The Return of Big Tech 12/11/24
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Getting there starts here with State Street.

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.

Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. The return of big tech. NASDAQ hitting 20K for the first time ever. It is right there, right now. Several mega caps are also hitting record highs

at this very moment. We're going to go through all of it. We're going to trade everything. Joining me for the hour, Joe Terranova, Shannon Sikosha, Stephanie Link, Rob Seachin. We will check the markets. I just told you what the NASDAQ is doing, but the NASDAQ is up by better than 300 points, by the way. S&P almost 1%. The Dow is the laggard by far.

But we're going to start with the mega caps. And Rob, I'm just going to go to you first because you're the only one today who's got this position in Apple. But I've got Alphabet record high, Amazon record high, Meta record high, and then Apple. Nine straight intraday highs for that name.

So you know the biggest challenge to overcome is the projected deceleration in earnings growth for these names Scott. If you look at the market cap weighted mag seven earnings are projected to decelerate from 55% to 25% in 25.

And will these stocks, we have no doubt that they'll be as strong in the year end. We know a lot of them and own a lot of them. Be as powerful leaders, particularly as Nvidia and Amazon kind of slow down. If you look at this, and this is as of right now, Tesla is the only Mag 7 name projected to exhibit meaningful earnings acceleration.

Not to say that can't happen, but that is the only one. Nvidia and Amazon are expected to experience decelerating earnings growth. And Microsoft, Apple, Google, Meta are all projected to have steady earnings growth. So when you have 55% of the growth index, which is led by these Mag7 names, projected to decelerate,

Can the rest of the index kind of lift and drive these forward next year? We think the answer to that is yes. And you just have to remain selective in that index. Joe, people tried to write these stocks off for a while, thinking that they were going to take this backseat. The rest of the market was going to lead everything. And it has proven not to be the case.

particularly lately it's why the Nasdaq has crossed 20 000 for the first time ever it is why on not much news Apple has hit a record high has been on on this streak you get a software update today including chat GPT they're said to be working with Broadcom on new AI chips I don't know if that is you know enough to get the stock to continue to work or not but these other stocks too um just

Mag7 on track for four straight weeks of gains now. Well, these are core equity holdings in portfolios for certainly for retail investors and institutional investors as well. What's interesting to me is that we continue to play this game. We play this game of trying to pick the winner. We play the game of trying to pick the winner because of the environment of 2023.

and i think as a speculator and as an investor you just have to accept that was the environment in twenty twenty three here we are turning the page into twenty twenty four and you have an optimistic risk on environment we go through these little cycles these little cyclical moments were certain areas of the market

receive inflows of capital. - Well, we're turning the page into 2025. You just said 2024. What are we talking about? Here and now, or are we talking about the new year? - What has happened in 2024 is a different environment than in '23, where in '23, the conversation surrounded seven stocks only,

And we forgot about the 493. The optimism for 25 is built upon the environment of 24, where you have a broadening out of the opportunity. So that doesn't mean it comes at the detriment of the MAG-7. That doesn't mean it comes at the detriment of the other 493. I never understood the premise that you want to ignore the MAG-7 in your portfolio. It's not a matter of people weren't necessarily saying ignore it.

Nobody was saying get out of it. It seemed as though it was a binary choice. Not necessarily. No, it was just that what was a tremendous level of outperformance was not going to be as such in the new year. That's where it all came down to. Yeah, but that's completely fair, and I still think you could have that expectation. Just because you have five of the MAG-7 names making an all-time high today doesn't mean that they're going to see dramatic outperformance in 2025. And I know some people...

are suggesting that in fact that will be the case but i don't know given the environment we have here in 24 if that's the right way to think about moving into 25. all right chan what do we take from this move this resurgence we started calling it that uh in the last couple of weeks because that's what it's been alphabet up 13 and a half percent month to date amazon 10 and a half meta ten and a half apple five and a half but apple's been on this huge run what do we make of this

Yeah, I mean, I think there's two things that are happening here, Scott, right? First, we saw this rotation from semis to software. I think that we've seen a meaningful outperformance from the software perspective. And what that's lending to is really this re-emphasis on enterprise spending going into 2025. And you look at an area like cloud consumption, for instance, which was expected to decline because of cannibalization, because of AI spending. And you're actually seeing a re-emphasis on cloud consumption. So that certainly helps a number of those max seven names. If you think about

Apple, innovation for Apple, people threw Apple out the window in the first quarter because they hadn't yet had this articulated AI strategy. It was naive to think that Apple wouldn't come out swinging in the second half of the year and create a strategy for AI that would not only be competitive from an AI perspective, but also help to drive handsets and this refresh cycle that is so necessary for Apple to be successful. Would you buy these stocks right now?

Would you do that? I think from the perspective of if you don't have exposure to these stocks, Scott, which to be fair, I can't imagine that anybody in the U.S. doesn't have. So let's not take it from that perspective then because it doesn't, I don't think that works for me. If you have exposure,

And you were thinking and maybe you were trimming along the way up because you were thinking there was going to be a rotation. Should you start adding to these stocks again here with those month to date gains that we're showing you right now and the Nasdaq crossing 20K? I think there's probably still some vulnerability at these levels, Scott. So I don't I wouldn't say I would necessarily be adding here. However.

I think, again, when you think about these names in each of them specifically, if you think about the overhang for Alphabet, particularly on the regulation side, if you think about them being able to monetize their data, those are things that you have to start to parse out differently from name to name.

But if you're looking to set yourself up to Joe's point on what we think will be maybe a compressing delta or spread between the performance of the Mag 7 and the rest of the market in 2025, I don't know that necessarily this is the time to enter into these names because again, Scott,

A lot of this has been driven by equity flows that have just been coming into the market since the election. And a lot of that is being driven by going into some more passive or index-based solutions. Steph, Amazon is, I think, by far your largest position now. This stock has seen a breakout, to say the least. It's up 24.5% in three months. How would you address that question? Would you be looking to add to these names, thinking that, okay, maybe...

Maybe people got this a little bit wrong in thinking that these were going to take a bit of a backseat. I'm not, I was, that would never suggest to say, well, they're going to dramatically underperform. That is not the conversation. It's just that they were going to take a little bit of a performance backseat to the rest of the market. They're coming back with this resurgence with a vengeance saying not so fast.

Yeah, I think there's a little bit of chase going on, Scott, between now and the end of the year, chasing the winners. And they're all winners, to be honest with you. Would I put new money to work today? No. You know I sold Apple in late August because I made 42% in four months from, you know, when I was adding to it in the springtime. And for me, Apple...

with earnings declining 33% and total revenue 6% and product revenues only growing at about 4%, yes, services is growing 12, you add that all up, I added that all up, and at 34 times earnings, to me, it wasn't really compelling. So I took profits, I put it into Amazon because they do have the numbers, actually. The third quarter operating income rose 54%. EBITDA grew 22%.

Operating margins expanded 320 basis points. Free cash flow is at $46 billion. They're probably, I hope, going to announce a bigger buyback and maybe even a dividend at some point. So the fundamentals match up, in my mind, to where the valuation is. It's not cheap on a PE by any means. But at 14 times EBITDA, it's below its 17, 18 times EBITDA average. So that is the one that if we should see a pullback, I would absolutely add to it.

I mean, just think about what they announced last week in terms of what AI is doing to their cost structure. Fulfillment costs are going to be down 25%. So if you believe operating margins have upside from retail, international, AWS, well, guess what? They also have upside from AI and they're seeing it real time.

You know, it's funny, Rob. I heard a lot of folks say, well, if Nvidia stumbles or if Nvidia doesn't do anything, the market as a whole is going to have a problem. Not really.

Not really, because that stock hasn't done anything. Certainly not month to date. It's the laggard since the election. And these other stocks have picked up the slack. So maybe those calls were not correct. Does it matter, though, at some point if NVIDIA doesn't work?

given the size of the stock. I mean, we're talking about Apple near $4 trillion. So NVIDIA is not even the largest market cap stock in the market anymore. It was for but a hot minute, but that's about it. Well, you know we own that, Scott. We bought it when it got a little cheap here midway through the summer. And, you know, occasionally these names are going to give you opportunities. So getting back to your point, are we buying the Mag 7 or not? I think you've got to be selective.

And when you look at the Mag7, you have names like Google, which was a laggard year to date until here recently. But if you just look at the fundamentals of a business like that, it's PEs trading at 20 times right in line with its history. It's the cheapest of all its Mag7 peers.

profitability is among the highest two times the sector average that it competes in high capital efficiency three times the sector average and they're starting to see a return on ai so while we own all these it's the when matters of how you buy them you'll remember that we bought meta at the end of 22 it's a double weighting to the index it's also about how you size these names right and so i don't

think you can paint all these with the same brush because they're experiencing different reactions related to the news of the day and the opportunity of the day. And I would argue that names like Microsoft, names like Apple, which we own but we're neutral on,

are trading at the high end of their ranges despite the opportunity that you see in those names. Microsoft's the most diversified software and AI business from cloud computing to co-pilot to open AI partnerships and maybe a better long-term hold. But when in the world do you want to buy them? You buy them when they become attractive. So even in a market that's run, there is opportunity.

There are some saying that, you know, this is going to be a rising tide lifts all boats moment like Dan Ives on the FTC. Andrew Ferguson is going to lead it. Lena Khan is going to be out. Dan Ives suggesting Christmas comes early for the tech world. Khan done. Deal making ready. Also, Sarah Fryer, OpenAI CFO, very well known in Silicon Valley, sees President-elect Trump as the, quote, AI president.

What do you think? I like that narrative. I like it a lot. The fact that Andrew Ferguson has been nominated to the FTC, I think that's one of the catalysts behind why you're seeing the reason for the MAG7 rally. Funny that some even on this program were trying to argue in the last few weeks that, well, you know, there's a good chance that Lena Kahn's going to stay on. We're like, really?

No. According to who? That was an impossibility and it never made much sense. I would say that, you know, let's go back again to what many have said. Josh Brown has said that as well. President Trump's scorecard is the stock market and his golf handicap. And that's true and it's clear. And I think that

The technology sector is important in that regard. And I think that he understands that. And I think that the economic team around him understands that as well. So look, I look at the totality of these mag seven. I said before they're a core equity holding. Tell me that they're going to outperform. And I think there's some form of an imbalance within the market.

I think in one scenario you've got a concern about yield spiking like we saw in '23 and you had the outperformance. Or maybe on the other side, if we see that the economy cools or there's some concerns around tariffs and geopolitical tensions, they become a safe haven, a port of safety.

So I think on either side, that's where you get the outperformance. In the middle, I don't know that you get the outperformance, candidly. Wolf, Shannon, today says the rally to refocus on the MAG-7 in the first half. After calling for a broadening out in the back half of 24 and favoring the other 493, we believe this dynamic shifts back in favor of the MAG-7 in the first half of 2025 as the market pays up for, to Joe's point, defensive, secular growth stocks in the face of D.C. policy uncertainty.

The minute you introduce any kind of uncertainty, but you're still positive on the overall environment, where do you go? Obviously, people have been going back to Mega Cap Tech.

Yeah, I think it's not just policy, though, Scott. I mean, I think in order for that to play out, you have to be seeking out growth where growth is scarce. And I think that is the number one rationale for the broadening out is that this anticipation, at least from our perspective at Neuberger Berman, that there will be above-trend growth next year really supports that. And so in the first half of the year, in order to create that scenario that Wolf laid out, I would say you would have to see significant increase

policy uncertainty around industrial policy, around pro-business. But don't we already have the environment now for what they're suggesting will continue? You're talking as if something needs to change for the MAG7 to lead in the first half of the year. Isn't this a bit of a precursor to what might be a 2025 early story? No, I disagree. I think it's more what Steph was saying. I think this is positioning in winters to the end of the year. I don't think that there is anything in the current environment, Scott, that

points to the fact that we see anticipation of a deceleration of growth and anticipation that we won't see an industrial impulse in 2025 that supports cyclicals. And therefore, if I look at it from a valuation perspective, which truly does matter, and you think about what can grow into their valuations,

There's not a lot of multiple expansion opportunity in small cap stock, but there's earnings growth opportunity that is cheaper than the earnings growth that you're paying for in the max. Steph, what do we make of what's been the blow up of sorts in momentum, which we pointed out the last several days now as money has come out of those stocks, it's been

finding a home in mega cap. You know, among other places, there was also a suggestion that if momentum continues to blow up, it was going to be bad for it was a yellow light flashing for the overall market. I don't necessarily believe in that either. If you look at some of these momentum trades, this is weak today. There's

you know, Kava and Applovin, Vistra, Robinhood. You get the idea. Now, you know, Applovin's having a bounce of some 2% today, but that stock's been down a ton this week. Does it matter about momentum trades not working for a while as long as the mega cap ones are?

Well, as long as mega caps and other parts of tech are working, which they are, that's 35% of the S&P, the momentum names are much smaller. Some of them are not even in the S&P 500. So to the extent that you have a greater portion and the bigger names that are doing better, of course, you're going to see the markets rebound. But I kind of come back to why does it have to be

all Mag7 and no 493. Why can't it be a combination of both? Why can't it be parts of technology that are not Mag7? And you and I talked about this yesterday with regards to cybersecurity. There are so many opportunities

out there that I think will be positive for overall the earnings picture. And that's what I'm trying to get at. The earnings picture for MAG7, it's going to be good. Maybe it's decelerating, like Rob said, into next year. But you have about 8% to 10% earnings growth for the overall S&P 500. But other sectors are having good earnings too.

Anything tied to the grid, you're seeing anywhere from 20 to 40% earnings growth. Industrials overall are running at about 10% growth. Discretionary is running at about 12%. Utilities, the earnings are running 13%.

So there are other ways to make money. And I just don't think it's all or nothing. And as for D.C. policies unknown, sure, we do not know about tariffs. We don't know about immigration. But we do know, we do know that Trump is pro-growth. We do know he's deregulation. We do know he's lower taxes. And that is going to be a nice offset, I think,

to the questions that we have on the former tariffs and immigration. - One of the reasons Joe Piper's talking about the rally's got room to run, small caps are gonna lead, Schwab's Kevin Gordon, better breath for small caps. Tom Lee likes small caps heading into the new year as well to Steph's point.

Yeah, to Steph's point, and to add to Steph's definition of what we know about President-elect Trump and his economic policies, he's visiting the New York Stock Exchange tomorrow. So I think that tells you a lot about what he thinks about the capital market environment. But in terms of broadening out, all right, let's take the conversation towards positioning. Because I suspect, and I don't know this to be true or not, but

But you believe that potentially, potentially a lot of people are offsides. And I might agree with that if in fact that's what you think in terms of how they're positioned

towards the mag seven because if you think about it scott over the last month what does everyone come on the network and said only equal weight s p you have to be in the equal weight s p now do the fund flows support that without question they do you've seen dramatic inflows into rsp and equally weighted stratus strategies at the detriment of the mag seven so if i look at positioning right now okay i'll tell you what this is against my book

This is against my strategy. I could see that if for an extended period of time, you get multiple weeks of outperformance in the MAG-7 to the detriment of the equally weighted S&P. You're going to turn the calendar into 2025 and there's going to be significant flows away from equal weighted. And that's going to support further price appreciation and outperformance for the MAG-7. Tom Lee is going to come on Closing Bell today and give his 2025 outlook for the S&P and what he thinks is going to

the leadership in into the new year so i hope you'll join me for that interview which we're looking forward to very much but it does match up with what you're talking about with these cyclical trades along with maybe small caps that you're going to have a a continued boom in the economy that it's going to remain as the fed chair himself said the other day remarkable that's his word not mine um s p targets oppenheimer's at 7100 wells is at 7 and 7. deutsch is at 7 000. what do you think

Yeah. The reality of the situation that we're facing is that, you know, the economy has continued to be stronger than what we anticipated. And that has been primarily due to what was initially a very consumer-focused stimulus

effort from Washington. And what you're seeing is actually you're seeing this outside of the U.S. as well, is that countries who have not made that similar level of fiscal stimulus towards consumers are starting to second guess their policy and think about maybe they need to be a bit more, a bit less austere as it relates to fiscal stimulus. But in 2025, you know, there's a lot of talk about this D.C. policy uncertainty, Scott, and a lot of it stems from what's going to happen with the CHIPS Act, what's going to happen with the highway bill, what's going to happen with the IRA.

A lot of that is going to remain in place. And the tail on those things are very long. And then you loop in national security. You think about, you know, maintaining the protection of our supply chains in areas like pharma. You think about the very strong interest right now in pipeline growth that's going to come out of the energy sector. And so all of these things really speak to a broader sense. But, Scott, the other thing— You're talking about an everything rally.

There's a clear potential for that. And even in tech, which I have been talking about this broadening out for some time, we're entering this third wave of AI as well, where we have agentic AI, which could potentially lift the boats that Stephanie was talking about earlier outside of the Mag7 into other parts of the tech sector. So that is what

our our perspective is going into next year all right we um we're gonna take a quick break and coming up we're following some of the big stock movers this hour including a pop for ge vernova a drop for uber plus a big price hike uh for a target hike for netflix we'll debate those trades coming up

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We are back on the Halftime Report. Let's get to Bertha Coombs now with a news alert. Bertha?

Scott, we're watching the large insurers that own pharmacy benefit managers under pressure today. Their shares are down on a new bill being introduced called the Patients Before Monopolies or PBM Act by Senators Elizabeth

Warren and Josh Hawley and also in the House by Diana Harshberger and Jake Auchincloss. It would prohibit joint ownership of PBMs and pharmacies, and that would prohibit not just PBMs, also insurers from owning a pharmacy business. It would also force those companies to divest pharmacy businesses within three years and would direct

the FTC to distribute any revenue disgorged to what they call harm communities, including consumers that have been overcharged. Emily Wilkins spoke with Senator Warren just a few minutes ago, and she said it's important instead of nibbling around the edges and kind of looking for a piece here or a piece there, we go straight to the heart of the problem, and that is the conflicts.

This is an issue that has been bipartisan over the last couple of years. We've seen a number of bills trying to get at PBM reform, but this one would be much more strict than what we've seen in the sense of saying that these entities would have to divest their pharmacies in particular.

Both CVS, of course, it has CVS Caremark. That's their PBM, Aetna. And, of course, they have the CVS pharmacies. Back over to you. But the timing of this proposed legislation, we'll call it that, Bertha, is certainly not lost on anybody, given what the current debate in the public is and the discourse that has developed over health care since the shooting here in New York City. Well,

Well, this debate has been going on for some time, particularly when it comes to PBM. Again, this is something that Washington has been looking at for over two years. Elizabeth Anderson, an analyst over at Evercore, says this is unlikely to move forward in the lame duck session, but it could very well be taken up.

in the year ahead. And given all of the furor now that we have heard, Scott, as you mentioned, you could see more momentum to actually pass some kind of PBM reform bill in Congress.

Bertha, thank you. Bertha Coombs with the latest on a story we'll continue to follow. You know, Rob, you do own UnitedHealthcare. So I'd like your take on the fact that the stock is lower by 5 percent. But in the broader sense of what I was alluding to, the discussion, the conversation, the debate that is happening in the court of public opinion right now, to say the least,

on these health care companies and what you think the ultimate fallout might be for the stocks particularly the one you own yeah you know this is a name we've been slightly underweight and trimming obviously has nothing to do with the tragedy that happened and obviously the public outrage that we've seen uh... we a you know boil to uh... boil to a point around this uh... around this tragedy

uh... you know i view this is very opportunistic for somebody like elizabeth warren to try to try to take advantage of this at at this time i think i think bill it should be pointed out it's bipartisan senators uh... warren and holly uh... was a republican from missouri of course

No doubt that all health care companies, Scott, are going to be under some regulatory scrutiny and pressure as it relates to this. And I think anybody that owns equities in this space is going to need to re-underwrite that risk because it's certainly going to have an impact. We have not done that yet with UnitedHealthcare. Obviously, we will.

All right. We'll talk Lilly as well, because there's news regarding that company today as it's teaming up with Rho to offer lower-priced vials of the weight-loss drug Zepbound. You on that, Joe? Lilly? So it's in the JOT, and this is part of a larger conversation surrounding health care. I think there's universal sentiment, bullish sentiment, surrounding health care. Everyone believes it's underperformed, it's going to come around, and it's going to work at some point. Now, Lilly has benefited, obviously, from the GLP-1 vaccine.

investment and and being able to bring a drug to marketplace but the stock peaked in august the stock is actually below its 50 100 and 200 day moving average so technically the stock is broken you could look at novo nordisk you could find the same thing there's something going on here in the totality of the healthcare sector and i think they spent a lot of companies spent too much of their resources during covet and post-covet

focusing on COVID itself, not enough investing in things like GLP-1. And very candidly, the entire sector has limited positive momentum, but also you're really not seeing the revenue growth either. One of my favorite names has been Merck over the last several years. Merck looks all

awful right now on the chart so it's a struggle to invest in health care for sure while that sentiment is bullish and I think you have to reverse let me ask you this you when did you say the stock peaked August August 9 22. let's take a look at a longer out chart of um Lily guys if we could so if it peaked in August why didn't you get rid of it when your rebalance happened after that

Because if you pull the lens back, I mean you're asking me now a complicated question surrounding How do we measure momentum? There was still a positive momentum score on the stock itself If you pull back the lens you measure it relative to 12 months You'll see had a very strong move from April into July. So that's kind of where you maintain the thumbs up on momentum I know

There's proprietary factors that go into how we score momentum. I don't want to put you in a bad position. No, it's not that you're putting me in a bad position. But it's like if you tell me that the stock peaked in August, theoretically, the momentum was gone after that. No, the momentum was not gone after that. The momentum broke down probably surrounding the election. I'm looking at the chart and I'm eyeballing it and I know what we look at from what the momentum score is. And I could see probably around the election, you...

took momentum to where I'd say it's a red light. You got a little bit of a bounce, but right now you don't have a green light on momentum for sure. You did have that green light in place for the better part of 2024. I got you. Steph, I got news on Vernova, GE Vernova and GE Aerospace today. So Vernova raised its multi-year outlook, initiated a dividend, authorized the buyback. Aerospace was named the top pick at Wells. You got both.

Yeah, I was a little nervous about GE, Vernauva. I thought they were going to be a lot more conservative. They were definitely conservative, but not nearly as feared, if you will. But we talk about U.S. reshoring being a $10 trillion total addressable market. In the United States, Scott, the U.S. produces only 16% of the goods that we consume. Can you even imagine, as we see this trend increasing,

in reshoring take hold in a big way what that means for the overall total addressable market and a leader like ge vernova we talk about spins working and man this has worked in spades it's up 164 percent post the spin they have more to it because the margins are so depressed two two and a half percent in 2023 going to about 12 by 2028 so really good

a momentum there talking about momentum um ge aerospace i'm not really sure i agree i like ge very much i'm not going to change my position on it but this was really a services story for 2023 and 24 as boeing had has

had a lot of problems and you've had older planes needing to get more service. We care about services because it's higher margins for the overall company. I think that's going to start to reverse in 25, probably more though for like a 2026 story where we're going to go more on the OE side, which again is lower margins. But if anybody can navigate through this, it's Larry Culp and his team. So I stick with the name long-term. All right. So I've got some calls of the day to do. I've got Santoli and his midday word coming up in the setup.

as well when some stocks about to report earnings. We're back after this. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella.edu.

CNBC exclusive with Adobe's CEO. Breaking down earnings before the call to Wall Street. Plus a look at their AI strategy for 2025. John Ford, Morgan Brennan. Closing bell overtime. Today for Eastern. CNBC.

All right. NASDAQ still above 20K, hitting that for the very first time ever, just as we came on the air today. Let's do our calls of the day. Netflix. Target today gets raised to $1,010 from $850. That's at J.P. Morgan as they reiterate a buy. Strong year-end content. Ad tier into 25. It's a record high. Another one of those stocks that's helping the NASDAQ today. You have that.

Absolutely. I think you buy more. I think you could buy it right here at an all-time high. I think, obviously, it will exceed $1,000. You mentioned some of the reasons. We know the strong fundamental tailwinds that this company has behind it. And is there really true competition to what is the clear leader in streaming?

You're asking yourself the question? No, I was kind of asking you. Oh, I thought you were asking yourself. Boeing, top pick for... What am I supposed to do? Boeing, top pick for 2025, Steph, at Wolf Research. You want to take that one first?

Sure. I mean, I said it yesterday. It has a great setup for 2025. It was a horrible 24. But I think next year gets better. You have this new CEO. When he was at Rockwell Collins, the stock rallied 107%. He's good at execution, a proven execution specialist.

And I just think that the overhangs are removed. You've got the balance sheet is short, the capital's short up at 21 billion. So they've got a couple of years to buy time. The 737 MAX is now beginning production. Again, they'll get eventually the 38 planes a month. Eventually the FAA will allow them to do more than that as well. I think there's a little worry on their defense business, but I think, again, that we are seeing some reorganizing from the company. So that should be fine.

Robert, how about lamb? Top pick at Cowan, target $100. You own that stock.

Yeah, this is a company, Scott, that has attractive profitability, but the semi-equipment space has been one of the weakest parts of the market since July. Sluggish demand because of excess inventories. Lam is one of those companies more leveraged to AI spend, given they're focused on leading-edge equipment. That said, Intel has remained a key customer, and given the challenges there, we've seen the impact of

on lambs uh... you know top line revenue uh... but the industry is continue to expected to grow in these companies will have uh... attractive opportunities but it's going to require some patients alright travelers today joe downgraded to underweight that's a wells fargo the target uh... cut down to two seventeen off from two fifty six that's a big dot drop from here

the analyst community is following price here in a lot of these insurance companies we've seen recently uh some corrective price action in a large portion of the insurance industry that

Difficult comps when you look ahead in 2025. I would say where Travelers sits right here at this price level, this is your last line of support. Breaks below $235, you've got a problem. I understand what the analyst community is doing, though. Home Depot, top idea, D.A. Davidson. Price target to $500 from $466. Stephanie Link.

Yeah, so this was my stock of the year contrarian. It's taken a little bit longer, Scott, to work, to be honest with you. I thought it would be up much more this year. But I think the setup for 2025 is good. They've had eight consecutive quarters of negative comps. Never in the company's history have they ever

seen that. And so you have easy comparisons. You also have home improvement spending bottoming, I think. And at the same time, the company's doing a very good job in terms of execution, profitability, margins, et cetera, et cetera. So I would stick with this one. And I like it for 2025. All right. Let's get the headlines now with Julia Boorstin. Hey, JB.

Hey, Scott. Two of the country's top luxury real estate agents, along with their brother, were arrested today in Miami on charges of sex trafficking. Federal prosecutors accused twins Tal and Oren Alexander, along with their older brother Alon, of a years-long scheme to sexually assault and rape multiple women. Several of the alleged victims have also filed civil suits. The Alexanders have denied the allegations.

Police in South Korea faced off with security officials as they attempted to raid the president's office Wednesday as the fallout deepens after a failed attempt to impose martial law. It comes as the former defense minister attempted suicide after becoming the first person to be arrested in connection with the martial law declaration.

And TPG co-founder David Bonderman has died. The private equity investor spearheaded massive company takeovers and investments in startups, including Uber, Airbnb and Continental Airlines. Bonderman was also a member of a group of financial entrepreneurs that include David Rubenstein, who turned small buyout shops into Wall Street powerhouses. He was 82 years old. Halftime Report will be right back.

It is setup time. Adobe reports after the bell. The CEO is going to be on overtime, by the way, so you want to see that. And Rob Seachin needs to give us his take because he owns the stock. It has not made a new high, Rob, since August. The last high was in February of this year. So even while software has done quite well, this stock has not done much.

Yeah, it's been a core quality holding for us and we increased the position regrettably in January. But despite this performance from a price standpoint,

It's T12 EPS has grown by 40% since that point. And it's a great example of a high quality company that has posted healthy fundamentals, but has been viewed as too slow to monetize AI and is viewed as a company that could get disrupted by generative AI. I think this narrative will change.

change. I don't know if it's in the next earnings release, but Firefly has seen 13 billion image creations since its launch. And it's got industry leading text to video, text to image creation capabilities. And so ultimately, we think that will continue to increase profitability. And slowly that narrative will fade to the background. Costco tomorrow after the bell.

Joe, you own it. It's up 50% year to date, and it is a new record high today for those shares, topping $1,000 today. Topping $1,000. The stock has been a phenomenal holding for us in the ETF strategy. The expectations for this stock are very high tomorrow, and the stock is extended. I will acknowledge that. 7% revenue growth at a minimum must be reported. Free cash flow generation needs to be strong as well.

I would not be surprised to see a good quarter and the stock not do much thereafter. All right, we'll take a break. We'll do finals on the other side. Hope you'll join me, 3 o'clock, closing bell. Tom Lee is going to be here with his 2025 outlook. You don't want to miss that. Richard Fisher is going to be in the house here, too. So is Ed Yardeni. So is Lauren Goodwin and Brian Levitt. So I hope you'll join me then. Stephanie Link, your final trade today for us is what?

Yes, it's Rockwell. It's a 2025 story and a laggard in electrification going to automation. Their businesses are bottoming. They got a new CFO who is a rock star. Sichi. Meta continues its near-term momentum. Happy birthday, New Edge. Happy birthday, Megan Sichi. Thank you. All right. All right. Good stuff.

Shan. Utilities. Stephanie mentioned it earlier. There's not as much emphasis right now on power scarcity, but continues to be something we need to solve for over the next few years. Joe. On the close today, it will be a buyer of ticker symbol ZM, Zoom Communications. All right. Good stuff. 44,300 on the Dow. We're not that far away from 6,100 on the S&P. And we are currently above 20,000 on the NASDAQ. I'll see you in a couple hours.

You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their 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 opinion.

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