Banking on Nvidia 5/28/25
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Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour, banking on Nvidia. The company's earnings a little more than four hours away now. We will debate how much of the AI trade is once again riding on those results. Joining me for the hour today, Joe Terranova, Stephanie Link, Malcolm Etheridge, Surat Sethi. We will check the markets. You heard Sarah telling you we are down a little bit across the board. So we've got some red on the screen. Not so much in Nvidia lately. Those shares are having their best month in a year.

All right, Joe, you get the first crack at this. Several issues on the table that we need to think about. Will revenues miss because of the H-20 ban in China? What does demand look like outside of China? Is there a deep-seek overhang still? What about Middle East partnerships? And because of what I just said,

Best month in a year. The bar is high. The bar is higher than it used to be. We're up 40% on NVIDIA since April 4th. Add that all up, and what do you get? I think what you get is that...

the hardest trade is usually the best trade. The hardest trade, the most difficult thing to do, is generally the right thing to do. And the momentum, while it's up 24% month-to-date, it does point towards potentially taking out the all-time high from January at 153. I think what's important tonight, you mentioned, you said, is revenue going to miss.

Revenue probably is going to miss, but I think the estimates have come down enough. The expectation, knowing that that charge is there because of the H-20 ban in China, I think we've already priced that in. So I think what's important is hearing the commentary and getting the confidence that demand is there, that demand is strong. Demand out.

outside of China. The demand is there outside of China. The AI demand is there. We've heard from Meta that the demand is there. We saw that the Middle East, the demand is there. So the demand is able to

to outstrip the supply. I think that's important. And I do think, look, what we do on this show is we pick a direction sometimes. And I'm going to pick a direction. And I think the direction is higher after this evening. If the stock falls, I'm not going to come on the network and say, OK, I think you need to get out of the stock. It's still going to like the stock because I believe in the long-term story. But I think tonight you have momentum leaning to the upside. Malcolm Goldman says investors are potentially underestimating volatility.

There's always like a big implied move going into a number like this for a company like that. Wolf agrees with Joe. It says it's time for the stock to finally break out to the upside. Shares are flat over the last six months. Let's go through a couple of charts to remind our viewers where this stock hasn't gone. Let's say that.

Six months, draw a straight line across. That's what you have. It's down nearly 12% from an all-time high. Back that out to, let's say, a year.

or so on the charts. You can get what I'm talking about, the stock backing off from its all-time high, sitting 12% with the comeback, which has been significant. You add that up and what do you get? It's been a round trip. If you've been in that name more than six months, like you said, I myself got in in March and decided to keep on adding along the way.

as that elevator continued to go down. And so for somebody like me, I look and I say Blackwell is what matters as far as this earnings report is concerned, right? We knew that the demand was there. They weren't able to meet the demand for whatever reason, all the different hiccups with the rollout. If we find out that they were able to ramp up production of the Blackwell chip and they haven't had to cannibalize the upgrade cycle because the next one is supposed to be 50% better than the one that exists today that they haven't been able to get out there,

Add all that up to your point, if that sounds positive, at least the guidance related to it, I think we do take out that all-time high. I think if, for whatever reason, that guidance is negative, we're going in the other direction. Still always about the guidance, right? I mean, the results are the results. As Joe said, there's probably baked-in stuff

at this point, but the bar is always high for the guide relative to where the stock currently sits. It is, and the key point is visibility. What are they going to say for 26 and 27, and what orders do they have in the book? Because that was the one thing that we always, being a semiconductor company as opposed to having...

recurring revenue, where are you getting this demand? Is it the sovereign funds that we now see? How is the deep sink? How are they going to improvise for that? So I think that's going to be the key. Production is going to be really important. Are they going to have any hiccups in terms of where they're producing? Because how much can they do? And I think the China thing is just it's really upside. I mean, at this point, it's discounted. They're not really going to be selling a lot in there.

And if they can prove that not only are they selling Blackwell, but the upside on the other chips coming, I think the stock could move from here. Yeah. Jensen Wong, by the way, is going to be on Mad Money tonight live at 6 o'clock. So you get the number. You're going to hear from Jensen with Jim tonight. And sometimes it takes for an interview or a call to actually start the shares moving in one way or the other.

you don't necessarily get that from the pure results. So, Steph, I turn to you and broaden it out because you don't own Nvidia, but how much of the near-term AI trade is riding on what happens tonight?

I don't think it's a demand problem at all. I think it's a supply problem for Nvidia. We all know about China. I never thought that this quarter would be the catalyst quarter for Nvidia at all. But across the board, you're still seeing the hyperscalers spending a tremendous amount of money on AI, something like $300 billion this year alone, up 40%. Next year is probably going to be up about 30%.

There's no end in sight, Scott. And so you definitely want to have an opportunity to, if in fact this stock, NVIDIA, were to fall, or Broadcom, for example, also will fall if NVIDIA falls, that's when you want to take a look at it and buy more. And you know I have been buying Broadcom the last month, month and a half. You and a lot of other people, because the stock is up 22% in May, as the SMH is having its best month.

in some two years. Yeah, and the reason that I own it, we do get 31% of their revenues is AI, but you also have 41% is software from the VMware acquisition, and they've done a really good job at that, and it's helped margins as well. And the cyclical businesses, which is the remaining part of the company's revenue mix, that has

hasn't even recovered yet. And that's what we're waiting for. So if you can get all three of these areas to see improvement, I think the stock could actually go a lot higher. It's still down about 2%, just like Nvidia year to date. It's up 36% from the April lows. So it was right to be buying these stocks in April and May. So expectations are a little bit higher now.

But I don't think the story is over by any means and we want to take advantage of any dislocations on concerns about AI to be buying. That's what Melius says today too, that Broadcom is still one of the quote, "must own AI stocks." The target today goes to 300 from 250 at Mizuho.

The target goes 301 at Redburn as they initiate coverage, Joe, with a buy rating on Broadcom as well. So the VMware acquisition is proving to be an excellent acquisition. And I think at the time there was maybe some skepticism surrounding Hot 10.

hot tan making that acquisition. I also think that this is a company that now might surprise shareholders by accelerating the buyback program. And that's something that in the past maybe people were skeptical for. That's usually a fourth quarter thing. Well, you've got a $10 billion buyback program in place, but I think the street will begin to price in

the concept that they will accelerate the buyback. And I think there's been skepticism in years past that they want to preserve that capital because they like to do the acquisitions. Look, I agree with you. I think the entire semi-trade kind of hangs in the balance, not just tonight, but really over the next several weeks. I think Broadcom reports on June 5th, if I'm correct. Next week.

So I think it hangs in the balance as it relates to AI. They're there with processors, but they're also there with networks. For a trade, by the way, that hadn't done much of anything until May came around and there was a resurgence in tech, right? The NASDAQ over the last month, we've said it's up 10.5%.

Thank you, software. Thank you, semis. We'll get to software in a minute. But this trade was done. And then it's now it's woken back up. And you have the ability, when you think about positioning, to rebuild very quickly because a lot of, I know, you know, I know you guys don't look at momentum the way I do, but I know the momentum funds moved away. They moved away from arguably the three best semi-equipment names out there, Lamb Research, KLA Corp., and Applied Materials.

A lot of hedge funds, when you look at their holdings, they've reduced the holdings of semiconductors. So you have the opportunity to really rebuild positions here. When you have gross margins at Broadcom at 79 percent, industry high, operating margins at 65 percent, total revenues at 19 percent, how do you not buy when these stocks fall like that? Well, NVIDIA has some issues.

Broncom actually doesn't have issues for the first time in a really long time. It's just a cleaner story. What do you guys make of the fact that there's been some selling in tech picking up

Bank of America equity client flows show that. Clients sold stock in seven sectors led by tech. JP Morgan says notable outflows from tech over the last week. What's that about? Is that about, okay, you got a dial back of tariffs on some areas, so it opened the door for money to go into other places. Maybe you've had the fear that rates were going to continue to back up, so the growth trade was hurt a

a little bit. What do you see there? Does that surprise you that tech selling has picked up a bit according to B of A and JPM? Yeah, that's sort of where I was going to go to Joe's point about the hedges and the bigger institutional buyers being out of this trade and unwinding those semi positions. And I think what we see happening is retail sort of rescued the market following Liberation Day. They stepped in and bought a lot of those tech names

And to your point, Scott, I think what we're seeing is a selling of some of those tech names and a buying of the semis, because that is where the attractiveness happens to be right now for those retail traders. So the bigger money, we still see a ton of money sitting in money market funds, not buying treasuries, not buying the things you would normally think of as defensive when the market sells off in relation to tariffs. And I think right now retail is loving semis, and that's why we're seeing that uptick

double-digit gains in those semi-names. It's pretty amazing. 10.5% basically over one month for the NASDAQ. We've got a couple days left. We're not finished yet. Who knows what happens as a result of what NVIDIA does. The MAGS, the MAGS 7 ETF, best month since its inception. Over one month, NVIDIA 22%. Tesla in there up 26%. Meta 19%, Microsoft 18%, Amazon 10%, and Alphabet 8%. That's in the month of May.

Yeah, look, I mean, a lot of it is post-liberation day. It's post the agreements that happened overseas. And also, you know, you get this volatility with the 10-year. Don't forget, if the 10-year starts going above 4.5%, we're going to get a pullback in the market, especially in the growth stocks. So as you see some of that and you see some of the tariff discussions kind of soothe, these stocks are going to have much more of a run. I mean, meta, I just read it, 19%. It's up 11% year-to-date.

It's still down 12% from its high. It is having its shareholder meeting today. The question is, with supermajority voting rights, does it even matter? Do those events matter when you have the structure that a meta does? Julia Boorstin joins us now with how investors should be thinking about it. I think that's a fair and legitimate question about these kinds of meetings when you have that kind of structure.

You're right, Scott. Mark Zuckerberg controls the majority of Meta's Class B voting shares. So shareholder proposals, they do indicate investor concerns about the company, but they will not be approved if Zuckerberg Meta management opposes them. So in addition to approving board members and the company's pay plan, proposals of

for a vote today include demands for more transparency, including for reports on child safety impacts and harm reduction to children, on hate targeting marginalized communities, on risks of deep fakes and online child exploitation, and on AI data usage oversight, as well as emissions reduction action. And here's a key one, data collection and advertising practices. Now, Meta poses all those proposals about more transparency in those reports, so they will not pass.

us, but it will be interesting to see how many votes they draw. Scott, back over to you. Julia, thanks. We shall see. Steph, you own the stock. I mean, how do you think about that question? You know, do you have any? I don't even care. I just want to I want fundamentals. I want a CEO that delivers, that executes, that's motivated. And he clearly is. And they just had a great quarter. I have said this before.

They had the best mag seven quarter out of the mag seven. No question about it. They beat and they raised. Revenues grew 16%. Margins actually were up 360 basis points year over year. That is remarkable. Guidance goes higher. Free cash flow goes higher. CapEx and OpEx all in the right direction of what you want to see. And they're still investing heavily in AI because they are one of the hyperscalers that are spending all this stuff. So I care about fundamentals. I don't really care about this other noise. Yeah. Anybody else?

I agree with everything Stephanie just said. I also think that they are probably best positioned as it relates to Washington, D.C. and the relationship with the president.

He's done, ex-Mark Zuckerberg has done an excellent job in managing that relationship. Are they? I mean, they still have these regulatory issues that maybe haven't gone the way that Zuckerberg wanted, obviously, or thought, given a relationship that you declare to be so great. Well, you've got the vice president of the United States in Europe giving a speech talking about the regulatory challenges as it relates to META,

and basically advocating and arguing on behalf of META itself. So I do think that they are in a good position with the current administration, and I think ultimately at some point that's gonna benefit them. - Anybody have a different opinion on that? Because it's not a foregone conclusion how all of the regulatory issues are gonna come out of this. - No, I don't think it's clear as to what's gonna happen, and I think what he's doing is staying under the radar as well and kind of focusing on the business to Steph's point. Get the return on invested capital,

He got religion a few years ago when the stock was back in the 90s when they were spending too much. So I think the focus is free cash flow return on investment and kind of stay below the radar. Steph's made the argument before that even in the worst of worst cases to some, whether you have to break the company up in any way, you've said, well, it's worth more. Right? That was your answer. Certainly. Same with Amazon, by the way. And Google, too. Oh, and?

Sure, absolutely. I don't own that one, but absolutely. You can make a case for certain. I mean, I love spins. You know that. I love when companies do all these shareholder creativity actions. Yeah, sure, but sometimes you spin underperforming assets. This would not be that because the assets that they have aren't in any way the ones that are

under criticism, it's not like they're underperforming parts of the business in any way. But the management teams running each of the businesses are focusing solely on the one business. They're not distracted with other businesses. So all the attention, all the capital, all the focus goes on each individual company. And that's how you get creative businesses.

And to that point, but you can't then do any acquisitions. So right now, Meta really can't do anything, whether they want to be doing something with WhatsApp or et cetera. You know, it just they're they're stuck in their lane. And if you do want to grow through acquisitions, it's almost impossible for the big seven. They own the biggest property by a mile, though. What is there to acquire that they don't already have?

Well, if you broke up Facebook and said it's totally separate, they might be things they could do. Right now, you can't do anything. You can't even, you can't, like, think about the regulatory issues. They've done the acquisitions to get the growth already in the last several years with WhatsApp and Instagram.

And to Scott's point, a lot of times when you're spinning out companies, you're spinning out businesses that one business can be identified as growth and the other business is struggling. And maybe you'll say, OK, that's more value. I think when you break up, if you were to break up meta, everything that you're spinning out is basically growth, which is the growth of today. Yeah.

You can grow more, but it's not like I'm spinning out and I'm questioning if I'm going to get the growth. The growth is there. It's visible. I mentioned software. I know we hit semis pretty hard, but software is having its best month since November. That was coming into today. Steph Snowflake hit a 52-week high. Surat

Intuit hits a record high today. Applovin, Joe's up 41% in May. Obviously, you're going to take the volatility either way if you're willing to own that stock. Oracle is up 15%. I mentioned Microsoft already. What about Malcolm, the software trade in general? Is this back on too? You know I'm excited to see that as a person who's interested

entire portfolio almost indexes towards software in some way. I think that part of it is that investors are starting to appreciate the importance of gross margins, right? When we talk about, you know, what tariffs are going to impact and what they aren't necessarily going to impact. If we look at a Walmart who's got a margin of like 3% or something, tariffs immediately make a difference for them. If I look at a company like a Microsoft or an Oracle or an IBM or somebody like that, they've got a lot of wiggle room to play with.

And so that operating leverage matters a ton more. And I think that's maybe why we're seeing a push into software right now by investors who are looking for ways to get defensive against

a reversion back to 30, 40, 50% tariffs. We get a nice test today, too, in overtime, don't we, with Salesforce? We do. Which does report Benny Off is going to be on with Jim tonight, too. It's six. So he's got an all-star lineup tonight. The stock reiterated overweight at Morgan Stanley, 393 is the price target. They just announced the Informatica deal. Do you like that?

I'm not sure. They did the deal right before earnings, so that sometimes gives me caution as to what are they going to be saying. Oh, we're buying growth for the future. So in the short term, I'm not sure. Isn't that their story? I mean-

Isn't that what they do? They do. I know. But it just makes me, because they also have to prove that AI is actually working. So I still like the stock and I'd buy it on a dip. But I'm just saying I don't know how much of the quarter is going to be, hey, we blew it out. You? You have criticized this company in the past. I have. For being too acquisitive. Serial acquirers. I'm undecided on this deal. I'm not sure if this is a good deal, bad deal. I

Obviously going to listen tonight to Mark Benioff with Jim to hear his thoughts on it. But the one thing that I see in front of us, both semis and software have had a really strong month. You've had that positive correlation.

But candidly, if you look back over the last year, they have a very strong negative correlation. And I just wonder, if you get the rebuilding and positioning in semis, does that come at the expense of software? Not in the near term, but over the next several months. And I would be concerned for some of the software names with the extreme valuation like AppLovin, which I know, Steph, you would never even think of.

Well, I'm there with you on Snowflake. It's not cheap. What do you mean? A lot of those names, I think, when you look over the next several months, I don't know if there's enough room in the market for positioning to applaud both semis and software, in particular software names that have the extreme valuation. What about Okta? Do you consider their valuation to be extreme? The stock is down big today after the earnings and the guide. Not surprised. Not surprised.

The growth has been decelerating. The margins really haven't been strong. It's been a lift on AI and really riding the coattails of cybersecurity. So looking forward, they're going to have to lift margins. They're going to have to lift growth. I know that today the commentary is, well,

They gave guidance that was very troubling as it relates to the macro, it was very conservative. Yeah, that's true. But there's more to the story. They have to really raise a lot of the revenue growth story and they have to bring margins higher. And in fact, it is a cybersecurity story. - Malcolm, you sold, speaking of, Palo Alto.

which is a pretty interesting move given how much love there is in that space. Why'd you sell that stock? - I know, I know. This one was one of my beloved cybersecurity stocks. I probably got into it February, I think, of last year and intended to be there for quite a while. I love the cybersecurity space. I've been on the network for probably the last two years encouraging investors

to pay attention to cybersecurity as a defensive play and a must-have in anybody's tech stack. But Palo Alto specifically scares me because I look at a Trump administration that has taken a very different stance towards cybersecurity from the Biden administration. They're even looking at cutting half a billion dollars from the cybersecurity

agency, the lead cybersecurity agency for the 2026 fiscal budget. And when you look at a company like Palo Alto, where 50 to 60 percent of their revenues comes from the federal sector, that's scary to me. So I'd rather be owning something like a CrowdStrike that focuses more on enterprise and isn't so reliant on. There's no way this administration is cutting anything in cybersecurity. They were just on Congress defending their stance to cut the budget by half a billion dollars. There's no way. They can't afford to.

forward to. There's no way they'll find other places to come. I agree with you that they should not, but I believe that they will. And in the meantime, you have 4,000 cybersecurity companies in this world. Some are public, some are private. None of them talk to each other. And the big five are only going to get bigger through M&A so that they can offer more to their customers. You talk to CTOs just like I talk to CTOs.

And they are spending on AI and they're spending on cyber. What if the government, what if they did cut what Malcolm says is on the table? Well, I just don't think that's, I don't think that's not even close. But what if they, but, but.

That's not the same as whether they do or they don't. It's a foregone conclusion. Six of the top ten managers of the regions that operate under CISA have been let go as of the month of May. Everybody's been let go in the government. Do you think there's any reaction to that, though? I don't think so. Doge cut 45% of the cyber workforce in the U.S. government. What do you mean if? This is a total addressable market of a

trillion between now and 2030. And it's not addressable by the government who said we don't care about cyber anymore. You don't need the government. Palo Alto Networks needs the U.S. government. They are expanding their next-gen cybersecurity products. Do you know very well about that? These guys are on-prem. They don't know about a zero-trust environment right now. They're trying to platform their way into people's hearts. Meanwhile, CrowdStrike... It's working. Total

revenues were up 15%. Product revenues accelerated last quarter. In comparison to a CrowdStrike or a Zscaler? And guess what? It trades at half the multiple. Okay, well, I tell you what. The market agrees with me. CrowdStrike is up 40% year-to-date. Zscaler up 40% year-to-date. And Palo Alto is up 3.5% or something. And that's actually why I bought it. I think the marketing agrees with me here. It trades at 12 times

Price to sales. CrowdStrike, which I also own, trades at 30 times price to sales. I wish I had called you before I sold my shares. You might have paid a premium. I probably would have bought it from you. CrowdStrike, by the way, the target goes to 500 at Barclays.

And just to put it on the table, you bought more Palo a week ago, almost to the day. After they reported, yeah, because I thought that the quarter was actually pretty good. I thought the reaction down 7% was way overdone. As I mentioned, the stock is flat, whereby the other competitors are up.

20, 30, 40 percent. I'm participating in CrowdStrike for sure. I owned Zscaler, made 25 percent in like three weeks. And now I'm going after a laggard because I think there's opportunity and the valuation makes sense. All right. We'll leave it there. A little spicy, which we like. Sure. Like a little debate. We have moves coming up. We're going to do that after the break and we're going to get our chart of the day as well. Among other trades. We're back in two.

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We have a news alert from San Francisco. Our Kate Rooney has that. What do we know?

Hi, Scott. So we are finding out that Netflix co-founder Reed Hastings is going to be joining the board of AI company Anthropic. This is the roughly $61 billion start about here at Rivals. Open AI. Hastings, of course, ran Netflix for about 25 years, was a co-founder and turned it into this media empire that it is today. It's a huge move for Anthropic as they are moving more into media. Copyright is a huge issue for these AI companies. He is also in terms of AI competition out there. He's on the board of

Facebook or Meta. He's served on the board of Microsoft and Bloomberg as well. So interesting competitive dynamic quote here from one of the top executives over at Anthropic. They talk about Reid and his leadership and a lot of his experience in philanthropic work committed to AI social challenges. They say that makes him uniquely qualified.

to help on the board here. They do also talk a lot about what he's done in education, some of his initiatives and research on AI and humanity, especially in the education side. But a big hire here, a big move for Anthropic, bringing on Reed Hastings to the board. Back over to you. Kate, thanks. Appreciate that update. There's Kate Rooney. Let's do our chart of the day. It is Abercrombie & Fitch, which is soaring on its results today. Gap.

is tomorrow after the bell. So even though we don't have any ANF ownership here on the desk, it's relevant to how I'm sure Stephanie Link is thinking about what Gap might deliver and then retail in general, which has been beset with survey after survey after survey after survey until yesterday, which has been horrible.

from consumers and yesterday we do a good finally do a good confidence number we are a nation of spenders Scott no matter if we feel bad or we feel good it's just a fact so with Gap I mean look I'm excited about Abercrombie and the progress that they're making and that this consumer is spending

But I do think the gap is a turnaround story under great leadership with a creative director that's proven. And I do think you're going to see three out of the four brands do very well. They've gained market share actually the last eight consecutive quarters. Inventories are well under control. The one area that I don't think is going to see improvement is Athleta.

There's just too much competition. But all of the other businesses that they have should show positive same-store sales momentum and, oh, by the way, decent gross margins as well. The promotions are lessening. That's good for them. And the brand is actually regaining momentum. Yeah, it's a monster week for retail, as we told you yesterday.

Abercrombie, Macy's, Dick's Sporting Goods, Best Buy, Kohl's, Costco, Burlington, American Eagle, Bath Body, Foot Locker among the companies reporting. Costco, as we just mentioned, Joe, that's you? Specialty retail is doing well. The consumers there, I agree with you. Some of the big box retailers, I'm a little concerned. I'm concerned because

because I feel that you're going to continue to see margin contraction, that they are eating the cost of the tariff. They are not passing it through. So I wasn't particularly excited about the reaction that we got TJX and long TJX for a while. I don't know if you were there. The same could be said with Ross Store. Walmart post earnings kind of running in place. I still think it gets above 100. So I

I think the sales are there, but the earnings are going to be challenged because I think what we're seeing so far is that the companies are eating the cost of the tariff. And I think as it relates to looking forward on the coming quarter, you have to ask yourself, have we really seen the margin for sure? Yes. So have you seen the effect yet?

on the consumer of price increases from the tariff. I don't know that you have. And I think that's coming in the next quarter. Any updates on Target, your position in Target?

No. You still have your life preserver on? I'm watching it though, Scott, because it actually, I thought it was going to be down like another 10% when they reported. Yeah, I know, but the last time we spoke- And it was down, but actually it's recovered, so I'm just kind of keeping an eye on it. I'm not pleased with the way they reported. No, I know, but the reason I asked you is last time we had this conversation, I got the feeling that you had maybe, you were closer to having one foot out the door than doubling down and keeping both feet planted in there.

Yeah, I have to think about it because I don't want to be emotional. The stock is very, very cheap. It has a very good dividend at this point, which is well covered. The reason I kind of changed my mind a little bit on the margin is because of the traffic. They had traffic growth for the last year and a half, and they weren't able to execute. So it was always an execution problem, and I thought they could fix that. Well, this past quarter,

traffic was down 2.4%. So that's disappointing. But that being said, I still believe, you asked me the question why I would hold on to it, because I believe in the brand. I believe in the enterprise value. I do see value. I'm not sure what happens to Brian Cornell, by the way. Do you believe in management? Well, it's hard to. It's very hard to when six out of the last nine quarters they've missed, right? So I think he has the message, but they still haven't translated that into returns.

All right, we'll get more committee moves. I mentioned to you we do have a few to get to. First, we're going to get to Contessa Brewer, who has our news headlines for us today. Hi, Contessa. Hi there, Scott. Yeah, defense lawyers for Sean Diddy Combs have asked for a mistrial in his sex trafficking case, and the judge has just denied it. The defense made the request after an arson investigator revealed some fingerprint evidence had been destroyed that allegedly may have linked Combs with rapper Kid Qt's car being set on fire.

The defense argued jurors would infer that Combs had something to do with the missing evidence. The judge struck this testimony from the record but refused to throw out the whole trial. Germany said today it will step up its weapons support for Ukraine and vowed to increase pressure on Russia to engage in peace talks with Kyiv. Chancellor Friedrich Merz said during a joint news conference, Germany and Ukraine jointly would develop long-range missiles and intensify their cooperation.

And people are spending a whole lot of time watching YouTube. Nielsen's Gage report says YouTube earned the top spot for a third straight month in April, with more than 12 percent of viewers total time watching TV or their screens, I guess. That's followed by Disney, Paramount and our parent company, NBC Universal. Halftime report. We'll be back right after this.

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Welcome back. A new study out of UBS today shows family offices are bullish on stocks but starting to sour on one key part of the alternate universe. Our Robert Frank follows that money for us and joins us now with what they said. Robert.

Scott, good to see you. Well, family offices, as you say, getting bullish on stocks as well as the U.S. The private investment arms of wealthy families boosting stocks from 26% to 29% of their portfolio. That is the biggest increase in years. U.S. family offices even more bullish with those American family offices upping their stocks to 32%.

At the same time, they are trimming their private equity holdings, dropping from 35% to just 27%. That, of course, marks a big shift for family offices, which had been moving from public to private markets. Now, family offices also staying very close to home with their money. They have 86% of their investments in the U.S.,

That compares to a global average of 53% invested in the U.S. Now, to see all of the investments of today's family offices and where they're putting their money, you can get the Inside Wealth newsletter at cnbc.com slash insidewealth at cnbc.com slash insidewealth. Scott?

Robert, that was good. Thank you. Maybe a little counter to how people, guys have been, that's Robert Frank, by the way. Counter kind of to how people have been thinking of late. How do you address this? Anybody have a strong opinion? I mean, alts are bigger than ever.

And more retail investors and institutions, I mean, certainly retail has more access to alts than they ever have in the past. Yeah, I'm talking to financial advisors throughout the week, and I get asked that question quite frequently. What do you think about giving our clients more private equity exposure? In what form should we be giving them the private equity exposure? Should we be giving them private credit exposure? What's your answer? Rather than the 20 questions, what are the answers? Kyle?

You could keep going, but I don't have the time. I mean, look, for wealth management, I think everyone at the desk understands it. It really depends. I often say a portfolio is like a fingerprint. It's unique to the individual. So tell me what the characteristics of... It's been great diversification, though. But not for everyone, Steph. Absolutely. I mean, it's...

I wouldn't own any more than 10% of private equity in my own portfolio, but there are advisors that are advising their clients as much as 20, 30, 40% of their exposure. I don't think that's the right thing. I think what the family offices are doing is they're buying low and they're selling high. Well, you own private equity through public equities like KKR. Yes, because it's liquid. I mean, that's the problem with private markets. It's not liquid and it's a longer term investment. It's a great diversifier, again, but I'm an expert.

portfolio manager and I like the liquidity and KKREA I added to it because I do think private markets still in the early innings is a very diversified company in private credit private wealth infrastructure insurance real assets are 26% of their assets under management and so they are I think and by the way the stocks down 18% from its highs in year-to-date so I actually think

I'm buying this one. I also am buying Morgan Stanley because I do like Morgan Stanley. And I come back and I think about what the CEO of J.P. Morgan said two Mondays ago. Jamie Dimon said that business is incrementally better now than it was when they reported the first quarter. And net interest income actually could be a billion dollars more than they expected for the year. That will benefit

Morgan Stanley, Goldman Sachs, all of the banks. Is this a bullish sign for stocks? I don't think so. Why not? Because if you have the increasing allocation to 29% family offices on stocks from 24 just two years ago, which is the fastest shift in recent history, according to UBS,

You don't think that's bullish for stocks? No, sorry. I was answering a different question. I don't think it's bullish for the alt space. So you're saying alts are bigger than ever? No, I'm talking bullish for stocks. I do think it's bullish for stocks because that unwind of that trade, right? If I have to pull that cash to go somewhere, I'm not going into something stable like treasuries. I'm putting that money back into stocks. That is a very bullish sign because-

It means I want to get my growth from somewhere. I've got to get it from the public markets if I can't get it from the privates. -And I do think they are so overloaded, family offices on private investments, they're getting so many capital calls. So the idea of liquidity, where do I want to go, is in the public markets. And I completely agree. We own Blackstone for the same reason you own KKR. I think if you're going to play the all space, you want to be in the supplier to all the wealth managers as to who's going to produce the best product for the wealth managers. And again,

I'm not going to make a call who needs to do what, but they're producing everything under the sun, a new product of the day, a new fund, a special situation, a distress fund. You could just name them and they're out there and they're full fee. So the fee compression is not there on the KKRs and the Blackstones and Apollos of the world. Coming up, record setting stocks, including an under the radar winner that Joe owns. We will discuss when we come back.

All right, welcome back. Some record setters to mention that we just don't talk about that often. Monster Beverage, a record high today, up 23% in three months, reiterated by today in a $66 target at B of A. And Joe happens to own the stock. We do. It's a name we used to talk about a lot in the past. They fell on some difficult times over the last several years, but they've restored what they do best, and that's really delivering the revenue growth. If you think about the consumer staple sector, it's very, very,

challenging to find a company that has the ability to grow its revenue the way that Monster does. Yes, we own it because of momentum and the strong price appreciation, but we also really appreciate the quality nature of this company and its revenue. There's a good representation on your screen of momentum, correct?

Absolutely. Look at that. Straight up into the right. But let's not also forget that it has a really good balance sheet and it gives you the revenue growth that you're looking for. And that's hard to find in the sector. Okay. Now, the Mag 7 take up a lot of airspace, obviously, within tech.

IBM, however, is up 19% this year. It hit a record high last week. It was up 34% last year, and it hasn't had a down year since 2020 when it fell 6%, Stephanie Link. Reiterated by today, $270 price target.

at B of A. Arvind, the CEO, does not get credit for all the things that he has done since he's been the CEO. He's done over 40 deals in higher growth businesses, software, parts of consulting, AI, data center, blockchain, everything you want them to do. So it's not a mainframe company anymore. It still has mainframe to it.

But software and consulting is over 75% of total revenues, and those are growing nicely for them. He's done a really good job in terms of gross margins and operating margins as well. So I'm going to stick with it. It's kind of boring. It doesn't get a lot of love, but up 53% in the past year, I'll take. All right, you'll take that. Mike Santoli, he's next with his midday word. All right, welcome.

Senior Markets commentator Mike Santoli joins us now with his midday word. And I had a feeling we'd probably have a little bit of just relaxation and wait for this afternoon before deciding what next move is going to be. Yeah, it does make sense, Scott. Obviously, not just the fact that you have, you know, the market being held in place waiting for NVIDIA, but also, you know, it shows that that bid we got in Treasuries kind of wavered today. It's a little bit fragile in terms of demand for bonds. So yields leaking a little bit higher.

And in general, I think we're still in digestion mode, not just from yesterday's big pop, but also from the six-week ramp off of the early April lows. We're still working below last Wednesday's level. So I think it all fits together. And I think some of the things you would look for to say, OK, is this move in stocks we've seen since early April confirmed? Is it supported? You would say credit looks spotless.

global stocks actually outperforming. So that's sort of a confirming signal. Industrials making new highs. All of this is pretty comforting. And I get it. But I would flip it around and also say it means that today you're paying at the current price for a pretty good outlook. You know, you're not paying for some kind of impaired, troubled tariff, complicated outlook at the moment. So I think that that's the balance we're striking. OK.

I'll see you in a couple hours on Closing Bell, and we'll walk our viewers right up to that critical earnings report. Mike, thank you. We have those committee moves I talked about coming up next. All right, we're back. Let's do those moves I told you about a couple times. Joe, you sold Alibaba.

Why? Bought it February 12th at $118,000, sold half at $135,000 the end of March, sold out of it today completely, gave the trade basically 90 days to work. It's right back to where I bought it initially. I know everyone's going to say, well, David Tepper's in it, but David Tepper's not calling me to tell me how he's managing the position. Maybe he'll call Weiss. Maybe.

Maybe. Don't count on it, Weiss. Don't count on it. Sirat, you sold Charter. Yeah, Charter. Take us through that. So Charter is going to merge with Cox. I think of it much more of a defensive action situation.

They're just trying to cut costs, synergies. They've got sub losses. Stock's up almost 20% for the year. I lost money on this because-- How long you own it? Over two years ago. So net-net, we lost money. I did double ups, et cetera. But I just think longer term, the amount of debt, the sub losses, it's going to be really hard in the consolidation for them to go forward. To get a multiple premium that they normally used to get, I just think you're going to get a discount. OK. A break, and then finals.

All right, I hope you join me at closing bell. We will take you right up to those Nvidia earnings and I cannot wait. Stacey Raskin will be with us, shareholder Bryn Talkington. We also have the former Dallas Fed Prez Robert Kaplan with us and Anastasia Amoroso. So we got good lineup and I'll see you in a couple hours. We do finals now with Surat, your first. What do you got? I like into it. I think they had a great earnings and I think you've got much more momentum forward. Malcolm.

CIBR, the cybersecurity ETF. All-time high. New one yesterday. All right. I had a feeling you were going to do something that related. Should I do Palo Alto? Yeah. You guys want to have round two? No. Steph, what do you got?

Vertiv Infrastructure Data Center, 18% revenue growth, 25% earnings growth. All right, Joey. Axon Enterprises. I think Josh put it on his best stocks list recently. We've owned it for quite some time. Continues to move higher. Okay. So we're right across the board. As I told you, you know what's hanging in the balance here. And I'll see you at 3 o'clock on Closing Bell.

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

Thank you.

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