CNBC’s Halftime Report: Trade Negotiations and the Market (April 25, 2025)

Host: Frank Holland (filling in for Scott Wapner)
Guests: Stephanie Link, Joe Terranova, Malcolm Etheridge, Kevin Simpson
Air Time: April 25, 2025
Duration: Approximately 47 minutes

1. Market Overview

The episode opens with a brief snapshot of the stock market's midday status:

• Dow Jones Industrial Average: Down nearly 0.5%
• S&P 500: Essentially flat, edging slightly higher
• Nasdaq: Best performer, up approximately 0.3%, buoyed by strong earnings from Alphabet Inc.

2. Alphabet’s Stellar Earnings Report

Strong Financial Performance

Kevin Simpson leads the discussion on Alphabet’s impressive earnings:

• Operating Income & Net Income: Both surged, with net income more than doubling to $2.2 billion.
• Share Buybacks & Dividend Increase: Alphabet announced a $70 billion buyback program and a 5% increase in dividends, signaling robust financial health.

Stephanie Link highlights Alphabet’s operational excellence:

“Operating margins were up over 120 basis points relative to expectations.” [03:27]

Guest Insights

Joe Terranova probes whether Alphabet’s performance was a result of low expectations or genuine strength. Frank Holland emphasizes that the earnings were "unbelievable," citing the company's ability to erase recent market pessimism. Malcolm Etheridge provides a counterpoint, expressing concerns about Alphabet’s reliance on consumer-driven advertising, particularly in sectors like retail and travel, which may face headwinds.

“Advertising is the first thing to get cut when enterprise spending slows.” - Malcolm Etheridge [06:59]

3. Tech Sector Dynamics

Tech's Recovery and Future Outlook

Stephanie Link notes the tech sector's robust rally from recent lows, attributing gains to oversold conditions and strong free cash flow stories:

“Technology as a whole is a great free cash flow story with many wonderful moats.” - Stephanie Link [04:24]

She elaborates on Meta's potential, influenced by Alphabet’s stable ad revenues:

“Meta is trading at almost 13 times EBITDA, below its historical average of 17 times. This presents quality on sale.” - Stephanie Link [05:35]

Diverging Opinions on Advertising Reliance

Malcolm Etheridge voices caution regarding tech giants’ dependency on advertising revenue, warning of potential declines in ad spending impacting companies like Alphabet and Meta.

4. Amazon's Position and Trade Negotiations

Earnings Expectations and Trade Impact

Amazon’s forthcoming earnings are a focal point, with discussions centered on the impact of trade tariffs:

“Amazon’s exposure to tariffs, especially with 30% of their margins stemming from China, will require careful guidance.” - Scott Wapner [14:13]

Stephanie Link remains optimistic about Amazon’s long-term growth despite tariff concerns, citing retail market share gains and strong demand:

“If they lower their operating profit guidance, the stock may dip, but long-term growth remains solid.” - Stephanie Link [11:41]

Apple’s Challenges and Future Prospects

Apple faces scrutiny over supply chain dependencies and innovation pace. Malcolm Etheridge stresses the need for Apple to innovate to overcome current stagnation:

“Apple needs to innovate its way out of this rut. The current AI initiatives haven’t met expectations.” - Malcolm Etheridge [15:35]

Stephanie Link counters by focusing on Apple’s valuation and potential benefits from trade exemptions, though acknowledging the stock’s fair valuation:

“Writing covered calls on Apple is a prudent strategy given its current price levels.” - Scott Wapner [15:17]

5. IBM and Palantir: Strategic Plays in AI

IBM’s Transformation

Stephanie Link praises IBM’s strategic pivot towards growth areas like data centers, cloud, AI, and blockchain:

“IBM’s free cash flow guidance of $13.5 billion for the full year is the best in their history.” - Stephanie Link [19:09]

Malcolm Etheridge highlights IBM’s role in AI-driven consulting:

“IBM is perfectly positioned to fill the need for companies integrating AI into their tech stacks.” - Malcolm Etheridge [20:56]

Palantir’s Momentum and Fundamentals

Palantir receives accolades for its rebound and strategic expansion into commercial sectors beyond government defense:

“Palantir is not just a momentum stock; its commercial division is driving significant revenue growth in AI.” - Scott Wapner [30:11]

Joe Terranova underscores Palantir’s differentiated offerings and strong fundamentals as drivers of its recent performance:

“Palantir’s commercial segment leveraging AI is a core strength, distinguishing it from pure momentum plays.” - Scott Wapner [30:11]

6. Private Equity and Financial Sector Insights

Underperformance Amid Expectations

The discussion shifts to private equity firms like KKR, Apollo, Carlyle, and Blackstone. Despite initial optimism tied to regulatory tailwinds from the incoming administration, these firms have underperformed since January 20:

“Private equity is down, with Carlyle and KKR among the worst performers since the inauguration.” - Joe Terranova [39:43]

HSBC’s Strategic Upgrades

HSBC upgraded KKR to a "buy," highlighting share price corrections and maintained buy ratings on Blackstone and Brookfield Asset Management, despite overall sector challenges.

Apollo and SoFi’s Performance

• Apollo: Faces headwinds due to unexpected policy sequencing, leading to underperformance within the financial sector.
• SoFi: Contrastingly, SoFi’s innovative "banking as a service" technology and additional customer services have driven strong performance, positioning it favorably against traditional banking models:

“SoFi’s banking technology offers significant growth opportunities by leasing services to companies wanting to perform banking functions without full regulatory burdens.” - Malcolm Etheridge [41:37]

7. Strategic Stock Recommendations and Committee Moves

Intuitive Surgical

Stephanie Link recommends buying Intuitive Surgical, citing its strong management, robotics technology, and recent financial performance:

“Intuitive Surgical reported a 19% increase in total revenue and 22% EBITDA growth, making it a quality buy on sale.” - Stephanie Link [24:12]

Eli Lilly and McDonald’s

Bill Baruch discusses adding Eli Lilly, driven by positive developments in their GLP drug, and McDonald’s, viewing it as a defensive play amid potential recessions:

“McDonald’s resilient franchise model and dividend growth make it a solid investment in uncertain economic times.” - Bill Baruch [28:25]

Procter & Gamble and GE Aerospace

Scott Wapner and Stephanie Link touch upon Procter & Gamble’s recent downgrade due to poor guidance, while GE Aerospace receives a price target upgrade based on strong performance and proactive supply chain management.

8. Market Outlook and Strategies

Breather and Stability

Mike Santoli shares the word “breather,” emphasizing the current market’s relative calm after recent volatility:

“A breather in the market is a refreshing change, providing stability after intense fluctuations.” - Scott Wapner [43:04]

Trading Strategies

The panel discusses various trading strategies, including covered calls on high-valuation stocks like Apple and opportunistic buying on dips in technically sound companies like IBM and Palantir.

9. Headlines and News Briefs

A brief segment covers significant news headlines unrelated to the main market discussions:

• FBI Arrests Wisconsin Judge: On obstruction charges related to aiding an undocumented immigrant.
• Senator Tommy Tuberville: Indicates potential gubernatorial run in Alabama.
• Jorge Santos Sentencing: Former congressman sentenced for wire fraud and aggravated identity theft.

10. Conclusion and Final Trades

The episode wraps up with final stock recommendations, including:

• Qantas Services: Strong electrification theme.
• TJ Maxx and Digital Realty: Emphasizing robust performance in specific sectors.
• Republic Services: Highlighted as an alternative waste management play.

Frank Holland concludes the segment by reminding listeners of upcoming content and encouraging them to join the next Halftime Report episode.

Notable Quotes:

• Stephanie Link on Alphabet’s Margins:
  “Operating margins were up over 120 basis points relative to expectations.” [03:27]

• Malcolm Etheridge on Advertising Risks:
  “Advertising is the first thing to get cut when enterprise spending slows.” [06:59]

• Stephanie Link on Meta’s Valuation:
  “Meta is trading at almost 13 times EBITDA, below its historical average of 17 times. This presents quality on sale.” [05:35]

• Malcolm Etheridge on Apple’s Innovation Needs:
  “Apple needs to innovate its way out of this rut. The current AI initiatives haven’t met expectations.” [15:35]

• Scott Wapner on Palantir’s Fundamentals:
  “Palantir is not just a momentum stock; its commercial division is driving significant revenue growth in AI.” [30:11]

• Stephanie Link on Intuitive Surgical:
  “Intuitive Surgical reported a 19% increase in total revenue and 22% EBITDA growth, making it a quality buy on sale.” [24:12]

• Bill Baruch on McDonald’s as a Defensive Play:
  “McDonald’s resilient franchise model and dividend growth make it a solid investment in uncertain economic times.” [28:25]

Conclusion: The April 25, 2025 episode of CNBC’s Halftime Report provided a comprehensive analysis of the current market landscape, with a strong focus on tech sector earnings, particularly Alphabet’s standout performance. The discussion navigated through varying perspectives on the sustainability of advertising revenues, the impact of trade negotiations on major players like Amazon and Apple, and strategic moves within the private equity and financial sectors. Final stock recommendations underscored opportunities in companies exhibiting resilience and growth potential amidst economic uncertainties.