Halftime Report: Trading Big Tech’s Big Beats (May 1, 2025)

Introduction

On the May 1, 2025, episode of CNBC’s Halftime Report, host Scott Wapner delves deep into the latest developments in the big tech sector. Joined by top investors Josh Brown, Joe Terranova, Jenny Harrington, Stephanie Link, and guest analysts Kate Rooney and Steve Kobach, the discussion navigates through the recent earnings reports, stock performances, and strategic investment decisions shaping the tech landscape. This comprehensive summary captures the key points, insightful analyses, and critical conclusions drawn during the hour-long broadcast.

1. Microsoft’s Stellar Performance

Timestamp: [00:46]

Scott Wapner opens the discussion by spotlighting Microsoft’s impressive market move, highlighting a near 9% surge in stock price. He remarks, “Now, you take out that massive rebound we had post Liberation Day sell off, and you don't often see a move of this magnitude for Microsoft” (00:46).

Joe Terranova emphasizes the rarity of such a significant single-day rally for Microsoft, noting that there have been only 13 other instances since its IPO in 1986. He attributes the surge to Microsoft’s robust Azure growth and strong financial performance: “Revenue was 70 versus 68 expected. Net income up 18% year over year” (01:55).

Jenny Harrington adds that Microsoft’s efficient growth strategy distinguishes it within the Magic 7 tech giants, emphasizing the company’s ability to deliver consistent top-line and bottom-line growth despite its maturity (06:24).

2. Meta’s Strategic Efficiency and AI Investments

Timestamp: [07:24]

Turning to Meta, Scott highlights the company’s steady performance with a nearly 5% stock increase: “They increased their capex range for more data center investments. They’re not slowing down in any way” (05:34).

Jenny Harrington underscores Meta’s commitment to efficiency, noting an increase in operating margins from 38% to 41% over the past year. She attributes this to strategic investments in AI, stating, “The bet on AI is a bet that has rock solid attached to it today” (07:55).

Joe Terranova contrasts Meta’s successful pivot towards AI with its earlier foray into the metaverse, labeling the latter as a “sniff and glue” misstep. He praises Meta for staying ahead of technological trends and maintaining shareholder confidence through strategic acquisitions (08:07).

3. Amazon’s Turbulent Trajectory and Investment Strategy

Timestamp: [09:40]

The conversation shifts to Amazon, where recent trading trends show the stock down three consecutive days. Kate Rooney explains the multifaceted challenges facing Amazon, including tariff impacts, advertising revenue declines from Chinese third-party sellers, and political scrutiny: “Half of third-party sellers on Amazon are based in China” (09:40).

Stephanie Link reveals a strategic shift in their investment approach, announcing the sale of Amazon from their portfolio: “We sold Amazon from the Jyoti” (10:56). She elaborates that despite Amazon’s strong revenue growth, the company’s high capital expenditure reduces its free cash flow yield to an unattractive 2.5%, making it difficult to justify continued investment under their strict capital allocation criteria (15:24).

Joe Terranova defends Amazon as a core holding for his personal portfolio, highlighting its undervaluation relative to Walmart and its potential for post-earnings rally: “Amazon is now a cheaper stock than Walmart” (12:34).

4. Apple’s Tariff Challenges and Production Shifts

Timestamp: [18:39]

Apple is another focal point, with Steve Kobach outlining the company’s strategic move to shift iPhone production from China to India to mitigate tariff impacts: “Apple is planning to shift production of all iPhones sold in the US to India from China” (18:57). Kobach raises concerns about Apple’s ability to ramp up production in India to meet demand, especially with new iPhone models on the horizon.

Joe Terranova voices worries about Apple’s market share in China, compounded by increased competition from domestic brands like Xiaomi and Huawei: “China has not been growing. It's been the story for many quarters now” (20:12). Stephanie Link discusses the strategic decision to sell Alphabet and maintain a position in Tesla, reflecting on the challenges of managing a diversified portfolio amidst regulatory uncertainties (24:07).

5. Dividend Cuts and Shareholder Impacts

Timestamp: [28:36]

A significant segment of the episode focuses on Oregonon’s unexpected dividend cut, triggering strong emotions from investor Jenny Harrington. She expresses her frustration: “They reaffirmed this year's guidance... and then they went ahead and cut the dividend from A$12 to 8 cents. I’m so angry” (28:36). Jenny criticizes the company for betraying its commitment to dividend-focused shareholders and underestimates the significance of maintaining consistent dividend policies.

Scott Wapner probes Jenny on the rarity of dividend cuts during strong financial periods, to which she confirms it is an uncommon and disheartening move (31:00). The discussion underscores the importance of dividend reliability for certain investor demographics and the strategic missteps companies can make in maintaining shareholder trust.

6. Highlight on Best Stocks: Spotify’s Momentum

Timestamp: [35:17]

In a segment promoting investment opportunities, the team highlights Spotify as a standout performer. Joe Terranova compares Spotify’s growth to Netflix, noting its extensive user base and effective monetization: “Spotify looks incredible right now. It is acting exactly like Netflix has been acting” (35:17).

Stephanie Link praises Spotify’s strategic positioning, emphasizing the importance of riding strong-performing stocks: “I believe you buy the confidence and one of the reasons you buy the confidence is because the industry is moving towards systematic trend following” (38:08). She elaborates on Spotify’s user growth, premium subscriptions, and robust free cash flow as key drivers behind its attractive investment profile.

7. Final Trades and Strategic Moves

Timestamp: [45:27]

As the episode nears its conclusion, the panel discusses final trades and strategic moves within their portfolios. Stephanie Link announces the addition of Shake Shack to their portfolio, citing strong restaurant-level profit growth as a key indicator of the company’s ability to scale efficiently: “Restaurant level profit is increasing. That's the promise when the new CEO came in” (45:27).

Jenny Harrington also highlights her investment in Shell, attracted by its attractive earnings multiple and stable free cash flow from long-term LNG contracts: “Shell, it trades at 10 times earnings, has a 4.3% yield” (46:15).

Conclusion

The May 1, 2025, episode of Halftime Report provides a comprehensive analysis of the big tech sector’s current state, highlighting significant earnings performances, strategic investment decisions, and the intricate balance between growth and financial stability. Insights from top investors underscore the importance of evaluating free cash flow, dividend reliability, and strategic positioning in navigating the volatile tech landscape. As big tech continues to drive market dynamics, the episode offers valuable perspectives for investors aiming to capitalize on emerging opportunities and mitigate potential risks.

Notable Quotes

• Scott Wapner [00:46]: “Now, you take out that massive rebound we had post Liberation Day sell off, and you don't often see a move of this magnitude for Microsoft.”

• Joe Terranova [01:55]: “If you're long the name, what would make you sell it here? Revenue up 13% net income up 18% year over year.”

• Jenny Harrington [28:36]: “They reaffirmed this year's guidance... and then they went ahead and cut the dividend from A$12 to 8 cents. I’m so angry.”

• Stephanie Link [35:17]: “Spotify looks incredible right now. It is acting exactly like Netflix has been acting.”

• Jenny Harrington [46:15]: “Shell, it trades at 10 times earnings, has a 4.3% yield.”

This detailed summary encapsulates the multifaceted discussions of the Halftime Report episode, providing actionable insights and a thorough understanding of the current big tech landscape for listeners and investors alike.