interested in. We have a huge week for that sector. Plus, Josh is back with his best stocks in the market. His stock spotlight today just hit an all time high.
- [25:18]
Josh Brown
It's a tasty one, judge.
- [25:19]
Bryn Talkington
Tell you what it is coming up. We'll be right back.
- [25:24]
Scott Wapner
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- [25:55]
Josh Brown
With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business helps turn today's enterprises into engines of modern business. Powering the engine of modern business Powering possibilities. Restrictions apply. Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?
- [26:16]
Bryn Talkington
Do you think Discover isn't widely accepted?
- [26:19]
Josh Brown
If this sounds like you, you're stuck in the past.
- [26:21]
Scott Wapner
Discover is accepted at 99% of places.
- [26:24]
Bryn Talkington
That take credit cards nationwide.
- [26:26]
Josh Brown
And every time you make a purchase.
- [26:27]
Scott Wapner
With your card, you automatically earn cash back.
- [26:30]
Josh Brown
Welcome to the now it pay to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [26:52]
Bryn Talkington
All right, some brand moves to talk about. They're out of the retail space. Well, it didn't take long. You sold Nike, you took a risk and the stock's actually been working lately. And then you sold rh. So what's up?
- [27:05]
Scott Wapner
Okay, if you remember this, it was last time I was on set in the middle of the trade tariffs and quotes. You know, Restoration Hardware got down to 145. So I said I bought Restoration Hardware at 145. I sold the May 23, 180 calls and I got $200. So the stock was above 180 on Friday, got close, called away. So if you followed me in about six weeks, you made about a 39% return and it got called away. So I think it was a good rebound trade off the nonsensical cardboard billboard box that we saw back in April. Nike was the same trade. It did. Okay. I sold it anyway. I bought it around 57, sold it around 6061 on Friday. I just felt like that trade had made its pop. Obviously Restoration Hardware moved far more than Nike. So I'm out of the trades. Both trades.
- [27:56]
Bryn Talkington
Do you just not believe that Nike is on a longer term trajectory? Higher. The turnaround story isn't as durable as maybe you thought it could be or would be.
- [28:12]
Scott Wapner
No, I purely did this because about a third of shoes writ large in America are made in Vietnam. Nike has 500,000 employees in Vietnam. And I just felt like we're not going to make iPhones, we're not going to make shoes in America. And so I just, that's why I went into the trade. Nike's trading at like 2016 prices. I actually think longer term, going back into Amazon was incredibly smart. They got above their skis. But they do need to do a refresh because people love Those on shoes, people like Hokas, people like all sorts of other tennis shoes. So I just think it's very competitive. But I think here, when you have the stock that's been flat since 2016, for the fundamental folks looking for a turnaround, it could be a good name. I just don't like buying retail to begin with. And I just did it as a trade.
- [28:55]
Josh Brown
Yeah, stock is going lower.
- [28:57]
Jenny Harrington
I want to make a point.
- [28:58]
Josh Brown
I think she did the right thing.
- [28:59]
Jenny Harrington
Yeah. But you know, what's really important is that Brin had the guts and the presence of mind to buy on those days when they got down to 145 and below 60 bucks. And that's, that's a very brave, very important thing. It's a sign of a real professional portfolio manager. And it's hard. You know, on those days I was getting calls from individual clients thinking they should sell. Like, no, you know what the professionals do? They do, they buy on those days. So well done, Brent.
- [29:23]
Josh Brown
I mean, Nike is, this is a stock that is effectively sitting on an eight year low. It keeps making lower lows even when they have a quote, unquote, better than expected quarter, like within a week, stocks down, the superstar that are all aging. LeBron James is in his 40s. Michael Jordan is, you know, 30 years retired. I don't even, I don't even know what, what we do with something like Nike here. But like, it's just a, it's just a perennial falling knife. It's a really tough stock price.
- [29:52]
Bill Baruch
Tells a story here. I mean, the fact that it's coming back down after the earnings report is telling you something.
- [29:56]
Bryn Talkington
Yeah, but I mean, what is a price that tells the story today does not a turnaround story tell tomorrow.
- [30:05]
Josh Brown
What is the turnaround?
- [30:05]
Bryn Talkington
Throwing that out there for a point of debate. I don't have facts in my back pocket to say this is what the company is going to do and it's going to work. And they're going to counter the fact that, you know, LeBron's soon to be retired and what's the longer rep. Tony, let me ask you, Sabina's gone and all these other athletes. I get that story, but it's still nightly.
- [30:25]
Josh Brown
Yes, but they have been getting by with the staples. Brent, one sec. Like they have been getting by selling dunks and Air Force drive over Jordan and Jordans. And this is the same thing they've been doing. And look, you've got these other brands that have come along, they don't have meaningful market share, but they're forcing Nike to fight defensively in key markets like running.
- [30:48]
Jenny Harrington
Right.
- [30:48]
Josh Brown
And then this thing that they did with Foot Locker and Dick's and all of their retailers, like basically saying we don't need you. And now coming back to them hat in hand, what do they think would happen? The shelves would have nothing on them. See, they've been replaced.
- [31:02]
Jenny Harrington
You know what this does? This brings us back to our Google conversation where Google 2 years and 5 years and 10 years ago had no competition and now they do. Nike has more competition now than it did 10 years ago and 20 years ago. The competition is changing and that's why the stock's flat.
- [31:15]
Bryn Talkington
Amber Sports is your play here.
- [31:17]
Bill Baruch
Yeah, yeah, we, we bought that. You know, I was waiting to for a better price, but when it broke out above its February ipo, we bought it last autumn and really caught the Chinese ramp on it. This thing hasn't looked back. Talk about that. A company has a portfolio of brands. Salomon, Salomon Sports, they have Wilson for four Paddle Sports, arc' Teryx. I mean they list continues to go on. They've done a lot of those acquired at cheap levels. They had a blowout report last week and raised full year guidance, raise quarter two guidance. And I see a lot of momentum. Maybe it settles in a little bit above here, maybe between here and $30. But this reminds me of the, of the, of the elevation that the hockey stick that Deckers had a couple of years ago.
- [32:00]
Bryn Talkington
Let's get the headlines with Contessa Brewer. Hi, Contessa.
- [32:02]
Scott Wapner
Hi there, Scott. Health Secretary Robert F. Kennedy Jr. Said the make America Healthy Again report sourced what he called gold standard science, citing more than 500 studies. Now this is a report that was commissioned to investigate the factors contributing to the rise of chronic disease in children. But seven of the cited sources don't even exist, according to notice, a nonprofit, nonpartisan news platform. Health and Human Services did not comment on the inconsistencies. Israel has accepted a new proposal from US Envoy Steve Witkoff for a cease fire in Gaza. Israeli media reporting that Prime Minister Netanyahu also notified hostages messages or their families rather about the latest proposal. Earlier today, Hamas announced it received and it is studying that same proposal. Victoria's Secret website is still offline today, days after the lingerie company was hit by a cyber attack. The company said today it took the site down as a precaution, but wouldn't confirm when the cyber attack happened or indeed point the finger at any potential hackers. Victoria's Secret is just the latest retailer to be hit with a digital Breach including British companies Marks and Spencer and Harrods. Scott, that's the news.
- [33:16]
Bryn Talkington
All right, Contessa. Thank you, Contessa Brewer. Up next, Josh Brown's got a new name to talk about his best stocks in the market. Shares just hit a new record high. We will tell you what it is next.
- [33:28]
Scott Wapner
Welcome to Birch Lane where you can find a fresh take on classic furniture and decorate. Every piece is handpicked and crafted to last for years to come. At Birch Lane, you can explore everything from outdoor sets to living room furniture and everything in between. And get fast free shipping. It's classic style for joyful living. Shop now@birchlane.com Imagine what's possible in your.
- [33:52]
Bill Baruch
Business career when learning doesn't get in.
- [33:55]
Scott Wapner
The way of life. At Capella University, our game changing flexpath.
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Bill Baruch
Learning format is available in select business programs and lets you learn at a time and pace that works for you.
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Scott Wapner
That means you don't have to put.
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Bill Baruch
Your life on hold while earning your business degree.
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Scott Wapner
Instead, enjoy learning your way and earn.
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Bill Baruch
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Scott Wapner
A different future is closer than you.
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Bill Baruch
Think with Capella University.
- [34:18]
Scott Wapner
Learn more at Capella.
- [34:20]
Bill Baruch
Edu.
- [34:33]
Bryn Talkington
All right, we are back. Josh Brown's best stocks in the market. A new name and it is. You said it was tasty. Hint, hint. What is it? What is it?
- [34:40]
Josh Brown
You like capital grow, right?
- [34:41]
Bryn Talkington
I do, yeah.
- [34:42]
Josh Brown
That's nice. That's low key. My jam consistently good. Yeah. Darden restaurants. Okay. I've learned a very long time ago that my taste is not necessarily important when it comes to selecting investments. And what I think people should do, should buy, should spend time, should spend money on. Doesn't often matter. And Darden is a really great example of that. I don't go to the Olive Garden. I live in Nassau County, Long island. I live 10 minutes away from Mateo's, Bella Note, Chris and Tony's. I could, I could, I could go to 388. I go to like the best Italian restaurants anywhere outside of Italy anytime I want. Olive Garden supplies Italian food to people all over the country who don't have those same options. And they're doing a really good job. Darden's biggest chain is Olive garden. It's about $3.8 billion in revenue. System wide sales at Darden are 12.1 billion. They also own Capital Grill. Eddie V's Longhorn Steakhouse is a really big part of the business. Yard House, Ruth's, Chris. So they're basically catering to the consumer. Consumer at every level, every income level they have. We'll Call it a solution. Olive Garden is the biggest part of the company's revenue, and that's where things really matter. Profit margin is increasing. The company has been growing earnings at about 12% of you over the last five years. That's why this stock is on the best stocks in the market list. I think it's way less susceptible to the things we worry about. Who's getting hurt. The low end consumer, the high end consumer, the middle consumer. They've got. They've got offsetting properties in different markets, and they're doing a really good job. So this is a great stock. What I would do here, I would use that $200 level as kind of like a line in the sand. If I'm trading this short term, that's where the short term uptrend breaks down. As an investor, I would say more like 180. The stock had resistance there, then it found support there. That would probably be the level that I would use. So long as this name is above 200, though, I think you can own it. And it acts great. In a difficult market where people are questioning the consumer. This thing is ripping, rook.
- [36:52]
Bill Baruch
Never ending.
- [36:53]
Bryn Talkington
You're a restaurant guy.
- [36:54]
Bill Baruch
Soup, salad, and breadsticks.
- [36:56]
Josh Brown
And they're not doing that anymore.
- [36:57]
Bill Baruch
They're not doing anymore.
- [36:58]
Josh Brown
I think they still do Never ending pasta, but I think they chilled out with the breadsticks. Nobody needs that.
- [37:04]
Bill Baruch
America. America gravitates towards the all you can eat the lunch and the dinner. And I mean, it's. It's not a surprise that they've been able to be a staple. I mean, if you drive through some of these, some of these, you know, areas, suburban areas, you're going to see outside Chicago, there are Olive Gardens there, Longhorns across the street going on road trips. They're all over the place. And they're, they're attacking the, I think strategically, the placing these in the right spot.
- [37:25]
Josh Brown
Capital Grill. The Oakwave New York strip. Like, if you ever. You don't know where to go, you're at a shopping mall. There's Capital Grill. Get the strip. Or they do a rib eye with like a.
- [37:34]
Jenny Harrington
That's my favorite. The Porcini rub. No, like a Kona rub.
- [37:38]
Josh Brown
Kona rub.
- [37:38]
Jenny Harrington
The Kona rub. That's the one.
- [37:40]
Bill Baruch
Got to do the ribeye.
- [37:41]
Jenny Harrington
Can I finally deliver the line I've been wanting to use?
- [37:43]
Josh Brown
God.
- [37:44]
Jenny Harrington
Josh isn't just an investor, he's a customer too.
- [37:46]
Josh Brown
Look at you. We're gonna have to leave it there.
- [37:48]
Bryn Talkington
Wow. Stealing from commercials past. All right, up next, Berkshire Bitcoin and Big Energy. The debate on three committee movers next. All right, committee holdings on the move.
- [38:22]
Scott Wapner
Move.
- [38:22]
Bryn Talkington
Bitcoin ETFs pulling in $9 billion as investors ditch their gold holdings. Bren, you've got Bitcoin etf, Bill has Bitcoin etf, Josh has bitcoin personally. But you get the first crack. Bye bye gold. Hello, Bitcoin. Is that where this trade is now?
- [38:39]
Scott Wapner
You know, at the end of the year When Bitcoin hit 109, it was not able to hold that. And you got right close to it yesterday and it's not able to hold it. I think you see between like 95, maybe like 1 of 3 support here. But I definitely think it could not break through. So you have a double top.
- [38:55]
Josh Brown
Yeah, I'm a dollar cost average guy on both. The only they don't trade on anything other than what they like. Whatever's happening that day, there's no valuation here. Neither one of these has a cash flow attached to it that you could say it's worth 18 times because blank. So I think the rational way to be in the these markets like gold, like Bitcoin, if they're going to be a long term part of your asset allocation, set the rules in advance. I buy X dollars each month and no matter what happens, the price gets cut in half. I'm still a buyer that way. I'm rooting for it to come down. The price keeps going up. I keep buying. That's what I've done. That's what I think works. I know, I know it works. And I think it's more rational than making up price targets based on magic and fairies and rainbows.
- [39:43]
Bill Baruch
I think technicals matter here. We own, we own IBIZ Trading. Yes, we own IBIT as a diversifier in portfolios, about 75 basis points. But there are days that, where this diversifier works, not necessarily ibit, I would not be throwing gold out. Gold looks really constructive. A lot of people, a lot of people were really, really negative on gold recently and it held a really great technical pattern. It is capitalizing on days that the stock market's down a bit. But speaking to cash flow, you can build out a real asset bucket in a diversified portfolio. You have something like gold miners, I think, which I think are in a tremendously bull market. They do pay tremendous cash flow. Gold itself I think is again a great diversifier. There's ways to place this in the portfolio. The way we look at ibit, the way we look at miners, the way we look at, at gold and Being able to diversify because the traditional 6040 just isn't there anymore.
- [40:33]
Bryn Talkington
Gold's not that far from its, from its all time high either, with some predictions suggesting 4,000 is the next in a second.
- [40:39]
Josh Brown
A secular bull market. Big thing is that it's a secular bull market, which means it could go up 50%. Like when it, when it's in one of these phases.
- [40:48]
Bill Baruch
I'm calling it, I'm calling a generational bull market. I do run a gold fund. It's a cta. I mean we are very bullish on gold, but we do try to monetize some of the larger moves. I think it's in this elongated bull flag pattern. It has an $80 average true range right now. $80, that's crazy. So you have to manage risk in a very volatile market. But I think it's higher to go. It does need some of the other metals wake up. Copper, silver, platinum, starting to really wake up. I think this is just getting started.
- [41:14]
Bryn Talkington
Okay, next Santoli after this break. We're back with breaking news from the White House. We go to Megan Casella for that. Megan, what do we learn?
- [41:39]
Scott Wapner
Hey, Scott. We are just learning that Federal Reserve Chairman Jerome Powell was here at the White House today to meet one on one with President Trump. The Fed put out a statement on this saying the meeting came at the President's invitation. He says that they discussed economic developments, including growth, employment and inflation. The statement goes on to say that Chair Powell did not discuss his expectations for monetary policy except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook. The statement also concludes saying finally Chair Powell said that he and his colleagues on the FOMC will set monetary policy as required by law to support maximum employment and stable prices and will make those decisions based on solely on careful, objective and nonpolitical analysis. So here, Scott, in this statement, the Federal Reserve saying they did take this meeting, they had this meeting with the President, but clearly here sticking to the Fed's role of this third party, not clearly listening to political pressure and that sort of thing coming after the President many times over the course of this term so far this year, trying to put some pressure on the Federal Reserve chairman. And this does come, Scott, just for a little bit of context, after at the last Fed meeting, Powell was asked about meeting with the President. He said he had never asked for a meeting he thought he never would. Now saying the Fed saying today this meeting did come at the President's invitation.
- [43:02]
Bryn Talkington
Scott yeah, as one usually does I mean, just, just to be clear, it's not normal that the Fed chair necessarily reaches out and asks for a meeting with the President to begin with. So this is sort of true to historical norm. Megan, thank you. Megan Casella on the north lawn of the White House. As you see, our senior markets commentator Mike Santol is here with his midday word. I mean, just speaking about the Fed. No one's really speaking about the Fed, right? It's not really about that right now.
- [43:24]
Bill Baruch
Well, you have to put the Fed in the category of one of the many things that are in wait and see mode. And as long as the economy looks.
- [43:31]
Josh Brown
Like it's performing okay and you can.
- [43:33]
Bryn Talkington
Sort of say it's being resilient or.
- [43:34]
Bill Baruch
Steady as she goes, the market can live with a Fed that's going to be completely agnostic about the next move. I do project ahead to July. I think right now. I mean, the market's only priced for like a 1/3 chance.
- [43:46]
Josh Brown
Maybe there's a cut in July, but.
- [43:48]
Bryn Talkington
There'S a good distance between now and.
- [43:49]
Bill Baruch
July 30th and we'll see if the conditions remain. But it's interesting because all the back and forth on tariffs this way, that.
- [43:57]
Josh Brown
Way, court, not court high, low, it.
- [44:00]
Bill Baruch
Kind of redeems the Fed from, you know, stance of saying we're not going to project what's going to happen because it can change so much.
- [44:08]
Bryn Talkington
They feel like they're in a good spot. I mean, the market obviously is more interested in, in video and economic data that's coming around. We've got a jobs report coming up than it is in monetary policy.
- [44:19]
Bill Baruch
As long as the bond market is kind of steady in its range, it's.
- [44:22]
Josh Brown
All the action has been on the long end.
- [44:24]
Bill Baruch
And, you know, the Fed sensitive areas of the market have been pretty benign.
- [44:29]
Josh Brown
I just find, I find it fascinating that the Fed thinks it can control inflation with overnight rates as, as if they ever have been able to produce inflation before, trying as hard as they could for 15 years and not able to. And now they think they can have inflation resume. We're looking at continuous claims continuing to rise in the labor market and the mother of all disinflationary bombs in the form of a high, literally making it. So it's getting harder every month for people who have previously laid off to get a new job. Are we just going to ignore that and think the fed by cutting 25 basis points is going to resume 20, 21, 9% inflation readings? It's never going to happen.
- [45:15]
Jenny Harrington
No, it's not going to happen, but.
- [45:17]
Bill Baruch
It'S not going to hurt housing's 30% of CPI. Have you seen the housing data recently? Case Shiller home price index all coming lower. Housing starts this morning. I mean, that's why it's displacement.
- [45:27]
Bryn Talkington
So bounce. Make this quick look at.
- [45:29]
Josh Brown
Look at what, look at what Best Buy said today. Stock is pancaked right now. They literally, they have this demand destroying tariff thing going on. It's not producing inflation. And the Fed won't make inflation worse by cutting rates. It's just, that's not how it works anymore. It's a different world.
- [45:47]
Bryn Talkington
So Austin, closing belt or we'll see you on closing bell.
- [45:51]
Bill Baruch
That's right.
- [45:52]
Bryn Talkington
Final trades are next. Bryn, what's your final trade?
- [46:02]
Scott Wapner
Silver. If it can break out here, I think it runs and catches up with gold.
- [46:05]
Bryn Talkington
All right, thank you, Bill Baruch.
- [46:07]
Bill Baruch
I love her trade. Another diversifier. Ccj. Trump is pushing uranium nuclear. So look for this to settle in. Goodbye.
- [46:15]
Bryn Talkington
Okay, Jenny Devon, Energy.
- [46:16]
Jenny Harrington
JP Morgan hosted a call this week with the CEO and is extremely encouraging.
- [46:20]
Bryn Talkington
The Josh Brown Toast is 3 points.
- [46:23]
Josh Brown
Off its 52 week high and I think we'll rechallenge.
- [46:26]
Bryn Talkington
All right, good stuff. Thanks, everybody. We'll see you on the bell. The exchange starts now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:43]
Scott Wapner
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. Welcome to Birch Lane, where you can find a fresh take on classic furniture and decor. Every piece is handpicked and crafted to last for years to come. At Birch Lane, you can explore everything from outdoor sets to living room furniture and everything in between and get fast free shipping its classic style for joyful living. Shop now@birchlane.com.