CNBC Halftime Report: “The State of the AI Trade” – September 25, 2025

Host: Scott Wapner
Guests: Josh Brown, Joe Terranova, Bill Baruch, Jim Lebenthal
Special Guests/Quotes: Ken Griffin (Citadel), Mike Santoli (CNBC Senior Markets Commentator)

Episode Overview

This episode dives deep into the current state of the AI-driven equity market, focusing on recent volatility in major technology stocks, escalating capital investments, and the narratives driving both bullish and bearish sentiment. The discussion is anchored by recent remarks from Citadel’s Ken Griffin, who warns of “echoes of the dot-com bubble," and an in-depth look at the sustainability and concentration of AI’s impact on the S&P 500. The panel also examines portfolio moves among themselves and debates whether the AI spending spree is healthy growth or bubble risk, with a particular focus on stocks such as Oracle and Palantir.

Key Discussion Points & Insights

1. Market Vulnerability & AI Concentration

• Market Pullback & Rising Rates ([01:01]–[02:32])

  • Scott Wapner opens by highlighting a consistent market downturn, driven largely by rising rates since the Fed cut.

• AI's Disproportionate Role in the Rally ([02:32]–[05:11])

  • Josh Brown: Describes the market as "vulnerable" due to overreliance on tech:

    “AI-related stocks have accounted for 75% of the S&P 500 returns... 80% of the earnings growth... and 90% of cap spending growth since ChatGPT was launched.” ([04:40])

  • Notes the record AI-powered rally and historical context for similar win streaks ending.

• Market Internals and Breadth

  • While 59% of S&P stocks are above the 200-day moving average, the rally is not broad-based but is heavily concentrated in a few AI names ([05:11]).

2. “Echoes of Dot-Com”—Is this a Bubble?

• Ken Griffin’s Remarks ([06:09]–[07:21])

  • Griffin observes “echoes of the dot-com bubble” amid intense AI-related capital spending and parabolic moves in names like Oracle.
  • Scott: “If you take what Josh said from Samblis, 75% of S&P 500 returns have been from AI-related stocks. 80% of the earnings growth and 90% of cap spending growth since ChatGPT launched…”

• Skepticism Over Oracle’s Surge ([07:21]–[11:39])

  • Oracle issues $15bn in new debt to fund AI infrastructure, raising concerns about sustainability.
  • Joe Terranova:

    “That's where you get the echo, Scott, of 1999... This is not cash from operations... That's exactly what Oracle is doing.” ([07:21])

  • Bill Baruch, an Oracle holder, is trimming the position, citing a lofty 41x forward multiple and increased volatility ([09:23]).
  • Jim Lebenthal contends that while AI is showing strong earnings now, it's not yet analogous to the dot-com bubble, as multiples aren't as stretched ([12:16]):

    “We will eventually be in a bubble in AI. We are not there yet... the earnings are really coming through.” ([13:25])

3. Where Is the Real Bubble Activity?

• Speculation in Small/Obscure Names ([14:01]–[15:41])
  • Josh Brown differentiates between legitimate growth in big AI names (“Nvidia and Oracle per se”) and speculative fever in “pre-revenue SPACs” and smaller quantum computing stocks.

  • “If you're looking for signs that it's an egregious bubble... it's companies we've given $30, $40, $50 billion in market caps that have no earnings, and in some cases, no revenue.” ([14:01])

  • Discusses the likelihood of high-volatility names experiencing downside reversions soon.

4. Retail Investor Behavior & The Search for 10-Baggers

• Palantir: AI Stock with Cult Status ([16:12]–[17:21])

  • Bill Baruch discusses Palantir’s spectacular run (seven-straight quarters of double-digit gains), yet cautions about its 230x multiple.
  • The panel addresses how retail flows are subdued in “MAG7” names, with current retail enthusiasm more focused on speculative potential (the “next 10x play”) than in blue chips ([17:21]–[18:38]).
  • Josh Brown:

    “People are out there looking for 10-baggers, 20-baggers... That's the stage of the rally that we're in.” ([18:17])

• Divergent Retail Strategies

  • Distinguishes between different types of retail investors (e.g., Robinhood traders vs. Schwab clients) and their current approaches.

5. Fed Policy, Dollar, and Profitability

• Ken Griffin on Fed Independence ([19:57]–[21:38])

  • Griffin expects one more rate cut this year, calls a 25bps cut “symbolic,” and argues for Fed independence from political influence.
  • Discussion on the effects of a weaker dollar: tailwinds for corporate profitability, especially multinationals, and encouragement for non-US asset allocation.

• Risks to Small Caps and Broadening ([22:06])

  • If rates don’t fall as hoped, the chance for a rally expanding into small caps and biotechs diminishes.

6. Portfolio Moves: Managing Risk Amid Volatility

• Panelists Trimming Winners & Raising Cash ([22:20]–[25:33])
  • Bill Baruch details recent trims in Micron, Tesla, Cameco, and a complete sale of Freeport; raises cash to ~10% of portfolio, ready to “go shopping in the coming month or two.”
    • Baruch: “At this point, about 8% cash... with Freeport, got us to about 10% cash. We feel very comfortable sitting here... looking for opportunity.” ([24:09])
  • Jim Lebenthal reinvests in Delta: “Trades at 9 times earnings. This is an obvious play on a growing economy to me.” ([25:04])

Notable Quotes & Memorable Moments

• "There are certainly echoes of the dot-com bubble in this moment." — Ken Griffin, cited by Scott Wapner ([06:09])
• "AI-related stocks have accounted for 75% of the S&P 500 returns... That’s not just NASDAQ, but the overall market." — Josh Brown ([04:40])
• "The activity in those stocks [SPACs, quantum computing] is more reminiscent of the dot-com bubble." — Josh Brown ([14:01])
• "We will eventually be in a bubble in AI. We are not there yet." — Jim Lebenthal ([13:25])
• "People forget risk exists... if there were ever a time to say maybe I don’t need to add, this is that time." — Josh Brown ([05:11])
• On retail: "People are out there looking for 10-baggers, 20-baggers... That’s the stage of the rally we’re in." — Josh Brown ([18:17])

Stock Moves & Committee Trades

1. Bill Baruch's Moves ([22:47])

• Trimmed: Micron, Tesla, Cameco
• Sold: Freeport-McMoRan (“crown jewel” mine issues)
• Rationale: Raised portfolio cash to ~10%

2. Josh Brown’s New Buy: Phillips 66 (PSX) ([27:35])

• Anticipating a breakout; points to insider buying and Elliott Management’s activist stake as catalysts.

• “If Elliott is right and this should be a $200 name and the refiners remain bid, I think this thing could work.” ([29:31])

3. Joe Terranova’s Moves

• Trimmed: Energy trades — kept PSX and Valero, sold Marathon ([29:50])
• Sold: TradeWeb & Broadridge Financial due to underperformance ([38:54])

4. Jim Lebenthal

• Bought more Delta: “This is an obvious play on a growing economy to me.” ([25:04])

Segment Breakdowns with Timestamps

• AI Market Dynamics & Bubble Debate: [01:01]–[16:12]
• Retail Investor Trends & Stock Mania: [16:12]–[19:20]
• Fed/Currency Policy & Macro Risks: [19:57]–[22:20]
• Panel Portfolio Adjustments: [22:20]–[25:33]
• Josh Brown’s PSX Buy & Energy Thesis: [27:35]–[31:08]
• Financial Exchanges Discussion: [39:00]–[40:45]
• Amazon’s FTC Settlement: [40:50]–[41:54]
• AI vs. Human Stock Picking: [43:31]–[46:17]

Special Segment: AI Stock Picking – Man vs. Machine ([43:31])

• Reuters study: AI-selected stock basket outperformed UK’s leading funds (55% vs. 36%)
• Panel is skeptical:
  • Josh Brown: “If that's the case, then... everyone does the same thing and that edge gets completely nullified.”
  • Joe Terranova: Describes how institutional algorithms can exploit predictable retail moves stemming from mass AI use.
  • Jim Lebenthal: Highlights that AI can't provide emotional steadiness in downturns:

    "One of the most important things we do is when the markets go down, is we keep people from turning temporary losses into permanent losses. ChatGPT won’t do that for you." ([45:47])

Macro & Policy Insights

• Ken Griffin remains a market purist: Advocates for Fed independence and minimum government intervention in markets ([35:03])
• Mike Santoli: “As much as we talk ourselves into bubble watch, sometimes that inoculates us against going too far in the short term.” ([35:43])
• Debate over whether high rates are truly curtailing the secular growth trade or just shifting risk onto smaller caps ([37:43])

Final Thoughts & Closing Calls

• Panelists each give a final portfolio thought:
  • Jim Lebenthal: Citigroup ([46:30])
  • Bill Baruch: LNG ([46:31])
  • Joe Terranova: Apple ([46:33])
  • Josh Brown: BRK Big ([46:35])

Tone & Takeaways

The panel offers a blend of caution and realism, noting parallels to previous speculative bubbles but emphasizing the difference in underlying earnings strength today. There is healthy skepticism around current AI-mania, and a clear sense that active portfolio management—raising cash, trimming big winners, and seeking underappreciated opportunities—is essential in this phase. Despite headline-grabbing surges in AI stocks and the rise of algorithmic investing, the consensus is that a thoughtful, balanced approach remains necessary.

Key Quote to Remember:

"If there were ever a time to say maybe I don’t need to add my next stock without taking something else off or lightening up, this is that time." — Josh Brown ([05:11])