← Halftime Report
Halftime Report
The State of the Tech Trade 2/25/26
00:44:08
Scott Wapner and the Investment Committee debate the tech sector as Nvidia, Salesforce and Snowflake all reporting earnings tonight. CNBC’s Kristina Partsinevelos joins us with the latest from Nvidia. Plus, the Committee share their latest portfolio moves. And later, we get to the Setup on some key Committee names reporting earnings tonight and tomorrow. Investment Committee Disclosures
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Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help. And access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading oh, could this vintage
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B
store be any cuter? Right. Best part, they accept Discover. Except Discover in a little place like this? I don't think so, Jennifer.
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A
Oh, yeah, huh?
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B
Discover's accepted where I like to shop.
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A
Come on, baby, get with the times.
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B
Right? So we shouldn't get the parachute pants. These are making a comeback, I think.
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Discover is accepted at 99 of places that take credit cards nationwide. Based on the February 2025 Nielsen report. 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. All right, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the State of the Tech Union with Nvidia, Salesforce, Snowflake all reporting earnings. Tonight we discuss and debate what is on the line for these markets with the investment committee. Joining me for the hour, Joe Terranova, Shannon Sokotov, host Jim Laventhal, Rich Saferstein. Let's go to the markets, give you a look at the picture. 12 noon. Nasdaq is leading as we look ahead to these big events. It is, I think, fair to say, Joe, the biggest day for the tech trade in some time. Not just because of Nvidia, but given what's happened with software. With Salesforce and Snowflake also reporting, the NASDAQ's the only major average to be down year to date. Most of the mega caps are as well. Take it from there.
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C
Well, I think the market was able to shrug off the earnings report from workday. So I think really the bellwether, and I'm going to call in video the bellwether because I am 100% confident that exactly is what it means to the marketplace. That bellwether is critical. And it's critical because the Mercurial nature of 2026, we see it represented today, the leading four sectors for the S and P, all up greater than 13%. They're all down today. The worst performing sector, financials. That's software is higher. Crypto is higher. Technology coming back once again. So I think what's critical about Nvidia
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A
this evening and the software ones don't. I think.
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C
I disagree.
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A
No, not. And again not given what's happened with, with the software.
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C
We have stabilization today.
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A
Work one day means not working.
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C
Workday. We, you know, workday was, was down. We were expecting that that would bleed into the software names. Continue. I think you have stability in the software names. And I go back to the livestream yesterday from Anthropic was critical in giving a little bit of comfort to the, to the market in particular software.
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A
How can you have stability? One day means zero. IBM is down another IBM on the week is down 7%. Who cares what it's doing today? Snowflake is down on the week. Who cares what it's doing today? Crowdstrike and Palo Alto and some of these other names are down on the week. Who cares what they're doing today? Which is why Rich Saperstein, I would submit to the court as the judge, I disagree that the tech trade in general has so much riding on it today. Salesforce and Snowflake are, are arguably two bellwethers in terms of the questions about AI and what's. And what's been happening there. So yeah, all three add to the importance today.
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D
Look, the offensive team is off the field right now and a defensive team is on the field and that's probably going to carry on for, I don't know, weeks, months, who knows. But I think there's a defining point where we have to look at, at what price you're paying for earnings and the growth in earnings which is P E to growth. And if you look at the Staples, whether it's Procter and Gamble, Clorox, Coke, Kimberly Clark, right now the peg ratios are anywhere from two and a half to five. I own Proctor. It's five times right now. If you focus back on the Mag 7 the bigger stocks, the peg ratios are one for Google, one for Meta, one for Amazon and 1.5 for Microsoft. So at some point the market will redefine who's going to be on the field. Right now it is clearly the consumer staples as it looks as it turns to Nvidia, they're going to put up good numbers because the hyperscalers are basically is spending $670 billion this year.
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A
Doesn't mean that the stock is going to trade in kind. Right. The stock has been stalled. It's run a little bit into the print. So a great report doesn't necessarily mean great price action. And that, frankly, is something probably more interesting to watch than anything else. I would also suggest as Piper Sandler today downgrades tech to neutral B of a credit Investor survey says AI bubble now seen as the number one risk for the first time ever. Okay, 23% investor risk for the first time ever. A bubble. So, Shan, that's. That says to me why I framed it from the top the way I did. Joe's sort of sitting back looking to be like I'm crazy because I know he wants in.
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C
Never crazy, never so many things to
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A
say looking at me. And I know when he does that what it means. And we'll get to you in a minute, but Shannon's sitting next to you and I want to get to her first. Sure. That's why I framed it the way I did.
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B
And I think your point, Scott, is that the market right now is teetering between oversupply versus obsolescence. And I think that regardless of that B of a survey, I think investors are looking at what is the broader, like, what is the broader impact of AI? A couple of months ago we were all talking about the potential productivity enhancements, the creative disruption, destruction and disruption of businesses and the opportunities for growth. Now we're looking at it from the perspective of maybe some of these business lines are no longer relevant in terms of this. But I would point you back to Nvidia. You made a great point that and, and Rich, you sort of talked about this already. Valuations, if you look at consensus expectations for EPS for Nvidia for 27, 10, 17, implies a multiple about 19 times. Scott. So given your point and how much demand is already been stated, put on paper by the hyperscalers Nvidia, I have to agree with Joe here continues to be really important in terms of corroborating those expectations.
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A
I'm not, I didn't say it wasn't the bellwether. I'm not the one who said that. DA Davidson was the one who said that yesterday.
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B
But I will agree with you that we, you know, we get a blowout in earnings on Nvidia. I actually don't know that that completely tamps down some of these concerns on software. And I think again, the obsolescence idea, this disintermediation, this is going to be a rolling concern concern between now and when we start to get earnings again for second quarter.
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A
I'm saying, Jim, then when Piper Sandler downgrades tech and then bank of America's credit investor survey says the AI bubble is now the Number one risk for the first time ever. That's why I think there's added and greater importance on these in total today, the two software names along with Nvidia.
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E
Well, look, I am today focused on the software names. Part of that is because in video we all agree should have a answer. Excellent quarter, an excellent guide and the stock's running up into it. So it gives me some comfort that it will probably respond.
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A
I don't know. You know what? I know they've seen muted earnings. The reason that this, the stock has not moved a whole lot in recent prints. That's another thing.
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E
That's absolutely true.
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A
The stocks gained or fallen less than three and a half percent after the last three report.
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E
That's absolutely true. But the fact that it's rallying the last few days into the report gives me some comfort. Maybe I'm wrong, but it gives me comfort. Where I am still concerned is software. Now I do have to say with this D.A. davidson report that when we say a bubble is the biggest concern, are we saying that the data that was the
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A
bank of America Credit, bank of America.
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E
There's two things that can't be true at the same time. We can't have this massive overbuild of data centers and then at the same time, same time say that AI is killing everything in its, in its path. I just don't see that as a bias.
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A
Now again, it's their credit investors. So it's all, it all plays into in the same story. Well, if you, you know, you're borrowing hand over fist to build data centers and to raise capital to deploy towards the AI trade, well, if you're overdoing it on all accounts, like the market has placed its bets at certain times with some of the names out there, whether it's the private credit names or the oracles of the world or others, that's why you get number one risk for the first time ever, according to them, an AI bubble.
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E
Can I go back to where I just want to finish my point really quickly? Because software is to me the more important part today. And I think the workday earnings report basically doesn't answer the question because on the one hand, hey, they've got 12 to 13% growth going forward. On the other hand, that's down meaningfully from the high teens of a year ago. The one thing I will point out on this, and I think it applies to Salesforce, applies to Adobe, applies to all of these guys, is that their share price charts actually exactly mimic their valuation charts. It's not a Question of earnings. It's a question of what we're paying for earnings. And I think when we're down at roughly 12 times for some of these companies that it's cheap enough. And that's why workday is actually slightly positive.
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A
What you're paying today for your idea of what the future earnings are, a lot of questions. Paying these prices based on what you think today's earnings are going to be. The real fear is that you might have to pay even less because you're more worried about what future earnings are going to be. You got to keep that into perspective, too.
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E
That is in my perspective and what I'm saying is specifically, if you look at workday just as an example, I don't own it, but two years ago, stock traded at roughly 35 times. Now it's trading at 12 times forward
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A
for a reason, isn't it?
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E
Yes. And the question is what you just said, Scott, about the, the skepticism about what forward earnings are actually going to be is I think at this point appropriately priced. 12 times. At 12 times for an asset light. These are asset light.
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A
You're trying to be a rock star. They keep telling you at workday not to be a rock star. You watch this commercial.
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E
I'm trying to be a rock star. You watch On My Mind.
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A
I'm just telling you what Billy Idol is telling you. Don't be a rock star, Billy. Okay, he's in the commercials.
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E
All right, now I know what we're talking about. Sorry, I kind of.
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A
Jimmy, look, man. Jimmy, have some water.
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E
I'm not, I'm not an HR guy. Those are good commercials, but they go right, you know, in one ear and out the other. I'm sorry.
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A
Just save him.
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B
I know Joe wants to get in on this, but I think I want to note something that you just said, Scott. That was from the credit analysts right. At Davidson. There's a reason that there's equity investors and credit investors.
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A
The equity investors ain't feeling much better.
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B
Well, but I actually creates hard to price tail risks for bondholders. And I think that you're going to continue to see some dispersion in terms of views on credit versus views on equities. And I think that investors need to take that with a grain of salt in terms of thinking about what is the earnings going to support port that may not be as supportive to bondholders because of that cannibalization for Capex, I
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A
want to, I want to focus on what has to happen tonight when you have, according to Vander Research, retail conviction soft into in Video net buying into the earnings is running materially lighter than prior quarters. I told you what the response has been to earnings over the most recent prints. And who better than Christina Parts and Evolos to join us now with the title of her hit today Show Me the Money. Jensen what, what, what does he have to really show to. To change the. I don't know the, the trajectory of late.
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B
A lot of it is going to ride on the earnings call for what he says because you guys talked about another beat and raise is really just the base case. This afternoon April guidance is going to be roughly around 75 billion. We're expecting the backlog to climb higher than 500 billion. Blackwell which is the advanced GPU still ramping. But none of that is really a surprise at this point and maybe why you're not seeing retail investors get into the stock. The stock is essentially flatlined for months year to date. It's lower than the SMH despite two reasons you guys talked about the hyperscalers continuously raising Capex but also bullish supply chain from let's say Wish John for example. Which tells you the bar isn't the numbers. It's Jensen's conviction on what comes next. What markets actually want to hear is the narrative how durable is HyperScaler demand in 2027? What happens to margins as memory costs climb into the Rubin cycle, which is another iteration of their GPUs. Are sovereign deals actually moving? And the stock we talked about it just really hasn't traded meaningful post earnings since mid 2024. Scott and Options right now is pricing in a sub 5% move. And Nvidia's at its lowest pre earnings multiple in a decade. Most seem right now content to sit on their hands. Actually wait for GTC as the next big catalyst which is March 16th.
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E
Yeah.
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A
Wow, that's interesting those stats that you had. Thank you for the setup. Christina. Parts and novels so Rothschild and Redburn, they write an open letter today to Jensen Huang. They talk about two deals, AMD with Open Air and AMD with Matter. That was a big deal this week. AMD shares rising substantially on that illustrate the strength of your marketplace position. Again, this is the letter to Jensen Huang. They also demonstrate the degree to which your rivals are determined or desperate to compete. Your largest customers are no exception. The big five all have XPU accelerator programs. I asked Jensen Huang about this very question about the competition when we spoke a few weeks ago during the super bowl run up. Here's what he said.
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D
You know, none of that bothers me.
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C
We're the only company in the world that takes our roadmap and all of our secrets and we share it to our customers who are also building their own chips internally. That's how much confidence we have.
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A
Alright, so that's Jensen Huang on the, on the competition, right? They're doing business with them, but they also want to beat them. It's undeniable that they want to do that. As Rothschild talks about in the letter today, in which they all also mentioned the GTC event coming in in, in. In March which Christina was just talking about. They want to know about strategic threats to in video competition with AMD and others. Geopolitical customer concentration, supply chain and so on and so forth.
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C
And that's what I'm looking for in this conference call this evening. I want the confidence furthered to what Jensen was. Huang already spoke with you about out at the Super Bowl. You have the inference chips, you have the tensor processing units, you have Metta and others who have said they are building out and designing their own chips. I want to understand that he is extremely confident and comfortable with the significant market share that he has. I think that's really important to hear. We know the earnings are going to be good this evening. The stock as we speak right now is trading to its highest, highest level so far for 2026. I think that confidence brings the stock higher.
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A
Well, we'd be shocked if it was anything but that. I mean you can't come off of a mega cap earnings season where you've got like $700 billion in projected spending this year on Capex. And Jensen was going to sit there and say, you know what, I'm not really sure about demand. Not sure where that 650 to 700 billion dollars is really going. Guys. No, obviously you know what he's going to say. I turn to you on the software angle because you own Snowflake, which was avoiding the big sell off in the software pullback initially. But it's been caught up in it like everything else now year to date down 24%. You see where it was in the early part of the year and it's just been a steady decline with that cliff dive and now a sideways trade
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D
since it's a tiny position which we just bought.
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A
So I think timing, what's it nice
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D
timing to be determined. But I had to say that because
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A
whenever I come at somebody with like something, I was like, well it's a very small position in my portfolio. I'm like, it doesn't matter. What do you think? Our viewers have massive positions in all these stocks, they feel the pain, whether it's large, big, medium, whatever.
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D
It's a 10 day old position. And I think we have to have a framework for evaluating software. Those companies that charge excessive rent are going to be impaired, so there'll be reduced license fees, seat costs. But those software providers that have hard to replicate workflows or proprietary data or security or compliance integration, they're going to be doing just fine and they're going to actually thrive by adopting AI. Snowflake falls into that category. So first of all, their pay as you go revenue model, it's not a SaaS model. Secondly, half their revenues come from AI related workflows. 125% client retention, meaning that their existing clients are actually boosting the revenues with them. So I'm not worried about one quarter. It's a toehold position which I plan to build over time.
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A
You think this is a one quarter phenomenon? Ostensibly you bought the position 10 days ago because you looked at the landscape of the software sell off and had to have at least some inkling in your mind that, okay, it's maybe this is it, maybe it's overdone at this point.
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D
Yeah, the software Armageddon is at or close to bottom right now.
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A
The SaaS pocalypse.
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D
Exactly. Whatever you want to call it. And it's time to have a framework which I just laid out and to start identifying where there is value in that landscape. Fallen companies.
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A
All right, then let me ask you this. Would you buy Salesforce here?
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D
No, that's the one. That's a SaaS model. Per seat, per license with excessive rents being charged.
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A
So any SaaS related name you're running?
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D
It depends. It's got to fall into proprietary service, proprietary data, hard to replicate, workflows, security integration, compliance. Integration within our framework. We're looking for names that fall into those categories.
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A
Okay, how about that big picture?
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C
I think there's far more complexity surrounding software than we're really giving credit towards. If you believe that software has resolved the carnage of the last several months. Do you? Well then you're. No, you're buying the private credit names because they, that's really the opaqueness of all of this, is the exposure that they have to the significant direct lending loans that they have made to the private software industry at valuations that no one knows 20, 30, 40 times. So you're going there to the private credit. As far as what's going on with public software companies.
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A
Okay.
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C
I mean it's easy to understand. First of all, there's A significant rotation going on that's continued from 25 so far year to date. Software as represented by the IGV is down 24%. Semis are up 20% so far year to date. So the money just keeps going from software to semis. You have semiconductor names making 52 week highs today. Monolithic power, applied materials, you have LAM research. So the money is in semis. The real complexity resides on if software is going to continue to fundamentally deteriorate, then it's private credit that I'm most concerned.
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A
I don't, I can't find many people trying to call a bottom in software. I don't. Shan, I mean, I've asked this question to guests on, you know, either one of the programs and when I say, do you, do you think software has more to go? They're like, yeah, well, I think as
- [19:48]
B
a group, I mean, we haven't really seen that dispersion or differentiation in that universe yet. So I would say, I would argue with you that that's what should be the next step is when we figure out, you know, who, you know, to Rich. There's a lot of investors like Rich who are looking at each of these individual software companies and thinking about the potential sustainability of those businesses, their competitive moat. But to Joe's point, I just want to clarify. I think what Joe, you're saying is that if you feel like there's a software bottom, why wouldn't you buy those private credit And I don't feel that way. No, but why wouldn't you buy those private credit names? Because. Because that's only a portion of what's in those private credit books. That likely has been pulled down, perhaps overdone.
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C
That's why I don't think it's 2008, because the full exposure of the portfolio is not in the software names, but those lenders that had the exposure to software, I don't think they're past the worst.
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B
So I agree with you. Can I say I agree with Joe? I don't think there's an easy button on software right now. I do think there is more dispersion to occur.
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A
All right, so on the, on the private credit angle, you know, the Iconnections conference is going out, going on down in Miami and Boaz Weinstein had an interesting comment down there and he was looking at what's happening in private credits. Called, said the wheels are coming off, worried about the overspending in AI. He said, quote, all you need is the snowball to start going down the hill. And it started Blue Owl is right in the middle of that. I think we are in the super early innings of the wheels coming off the car. Okay, so I had Mark Lasri on of Avenue yesterday on, on closing bell. I asked him about the software piece of this and the concern about where some of those loans are marked. Here's what he said. Of course you should be concerned.
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E
I mean we should all be concerned today.
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A
Would you want to make that loan at par? That's the real question. And I think the answer to that is no. You'd want more collateral, you'd want a higher ebitda. So things have changed, but you don't have that luxury. So if I was going to go buy that or other people wanted to buy that loan, you'd buy that loan at 80 cents. You wouldn't be paying par for that loan because you're not getting paid enough for the risk you're taking. Okay, this is about one part of the story that we're focused on. I'll come back to you guys. I want to have a conversation about this because ubs today says 15% defaults could, could happen in private credit. Now those who are in the private credit business disagree vehemently. I think with the, the fear, the anxiety with the what they probably perceive as fear mongering about what's taking place within their books and their businesses. We'll see what, what happens. Where do you all come down on this?
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D
Well, look, as I've said previously, we don't own any private credit. We don't own illiquid assets in a world that moves way faster than you can get in and out of them. In terms of al, rcc, kkr, apo, those names probably at some point become cheap and over the long term do rebound to become, you know, good opportunities. I wouldn't go near them now. It's just too much uncertainty. I'd rather own the direct companies going to Joe's Point, the direct companies that are public companies versus the lenders to private software or private companies. Right now. I just don't want to be in there.
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A
Well, hold on real quick because you're kind of the perfect person to ask. Your, your clients are probably all high net worth people. Are. You are. So you're saying you don't have any of them in private credit at all? No. At a time when that part of the investment advisory business is moving pretty quickly to give their clients access. And playing off that, it brings me back to what Lloyd Blankbine set told the Wall Street Journal in a, in a recent interview. He, he Took a shot. Now we, I read this before, I'm gonna read it again. Lloyd Blank Pine took a shot at the private equity firms and the private credit businesses for expanding to include retail in a bigger and bigger way. And there's a screen. Where's the screen? Why are you going into this dangerous territory just to make your business a little bit bigger when that represents such a big potential problem in the future? These securities are open, opaque and maybe riskier than most. But to the extent you're selling to institutions, people don't care that much. But if individuals lose money or insurance companies or real businesses lose money, it's terrible. I think it's so short sighted of these guys to get into it for that reason. I don't hear a lot of people saying that. I'm saying that that was, that was Lloyd. To which I asked Mark Lasry again about that side of it, whether he agrees or disagrees with Lloyd. Listen, you can only give liquidity when there's no issues. And the minute there's an issue, everybody wants to get out and especially retail investors. So I think Lloyd is absolutely correct. It's wrong, but it's a business and
- [24:53]
E
people love that business because they can
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A
get large fees from it. It's like he's a truth teller.
- [25:00]
D
So we look at the universe of long short equity, multistrad funds, private credit, private equity, and we started exiting that years ago. Our exposure is infinitesimally small relative to the industry. We think that the world moves too quick, the returns are too low, and guess what? When we can get four and a half percent tax free and a municipal bond that's 9% pre tax equivalent, which is really what these funds are purported to, to generate in good times. So there's no reason to tie money up in a liquid investment when you can replicate those returns on an after tax basis in a fully liquid municipal bond. That's our thesis.
- [25:41]
E
Two things are getting conflated here and they needed to be separated. One is the liquidity issue which Mark Las Re is talking about. So is Mr. Blank vine as well. The other is a credit concern. Now credit concerns popped up in October, Scott. I mean that was Tricolor and First Brands. There was some, some other telecommunications company that got caught up in it as well. Right now we're actually not talking about credit concerns. Yes, you pointed out, Scott, the UBS says there may be 15% credit defaults. Okay, that's fine. I mean, look, I'm not a big fan of licking my finger and sticking in in the wind and make Predictions like that. Because right now the indications are not that there are credit concerns, there are liquidity concerns and they are different. Now I'm not going to defend, I'm not going to criticize Bloomberg, I'm just going to say state the facts. They had a 5% per quarter redemption gate and they're giving back 30% at par. By the way. There are a lot of questions left to be answered. What's the other, you know, the rest of their balance sheet, their loans, what do those look like? Where are they marked?
- [26:36]
A
You have, you have any of your clients? I don't, we don't, I don't want to debate, I don't want to debate necessarily the, the, the merits or the pitfalls of private credit. People know that at this point point, it's simply the idea that retail for the first time over the last few years has the ability to have exposure to it in a way that they never did. And I'm not going to suggest that, you know, it's the so called dumb money getting into things that they don't know what they're getting into in any way. It's their, you know, advisors who are giving them access to yet another way to diversify their portfolios, theoretically get broader returns. But they are either side semi or highly illiquid assets which investors are learning about even more now with the software.
- [27:19]
E
Which is exactly why you need advisors for this. You need advisors to select the right firms to do this with the right vehicles within those firms and most importantly the education. And I will tell you that as much as what you just said, we're not defending or criticizing private credit. A lot of people are. A lot of people are. And when we talk about credit concerns and all these talks about something systemic happening, I don't think that's the right education. The right education is if you're in these things, you have to be aware of illiquidity. And as long as clients are educated on that and have advisors to guide them to the right vehicles, they should be fine.
- [27:52]
C
This is where I think this is ultimately going as it relates to private credit. It is complex, it is opaque. And when you think about investing, Josh has been talking about Halo. One of the most brilliant investors I have a ever met on Wall street is David Tish at LSV Advisors. He does liquidity financing solution. Where is he providing that liquidity directly towards the hard assets. And I think private credit, you can look at it universally and say it's all bad, but you have to look at it and you have to isolate where the exposure is with software and then where the good exposure is as it relates to hard assets.
- [28:26]
A
So we're going to take a break, and when we come back, we have some committee moves to get to rich sappers. I'm looking at a couple right in front of me. We'll document those next. Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before. Like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help. And access support by phone, email, and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading oh, could this vintage
- [29:06]
B
store be any cuter? Right? And the best part, they accept Discover. Except Discover in a little place like this? I don't think so, Jennifer.
- [29:15]
A
Oh, yeah, huh?
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B
Discover's accepted where I like to shop.
- [29:18]
A
Come on, baby. Get with the times.
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B
Right. So we shouldn't get the parachute pants. These are making a comeback, I think.
- [29:28]
A
Discover is accepted at 99% of places that take credit cards nationwide, based on the February 2025 Nielsen report.
- [29:35]
B
Not every sale happens at the register. Before AT&T business Wireless checking out customers on our mobile POS systems took too long.
- [29:43]
A
Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence.
- [29:49]
B
Now transactions are done before the storm, silence takes hold. That means I can focus on the task at hand and make an extra sail or two.
- [29:56]
A
Sometimes I do miss the bonding time. Sometimes AT&T business Wireless Connecting changes everything. All right, welcome back. Let's do some committee moves that I have in front of me. Rich Saperstein. So you're focused on healthcare here and you bought more Pfizer. That's number one.
- [30:26]
D
Why Pfizer and Bristol?
- [30:28]
A
So I didn't get to that one, but okay.
- [30:30]
D
Yes.
- [30:30]
A
Thank you.
- [30:31]
D
Together or separate?
- [30:32]
A
Well, now, I mean, since you decided you were going to do both at the same time. Together.
- [30:36]
D
Okay, so the thesis is broadening of the market. Put the defensive team on the field. And we added Bristol and Pfizer. The reason is 12 and a half percent operating cash flow. Spend 1% on R&D, 1 and a half percent. So there's a lot of operating free cash flow to return to shareholders. But more importantly, they have over 40 compounds in clinical trials, each of them, and they have growth portfolios. So there's a lot of shots on gold with each of these companies. Plus they have the cash to return to shareholders. So in an area where I want defense, not offense in a portion of the portfolio, that's why we added the two names.
- [31:16]
A
Okay. In terms of bmy, let's take a look at that one. Because it was initiated sector performed today at RBC. They got 60 bucks on there. Just a market performer. What's your case for the big upside with this one?
- [31:30]
D
Well, if they have a clinical trial that produces a favorable outcome, you'll see these stocks go much higher. They've also lagged the industry, these two, the sector. So I think there's great upside to both of these. And it's a defensive play in an area where I want some defense in my portfolio.
- [31:49]
A
Okay. You chose Merck recently as, as, as your sort of entree here? I did over Pfizer and some of the others.
- [31:56]
C
Why, yes. Well, first of all, I love what Rich is doing here. Getting the exposure to health care. At the last rebalance, we took our weighting up to 12 and a half percent. So it's Merck. I think Merck is doing a really good job understanding that the patent expiration on Keytruder in 2028, they have to diversify the business. They're looking towards the immunology division to really pick up some of the growth that they're going to lose there. But just in totality of health care itself. The names we added, it's Lilly, it's Merck, it's Abbvie, it's Abbott Labs, it's Gilead, which is arguably our best performing name right now. It's Sencora, it's Vertex, it's Regeneron. So health care really is working. And this began in the fourth quarter. It's not like this began January 1st.
- [32:38]
A
No, but it did stall for a bit to start. To start this year. People are wondering.
- [32:42]
C
Biotech more than anything else.
- [32:44]
A
Okay, so by the way, AbbVie outperform, RBC260, Lilly outperform also at RBC12 50 is the target there. Let's get the headlines with Mackenzie Segalis. Hey, Mac.
- [32:56]
B
Hey, Scott. Former Treasury Secretary Larry Summers is resigning from Harvard at the end of the academic year. He's been on leave since November following the release of emails between him and the late convicted sex offender Jeffrey Epstein. According to a Harvard spokesperson, his resignation comes in connection with the university's ongoing review of the government released Epstein files. Dr. Casey means, the nominee for Surgeon General, said today in her Senate confirmation hearing that she believes vaccines save lives. When pressed on her stance, however, she suggested that every patient should have a conversation with their doctor about medicines going into their body or their children's bodies. She also said current science shows vaccines do not cause autism, but suggested science is never settled. And Aston Martin said today it's cutting its workforce by 20%. The British luxury carmaker says the layoffs are needed to absorb the impact of US Tariffs and weak demand in China. According to a regulatory filing, the move will result in an annual savings of more than $50 million. Back to you.
- [33:56]
A
All right, Mac. Thank you. Mackenzie Seagalas up next, Something just happened in the housing market. Hasn't happened in nearly four years. Tell you what it is next. Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading this year perfect your
- [34:37]
B
morning routine with Nespresso Vertuo up with a three second start, easy open lever and dedicated coffee creations mode button. It's easier than ever to brew coffee with smooth flavor and rich crema over ice or milk. It's your coffee your way at the click of a button. Sip for yourself and shop vertuo up@nespresso.com I need to start off the new year right by getting the most for my money.
- [35:03]
A
I just opened a Goto bank account and it's paying off out the gate.
- [35:07]
B
I want to save money on filing my taxes.
- [35:09]
A
Look no further than go to bank. You'll get 20% off TurboTax when filing your 2025 taxes.
- [35:15]
B
That sounds like a great way to start the year.
- [35:17]
A
Open your GoToBank account today and get started.
- [35:20]
B
Learn more at GoToBank.com tax green.bank member FDIC.
- [35:40]
A
Show you the home builders here having their worst day since April even as mortgage rates fall to their lowest level in nearly four years. So you're looking at the group getting hit pretty hard. Joe you on pulte but what is this on? I see some people trying to blame policy uncertainty. I mean mortgage rates down, home builders also down.
- [36:00]
C
I don't think you got first further policy details beyond reiterating maybe banning institutional investors. I also think what we heard from Lowe's and Home Depot may be troubled.
- [36:11]
A
Depot was good. What do you mean?
- [36:12]
C
They had the surprise popping. They warned on the home. Lowe's specifically cited some weak demand as it related to housing. So I think that was a little bit troubling. Take a little bit of the other side of this negativity. Pulte is pulling back here. The 50 day moving average, if you could pull up multi, please. 50 day moving average is down at 128. So this is, this is more of a technical correction, I think, than anything else. I take the other side of it.
- [36:37]
A
Okay, who. So we have this revised offer from Paramount, right, for Warner Brothers Discovery now. Yeah. A lot of people on this show was like, I like Netflix, but the stock's not going to do anything as long as it's embroiled in this, you know, merger drama if Netflix doesn't emerge the winner. And maybe that's what the market is voting on today, which is why the shares are up 5%. Because market doesn't want Netflix to be the winner. Who's buying the stock? You're going to buy it back. You sold it.
- [37:13]
C
I already saved you. I know, but you saw shareholders, you sold it.
- [37:17]
A
I did in part for the very reason which I said, and actually a critical part, maybe the biggest part.
- [37:23]
C
Yeah. The reason why I would be somewhat hesitant to buy it back after obviously liquidating at a lower level here is I don't have the confidence that Netflix wouldn't turn and go in another direction to try and acquire the asset. So that's the only thing that would be an impediment for me actually going out and buying back the shares. But I'm sure at some point, if it reassigns, establishes the momentum, we'll go back to the name. That's not a big deal.
- [37:47]
A
What about First Solar? Can we look at that? They, they gave lower than expected revenue guide that. Stocks down. Hold on, let me finish. More bad news to pile on you before you go. Stocks down 12%. Downgraded it. Baird quote. Numerous unknowns in outlook lacking clarity. Goldman does reiterate the buy. They say by the dip. What do you think?
- [38:07]
C
I think 12% is actually better news than I was. I was prepared for it because it was down worse than that. Okay, this is, this is all about growth slowing. This is about growth slowing and not being able to replicate what they did in 23, 24 and 25, which was 20 plus revenue type years. This is a single digit, upper single digit at best. They had the tailwinds in 25 as it related to easing trade, the power demand here in the United States and expanding their manufacturing footprint. I think think in 26, it's more about kind of running in place for this company and getting the 27 cost.
- [38:42]
A
Cosco feels like it's kind of run in place. Right. The stocks hasn't been great. Let's do a year to date on, on Costco, it's up 15%. Maybe I'm, maybe I'm wrong on that. I think if you back it out a little longer, though, it hasn't done all that great. Reiterated by today at UBS, ahead of earnings next week, six months, 5%. Markets up. More than that. Right.
- [39:06]
D
Well, I've owned Costco for 17 years, so you're talking to a great fan of the company.
- [39:11]
A
Okay.
- [39:12]
D
Yeah. Look, in the world where there will ultimately be three dominant retailers, Walmart, Amazon and Costco, I think you've got to take a position. We own Amazon and, and Costco. So they have a membership model, 90% renewal rate, 20 to 30 warehouses that are being built every year, global expansion, consistent margins, loyal fan base.
- [39:34]
A
Why is it down 6% over the last year?
- [39:36]
D
How about over the last 17 years? It's been, I think, I think if someone wants to be in retailing, own retailing, where are you going to go? So this is, look, it's expensive stock. It's rich.
- [39:48]
E
Isn't this a classic example of what you started the show talking about high PEG ratios and consumer staples.
- [39:53]
D
Yeah.
- [39:54]
E
I mean, doesn't, doesn't that give you a little worry? 5.4 on the peg ratio, I would
- [39:58]
D
agree with you, but I've owned it for so long, and if there's a pullback I add to it, I just think it's a great growing company over long term.
- [40:06]
A
Okay, Santoli's next with his midday word. We're back right after this. We have a news alert. Kate Rooney has that for us. Hi, Kate.
- [40:33]
B
Hey, Scott. So I am now hearing from a source that Josh Kushner's Thrive capital invested in OpenAI at essentially what is a discount. So it was a $285 billion valuation late last year. That was a fraction of the valuation. OpenAI ended up raising money at around $800 billion. It was a $1 billion deal back in December. So it basically allowed Thrive, according to the source and folks I'm talking to, to get a preferential price in around late last year. Josh Kushner and Sam Altman, very close. Thrive was an early investor in OpenAI and has been one of the Main financial backers. Wall Street Journal first to report this. They described it in that piece as basically a call option. No comment here from Thrive or OpenAI. But again this was a deal late last year. Comes as Thrive itself is raising massive funds to invest in more of these venture capital names especially. But a major backer in OpenAI and that's the latest cut.
- [41:31]
A
So just quickly, just to make sure we all understand each other, this was simply a preferential deal for Thrive and in no way an indictment in any way, shape or form of the current valuation of of AI, which is like $800 billion. So.
- [41:51]
B
Exactly, Scott. So separate deal from what is actually going on right now, which we've reported is a $100 billion deal in itself. We're hearing that it's SoftBank, Nvidia, Amazon. There is this ongoing financing happening right now, February 2026. This had to do with the deal late last year. So it is more of a Thrive story in my mind that they were able to get in at a discount, get this preferential price and get into that round with basically a call option and some interesting sort of preferred financing. So in some ways backwards looking but speaks to this close relationship between Josh Kushner and Sam Altman and OpenAI. But I'm also told they are expected to participate in this current round which could close as soon as this week. And that is really the mega round that will push OpenAI's valuation even higher.
- [42:39]
A
Yeah, to closer towards a trillion bucks. All right, thank you. That's K. Rooney, senior markets commentator and overtime co anchor Mike Sentoli is here now with his midday word. We frame this, Michael, as a real critical day for the tech trade. It would be, we would think, just if in video alone. But if you throw Salesforce and Snowflake into the stew pot, you got a lot that needs to come out tasting good.
- [43:03]
C
You do. And I think what has led us up to to this is very relevant which is essentially everything but tech working. You have a two day rally in software. We've been saturating ourselves with the disruption trade and whether we've kind of, you know, repriced that too aggressively to the downside. Also kind of stewing in the private capital concerns now banks are bouncing. I'm just making the case here that the market's narrowing back out to mega cap leadership. Today in video looks like it wants permission to run. It's at a three, three month high and maybe we have the pendulum swing swing back to maybe we overdid it on max 7, which maybe gets the overall S&P 500, which is bent but not broken into that range of the old high. So I think that's how it all comes together. Just how I always say, a broader market is not a better market. We have a narrower market. It might actually be what the tape needs right now to carry us further.
- [43:54]
A
I'll see you at three. And you're going to have a really exciting one on OT Tea today. Can't wait for that as well. See in a little bit. The setup's next. Let's talk some setup on some earnings outside of Nvidia Salesforce and Snowflake TKO Group after the bell today. You personally own this one, Joseph?
- [44:28]
C
I do. $0.21 EPS about 1.3 billion in revenue. The company is growing its revenue. That's why it has a little bit of a rich valuation. On the call tonight, you want to hear and understand what the cost is going to be for the UFC White House on June 26th. There's estimates it could be 50 to 60 million.
- [44:47]
A
How come you don't own this in the ETF?
- [44:50]
C
So if you rank one through 125 in what we hold for the ETF, this felt ever so slightly out of that number.
- [44:58]
A
125 and a half.
- [44:59]
C
That's why felt just shocked. My compliance is watching. That's why I bought it personally, because I knew it was just sitting right on the outside on the bubble.
- [45:07]
A
Are you telling me not to ask you any more questions because your compliance is watching?
- [45:10]
C
I would appreciate that. Did you know Monster reports tonight?
- [45:14]
A
Monster is tomorrow.
- [45:15]
C
Tomorrow, tomorrow. I'm sorry, they report tomorrow.
- [45:17]
A
Flustered now. You're worried about your compliance.
- [45:21]
C
13% revenue growth there. You want to hear about the effect on aluminum as it relates to the tariffs, but this stock continues to work in comp in consumer staples. Yeah, I'm flustered.
- [45:32]
A
I hear you. Okay, we'll do finals next.
- [45:43]
C
Are you following the Halftime Report podcast? What are you waiting for? Look for us in your favorite podcasting app. Follow the Halftime podcast now.
- [45:56]
A
All right, 3:00 clock Eastern today, you know we're going to do. We'll count you down to Nvidia, Snowflake and Salesforce with Stacy Rascon, Bryn Talkington, Malcolm Etheridge, Doug Clinton and Abby Yoder. And I hope you all will join me then. Richard Saperstein, what's your final trade on this momentous day for this market? Tech trade, important day. Everything else. What you got?
- [46:20]
D
Small unknown company called Microsoft that hasn't traded very well.
- [46:25]
A
No.
- [46:25]
D
Now's the time to be adding It. It's a great opportunity to buy a hyperscaler. Growing 38% in that business business. 7% operating cash flow.
- [46:34]
A
Okay, Jimmy got all worked up during the private credit conversation. As you notice, he pounded like three waters. Normally it's two. No surprise then that he picks Apollo Global just to throw it right in our face.
- [46:47]
E
I don't always. I don't always get to use words on this show. So sometimes actions which speak louder than words.
- [46:54]
B
All right, Shannon, energy sector, nice run already, but there could be more room to go.
- [46:57]
A
Okay, Joey, tjx, excellent report this morning.
- [47:00]
C
It's a long term buy.
- [47:01]
A
Okay. Stocks giving back 1%. All right, we got a big one this afternoon. I'll see you at 3 o'. Clock. The exchange begins right 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.
- [47:20]
B
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and 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 opinion. Such opinions are based upon information the Halftime Report participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer trading@schwab is
- [47:56]
A
powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help. And access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading.