The Exchange (CNBC): Episode Summary

Episode: Meta's Metaverse Cuts, Jobs Check-In & Homebuilder Hesitancy
Date: December 4, 2025
Host: Kelly Evans

Overview

This episode of The Exchange dives into several pivotal stories shaking up the current business landscape. The big headline is Meta's major scaling back of its Metaverse ambitions, with investor enthusiasm pushing its stock higher. The show also covers trends in dollar stores and big box retail amid consumer belt-tightening, labor market mixed signals, and homebuilder challenges even as mortgage rates soften. Throughout, expert guests share insights into why these stories matter for investors heading into 2026.

Key Discussion Points & Insights

1. Meta Pulls Back on The Metaverse – and the Market Cheers

[00:51 - 08:20]

• Newsflash: Reports indicate Meta is cutting its Metaverse budget by up to 30% (Bloomberg), leading to a 6% pop in Meta’s stock.

  • Meta's Pivot: CEO Mark Zuckerberg is shifting investment focus from virtual reality to AI, after years of Metaverse-related losses.
  • Reality Labs Deep Dive: The division (which encompasses both Metaverse and hardware like Ray-Ban smart glasses) lost $4.4 billion just last quarter, and ~$70 billion since 2020.

• Expert Analysis:

  • Jason Helstein, Oppenheimer:
    "If you take the kind of headline, the reporting at face value, a 33% reduction in metaverse expenses would be like an 8% lift to earnings…The question is how much of that gets reallocated into the investment." (03:17)
  • Julia Boorstin, CNBC:
    "The virtual reality Metaverse world of Horizon…that's specifically the division where I think we'll really see them cut costs." (04:36)
  • The Ray-Ban and new AR glasses are cited as products with potential because of their links to AI, not the Metaverse.

• Investor Take:

  • "Why not just axe the whole division at this point?" asks Kelly Evans (03:45), with Jason responding, "I don't think Mark has kind of given up on it…It's more of a 'we'll pare back.'" (03:57)

• The Shift from Metaverse to AI:

  • "The future of computing is AI," says Julia, highlighting that Meta is ramping AI investment "faster than its rate of revenue increase," causing some investor concern. (06:02)
  • Meta’s stock has lagged peers: only up 8% in the past year vs. Google's 81% (07:14).
  • Jason: "It's hard to argue how [Meta] is a 10% EPS growth company based on this level of spending…" (07:36)
  • Jason prefers Alphabet over Meta for 2026.

2. Netflix’s Strategic Dilemma: Movie Studio Acquisition?

[08:20 - 12:14]

• Headline: Netflix is reported to be the leading bidder for Warner Brothers Discovery (WBD), possibly with an 85% cash bid.

  • This would put Netflix into the movie studio business, a big shift from its historical “build not buy” DNA.

• Expert Analysis:

  • Jason Helstein:
    "Almost no matter what they pay at this point…it is financially accretive…But…we don't know is really the long term strategic value." (08:45)
  • Julia Boorstin:
    "Netflix does not have a big library…Warner Brothers Discovery also has very valuable IP. Think about the DC Comics characters…or Harry Potter and what that might mean to Netflix." (09:49)
  • Investor Skepticism: "The question that I'm hearing many ask, is if Netflix is valued like a tech company…why does it need to get into this legacy entertainment business? Would that slow down its growth?" (10:59)

• Stock Picks:

  • Jason: Favors Netflix over Meta for 2026 (11:34)
  • Also highlights Amazon's underappreciated cloud upside as another preferred play (11:40).

3. Investing in the AI Wave—and Hedging Against It

[12:14 - 16:05]

• Guest: Drew Pettit, U.S. equity strategist, Citi, on strategies for AI bulls, skeptics, and stock-pickers.

  • "You can't [play] this all as one big basket anymore…focus on the companies that are getting the best cash returns for the growth capex they're spending…you want to be underweight the names that might not be able to self-fund." (12:43)

  • For 'AI skeptics': Stick with "more traditional low beta factor" stocks globally – consumer staples and "touch and feel" businesses (13:29)

  • On AI bullishness: Likes growth names such as Amazon, Nvidia, Uber, DoorDash, GoDaddy, Instacart, Pinterest, Meta, Eaton (14:41)

  • Financials/cyclicals: Specifically likes CoStar amid some AI-related headwinds (15:41)

4. Retail Check-in: Dollar Stores Rally, Kroger Stumbles

[18:03 - 22:55]

• Kroger: Stock down 4% after profit guidance cut; management blames smaller shopping trips and reduced discretionary spending

• Dollar General/Dollar Tree: Both raise guidance, seeing increased traffic across all income brackets; reflect continued price-conscious shopping behaviors.

  • Jihan Ma, Bernstein:
    "Dollar stores are benefiting from some unique macro tailwinds, including middle to high income consumers trading down…" (18:56)

    • On Kroger: Faces tough competition from Walmart in value and omnichannel grocery.

  • "Some of the outperformance for dollar stores is macro-driven, but also reflects self-help and turnaround stories." (20:36)

• Other Notables: Walmart’s market cap surpasses $900B for the first time.

5. Labor Market: Jobless Claims Low, But Underlying Weakness?

[27:42 - 32:26]

• Headline: Jobless claims hit their lowest in three years—typically bullish, but experts see signs of stress.

• Andy Challenger, Challenger Gray & Christmas:

  • "[Job cuts] tracked from US employers…over a million…something we've only actually seen three, six times since 1993…" (28:22)
  • Layoffs reflect "correction from over-hiring" post-COVID, but continuing cuts in tech/retail/warehousing could signal deeper issues (29:23)

• Evan Sohn, Revelio Labs:

  • "You could see that with like the AI jobs…job openings are down across all sectors, but the actual percentage of AI jobs actually went up a little bit." (30:13)
  • "We're certainly at a freezing point…hiring freeze, clearly waiting for whether there's going to be a rate cut and what does 26 look like…" (31:42)

6. Fed & Rate Politics: Who's Next as Chair?

[32:26 - 39:21]

• White House Fed Chair Search Speculation

  • Eamon Javers reports rumors swirl that National Economic Council Director Kevin Hassett could be next in line—though current Treasury Secretary Scott Besant is also discussed as a long-shot wild card.
    • "There’s been this sort of weird idea out there that the President could pick someone to serve as Treasury Secretary and Fed Chair at the same time…hugely eyebrow raising…" (33:57)
    • Consensus: Odds favor Hassett; Besant likely wants to stay at Treasury.

• Interest Rate Outlook with Tobin Marcus, Wolf:

  • Does NOT see the 10-year Treasury yield falling significantly even with cuts expected; deficits set to rise again in 2026; upward pressure from issuance and possible fiscal stimulus.
    • "We have it [deficit] going back up to around $1.94 trillion next year…it does go further up from here…" (37:27)
    • Market speculation on coordinated efforts to suppress yields, but sees little chance for such action without major economic deterioration. (38:35)

7. Homebuilder Hesitancy: What’s Next for Housing Stocks?

[39:50 - 45:36]

• Homebuilders: ITB index is up just 1% YTD (vs. S&P’s 16%). Pulte, Toll Brothers outperform; Lennar lags.

  • Michael Rehaut, JP Morgan:
    • Upgrades Toll Brothers (move-up market focus, undervalued vs peers) and likes Pulte.
    • Downgrades Lennar and DR Horton to underweight (entry-level orientation, higher price, lower margins).
      • "Both Pulte and Toll Brothers are at discounts…yet have solidly above average margins…and so...those names are mispriced and represent an opportunity." (41:30)
      • "On the flip side, we did downgrade Lennar to underweight…they generate below average margins and returns." (42:28)
    • Outlook on rates: JP Morgan expects the 10-year Treasury yield to climb slightly in 2026, limiting further mortgage relief; mortgage spread contraction has already occurred.
      • "They're expecting the 10-year treasury to actually rise over the next 12 months..." (43:52)

8. AI & Tech Developments: Google’s ‘Vibe Coding’ Push

[45:58 - 47:52]

• Google & Replit Partnership:
  • Replit (an “AI first coding” platform) and Google Cloud will broaden their partnership.
  • Non-engineers can use AI to generate apps and internal tools, moving "vibe coding" into the enterprise.
    • "With Replit…everyone in the organization is becoming a programmer." — Replit CEO, Amjad Masad (46:39)
  • Google sees this as a display of differentiation vs AWS: "We're going to provide both at all levels." — Google Cloud President Matt Renner (47:13)
  • Notably, the partnership does NOT include an equity investment at this stage.

Notable Quotes & Memorable Moments

• On Meta’s pivot:
  "Instead of the Metaverse, the future of computing is AI." – Julia Boorstin (06:02)

• On job cuts:
  "We've only actually seen [over a million tracked cuts] three, six times since 1993." – Andy Challenger (28:22)

• On the 'AI basket':
  "You can't [play] this all as one big basket anymore...focus on the companies that are getting the best cash returns for the growth capex." – Drew Pettit (12:43)

• On the Fed search:
  "There’s been this sort of weird idea…that the President could pick someone to serve as Treasury Secretary and Fed Chair at the same time…hugely eyebrow raising…" – Eamon Javers (33:57)

• On homebuilders and rates:
  "They're expecting the 10-year treasury to actually rise over the next 12 months...that's with another two cuts by the Fed." – Michael Rehaut (43:52)

Useful Timestamps

• 00:51 – Meta’s Metaverse retreat & stock market reaction
• 03:17 – Jason Helstein analyzes Meta’s expense reduction
• 06:02 – Julia Boorstin on AI vs. Metaverse future
• 08:20 – Netflix’s movie studio ambitions
• 12:14 – Drew Pettit on picking AI winners & safe havens
• 18:03 – Kroger’s struggles and the dollar store boom
• 27:42 – Labor market health check: layoffs vs. jobless claims
• 32:26 – White House Fed chair decision speculation
• 39:50 – Homebuilders: Pulte, Toll Bros up, headwinds remain
• 45:58 – Google-Replit partnership: moving AI coding to non-engineers

Tone

The episode is fast-paced, analytical, and market-oriented, mixing data-driven reporting with candid, occasionally witty, commentary from both host and guests. The mood is watchful: upbeat in some areas (tech pivots, dollar stores), cautious in others (labor market, housing), with an undercurrent of skepticism about big promises from corporate America and Washington alike.

For listeners: This episode gave a sharp, nuanced look at how some of the market’s biggest themes—AI, consumer spending, jobs, and interest rates—are evolving. Investors are cheered by “right-sizing” at Meta, cautious about post-COVID labor normalization, and still hunting for pockets of strength in both old and new economy stocks. Expect these topics to keep dominating the headlines into 2026.