transcript

Speaker 1:
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Speaker 3:
[01:01] 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.

Speaker 4:
[01:17] Thank you, Sarah and Mike. Welcome to the Halftime Report, everybody. I'm Leslie Picker, in for Scott Wapner today. We're in front and center this hour. The market's next move with stocks hitting fresh all-time highs. The committee is making a bunch of notable trades in this record rally. Joining me for the hour, Josh Brown, Malcolm Etheridge and Bill Baruch, all here on set. Let's get a quick check on the market. You can see stocks somewhat muted today. The Dow down about 0.2 percent. The S&P essentially flat there. The Nasdaq down about 0.3 percent. The Russell also essentially flat. Guys, I want to talk to you about tech because there's an interesting stat out of UBS showing how since the start of the Iran conflict, going back to February 27th, tech has accounted for all of the net increase in the S&P. Josh, how do you kind of think about that, especially moving forward? We've talked ad nauseam over the last few years about just the narrow rallies that we have seen and the role that tech has played and the concentration in the indexes. And here once again, that's back in focus.

Speaker 5:
[02:23] Yeah, so I think it's not as aberrant as it sounds on the surface, Leslie, because this is the fountain of earnings growth. This sector in particular is going to contribute the most meaningful amount of earnings growth. Even if you added up all of the other ones, they're just not quite as important mathematically. I'm not saying they're not important for people following the markets to try to understand what's happening with the economy and corporate profits. But when you think about a cap-weighted index, the biggest companies are tech companies. And as a result, we pay the most attention to their earnings. And the good news is their earnings are spectacular. We have 10% of the S&P 500 in as of the start of this week. It's a little bit more by now. But the blended, so take the actual results we've seen, plus the rest of what we're expecting, blended earnings rate year over year is 13.2%. This will be, if it comes in as expected, the sixth straight quarter of double-digit year over year earnings growth. Not just earnings growth, double-digit. This is the period of time that we live in. And so the buoyancy of the market is not surprising at all if you think earnings are important. I happen to think, other than interest rates, earnings are the most important thing that there is for stock prices. We're not getting Nvidia till the end. They will be the single largest earnings contributor to not only the MAX 7, but to all of tech and the entire S&P 500. When you look at the contribution from earnings for the MAX 7 companies versus the other 493 stocks in the index, if you pulled out Nvidia, the S&P 493 would actually have more growth than the MAX 7 year over year. Thing is we can't pull out Nvidia. But the reason I end with that point is I don't want to give people the impression just because tech earnings are the most important, that that's all we're watching. The 493 are going to pull their weight this time around, and the expectations for the 493 have actually been going up. 15.9 percent is the expectation for that side of the market, which is obviously extremely healthy.

Speaker 4:
[04:34] Well, you mentioned Nvidia. Obviously, semis have been a big contributor to the recent rally that we've seen. It had 16 straight positive days for the subsector, the longest winning streak ever. Malcolm, you have trimmed Nvidia. Why is that? Do you feel like it's run up too much?

Speaker 6:
[04:54] So, for context, I started accumulating in this name ahead of Liberation Day last year. So, somewhere around the $100 mark is where I first started buying and kept buying on the way down. The stock has basically doubled since then. And so, back in February, I trimmed 25 percent. Literally, this morning, I just trimmed another 25 percent. This is more about risk management than anything else. It's not necessarily me trying to call the top. But what I'm looking at is a market where the Google TPU is starting to be respected as a true competitor to the GPU from NVIDIA. We're also in a place where analysts are asking the question of, can you reasonably be expected to sell through that backlog that you have? Obviously, Jensen Wong thinks they can, but the rest of the street has its questions. Also, there's the conversation about Blackwell being good enough and whether there's enough emphasis on moving to the Vera Rubin option later in the second half of this year. And maybe they do, maybe they don't, but what that means is there's enough questions around this name that it's a good time to be taking some profits and taking a little bit of risk off the table.

Speaker 4:
[06:00] Was at Google News yesterday the impetus behind your recent sell?

Speaker 6:
[06:04] Yeah. So, I mean, I was already looking for an opportunity to trim this name. This just gave me the momentum that I needed, the push that I needed to say this is a good time to call it. So, I think now it's right-sized a little bit better. It got over its skis and was kind of jockeying to be my number one holding and not intentionally at all. It was just the way that it had run up. And so, again, it just, it looks like a great time to be taking some chips off the table. And as the guy who hosts the 6 o'clock show on this network, every single night loves to remind viewers nobody ever went broke taking a profit, right?

Speaker 4:
[06:39] Good point. Bill, you are an owner of Nvidia. So, you are not as worried, I guess, about the competition, the Google News yesterday, that they are producing chips that are specialized for the needs of training and inference, serving AI agents. Amazon also getting into that space. You still feel like they have a good enough moat to maintain that competitive advantage.

Speaker 7:
[07:00] Absolutely. I mean, Nvidia, it's our number one holding. Right behind, we've got Alphabet, Amazon, and Micron. And I think this might be the moving out of the first innings of AI because you're starting to see that expansion up and down the vertical here. You know, it's, you know, Nvidia's, I find it more in a value space right here. I mean, where it is on a multiple below 20s. I mean, there is some technical resistance that it's trading up to. There's about 206 is going to be a big level. But of those names you just mentioned, Alphabet and Amazon and Nvidia, they're all really kind of lurking right below their record highs right now. So, you know, I think there's tremendous momentum behind there. And speaking of Micron, they're going to account for about 50% of the S&P's earnings growth this year alone. So, there is, it is a, you know, you don't have to just own Nvidia. There's a lot of names within the space to take a look at. And it's how you look to piece that together.

Speaker 4:
[07:53] And you bought some Arm as well.

Speaker 7:
[07:55] Yeah, I mean, have you seen the CPU move just this week? Intel started to, over two weeks ago, Intel has been up about 50%. I think they reported after the bell. AMD then broke out. Now Arm broke out. Now Arm is known for powering smartphones. They cover about 99% of that market. And they did move into the CPU recently. And that's an announcement. They're gonna deal with the meta. There's a lot to remain to be seen there, but Arm is following the narrative, and it is continuing to break out above $200 here today. So we got our toes in. Gonna trust it here. And I think from a narrative standpoint, you have to have CPUs in your portfolio. Kind of exactly what we were saying, looking at Nvidia, Micron, Alphabet, and Amazon is doing well, but look at some of these CPU names, centric names there, and I think they are going to do really well in the coming months.

Speaker 5:
[08:42] I think there's still opportunity in semis, but if somebody says, is today the day that I add more to my semi exposure? I know that that's somebody that either didn't own enough the whole way up and missed this whole move, or somebody that's got a very short memory. Over the last 16 days, the SMH, which is the semiconductor ETF, is up 31%. That's in 16 days. These were already up big. It's not like this is off of a low. This is off of a high. That is the best 16-day rolling performance for the semiconductors in the history of that ETF, which goes back to the.com days. So maybe like today is not the day, but I do agree with Bill. There is a need for compute. That's probably not going away anytime soon. CPUs are obviously a very important part of the landscape. We talk a lot about Lamb Research. This is a name that's been on my Best Stocks in the Market list for a while. Company just reported earnings. I wish I could tell you there's a single negative in anything they had to say.

Speaker 6:
[09:46] Here's the question, though. Here's the question. You mentioned how important NVIDIA itself is to the entire overall earnings period we're in, right? When NVIDIA reports, they're already at 80% gross margins. What better story can they tell us near term than we're at 80% gross margins? They have the best profitability of every single company inside the S&P 500. How can it get any more impressive?

Speaker 5:
[10:11] Don't you think that explains the fact that the stock has done nothing for nine months?

Speaker 7:
[10:15] All their customers report before them. So we really have a great idea of what NVIDIA has done. It has such a big stock within the S&P, it's such an important stock within the S&P as well. You know, everybody has to own it, and no one is really looking to sell unless you're trimming. And we've trimmed from time to time. It's still about a 7% holding of ours. But I think you've got to look at where the puck could be going, and that's why I really like the CPU story right now. And I think the best way to think about it is the CPU is the brain, and the GPU is the muscle of the data center.

Speaker 4:
[10:45] Well, and there's also that question of how defensible those margins are, those 80% margins, because Malcolm, I know you sold ASML as well, and there's this Wall Street Journal story about how shares yesterday falling, wiping out $17 billion in market value, and that was after Taiwan Semi said it has no plans to buy ASML's high-end lithography machines because they are too expensive. So it does feel like price is becoming a bigger part of the chip story, especially when you have all the competition out there.

Speaker 6:
[11:18] Yeah, that hurts. The reason that I wanted to own ASML in the first place, I bought this when I first recommended it on this show back in August of last year when it was selling below $700. And it was because it had basically been left for dead. Basically, the word on the street was the growth opportunity is no longer in this name. It's reached the growth ceiling. And I think this could be the beginning of that sentiment creeping back in again. And so when I look at ASML, Taiwan Semi is the most important name on their roster of customers. And that's an understatement, right? So for Taiwan Semi to be saying, there really isn't enough need for us to upgrade to that next EUV machine that's going to cost us $400 million per year, when we've already got enough of them to last us probably through 2029, to maintain our profitability and keep our margins around 57%. That doesn't really sound great for a company who's only customer, our primary customer, is Taiwan Semi. And so before the cascade of downgrades come, I think it makes sense to look at ASML, how far it's run in less than a year, and say, do I really believe in this one enough to continue to take that ride? Or like I'm looking at it and saying, will I have the opportunity to buy this stock again in the near future at a cheaper price? And that's really what this one is about. So I expect to be back in the name at some point, but I also think that it's a good time to be taking that profit, freeing up that capital, because there's probably going to be a better point.

Speaker 5:
[12:46] We're just in this moment where it's probably smart to say, all right, I very much believe in this theme, I very much understand the chip demand story, but it's just too hot, the stove is too hot. I want to show you an example. This stock popped up on my Best Stocks in the Market list, and given my epic restraint, I said, as amazing as this looks, I can't even go there, but I want to show it to people. GFS, this is a company called Global Foundries, nobody's ever heard of it. They literally make chips in Vermont. I'm not making a joke. They're in Vermont and upstate New York making chips. They make mature, fairly boring chips. This is a stock that just went from 40 to 60 in a week. This is the type of thing that we're seeing when we look at the semi-sector, we look at the space. So I feel like we're getting to a place now where people are just saying, whatever, if it's chips, put me in it. And that's like normally the time where you want to be more selective, not more generous with your capital.

Speaker 4:
[13:47] Well, Bill, in that camp, there's Integris, which I know you've bought more of. That stock is up 77% this year. And they essentially are a supplier of materials for semi, so a bit more downstream on that supply chain. Do you feel like it is in that same camp that Josh is talking about, or do you think it's in a different category because of where it sits in the supply chain?

Speaker 7:
[14:09] I really like the narrative of looking down the vertical, looking down this supply chain of what's going to be driving, where's the demand going to come from? Some of these are really underpriced. You've seen some of the photonics and some of the other names, really, they're up over 100%. So I think in the material part of, in shipping of the supply chain, like in Integris, they're not up that much yet. So I think there's some room here to run. It's a very, very hard barrier to entry in this space. I think right here, this name was very quiet through 2024, a failed acquisition. They had to spin off a couple small units in the business. I think it's now leaner. And I think the way that you're starting to see it, they're integral in the supply chain. I mean, they do a lot with the memory names. So I think right here, we're also using technicals. So I'm not saying, I do agree with Josh. Don't just throw spaghetti against the wall. You think everything's going to work.

Speaker 5:
[15:05] Is the risk management on something like this technical?

Speaker 7:
[15:08] That's what we are looking for, technical in this as well as ARM. We are seeing breakouts. I want to see those breakouts continue. We are sizing positions in where if we are down 20% in it, we are ready to buy more and see the theme through. But there are areas that we are looking at that if it really starts breaking down or the theme starts to deteriorate, we are not just going to hold on to this for dear life. So we are looking through this. They had a great report in February. I'm excited to see. They think they will report about two weeks from now. What their report is and see that momentum continues. But I think you have to start looking starting with how we started the show. It's not just NVIDIA. It's not just Amazon. In alphabet, looking out the supply chain. Where else is this going? Because we are starting to move into that second inning within the Simi space.

Speaker 4:
[15:51] Well, this may or may not be part of the supply chain, but software. That seems like it's at an inflection point. Service now kicking off earning season for some of the big software players. Not off to a great start. You had that significant write down of Medallia in the private space that's drawing some concerns just about, you know, the defensibility of their business model of the soccer business model right now.

Speaker 5:
[16:16] You know what's scary about ServiceNow? They actually had a good report.

Speaker 7:
[16:19] It was good.

Speaker 5:
[16:20] So if you're a bull and you're in other softwares, I own a couple of software stocks, I wish I didn't. I see a company like this come in and do 22% revenue growth and hit expectations, and they looked for something to not like, so they didn't love the margins or they're worried about the pace of deals closing or whatever, and they whack it out 17% on the day. And that's despite the fact that there's been insider buying here and that they are giving good guidance going forward, it's just, it's a merciless pit and it's a very, very difficult place to be right now.

Speaker 7:
[16:56] I mean, there's a lot of value in a name like now. Now, we added to it for the first time, right about $99, we added to it around 90, maybe just below 90 for the second time, it's still sized properly, gotta be patient. I agree with you, I think there's gonna be insider buying.

Speaker 5:
[17:10] Street didn't like that they blamed the Middle East either for the conservative guidance.

Speaker 6:
[17:14] I understood, actually.

Speaker 5:
[17:16] I know, but don't do that.

Speaker 6:
[17:17] No, no, no, I mean, I understood why the street didn't like it. I thought that that muddied the waters a little bit on this one, it didn't necessarily tell it.

Speaker 5:
[17:24] They do it a lot of enterprise sales in the straight-up homos, you know, like that was the, that was like, people are like, wait, what, what are they saying?

Speaker 6:
[17:30] So if it is slowing down bookings, right, I understand, but it doesn't help to tell a cohesive story at the time when you'll get whacked for just about anything that's not positive praise. So we've been saying for months that it's hard to disprove a negative when it comes to these software stocks, and the good news is the numbers will speak for themselves come earnings season. The good news is now we're in earnings season and the numbers get to speak for themselves. The bad news is even when they have positive stories to tell, or at least they meet earnings expectations like ServiceNow, the street doesn't care and rewards you with the 17% sell-off.

Speaker 5:
[18:05] It went into the number in a 56% drawdown from its all-time highs, down another 17% today. That's shocking. They also said they bought 20 million shares in the first quarter, which is double the amount of stock they bought back last year. So can you imagine the selling pressure if this is what the stock looks like, even with that level of buy-back support? It's really shocking.

Speaker 7:
[18:29] 20% off the low. I mean, there was two or three Fridays ago that it felt like capitulation in the software space. It was just selling and it was heavy. And then Monday, they were all higher. So there was a gap and it looked pretty good. So this is some deterioration of that positive technical landscape for the software space in general. But I think it's part of a bottom. The bottom is a process. It's not a point. And I think this is really just tipping the iceberg of all these software names reporting. So hopefully we get some good reports and the market react positive to them, too.

Speaker 4:
[19:00] I mean, yeah, the IGV went up eight straight days in a row. So it had a nice streak and then, you know, clearly sentiment has taken over. Speaking of earnings, let's talk Tesla. Bill, that's one you own. This, of course, is the first of the Mag-7 to report first quarter earnings this season. It was a beat, revenue miss, but it's really that spending number that caught everyone a little bit, you know, by surprise, perhaps. That stock's down only about 2% right now.

Speaker 7:
[19:28] It's off the lows. I mean, I think it was down four, four and a half. You know, it's an AI arms race. And at what point did everybody stop looking at this as a, as a car company? I mean, for a while now, it's an AI company. It's an optimist company. It's a power company. So they're, their spending has to be in line with the expectations of, of that competing with the hyperscalers competing with database, you know, entry data center entry. It's, it, their spending is going to be there. So I think, I think that that is definitely hurt the, the price action here, but it's holding in fairly well. I think, you know, it was up 3%, 3% or so after the earnings. The call may not have gone that well. I think there's just a lot of questions here in general, but this is, this is that handing off the baton. And maybe, maybe this quarter, maybe it was last quarter, maybe, you know, but these next few months, I think they're really going to define what their future is. Because at the end of the day, it's never been a company of what are you doing for me now? It's what are you going to do for me in the future? And I think we're really starting to define and round that out.

Speaker 5:
[20:25] They didn't give the bulls any reason to change their mind and sell, but they didn't give people who are not in the stock any reason to buy. Basically, Elon's take was like, pump the brakes. I think the exact phrase he used was, I need to inject a little bit of realism here. The stuff that they're doing is really hard. Like standing up manufacturing operations to start producing humanoid robots at scale. This is a thing no one has ever done before. So he was very, I thought, circumspect on the call. The problem is, that's not what people are looking for circumspect from Tesla. They're looking for literally visions of the future and they want it now. And I think he was very honest with the shareholder base. And if you're on the sidelines and you're not in the stock, you're definitely like, oh, I can't wait to buy it.

Speaker 6:
[21:14] You took the words out of my mouth. You don't come to an Elon Musk earnings call for sobering tone. You come for a wild optimism. Right, and so that speaks volumes in and out of itself.

Speaker 5:
[21:26] You go to see your favorite band, and they put a stool out on stage. You say, oh, we're in trouble. And then they come out and say, tonight's gonna be an acoustic set. And half the audience walks out the door. I mean, that's where they are. Look, they're doing, again, they're doing impossible things. I think the bulls who believe in Elon's vision, they're not going anywhere. And that's, I think, what you get in terms of a stock that pops 4% and then reverses negative 3% before the open the next day.

Speaker 4:
[21:55] Yeah, next week we've got the rest of the Mag-7. Wednesday, we see Amazon, Alphabet, Meta. Bill, you own Meta, you own Alphabet, you own Microsoft. What's your expectation for the rest of the Mag-7 for earning season?

Speaker 7:
[22:12] Yeah, I mean, I think they've all traded fairly cheap. I mean, really cheap relative to where they've been. Meta is two standard deviations below its average multiple. It's traded below 15 times forward. Now, I think where, again, it's another where it's execution problems. I mean, there's a lot of capex. Are they going to get that to work? Yeah, I'm looking forward to Meta. I think Amazon is, in Alphabet, are two names that they have a lot of momentum right now. I think they're going to be great earnings. My only fear in general in speaking about them as a group is, my expectation is that the earnings are going to be so great. So how much are we pricing in in this move? I mean, the Nasdaq has broken out the all-time highs, and it's extended that gain, where the S&P really quite has it. And it's been the Mag 7, and it's been the Simis, that have really kind of pushed that. So how much is being pulled forward this week and last week with those earnings expectations? But again, I think they're trading very cheap. So there's not necessarily that, they can't miss, but there's not necessarily that miss.

Speaker 5:
[23:13] Use of Claude is going to be explosive, as all these, any company that has anything to do with that, any company that's got that Anthropic connection, and Amazon at a new high is not a coincidence. Amazon is becoming sort of a proxy for usage of Claude, and AWS numbers I think should be great. That's really all that matters when you look at that report.

Speaker 7:
[23:36] The deal earlier this week with AWS and Anthropics promise of spending $100 billion over the next 10 years, the five gigawatts of compute, I mean, the stuff that these companies are putting together, that's what's being priced in on this move, and I mean, earnings, of course, matter, and they're expected to be really well. They can't go out there and miss, but I don't think we're gonna see duds. I don't think that at all.

Speaker 6:
[23:55] That said, though, I would argue Microsoft probably has the most to prove, simply because expectations on that name have remained high, even though it's sold off the way that it has in the last few months. I think that the open AI story, to your point about Anthropic, that proxy for open AI is still an open question, and so I think Microsoft has more to prove going into it than all the others.

Speaker 5:
[24:15] What's the over, under, on analyst Q&A focus on Copilot? Because I feel like that's the thorn in the heel of the stock. There's just the questions about whether or not this is actually working.

Speaker 6:
[24:32] And they've already said they're revamping the way that Copilot functioned, right? Because it was a hodgepodge of different use cases of it. And that takes time. So I don't expect that in this particular earnings call, we're going to hear that suddenly Copilot has struck gold and there's a waiting list of people looking to subscribe. So analysts asking that question are going to be disappointed.

Speaker 7:
[24:51] Copilot, tied to Oracle, tied to OpenAI, I mean, these all have been headwinds. And they're going to have to address them. We're underweight Microsoft. And I mean, we've been buying it and buying more of it. I would like to find a reason here from this report next week to buy more.

Speaker 4:
[25:05] Yeah, a lot of circular deals to focus on next week. We have some news out of Washington. Let's get to our Megan Gosella.

Speaker 8:
[25:12] Leslie, the White House is firing a warning shot at China over what it describes as industrial scale theft, essentially, of American AI technology and research, at least taking advantage of American AI technology and research. So this is a new memo sent by Michael Kratzius. He's head of the Office of Science and Technology Policy at the White House sent today to the heads of executive departments and agencies. Here's the money line within it. Kratzius writes, the United States government has information indicating that foreign entities principally based in China are engaged in deliberate industrial scale campaigns to distill US frontier AI systems. Now, distillation is this idea of training new AI models based on larger ones, essentially teaching the smaller model to mimic a larger one. What Kratzius writes here is he says these coordinated campaigns systematically extract capabilities from American AI models, exploiting American expertise and innovation. He does outline some bullet points in here as to what the White House is doing about it, including sharing information with US AI companies concerning these attempts, the information that the government has on these foreign actors, sharing it with private companies, working with private industry to develop best practices and to build strong defenses against it. He also says that the administration will be exploring a range of measures to hold foreign actors accountable for industrial scale distillation campaigns. So we don't know exactly what that will look like, but the fact that the White House is looking at ways of punishing foreign actors for doing this and that they're naming China specifically here really is a warning shot to Beijing. Remember, it comes just about three weeks ahead of that visit to Beijing by President Trump where he's set to meet with President Xi. So another sort of friction point here between the US and China, this time specifically over AI. Leslie?

Speaker 4:
[26:56] Yeah, sounds like that could be more of a priority in those discussions at that time. Megan, thank you. Up next, we have a bunch of committee stocks on the move following earnings including a 20 percent pop for one big industrial name. We'll reveal it and later Josh's Best Stocks in the Market. Halftime is back in two minutes.

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Speaker 4:
[28:23] Welcome back. Let's hit some committee stocks on the move today. United Rentals soaring after earnings. Bill, this one is yours. You own it. 23% today?

Speaker 7:
[28:33] Yeah, big move. Yeah, what a move. I mean, it helps cancel out that service now.

Speaker 4:
[28:38] More than cancel it out, right?

Speaker 7:
[28:40] But here's, and this is top 10 name of ours now. It's breaking into the top 10 of this move. I mean, absolute phenomenal execution in the rental business. I mean, this is now a breakout in the stock. We're from technical weakness. And there was definitely, it has underperformed quite a bit. This in the early part of this year, it was a negative name. CapEx guidance is below consensus. So that's great to see. I mean, I think there's a lot of upside. This is a multi-year compounder. If it's coming back to life here, there's definitely a lot of upside from the consolidation we've seen since the middle of last year.

Speaker 4:
[29:10] Thermo Fisher is another one having its worst day since 2005 after earnings. Bill, this is another one of yours down about 10%. So are we still canceled out?

Speaker 7:
[29:20] You know, this is definitely a smaller position, but I would have higher expectations for Thermo Fisher this year. It's been a really tough year in general. I mean, trading 18 forward, EPS growth expanded to about 10% stable grow or solid margins. I mean, the beat's there, but the market just has not liked it.

Speaker 4:
[29:39] Is it just, why is it having a hard time catching a bit here?

Speaker 7:
[29:41] You know, interest rates holding up is, I think having a good impact on some of the spending in this space diagnostics. So some of the smaller biotech names, maybe they're not spending. I'm trying to make sense of it all, but it really has underperformed.

Speaker 4:
[29:55] CBRE is also falling post earnings. Josh, this is one you own.

Speaker 5:
[30:00] No, I haven't been in the stock for a long time, but I do follow it. I don't really think that what they reported was something that would make someone want to sell the stock. But it's been caught up, believe it or not, in the SaaS apocalypse. They're not a software business, but they are in the business of benefiting from an information asymmetry. In other words, they face buyers, they face sellers, they face tenants, they face all different players in the commercial real estate ecosystem. And they have all of the information, they can capitalize on that. And in a world of Claude and OpenAI, that information asymmetry probably will shrink. And I think all of these types of stocks, any stock that is primarily benefiting from information, has seen the same sort of erosion of investor interest. We see it in our industry, the shares of S&P Global is a similar example, but in finance, not in real estate.

Speaker 4:
[30:59] American Express also lowered today after sticking with their existing full year guidance. Malcolm, you own it?

Speaker 6:
[31:07] Yeah, I'm a little bit surprised by today's response. I was encouraged, on the earnings call, the CEO came out and basically said exactly what I thought three weeks ago, I think, when I first recommended the stock, which is basically that their customer is not phased by $4 a gallon gas at the pump. They're still shopping, they're still dining out, they're still flying. And so making that bet on the top end of the K, the higher end consumer, if you want to play the consumer, is the safest place to be. So I understand that revenue growth is expected to top out at about 10% and that doesn't necessarily speak volumes to anyone who is looking for a bang up guidance. But I really think there's an opportunity there. 15% growth in revenue year over year. I think that's a pretty positive number and actually their best one in, I think, three years based on their earnings yesterday. So I think there's still an opportunity here. I'll still continue to hold it. But I was definitely encouraged by what I heard.

Speaker 4:
[32:05] All right. Let's get to Angelica Peebles with the Cnbc News Update. Hi, Angelica.

Speaker 12:
[32:09] Hey, Leslie. President Trump is planning to nominate David Cummins, a senior vice president at a government services contractor for TSA Administrator. CBS reported, citing a person familiar. The TSA has gone through a turbulent period as of late as homeland security funding was withheld for an extended period due to disagreements over ICE funding. Acting Attorney General Todd Blanch signed an order today reclassifying state-licensed medical marijuana to a Schedule 3 from a Schedule 1 drug that's a less dangerous classification. President Trump previously signed an executive order in December to initiate that process. And French authorities are investigating potential tampering with the country's weather sensors by bettors to gain an advantage on prediction platform Polymarket. The probe comes after a surge in Polymarket activity and strange readings from some of those sensors. Temperatures briefly jumped as much as 5 degrees Celsius on April 6 and April 15. Bloomberg reports that those Polymarket contracts received about $1.4 million in combined bets. Leslie, back over to you.

Speaker 4:
[33:11] All right, Angelica, thank you. Coming up, Josh Brown's ready with his best stocks in the market. He's got a new industrial name. He's so ready, so ready. We're ready. He's got a new industrial name on his list. We'll reveal it next.

Speaker 10:
[33:28] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 1:
[33:34] Trailblazing women changing the game.

Speaker 11:
[33:37] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 4:
[33:42] Leadership can look in many, many different forms.

Speaker 8:
[33:44] It really does come down to just trusting yourself.

Speaker 4:
[33:47] Life is short and you just got to think big to accomplish big things.

Speaker 1:
[33:50] Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts.

Speaker 4:
[34:04] Welcome back. He said he was ready. Josh Brown, Best Stocks in the Market. We've been anticipating this now for about three whole minutes.

Speaker 5:
[34:14] It's a huge buildup. I'll try not to disappoint.

Speaker 4:
[34:16] Don't disappoint.

Speaker 5:
[34:17] All right, we're gonna talk about Trane, not drops of Jupiter. This is TRA&E, this is an HVAC company. Probably a very boring stock for most of my career until recently. Guys, do me a favor, give me a much, much, much longer term view. So, what you see here is a very obvious breakout in progress. We wrote about it this morning. They have modular solutions to address the cooling intensity of AI-related data center builds, and they have answers to one of the toughest problems with building these data centers at the rate that they're getting built. The labor, the speed constraints, it's all very real. It's very heavily felt by the hyperscalers, and Trane has been called in on some of the biggest projects happening around the country, around the world. Revenue has compounded at an 11% CAGR. Earnings per share has been compounding at 24%. That's going back to the year 2020. So this isn't just about AI data centers, although that is obviously the big driver now and going forward. I think the risk levels here are very simple. For traders, you want to look at this zone between 445, which is 50-day moving average, which has been rising, and 450, which you can see very clearly on the chart, is the last time it found major support, bounced off that level like a trampoline. Below there would invalidate the breakout, the stock resets, disciplined traders would then move to the sideline. For investors, I would use the same level. I really think that so long as the stock is above 450, structurally, the out, do I have you?

Speaker 4:
[35:54] Yeah, I'm just-

Speaker 5:
[35:54] All right, you following along on the chart?

Speaker 4:
[35:56] I'm following along on the chart. I was looking at the PE ratio of 37.

Speaker 5:
[35:59] Okay, don't worry about PE ratios. This is Best Stocks in the Market. We'll worry about that later. Stock is breaking out. Take a look at it. I am not personally in the trade just yet, but I might become so if this thing continues.

Speaker 4:
[36:13] Yeah, like I said, 37 PE, not cheap stock.

Speaker 5:
[36:16] How do you guys feel about it? Wanna high five me on this?

Speaker 7:
[36:18] I can see myself in this chasing it. Air high five.

Speaker 4:
[36:21] All right.

Speaker 7:
[36:21] I like to see the volume.

Speaker 5:
[36:22] I can see myself chasing this down.

Speaker 7:
[36:26] Personally, but I like to see this finish the week with strong volume, with some weak volume, maybe not loving it as much.

Speaker 6:
[36:33] Sorry, I realized I left you hanging.

Speaker 5:
[36:34] Give me that.

Speaker 4:
[36:35] All right. You must have delivered then.

Speaker 5:
[36:37] That's a Best Stocks in the Market segment.

Speaker 4:
[36:39] All right.

Speaker 5:
[36:40] We'll be right back.

Speaker 4:
[36:41] Love it. I'll do the tease. Okay. Up next, more committee moves. Bill is throwing in the towel on a stock that Josh owns. Sounds like it's not this one though. We'll debate the move. Halftime is back after this. Welcome back. New this morning, Warner Brothers shareholders approving the company's acquisition by Paramount. You can see PSKY shares at about 5% today. And take a look at Netflix, up roughly 10% since walking away from its own offer in February. But future M&A and other big moves are not off the table. Julia Borsten joins us now with that story. Hi, Julia.

Speaker 10:
[37:19] Hi, Leslie. Netflix today making its first big move in the wake of losing that Warner Brothers deal, announcing a new $25 billion share buyback program in addition to $6.8 billion remaining from a previous authorization. With $2.8 billion in a break up fee, Netflix isn't just using its cash to bolster its stock, but it also has said it's built its M&A muscle. Netflix saying the company will be disciplined and opportunistic about deals, but given the limited big assets up for grabs, its next deals are more likely to be smaller companies that accelerate its key priorities, including growing its ad-supported streaming business and competing with YouTube for younger viewers. So now there are a couple types of deals to look out for. One is rights to sports events, like the NFL's five-game package that Netflix is currently in talks for, shows around YouTube creators, like Netflix's Mark Rober show to help lure younger audiences, ad tech companies to help with Netflix building its own ad stack, and more AI visual effects companies, such as Interpositive, which was Ben Affleck's AI company that Netflix bought just last month. Leslie?

Speaker 4:
[38:27] Yeah, a lot going on there, Julia. Thank you so much. Bill, you just sold Netflix.

Speaker 7:
[38:33] Did, I had to pay for Arm and Integress. But here's the-

Speaker 4:
[38:37] Had to pay an arm and a leg?

Speaker 7:
[38:38] Yeah.

Speaker 4:
[38:39] As they say.

Speaker 7:
[38:39] So we cut Netflix, here's the thing. I mean, in the low 80s, sub 80s, it was way too cheap. We didn't move on it then. I mean, it had closed deal in the big rally. And you know what? The earnings report just kind of was a reminder, right back to where it was. Low momentum, free cash flow, growth slowing, weak guidance. And so we stepped out of it. I feel like it can't really do much here. I mean, obviously we sold it today and there yesterday, and then we get this buyback news. I was afraid it'd probably be up, and it still came in rally on that. So I think it's at least another earnings report away before the market can get excited about this name. And my fear would be we find it back to 80 bucks and revisit that ahead of the earnings.

Speaker 4:
[39:17] Josh owns it on Peaky Blinders Movie?

Speaker 5:
[39:19] Yeah, no, it wasn't that good. Look, they are going up against a year like last year where they had just incredible content quarter after quarter. They're gonna start lapping the Strangers thing finale. It got a little bit tougher. I think the $25 billion buyback is great, but there's a lot of flexibility in when they do that. So I don't think that's the kind of thing where they're gonna say, okay, we need a new buyback authorization because we bought back all that stock. They can go as slowly as they want. They don't even have to do it at all. It's not actually binding. It's an authorization. I do think it's a step in the right direction because the stock is too cheap. The problem that I don't disagree with you selling it, it looks like a dead horse right now. I have been buying it here. It's 30% below its highs, and I am a long-term believer in the story. I just think the problem is all those moves that we just saw up on screen, not one of those is gonna move the needle. We have not seen a lot of companies have success buying podcasts and putting them on their platform. Spotify tried that three years ago. It was a massive bust. They never got any credit from shareholders for doing it. Now we see shows from The Ringer on Netflix. That's great. I don't think it's negative. I just don't think those are the types of deals that are gonna get this thing going. What will is if they can accelerate the ad business. The perception that they are now in a mono-e-mono competition with YouTube, what better way to answer that than to say not only are we in this competition, but we're taking share. Get the ad biz ramped and you will see shareholders come back with buy orders.

Speaker 6:
[40:51] But I think that's where the competing with YouTube for younger subscribers comes in to play with podcasts, right? The video, podcasts.

Speaker 5:
[40:59] What are you gonna pay for these things, though?

Speaker 6:
[41:02] They're dirt cheap in comparison to big Hollywood produced blockbusters.

Speaker 5:
[41:06] Cheaper than Warner Brothers.

Speaker 6:
[41:07] Yeah, they're a lot cheaper.

Speaker 5:
[41:08] Smaller audiences than Batman, though.

Speaker 6:
[41:11] But the plus side for these guys is basically that YouTube's audience now is trained that when they watch a podcast online, they're gonna get bombarded with 17 creatine ads in between 12 words of interview. And so there is a place for them to drop a ton of ads that they're not currently doing without cannibalizing the rest of the business where people like me come here for the ad free viewing. And so I think there is a world where this could work out for Netflix, but they are going to have to be very aggressive about acquiring smaller talents and being able to make sure that they get people's attention.

Speaker 5:
[41:46] It's not another Mr. Beast out there anyway. So you're right, you're right.

Speaker 4:
[41:50] All right, up next, Mike Santoli joins us with his midday word. We are back on Halftime Senior Markets Commentator and Overtime Co-anchor Mike Santoli joins us with his midday word. We're all about re-risking the last couple days. Today, maybe taking a bit of a break?

Speaker 13:
[42:15] In broad terms, yes, Leslie, I would agree. In terms of the S&P 500, really we've been kind of sideways since Friday's high, if you look at the index itself, but still re-risking if that's what you think what's happening in semiconductors, where coming out of the lows, the market rushed for two things. One is the areas with the clearest high fundamental conviction about long-lasting demand in this capex plants. Obviously, that's AI hardware, food chain. The other place it went to is high beta, get me back in a hurry, high risk, high reward stuff, and that is also semi in some respects. So I think that's why you have that overlap. Since the, well, month to date, not even just since the pure lows, Mag 7 up 13%, Micro Cap ETF up 13%. That's your barbell right now. So the question is, is that making an unstable market? Is it kind of back in gear because we're still kind of rotating among themes? You know, this is a capex over consumer story, has been for a while, and I think that that's almost how the S&P 500 is built, to be exposed to those things, meaning capex and corporate spend as opposed to consumer.

Speaker 4:
[43:21] Get me back in a hurry. Do you feel like today is indicative of a rethink of that?

Speaker 13:
[43:27] Not specifically, no. I think it's much more about, look, we're kind of digesting this strong move off the lows. There's been a lot of idiosyncratic elements of this comeback, which is, yes, you saw a broad, very streaky comeback to the upside of the sort that you often see coming out of, a deeper correction or a bear market. It's not common to see that angle of ascent and then get you to all-time highs. So that's the funny part right now. I do think you've seen positioning stuff come up. There's probably still room for it to go higher, just in aggregate, slower moving money is not fully back in in terms of its exposures. Then valuations are not back to the highs either because earnings estimates keep going up. I don't think that means earnings season itself is a catalyst, because you have great earnings seasons where there's just too much push-pull offsetting activity, but it does lay the groundwork for people being able to justify owning at these levels.

Speaker 4:
[44:18] Yeah, good point. Stay with us guys. Final trades coming up on Halftime. We're back with Final Trades, Josh.

Speaker 5:
[44:31] Calling attention to a name on the Best Stocks list is Starbucks making its, I'm gonna say, sixth attempt to break above 100, 101 that has been resistance. This could happen. They report earnings next Tuesday, April 28th. So just putting this on your radar.

Speaker 4:
[44:50] Malcolm.

Speaker 6:
[44:51] DLR reports tonight after the bell. They've been on a tear this year, looking for them to keep it going.

Speaker 4:
[44:56] And Bill.

Speaker 7:
[44:57] I bought my ticket for the train. The thing's breaking out. Looking to manage risk if it goes below 470.

Speaker 4:
[45:02] All right.

Speaker 5:
[45:02] That does so influential, Leslie.

Speaker 4:
[45:04] So influential. Clearly. That does it for Halftime. The exchange starts right now.

Speaker 3:
[45:12] You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live, weekdays at 12 Eastern, only on CNBC.

Speaker 1:
[45:24] All opinions expressed by the Halftime Report participants are only their opinions and do not reflect the opinions of CNBC or its 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 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/halftimereportdisclaimer.

Speaker 10:
[45:58] What made you confident that you could do something that hadn't been done before? I have no fear of failure.

Speaker 1:
[46:04] Trailblazing women changing the game.

Speaker 11:
[46:07] One of my favorite pieces of advice, think about what your boss's boss needs.

Speaker 4:
[46:12] Leadership can look in many, many different forms.

Speaker 8:
[46:14] It really does come down to just trusting yourself.

Speaker 4:
[46:16] Life is short and you just got to think big to accomplish big things.

Speaker 1:
[46:20] Julia Boorstin hosts Cnbc Changemakers and Power Players. New episodes every Tuesday wherever you get your podcasts.