CNBC's Halftime Report – Episode Summary: "The State of the AI Trade" (May 29, 2025)

Hosted by Scott Wapner, CNBC's Halftime Report delves into the intricacies of the current AI-driven market landscape. Joined by industry experts Josh Brown, Jenny Harrington, Bill Baruch, and Bryn Talkington, the episode provides a comprehensive analysis of prevailing market trends, key stock performances, and significant economic developments.

1. Market Overview

The episode opens with Scott Wapner providing a snapshot of the day's market activities. He notes mixed signals with the NASDAQ retreating from its best levels and a slight dip in the Dow.

• Scott Wapner [00:59]:
  "We're 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%."

2. Nvidia: The Market's Powerhouse

Nvidia takes center stage as the focal point of the AI trade. Post-earnings, the stock has surged, reclaiming its position as the most valuable company in the market, up by 4%.

• Scott Wapner [02:12]:
  "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%."

Josh Brown analyzes Nvidia's performance, emphasizing the company's robust growth despite a decelerating rate.

• Josh Brown [02:12]:
  "The multiple is not crazy given how popular the theme is and given how badly people want to be allocated to it."

Bill Baruch expresses confidence in Nvidia's long-term prospects, highlighting leadership under Jensen Huang and Colette.

• Bill Baruch [06:06]:
  "This is a great name to add to your portfolio this year. It's a cheap stock. They're going to continue to be billions in revenue."

3. AI Demand and Its Implications

The discussion pivots to the surging demand for AI infrastructure, despite geopolitical challenges affecting chip sales in China.

• Bryn Talkington [03:32]:
  "Global demand for Nvidia's AI infrastructure is incredibly strong. And as AI agents become mainstream, the demand for AI computing will accelerate."

Jenny Harrington raises concerns about AI's impact on traditional revenue streams, particularly for companies like Google.

• Jenny Harrington [14:44]:
  "We don't know what the monetization is going to really look like. ... I'm not seeing any advertising on those."

4. Semiconductors and the SMH ETF

The semiconductors sector, represented by the SMH ETF, is highlighted as a key performer, rebounding strongly in May 2025.

• Bryn Talkington [08:01]:
  "It's the best month since May of '23. So two years for the SMH winners across the board, not just in video."

Josh Brown underscores the resilience of semiconductor stocks, noting their significant pullback from previous highs.

• Josh Brown [08:27]:
  "The median stock in the SMH ETF is 36% below its 52-week high."

5. Big Cap Tech: Alphabet vs. Meta

A comparative analysis between Alphabet (Google) and Meta (Facebook) regarding AI monetization is discussed, with Meta showing stronger revenue per user.

• Jenny Harrington [17:12]:
  "Facebook's got a $68 average revenue per user. They are minting it. So ... 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."

Josh Brown delves into Alphabet's challenges in monetizing AI compared to its competitors.

• Josh Brown [18:08]:
  "From a monetization standpoint, it's all Wall Street cares about... I think the answer is probably not."

6. Cybersecurity Sector

The cybersecurity landscape is examined, particularly focusing on Palo Alto Networks amidst debates over its government dependence.

• Bryn Talkington [21:05]:
  "Palo Alto CEO Nikesh Arora refuted claims that 50% of their revenue is government-dependent, clarifying it’s actually around 5%."

Scott Wapner emphasizes the sector's secular growth trend despite individual stock volatilities.

• Scott Wapner [22:28]:
  "This is a secular, secular growing trend. It's not slowing down."

7. Momentum and the MTUM Factor

The Momentum (MTUM) factor is scrutinized, highlighting significant gains and subsequent rollovers in top-performing stocks.

• Bryn Talkington [23:15]:
  "Momentum was doing so well and then it had a major rollover. It did hit a record high."

Scott Wapner discusses the rebound strategies within momentum stocks, emphasizing disciplined trading.

• Scott Wapner [30:04]:
  "What is the turnaround?"

8. Bitcoin ETFs vs. Gold Holdings

A dynamic shift in investment preferences sees Bitcoin ETFs attracting $9 billion as investors move away from traditional gold holdings.

• Bryn Talkington [38:22]:
  "Bitcoin ETFs pulling in $9 billion as investors ditch their gold holdings. Bye bye gold. Hello, Bitcoin."

Josh Brown advocates for a dollar-cost averaging approach in volatile assets like Bitcoin and gold.

• Josh Brown [38:55]:
  "I buy X dollars each month and no matter what happens, the price gets cut in half. I'm still a buyer that way."

Bill Baruch highlights the technical strengths of gold amid a generational bull market.

• Bill Baruch [40:47]:
  "I'm calling a generational bull market. ... I think this is just getting started."

9. Federal Reserve's Role and Political Interactions

A significant development involves Federal Reserve Chairman Jerome Powell meeting with President Trump, with the Fed reaffirming its commitment to nonpolitical monetary policy.

• Megan Casella [41:38]:
  "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."

The panel discusses the implications of this meeting, with Bill Baruch suggesting the Fed remains a "wait and see" entity.

• Bill Baruch [43:30]:
  "As long as the economy looks steady as she goes, the market can live with a Fed that's going to be completely agnostic about the next move."

10. Final Trades and Stock Picks

Josh Brown introduces Darden Restaurants as one of his best stocks, praising its robust revenue streams through brands like Olive Garden and Longhorn Steakhouse.

• Josh Brown [34:39]:
  "Darden is a really great example of that. ... Olive Garden supplies Italian food to people all over the country who don't have those same options."

Scott Wapner discusses his strategic trades in restoration hardware and Nike, emphasizing disciplined exit strategies.

• Scott Wapner [27:05]:
  "I bought Restoration Hardware at 145. ... I just let that process work."

Jenny Harrington commends Brent (Scott) for his professional approach to portfolio management.

• Jenny Harrington [28:55]:
  "Brent had the guts and the presence of mind to buy on those days when they got down to 145 and below 60 bucks. That's a sign of a real professional portfolio manager."

Conclusion

The episode of Halftime Report underscores the dominant role of AI in shaping current market trends, with companies like Nvidia leading the charge. While sectors like semiconductors and cybersecurity exhibit strong growth, challenges persist in areas like AI monetization for tech giants and the traditional stability of assets like gold. The interaction between the Federal Reserve and political figures adds an additional layer of complexity to the economic landscape. Through disciplined trading strategies and informed stock selections, the panel provides listeners with actionable insights to navigate the evolving market dynamics.

Notable Quotes:

• Josh Brown [02:12]:
  "The multiple is not crazy given how popular the theme is and given how badly people want to be allocated to it."

• Scott Wapner [06:06]:
  "The company is just absolutely on fire."

• Bill Baruch [40:47]:
  "I'm calling it, I'm calling a generational bull market."

• Jenny Harrington [17:12]:
  "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."

For those who missed the live discussion, this summary encapsulates the key insights and expert opinions shared during CNBC's Halftime Report on May 29, 2025.