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Halftime Report
The Surging Tech Trade 6/10/25
00:44:11
Scott Wapner and the Investment debate the tech sector’s surge over the past month, pushing stocks within distance of new highs. Plus, McDonald’s getting a double downgrade to sell at Redburn Atlantic, it’s our Call of the Day, the Investment Committee discuss how to trade the name. And later, the desk share their latest portfolio moves. Investment Committee Disclosures
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- [00:01]
Scott Wapner
Want to quickly create and execute trading strategies to help keep up with the markets. With Fidelity Trading Dashboard, you can access.
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Brenda Vingelo
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- [00:14]
Scott Wapner
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- [00:16]
Malcolm Etheridge
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- [00:18]
Scott Wapner
Your Fidelity Trading Dashboard is ready now.
- [00:20]
Brenda Vingelo
For free, visit fidelity.com tradingdashboard.
- [00:25]
Scott Wapner
Investing involves.
- [00:26]
Malcolm Etheridge
Risk, including risk of loss.
- [00:27]
Brenda Vingelo
Fidelity Brokerage Services, LLC Member NYSE SIPC.
- [00:31]
Deirdre Bosa
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [01:00]
Scott Wapner
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. Okay, Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wachter here at one market in San Francisco. Front and center this hour, the surging tech trade. The sector up big over the past month and that has sent stocks within spitting distance of a new all time high. We will discuss, we'll get the trades to make right now with the investment committee. Joining me today, Brenda Vingelo, Big Technologies. Alex Cantowicz is with us here on set. Malcolm Etheridge along as well. We will check the markets here where we are in the green across the board. We of course are still waiting for some headlines to come out of those now completed meetings in London between the United States and China on the issue of trade. We'll track that too. But the S and P and the NASDAQ up five of the past six days, Brent. And we're on the march, as I said, to new highs in large respects because of this trade. It seems from the commentary today that we are going to take out those old highs. It's just a matter of when, not if.
- [02:14]
Malcolm Etheridge
Yeah, I think if we look at what's happened within the technology sector, it was such a laggard during the first quarter. There were so many concerns over whether spending on AI was really going to continue at the pace that we had experienced last year. And what we learned is that actually corporate earnings were fantastic for the group. They were a leader during the first and valuation was attractive at a certain point back in in late March, early April. And so we've seen a really big resurgence and the group continues to be a leader, a projected leader for next quarter in terms of overall revenue growth. So I think as long as the growth can stay intact that these, some of these names can continue to work. Although I will say that there are some where growth looks like it's going to be a little bit more challenged and valuation still high. So I don't think every name is a value in this group.
- [03:02]
Scott Wapner
Yeah, Malcolm Barclays today says the path least resistance is to the upside. Wolf Research, new highs are ahead. You feel the same way.
- [03:11]
Alex Cantowicz
Definitely feels for the moment that the tech trade especially is intact. But I will say that I'm growing a little bit more skeptical of this market at 22 times on the S and P where as you just pointed out, we're still waiting on some substantial, some substantive news coming out of the trade talks with China, let alone all the different regions where those trade pauses are set to unravel toward the end of this month, at least that 90 day pause that a lot of those countries got. And we really haven't gotten any clarity there as far as tariffs. So I think that we should at least be cautiously optimistic. But I definitely understand that the momentum is on the side of pushing past those February highs.
- [03:49]
Scott Wapner
What about the idea, Malcolm, that it might not necessarily take all that much in a readout of what actually happened in London to get stocks moving higher again? Maybe the bar is reasonably low at this time. Just thinking that any incremental advance deemed to be positive is going to be good enough.
- [04:08]
Alex Cantowicz
I think that's true probably for the next three or four weeks. Right. We're heading into a period where we're going to get Q2 earnings and I think that's where the real rubber meets the road. We're going to get guidance from those CEOs of the retail institutions, we're going to get guidance from the banks, all of those that are really being hit by those tariffs and have a lot more clarity now on the impact of those tariffs, even though they don't have a lot of clarity. As far as the roadmap for where we go from here, is it 30%, is it 20%, is it 10%? We still don't know. But I think just getting guidance from those CEOs of what earnings will look like the rest of this year will really be the telltale sign for markets in the second half.
- [04:46]
Scott Wapner
As we said at the top, we're not even talking about new highs without the resurgence in Tech deboses here at one market as she always is with what's been driving that comeback?
- [04:57]
Christina Partsinevelos
D well, a lot of it has to do with the trade trade being back not just because of hype this time but because investors they're finally seeing enterprise deployment, strong infrastructure demand and this is key monetizable scale. Now just consider some of the recent headlines over the last few days. And this morning, open air hitting 10 billion in revenue. Glean raising at a more than $7 billion valuation. Microsoft it's at all time highs. Google powering its own rivals. This is all part of the same shift that undersc we are still in early days. Now take this chart from Goldman Sachs. Enterprise AI adoption, it surged this year but it still remains below 10%. So it's still early and that is where the upside is for investors. Now look at the public stocks. Alphabet is up 8% since its IO keynote. Nvidia is up more than 20% over the last month. A lot of that on inference, demand and sovereign AI. Despite China challenges. And then core weave, of course, the meme stock of the AI world, it's nearly tripled over the last month. The private trade, Scott, it's booming to new valuations for Darwin links like scale AI and glean. Now this morning's report about a new and surprising Google Cloud OpenAI partnership that's also positive for the tech trade at large. It means that demand for AI infrastructure, it's outpacing even the biggest partnerships, if that lasts, that will continue to run this trade. But of course when we get to next quarter, investors are going to again want to demand to see return on investment from all of these investments.
- [06:23]
Scott Wapner
All right, Deirdre, thanks so much. That's DeBosa really setting the table for us. I mean everything's up a lot since the April low. I think everybody knows that too. But technology far and away the best. It's up 34% and comm services up 26%. Big technologies. Alex Cantowicz is at the desk with us too. The news that Deirdre brings about these new developments from the hyperscalers and the deals they're cutting really only underscores why money continues to flow to these names from investors.
- [06:51]
Steve Kovac
Absolutely. With AI, what we've seen is that in hard times it's an efficiency play. In good times it's an expansion play. And so we now see leaders like OpenAI taking off some of the restrictions from the early moments where it could only work with Microsoft. IT partnering with Google, as D mentioned, is a very big deal. Right, because now you see that it's able to take its leading technology and sort of spread it across the entire ecosystem maybe outside of Amazon at this point. And that is, that bodes well for any company looking to build with this stuff because the real opportunity for growth here is outside of ChatGPT, it's companies that are trying to figure out ways to implement this in their workplaces and use it for that efficiency and expansion. If you have access, let's say you're a Google Cloud customer and you have access to OpenAI now if you're a Microsoft customer, you can get everything. An Amazon customer, maybe you're still working with Anthropic or Amazon's Nova models. This idea that you can now basically take the best in breed and implement it should lead to an expansion of building. Whereas these previous deals have held it back.
- [07:57]
Scott Wapner
What I think so interesting too is that competition here is so fierce, right? We talk endlessly about an arms race, but you don't generally have arms races where you have competitors doing deals in some cases with each other. Despite the rivalries of the open eyes and the Alphabet, Google's and what have you, you still in some cases have to do deals with your perceived rivals to get ahead. It's who has the better technology that you need to be willing to embrace.
- [08:29]
Steve Kovac
Silicon Valley is all about frenemies, right? You got to have these partnerships. Think about OpenAI, what they built that was right on top of Google's innovation, because Google wrote the paper that basically ushered in this moment of generative AI with the transformer paper. And so you have OpenAI building on top of their innovations and Google is building right back. Every single company here pushes the cutting edge forward. They understand that there is room for a tremendous amount of growth throughout the entire ecosystem. You have multiple companies that are over $3 trillion. That doesn't happen if one company takes all the gains. So I think you're right to point out that you have to work with your rivals. And if you do, it's sort of like may the best technology win. And we see that there's a leapfrog every couple of days. And each company that's trying to be the leader thinks that it has the capabilities to leapfrog next. And that's why they play this so.
- [09:17]
Scott Wapner
Interesting too, that what is the best technology today may not be the best technology quite literally, not just figuratively tomorrow. And that's the way that we need to think about all of this. You own Alphabet brand, you own Metta, they agree to take a 49% stake in the data labeling firm Scale AI for $15 billion. Our DeBosa confirming that as she just did a few moments ago. So how about both of those stocks?
- [09:41]
Malcolm Etheridge
Yeah, I think, I think about both of them a little bit differently. With Google, you know, Alphabet, we are a little bit concerned just about how the evolution of traditional search ultimately ends up and what happens to their business model. No doubt that Google has a ton of data that's incredibly important. They've invested a ton of money in AI. Gemini is it's completely legitimate and competitive in the marketplace. But what happens to their traditional advertising driven search model? With Metta, I think we're seeing that the investments they're making in AI is paying off with advertising and I think they were ultimately that platform I think is positioned to be a continued winner in this environment where traditional search is being disrupted, traditional media is being disrupted from an advertising standpoint. So I think that when we look at a place like Metta where they're making more investments now, I think we had an announcement just today about further investments in AI from Metta, I think partially to justify their CapEx guidance, which was higher last quarter. That's been a source of some controversy. But I do think the company is making the investments where they need to make them and is really positioning its model to continue to be a winner in this environment.
- [10:48]
Scott Wapner
Back to the arms race. AK Mark Zuckerberg personally hiring to create a new quote, super intelligence AI team according to one report today. What does that mean to you?
- [10:58]
Steve Kovac
Well, Meta has been really working hard to further the state of the art in open source artificial intelligence. But the problem is it hasn't worked according to plans. Llama 4, their latest model, was largely viewed as a disappointment outside and inside. So they needed something to supercharge that company. Now, superintelligence, you know, that is a jargon word, it's a hype word. But I don't think we should look past what they're doing with this acquisition or sort of like an acqui hires ISSH because they're going to get 49% of the company. Alexander Wang is going to come on board. I spoke with him right before New Year's with, you know, talking to him about where he thinks AI is going to go this year. He's interesting for a couple of reasons. First of all, he fits perfectly with that company in terms of his political adeptness. He has been very close to the administration. He speaks to the people they speak with. Now maybe this is a weird data point, but he was on The Theo Vaughn show, which is sort of becoming an indication that you're kind of in with that crowd. And that was a great episode. But also his bet is very interesting. He's betting on using data to scale AI models. We talk a lot about Nvidia and the infrastructure side, but there has been a undercurrent in Silicon Valley that if you don't have the data, it doesn't matter how much compute you have, you're going to eventually hit a wall. So scale is all about building that extra data source for artificial intelligence, in some case hiring PhDs to feed information into these models so the models get smarter. And if what Mark Zuckerberg saw was that compute is hitting a wall, remember, he has so many GPUs, they've had the lead because they need them to optimize Instagram. If he saw that wall and said, what we need to get to the next stage is going to be data, he just partnered with the perfect company.
- [12:39]
Scott Wapner
Yeah. It's interesting too, when you look at, as we say, this resurgence in tech has stocks really on the doorstep of a new high. We're talking 2% or so on the S&P 500. What was a terrible trade for a while has turned into a great one. And that's the semis. The the SMH ETF is up 44% off the April low. Some of the components within there. It's just astounding the gains that we've seen. Microchip a double micron 74 on semi 70 and on and on. The SMH is up five of the last six days. Christina Partzonevillos follows this so closely. She joins us now with more on why these stocks are moving yet again.
- [13:18]
Christina Partsinevelos
Yeah, they're staging a comeback with just to add more stats for the smh, the ETF heading for its third straight weekly gain, driven by specifically strong earnings and shifting policy wins. So the biggest catalyst today is a White House official signaled President Trump could ease chip export restrictions to China in exchange for faster rare earth exports. So a rocks for chips deal that could help names like AMD and Nvidia. Nvidia's dominance got another boost when Huawei's CEO admitted their chips still lag US peers by a full generation. This according to Chinese state media, just over the last 24 hours. Nvidia's CFO reinforced this edge just last week at GTC Paris, citing margin recovery and improving Blackwell supply. And that's why you're seeing shares up 22 and a half percent just in the last month. And the momentum spreading. Micron jumped 3% today after announcing they're shipping HBO, our high bandwidth memory HBM 436 gigabyte samples, two key customers while TSMC gained about 2% on a 40% year over year May sales spike. TSMC now on its longest winning streak since December 2023. That's seven straight days in a row. And then here's the key metric Scott, to your conversation. SMH has really climbed 16% this past month versus just what 6% for IGV which represents software and 6.5% for the second spy ETF as well which really signals a performance gap and a clear rotation back into hardware as infrastructure builds and those geopolitical risk ease.
- [14:47]
Scott Wapner
Scott Christina, thank you Christina. Parts and novels let's not kid ourselves either. You go back to Nvidia's earnings day which was so highly anticipated and you needed that to go well for this trade to continue to work. It did in fact and that in many respects is why we find ourselves here today as well. Brandy, you own that stock along with Broadcom?
- [15:08]
Malcolm Etheridge
We do. And what we've seen obviously when Nvidia reported the market was in a much different place but now we have when Broadcom reported recently reported a perfectly fine quarter gave strong guidance. Air is really continuing to drive that story. Even the non AI semiconductors stabilized a little bit more than I think everybody had expected. But the stock had a bit of a ho hum reaction. So I think it's just telling that this group has come a long way fast and the expectations are pretty high. Still believe that it's an important exposure to have in a portfolio. Absolutely. And that there will continue to be ongoing demand as as infrastructure spend continues that both of those names will be very relevant and important. But have to be mindful a little bit of how far we've come and that expectations just ratchet up as they get more exciting expensive.
- [15:57]
Scott Wapner
Malcolm they may have come really far, really fast but B of A for example and I am assuming many others are still bullish on the space. They put out a note today because of demand trends Data center and AI levered companies like the Nvidia's of the world, the Broadcoms, the AMD's and the Marvell you own in the very least of that group in video too.
- [16:18]
Alex Cantowicz
And Brenda pointed out the fact that they've come so far so fast. I think it's really important to point out the fact that they're really pegged to I would say Broadcom and Nvidia, whatever direction Nvidia goes You know, we, we saw Nvidia's earnings basically touting the demand that still is there and their ability to ramp up production to meet Blackwell demand. Now we're hearing that they have to actually increase the production even more to meet that demand and that's a very positive signal for the entire sector. So I think it's still that same trade. As Nvidia goes, so goes the rest of the semis trade. So I think investors should just be very cautious to pay attention to how fast this trade has run and be concerned a little bit about how much further it can go instead of maybe considering the fact that this is going to continue to run at this pace throughout the rest of the year.
- [17:05]
Scott Wapner
We're watching Apple shares today too, which are modestly in the green a day after the highly anticipated wwdc. It's what brought us out here to the west coast in the first place. Steve Kovac was alongside us yesterday. He's here today with some reflections as everybody has now had some time to take everything in that happened yesterday in which you put on social media, you called it and this is cold man, the worldwide Meh Velopers conference. Why was that your, why was that your big takeaway?
- [17:36]
Brenda Vingelo
It's not just my big takeaway, Scott. That's what the street is saying this morning too. It's just. And that was by the way, I was linking to the Kramer's Investing Club's takeaway when I tweeted that. But look, the street has the same reaction that we had right after the event on closing Bell yesterday and it was just kind of lackluster, muted. If you're hoping for more artificial intelligence announcements, you didn't really get anything groundbreaking. Let me just show you what the Street's saying right now. UBS more evolutionary than revolutionary. Melius nothing that moves the needle and so on and so forth. There are some positive sides and you do ask an analyst also on the other hand saying like at Goldman and Morgan Stanley and so forth, giving some more positive reaction, saying, you know, the foundation is there, the groundwork is there for artificial intelligence. It's just going to take more and more time. One thing that I did digest a little bit overnight though, Scott, is this idea that developers, this was the biggest announcement probably on the AI front. Developers can tap into Apple's AI model on the phone so it doesn't have to either pay Open Air, one of these other cloud based services. This is a way for them to kind of save costs and develop an Apple's ecosystem that is one kind of carrot, if you will, to keep developers making AI stuff on the Apple platform. But we'll have to wait and see how the rest of the week goes and how developers are reacting to the tools Apple is giving them. And by the, at the same time, the competition is just not stopping here. So, you know, we're now spinning it forward a lot of the street also saying let's wait for some cool hardware. There's some optimism about this new thin iPhone coming out and then even further out next year and the year beyond, the anniversary editions of the next iPhone, believe it or not, hitting close to 20 years and some new foldable form factors and things like that that might juice some excitement, but for now, Apple's kind of sitting out. Scott?
- [19:30]
Scott Wapner
All right, we'll see what happens. Steve Kovac, thank you once again for setting us up for our next conversation. Eric Woodring is Morgan Stanley star analyst. He covers this company and he joins us now. It's good to see you, especially the day after this event. And you heard the commentary not only from Steve, what, what feels to be sort of pervasive here fails to clear a low bar. Was a headline lackluster? Meh. Nothing that moves the needle. Does that match with your own takeaway?
- [20:00]
Eric Woodring
I think those are generally fair takeaways. Following the developer conference, Scott, you know, I think the problem and your private, your prior guest alluded to this is the the market in the industry is moving so quickly. And if we rewind back to the developer conference of 2024, we got a lot of features that Apple previewed that were very exciting, excited the market, excited consumers, and we want to see progress towards, towards those goals, towards those targets. We didn't get much. You know, software head Craig Federigh talked about having a more intelligent, more personalized Siri coming in the coming year. Listen, the market is very impatient when you see the quick pace of AI development. And so it's a combination of what we got wasn't necessarily what we're seeing from others. And then what we are seeing from others is moving so quickly that the concern is is that Apple will be left behind. Now, I would mention that historically we've seen Apple come in late to technologies. They kind of see how the market develops, they try to create something that is better and then they try to take all of the profits. And so it's not necessarily unusual to see Apple somewhat late to technologies. And as your previous guests mentioned, adoption of these technologies is still very early. But the name of the game is progress. And what we didn't get at the developer conference was tangible signs of significant progress. We got steps forward. Opening up the large language models for developers is an important step forward, but it's just not enough when the pace of the market is as fast as it is right now.
- [21:40]
Scott Wapner
Yeah, it's hard for, you know, I guess the analyst and the investors investing community to have to rally around another P word, that being patience. We're sort of tired of being patient. But you make a good point. It's one that we raised with our group yesterday. Traditionally, Apple marches to its own beat, its own drum, its own timeline and time frame. They don't really care what the investment community nor the analyst community really wants. They'll deliver what they think they can deliver when they're ready to deliver it. And history has been on their side.
- [22:14]
Eric Woodring
That's correct. And again, I think it's very easy to take a step back and think about how we all use our Apple devices, whether it's our phone or the ecosystem of our devices, and say let's kind of dream the dream. If Apple could deliver a very high quality virtual digital assistant that is voice controlled. They have the data, they have the user base, they have the privacy standards, they have the ecosystem. So these, these functions can work kind of across all of your different products. They have the partnership with open AI, they're seemingly willing to make partnerships with other large language and foundation model providers. You know, it's very clear or I think easy to look forward and say we can envision a world where Apple is a clear winner in this AI trade. But then you take a step back and again you think to the last developer conference and you say, well, we're not at the point of where even the company introduced some of the futures a year ago. Again, it's this patience factor that, that I think investors are not willing to tolerate. Right now. The Stock trades at 25 times earnings calendar 620 on calendar 26 numbers. Over the last year, it's traded kind of 25 to even above 30 times. And so the market has discounted the multiple to say we're concerned about growth, we're concerned about predictability, we're concerned about the competition within the landscape. And until we as the market feel better that things will be moving forward with kind of more tangible, larger steps, the valuation multiple will have a ceiling on it.
- [23:54]
Scott Wapner
Yeah, that's a good place to leave it. Appreciate your time very much, Eric. We'll see you soon. That's Eric Woodring of Morgan Stanley joining us with his friends. First take on what happened Yesterday, Malcolm, you told us right after it ended yesterday that maybe the stock was attractive here. Then maybe you were thinking about adding to it. What about that? Did you? Would you? Will you?
- [24:14]
Alex Cantowicz
Yes. So I haven't found the opening yet, but I do think we've reached what I'm referring to here as peak pessimism around Apple. We started getting analyst calls almost two years ago now at least starting to sound the alarm when we saw declining iPhone sales start to kick up around then we've seen the issues with tariffs related to China. Obviously that's going to impact Apple more than a lot of other companies. We've also seen the lag in AI development that's been covered a ton. There's all the reasons that, you know, investors may not be considering Apple. It's the reason it's lagging behind its peers significantly like a Microsoft or a matter. Right now I'm thinking that this is probably setting up to be the place where you want to be adding shares. Somewhere in here we saw right after Liberation Day, I think it traded down as far as 172 somewhere in that range. So we know that that's roughly where the floor is. As far as bad news in this name, we're right at the 50 day moving average. But momentum is not on its side. It's well below the 100 and 200 day. All of those things together. I think that we're probably on the cusp of a hardware event that is actually going to impress. And I think that we're probably setting up here for Apple to make some sort of announcement that does get investors excited again. And I think that all of the conversation we're having around WWDC and Apple specifically really reiterates just how important it is that a company like this gets this right. Because Apple is reflective of how much opportunity there is in what I'll refer to as consumer AI. Where everything else we've been talking about to this point has been strictly in the enterprise.
- [25:46]
Scott Wapner
All right, we're going to take a quick break. We have a move of Malcolm's to get to today and we certainly will. We also have our call of the day, a rare one at that. A double downgrade from Mickey D's. Doesn't happen all that often. We're back in two.
- [26:10]
Deirdre Bosa
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- [26:42]
Christina Partsinevelos
If your small business has a problem.
- [26:44]
Alex Cantowicz
You could say, just my luck.
- [26:47]
Brenda Vingelo
But you should say, like a good.
- [26:48]
Alex Harmson
Neighbor, State Farm is there and we'll.
- [26:51]
Alex Cantowicz
Help get you back in business.
- [26:52]
Christina Partsinevelos
Like a good neighbor, State Farm is there.
- [26:56]
Deirdre Bosa
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [27:45]
Scott Wapner
All right. Welcome back. Our call of the day today, a double downgrade for McDonald's at Redburn Atlanta. Kate Rogers is back and we are so happy to have you back. And you have the details for us.
- [27:56]
Christina Partsinevelos
Thank you so much, Scott. Great to see you. So Redburn hitting McDonald's with that double downgrade this morning to sell from buy on concerns over GLP1's leading to declining foot traffic coupled with worries, of course, about the economy. It also lowered its price target to 260 from 319. McDonald's often performs well during economic slowdowns, but clearly Wall street is challenging that narrative. The issue here is value and consumer perception around costs as restaurant inflation continues to outpace grocery costs. On the GLP1 front, the note refers to behavioral science. So if one person in a home is on one of those drugs that reshapes dining habits for an entire family. Worth noting here, this is the third downgrade that McDonald's has seen in the last two days. The note says foot traffic declines are expected at lunch and dinner and will impact not only McDonald's but also other chains including Domino's and Yum Brands KFC. Scott, back over to you.
- [28:47]
Scott Wapner
All right, Kate, thank you. That's Kate Rogers with a rare double downgrade. Malcolm, you have any interest in this name? Have you ever owned it? If not, why?
- [28:56]
Alex Cantowicz
Haven't owned McDonald's? Don't love anything, especially right now that's tied to consumer spending as we keep getting stories about whether the consumer is actually slowing down or not. But I do think the one positive buried inside of McDonald's is their growth plan and their plan to add additional franchisees and open additional stores from here. So if you are looking through at where the profit engine is going to come from, it's going to come from them collecting those upfronts with new franchisees coming into the system.
- [29:24]
Scott Wapner
I mean for a double downgrade down one and a quarter percent, not that big of a deal at least from the market standpoint. Today JP Morgan's price target in terms of other calls raised to 320 from 300 at Wells. That's Mike Mayo, the well known analyst over there. You own the stock?
- [29:37]
Malcolm Etheridge
We do. And I think if we look at JP Morgan, Morgan is the most dominant bank in the US And I think we're in an environment where large banks are going to continue to gain market share just as we move to the digitization. I how that impacts the consumer experience at the bank. So there are a lot of investments, investments that these large banks have the ability to make that small regional banks do not. And I think that's going to continue to set them apart. So we continue to own JP Morgan. We've owned it for a long time. It's our only position within banks.
- [30:07]
Scott Wapner
Oh, the only one.
- [30:08]
Malcolm Etheridge
It is the only one in traditional banking. So we're sticking with it.
- [30:13]
Scott Wapner
How about Disney, which you own as well. The price target to 130 today reiterated buy it loop. They finalized the Hulu purchase from our parent. What do you think about this name from here?
- [30:24]
Malcolm Etheridge
Yeah, so I think the Hulu purchase was really a lot lower cost than was originally speculated it could be. And this will allow them to really leverage Hulu and do more bundling with Disney plus. So I do think it's a positive and overall this name has really recovered quite nicely. Trends have picked up. I also think this deal they have with the Abu Dhabi location is fantastic. I mean they're not, they're not paying to open it. They're just going to manage it and collect a service fee. And so that I think is a great economic proposition for that name as well as just great for the brand overall to expand more globally.
- [31:02]
Scott Wapner
Let me get your take on Tesla while I'm on this topic because there were two more calls on it today. There were a couple yesterday as well. Reiterated underweight today at Wells. 120 bucks is the price target. Reiterated underweight at JP Morgan today. And there were a couple of downgrades yesterday in this fallout between Musk and the President. Where that goes from here and whatever ramifications there are resulting from it. How do you view that stock today?
- [31:30]
Malcolm Etheridge
Yeah, so obviously it's a bad moment in terms of PR for Elon Musk. But I actually do think the more I've thought about this after this breakup happened, I actually think it's the best thing for both parties because Elon can distance himself from the President. I think that's hurt some perception of Tesla, especially in certain areas of the coast. But when we look at the company overall, I mean this week on Thursday we have the robo taxi event that should, should be a catalyst or at least give us a view of how that project is coming along. Then you have the lower class vehicles which are coming down the pipeline, robotics. So there's, there's a strong pipeline there of innovation that I think we don't see in a lot of large companies. It's a highly controversial company, highly volatile stock. But we're sticking with our position.
- [32:20]
Scott Wapner
Okay, Malcolm, I mentioned that you had a move to come out of the last block. It's a sale that you've made and it's the cybersecurity etf, the cibr. Why now? Simply because of the gains that we've seen from many of these stocks that are, that are within that index, that ETF.
- [32:40]
Alex Cantowicz
It's. Yes. And so it's up six of the last seven weeks. It just put in a new 52 week high last week or new all time high last week. And that actually scares me a little bit. Makes me look under the hood and see what's really driving that. And if you look a little closer, you notice that it's Broadcom, that's actually number one, the top holding in that portfolio at like 9%. And then rounding out the top five, you got Infosys and Cisco. And so it's not necessarily one that I plan to get out of and stay out of, but after they rebalance and reset the holdings, the weighting in those holdings a little bit, we'll be looking to get back into it. But to your point, with us up more than 30% since we got into it last year with it meant to be a tactical overweight to play that cybersecurity trend. I think it was a good place to take some profits and just wait and let the rebalance happen.
- [33:31]
Scott Wapner
Still a little crowded to you? I mean, how do you view this space?
- [33:33]
Steve Kovac
Yeah, I like what Malcolm saying, the shifting balance in that ETF doesn't seem right to me. However, I will say that this space is definitely going to be a big one. If you think specifically about, and I drive so much of what we see in technology today. We have very powerful open source, artificial, artificial general intelligence models, generative intelligence models. Like Deepseek for instance, that bad people can get ahold of, deploy on their own machines and then send very personalized phishing attacks out to folks. So I expect that we're going to see an increase in these type of attacks and therefore cybersecurity is going to be very important. And by the way, this isn't just text. It's moving into voice. So you could have, you know, people's voices cloned and then call their family. Like our family. We have a code word that if somebody calls and says I'm in trouble, we ask for the code word because if you don't give the code word, you might be an AI voice. And so I don't think most families have that. So I think we're going to see so much more. I think that barley extends beyond just like the traditional cybersecurity companies. But this is going to be a very big issue. So if you can invest in the companies trying to prevent it from happening, I think that's a pretty good idea.
- [34:37]
Scott Wapner
All right, let's get the headlines now with Silvana Hanau. Hi, Silvana.
- [34:40]
Malcolm Etheridge
Hey, Scott. Good afternoon. U.S. ambassador to Israel Mike Huckabee told Bloomberg News today that the US no longer wholeheartedly endorses an Independence Day for Palestinians. Huckabee said there needs to be significant changes to the culture and that it probably won't happen in our lifetime. Asked if a Palestinian state even remains a goal of US Policy, as it has been for decades, he said, quote, I don't think so. House Speaker Mike Johnson said today that California, California Governor Gavin Newsom, quote, ought to be tarred and feathered over the protests in L. A because he's a participant and an accomplice in them. Newsom and State Attorney General Rob Bonta sued the Trump administration yesterday, claiming the state's sovereignty was trampled when President Trump ordered the Guard troops to immigration protests in la. And Uber is teaming up with startup Wave to test self driving vehicles in London. The companies say they chose London because of its different road layouts and traffic laws compared to the US where most testing has been done so far. Scott, I'll send it back to you.
- [35:43]
Scott Wapner
All right, Silvana, thank you so much, Silvana. And now coming up next, AI Driven Investing. We'll hear from the co founder of Portfolio Pilot. This company is looking to revolutionize the way you invest with the help of AI App Times. Back after this.
- [35:59]
Alex Cantowicz
Foreign.
- [36:02]
Deirdre Bosa
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted. If this sounds like you, you're stuck in the past. Discover is accepted at 99 of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [36:31]
Brenda Vingelo
Ryan Reynolds here from Mint Mobile with a message for everyone paying big wireless way too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month. Of course, if you enjoy overpaying. No judgments.
- [36:44]
Scott Wapner
But that's weird.
- [36:45]
Brenda Vingelo
Okay, one judgment anyway. Give it a try@mintmobile.com Switch upfront payment.
- [36:53]
Christina Partsinevelos
Of $45 for three month plan equivalent to $15 per month required Intro rate first three months only, then full price.
- [36:57]
Malcolm Etheridge
Plan options available, taxes and fees extra.
- [36:59]
Christina Partsinevelos
See full terms@mintmobile.com.
- [37:03]
Scott Wapner
All right, welcome back. Our next guest company bills itself as the world's first AI driven personal investment coach. Alex Harmson is the co founder and CEO. He joins us here at one market of portfolio pilots. Good to see you again.
- [37:16]
Alex Harmson
Hey, thanks for having me on again.
- [37:18]
Scott Wapner
It's been a while since we've spoken with you. Last time we had you on In September of 23, you had 13,000 users, $6 billion in assets on your platform. Now you have 30,000 users and some $30 billion in assets on the platform. How have you achieved that growth?
- [37:35]
Alex Harmson
It's been exciting, absolute massive excitement. The biggest thing I think is that I don't know if we're quite ready for AI to manage your money for you, but the idea you could hook up your finances accounts, answer a few questions and then have AI find optimization opportunities for you. I think just as the Overton Window expands as people get more comfortable with AI, that feels like an obvious solution. And we actually have a lot of people just reach out and find us. Sometimes even chatting or perplexity sends people our way, you know, as they're looking for this kind of solution.
- [38:12]
Scott Wapner
So to be clear, and you and you and you underscored this at the top. Your, your platform doesn't use AI to actually manage people's money, but it does in terms of I would put in my personal information my, you know, my net worth, this, that and the other. And it comes back to me with.
- [38:32]
Alex Harmson
What proactive financial advice. And so actually the parent company behind Portfolio Pilot is a registered investment advisor. So we can actually give you an individual fiduciary financial advice. Everything from specific investment advice on how to increase your risk adjusted returns, increase your downside protection, lower fees, optimize your taxes, think about long term retirement planning.
- [38:56]
Scott Wapner
Estate planning, actual stock picks and investment.
- [39:00]
Alex Harmson
Choices or no individual stock picks, ETFs, mutual funds, crypto, even takes into account your house, jewelry, cars, private equity, student loans. Truly across the board.
- [39:12]
Scott Wapner
How does it work though in an environment like the one we're in where we're so susceptible to it's a headline driven market. It's a, in many respects that people who come on and say it's a stock pickers market. I can understand this working well in what is a set it and forget it environment where everything seems to be going up and you generally have the assumption that it might continue to do that for a while. But what about in this kind of environment? How accurate is it?
- [39:41]
Alex Harmson
I think this is one of the best things about having a platform like I trying to remove a lot of the human bias from the situation. It's very focused on long term investing. And so it's not, we're not trying to say, you know, you should buy this stock today because it's really hard, because it's reacting to the tariffs. It's for, you know, the 80% of people that want to be somewhat involved in their finances, that know there's optimization opportunities that must be there across all these different accounts. They're not trying to trade the market every single day. And so for them, a lot of it is about making a more efficient portfolio, finding high expected return, low correlated assets and then making sure you have the right mix of downside protection at your risk level with the lowest fees.
- [40:29]
Scott Wapner
It's $29 a month for what you call a gold platform. And platinum is $100 a month. $100 a month is a lot. What am I getting for a platinum subscription?
- [40:41]
Alex Harmson
It is a lot. This $99 a month tier, that platinum tier is mostly for people that want to be a little bit more involved, actually interact with the agent. We have this AI equity research tool. But Scott, for most people the $29 a month here is perfectly fine. It's $20 if you buy an annual plan. And our hope is that it pays for itself with tax optimization opportunities on its own and thinking about even a small increase in your expected return or small decrease in your downside. Our hope is that it pays for itself, it doesn't break the bank, and it's something that is mostly just there in the background to give you this sort of proactive optimization advice.
- [41:26]
Scott Wapner
All right, appreciate you being back with us. We'll follow the trajectory of your company. Alex Thompson, thank you.
- [41:30]
Alex Harmson
Thank you so much.
- [41:31]
Scott Wapner
All right. Up next, Mike Santoli. He's back with his MIDDAY Word. We are back on the halftime report today from one market. Our senior markets commentator Mike Santoli is here with his MIDDAY word. What do you make of the price action today up upward grind, Scott, you know, when the market's in wait and.
- [41:51]
Steve Kovac
See mode, which we clearly are, you.
- [41:53]
Scott Wapner
Know, we're digesting two strong weeks which came at the end of two very.
- [41:56]
Steve Kovac
Strong months, it can kind of waver.
- [41:59]
Scott Wapner
And find excuses to back off. That's not what we're doing.
- [42:02]
Steve Kovac
We're sort of finding ways to stay supported up near these levels.
- [42:05]
Scott Wapner
You know, today's high in the S.
- [42:06]
Steve Kovac
And P where we are right now.
- [42:07]
Scott Wapner
Is a marginal new high for this move. So grinding toward progress, but supported by.
- [42:14]
Steve Kovac
The parts of the market that haven't.
- [42:15]
Scott Wapner
As much participated, that are maybe more risk seeking.
- [42:18]
Steve Kovac
You have the Russell 2000 outperforming again.
- [42:20]
Scott Wapner
Up 3/4 of 1%.
- [42:21]
Steve Kovac
I also was looking the 20 best performing S&P 500 stocks year to date.
- [42:26]
Scott Wapner
17 of them are down today. Of the 20 worst performing stocks year to date, 17of them are up today. So clearly money just kind of looking for places that haven't moved as much.
- [42:36]
Steve Kovac
Yet that can't last forever.
- [42:38]
Scott Wapner
Obviously, you're going to need some of these, you know, cards to turn over in a favorable way to keep going here. But, you know, volatility continues to leak. Lower the Vix now below 17.
- [42:48]
Steve Kovac
So everything seems pretty comfortable and benign for now.
- [42:51]
Scott Wapner
We'll see if the headlines cooperate with that. Yeah, slow and steady. I'll see you in a bit, Mike. Thank you. That's Mike Santoli, our senior markets commentator. Up next, CNBC unveiling its annual Disruptor 50 list. The company's the generative AI revolution has transformed, transforming that list as you might expect. We'll have the details next. Cnbc unveiling its 13th annual Disruptor 50 list today. Julia Boorstin joins us now to discuss. Give us more information on this.
- [43:37]
Christina Partsinevelos
Well, we've really seen the power of AI impact this list. There are so many companies on this list that say AI is essential technology. In fact, 21 companies on this year's list say that AI is an essential technology for generative AI is an essential technology for them, up from 13. And if you look at AI more broadly, beyond generative AI, 38 companies on this year's list say that is critical to their business, up from 34 in last year's list. And just looking at the top five here, Andrew, in the number one spot. Scott, this is a big deal here to have a defense tech company in the number one spot. OpenAI number two was the number one company both last year and the year before.
- [44:19]
Scott Wapner
It is interesting you had to figure to Julia, that I was going to be the central theme in all of this. Of course, certainly.
- [44:26]
Christina Partsinevelos
And what's fascinating is if you look back at before Chat GPT launch, which was really that pivotal moment for the tech ecosystem, only 11 companies on this year's list were on the list before ChatGPT launch. And many of those companies have really embraced generative AI. Andrew, a perfect example, has really leaned into AI Canva, number five on the list. That was a design platform and they've leaned so heavily into AI just in the past couple of years, really integrating partnerships with chatbots and the like. So the, the story here seems to be if you want to succeed in this tech landscape, AI has to be essential to your business. AI is the new technology.
- [45:06]
Scott Wapner
Yeah, no doubt about that. Julia, thanks so much. That's Julia Boorstin. And on that note, we have a special closing bell coming up from one market in just a bit, a look at the next wave when it comes to AI, the people, the companies that, the trends and technologies that will drive this revolution forward and of course, how you can invest in it. We'll have exclusive interviews today with the CEO Matt Garman, Andreessen Horowitz, general partner on Mitta. He was the first outside investor in anthropic vc. Jeff Richards with us today, along with portfolio manager Ankar Crawford. She invests heavily in the trade. We'll do final trades next.
- [45:50]
Steve Kovac
Who?
- [45:50]
Scott Wapner
Final trades? Malcolm, what do you have for us today?
- [45:53]
Alex Cantowicz
Yeah, believe it or not, I'm going to go Apple with all of the coverage we've been talking about the last couple of days on this name and the fact that there wasn't a sell off in the shares or even a meaningful downgrade by analysts, I think that's a good sign. Time to buy Apple.
- [46:07]
Scott Wapner
All right, thank you, Alaska. Thanks for being with us these last couple of days. And you actually have a final trade for us?
- [46:12]
Steve Kovac
I do. Mine is Alphabet bets in consumer AI bets on the enterprise side with Google Cloud. We just saw news today and then crazy stuff like Waymo that we don't talk about. So Alphabet, what do you got?
- [46:25]
Malcolm Etheridge
Quanta services, growth of electrical infrastructure. And it's not just data centers.
- [46:29]
Scott Wapner
All right, that does it for us. A closing bell special. The next wave in a couple hours. I'll see you then. You've been listening to CNBC's Halftime Report, the podcast you can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:45]
Christina Partsinevelos
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 halftime reportdisclaimer Wait. You're not a Hotels.com member, so you're choosing to pay full price? Did you not hear the song how.
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Scott Wapner
Could you not be a member and.
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Malcolm Etheridge
Save up to 20%? That's less than 50%.
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Scott Wapner
But it's more than zero percent.
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Malcolm Etheridge
You're welcome.
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Christina Partsinevelos
See, the math is mathing. Save up to 20% on hundreds of thousands of hotels. With hotels dot com.