Halftime Report: Trading the Critical Week Ahead

Date: October 27, 2025
Host: Scott Wapner (CNBC)
Guests: Joe Terranova, Jim Lebenthal, Surrot Seti, Brin Talkington

Episode Overview

This episode centers on what Scott Wapner dubs “the critical week for your money,” with market participants bracing for mega cap tech earnings, a pivotal Fed decision, and the high-stakes Trump-Xi meeting on US-China trade. The Halftime team debates whether the powerful stock market rally can sustain itself—even if the dominant mega cap companies stumble. The conversation ranges from the unique nature of this earnings “Super Bowl” to deep dives on capital allocation, CapEx vs. buybacks, breakthrough moves in the chip sector, Buffett’s succession at Berkshire Hathaway, the controversial Elon Musk pay package, and tactical trades in gold and ETFs.

Key Discussion Points & Insights

1. Mega Cap Earnings: Can the Rally Survive a Disappointment?

[00:53]

• Scott Wapner: Sets the stage, noting “Five of the seven mega caps are reporting… a Fed decision... and the Trump-Xi meeting.”

• Joe Terranova: Argues the rally is highly resilient.

  “This is a resilient market. It continues to recover from everything. … Even if [mega cap earnings] disappoint, they are not going to disappoint to the degree that is going to disrupt what is right now a very clear chase for performance… supported by very strong earnings growth, cost cutting, margin expansion, and inflation that never showed up from the tariffs.” (02:03)

• Brin Talkington: Acknowledges the fate of the rally is tied to mega caps’ performance and AI narrative:

  “There's no way, if they were to disappoint—which they won't—it definitely would change the narrative around AI… This Super Bowl of earnings this week is all going to be about CapEx spend.” (03:37)

• Jim Lebenthal: More cautious, noting market expectations are high and disappointment would increase skepticism about future growth:

  “If the hyperscalers disappoint, then that 14% [projected S&P earnings growth] becomes more difficult… we've got to get trade uncertainty continuing to decline if we're going to get that 14% earnings per share growth, which to me is the fulcrum upon which that 22.5 times multiple rests.” (05:30)

• Surrot Seti: Warns that cracks in consumer spend or advertising could shift the bullish macro narrative. (07:11)

• Collective Insight: While there’s consensus on the importance of mega cap earnings, the team is split on the scale of risk to the ongoing rally.

2. CapEx vs. Buybacks: What Do Investors Want?

[11:41]

• Jim Lebenthal: Points to Nvidia as the “poster child” for investing in innovation over buybacks.

  “Nvidia is sitting on a lot of profits and they could have returned that to shareholders but they looked and said the most productive thing was to invest in OpenAI and others. I think that makes a lot of sense.” (11:41)

• Brin Talkington: Sees a paradigm shift from “cap-light” to capex-heavy business models, requiring investors to rethink how these companies are valued:

  “These companies have grown so big because they have high margins and for the most part… they were capital light. Now there’s this paradigm shift where these are capex companies… To me… this is a change in how we’ve priced these for the past decade.” (12:45)

• Joe Terranova: Notes that quality (including buybacks/dividends) has historically outperformed, but current markets reward “momentum” and innovation.

  “On a one-year timeframe though, it is all about momentum, and companies that are investing in the innovation … we pay the premium in a momentum market for investing in the innovation.” (14:59)

3. AI: A Cure for Market Short-Termism?

[14:03]

• Scott Wapner: Suggests that investor preference for capex over buybacks may reduce “financial engineering” and focus attention on long-term innovation.

• Brin Talkington: Highlights that this capex boom could weed out companies with poor ROI, bringing in a “new way we price these for the next decade. …There’s going to be winners and losers.” (12:45)

4. Chip Sector: Qualcomm’s Big Move

[17:51]

• Brin Talkington (field report): Qualcomm spikes on data center AI chip announcement. Bank of America skeptical, noting the first and only customer is a Saudi project, chips ship in 2026, and revenue prospects are modest.

• Jim Lebenthal:

  “Up 20% today [on the news] was just too much… But I still believe this stock will be well above $200 a share, say over the next six months or so.” (19:15)

• Scott Wapner: Points out market optimism reflects belief in Qualcomm’s ability to win more AI business.

  “The market… is thinking one of many, many customers and able to compete… with the Nvidias of the world and others.” (20:12)

5. Berkshire Hathaway: A Rare Downgrade

[21:52]

• Discussion of KBW’s downgrade (to sell/underperform):
  • Lags S&P 500; concerns focus on insurance (GEICO), railroads, energy, lower rates.
  • Joe Terranova: Argues it’s unjustified, but acknowledges lack of clear innovation direction.

    “I think you’re better served trying to understand why this stock has underperformed… they’re sitting on $344 billion in cash.” (22:00)

  • Jim Lebenthal: Sees value in the diversified operating companies, expects future transformative uses for the cash post-Buffett, and calls it a “buy today.” (23:37)

6. Tesla & the Elon Musk Trillion Dollar Pay Debate

[28:48]

• Brin Talkington: Supports the board’s plan, emphasizing alignment of incentives; sees this as fundamentally different from standard CEO pay.

  “This pay package is: Elon, if you do this over this period of time and then this happens, then we will reward you. So to me, it's like aligning exactly what a board should be doing… to stay, stay here for the next 10 years, innovate, and then execute and then we will pay you this.” (30:55)

• Joe Terranova: Reads from Adam Jonas (Morgan Stanley)—if Musk can solve autonomy, he transforms transportation and deserves the reward. (32:02)

• Jim Lebenthal: Agrees Musk’s achievement would justify the payout, though cautions about the magnitude (“$8.5T market cap = 2x Nvidia’s current value”). (33:23)

7. ETF Edge: Buffer/Uncapped ETFs

[35:40]

• Interview with Mike Lucas (Truchares ETFs):
  • Buffer ETFs aim to protect downside but cap upside; newer products allow participation in larger rallies.
  • Lucas argues, “capturing as much of those chunky right tail events is just as important as mitigating those left tail or downside events for long-term returns.” (36:58)

8. Gold Pullback & Bitcoin Rotation

[40:33]

• Joe Terranova: Notes gold may “have further to pull back toward $3,797 (DEC gold)” and is in a technical downswing, but expects it to return to favor—especially in January. (40:33)
• Brin Talkington: Endorses the gold/bitcoin pair trade, citing J.P. Morgan’s embrace of crypto collateral. (41:24)

9. Market Sentiment & Macro

Mike Santoli (midday word) [41:48]:

• The NASDAQ-led rally is powered more by clearing obstacles (Fed, tariffs, Trump-Xi) than substance.
• Quote:

  “It’s not about the substance of [trade deals]. It’s about having one fewer thing that’s standing between this market and kind of cranking up the trade again and going back to the old names and seizing on earnings and all the rest of it.” (42:27)

• Concern: consumer spending softening and whether “early 2026 has the makings of kind of a re-acceleration policy.”

Notable Quotes & Memorable Moments

• Brin Talkington:

  “This Super Bowl of earnings this week is all going to be about what is going to be the capex spend.” (03:37)

• Jim Lebenthal:

  “If the hyperscalers disappoint, then that 14% [earnings growth] becomes more difficult… The fulcrum upon which that 22.5 times multiple rests.” (05:34)

• Joe Terranova:

  “On a one-year timeframe though, it is all about momentum and companies that are investing in innovation… we pay the premium in a momentum market for investing in the innovation.” (14:59)

• Mike Santoli:

  “It’s not about the substance of it… it checks the box. The question is going to be did you get enough of a reset in the majority of stocks that you could have some kind of breadth push toward the end of the year.” (42:27)

• Brin Talkington: (On Tesla’s Musk pay)

  “Absolutely, I would vote with the board because they're aligning my return with his pay package.” (31:45)

Timestamps for Important Segments

• Mega Cap Market Stakes: 00:53 – 09:27
• CapEx vs Buybacks/AI Shift: 11:41 – 16:32
• Chip Sector: Qualcomm: 17:51 – 20:12
• Berkshire Hathaway Downgrade: 21:52 – 25:47
• Elon Musk Pay Package Debate: 28:48 – 34:06
• ETF Edge (Buffer ETFs): 35:40 – 39:03
• Gold & Bitcoin Rotation: 40:33 – 41:48
• Santoli’s Market Word: 41:48 – 44:40
• Final Trades: 45:49 – End

Final Trades & Outlook

• Brin Talkington: Alphabet (Google) before earnings (45:49)
• Jim Lebenthal: Double call on Alphabet—reinforces Brin’s bullishness (46:02)
• Surrot Seti: Amazon
• Joe Terranova: Semiconductor equipment (Lam LRCX, KLA Corp, Teradyne)—“CapEx comes through”

Summary:
This episode encapsulates the tug-of-war between bullish momentum, driven by the mega caps and AI innovation, and the lurking risks of earnings disappointment, investor fatigue, and macro softness. The panel closely watched how investor preferences are shifting from traditional capital returns to aggressive CapEx and long-term innovation—a dynamic echoed in both mega cap and chip sector debates. The Elon Musk pay package and the Buffett succession added further intrigue to a week where market psychology, as much as fundamentals, seemed at stake.