The Summer Playbook for Stocks 6/3/25
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Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. More on the summer setup as another firm now says record highs are coming in the months ahead. We'll debate and trade it with the investment committee. Joining me for the hour today, Joe Terranova, Stephanie Link and Jason Snipe. Sarah just told you we're at the highs of the session here and we've been slowly ramping as the morning has gone on. NASDAQ's good for just shy of 1%, but the S&P and the Dow are quite good as well.

Joe Wolf for Search today says signs that new record highs are ahead. We are 3% roughly away on the S&P 500. That's generally been my feeling over the last month, that we were going to push higher, make an attempt to run at all-time highs. We have that Geneva price gap from three weeks ago, that weekend where the market gap from 56.91 to 57.67. 58.30 is the lowest we've been since then. We're kind of running sideways in place. Look,

You know, Steph, you've done a great job talking about the fundamentals. What I'm looking at is I look at technicals. I look at momentum. And I'm just telling you, the technicals and the momentum are way too strong right now to be stepping forth and saying, OK, we've got an inflection point coming. The market's about to roll over. In addition to that, yields have kind of calmed down. So we really don't have that work.

worry so much anymore. You have a significant amount of S&P 500 companies that are making 52-week highs. Steph Bowie, you've got to start somewhere. 52-week high today. It's getting there. It's getting there. You have several other names that are making 52-week high. We'll talk about CrowdStrike later, but it's Netflix. Netflix, rather. It's Avago. It's Axon. It's all the usual suspects.

And when you have that many stocks making a 52-week high, that's not indicative of a market that's about to roll over. So I think right now, literally, the pain trade is probably to the upside, because I don't think sentiment reflects where price is.

Chase's sentiment and momentum either up or down like Wall Street strategists. Because, you know, when things were deteriorating, you had, and I guess rightfully so at the time, you had a number of targets come down. And now that we're in a new environment and three or so percentage points away from an all-time high, you do have them going the other way. Deutsche Bank today says they're back at 65.50%.

They were at $61.50. And they're also looking at estimates on earnings higher as well, taking those from $2.40 to $2.67. So it seems like many of the most dire predictions about where this market can go have all but dissipated, not to suggest that people don't see volatility ahead or there still aren't some serious questions that need to be answered. But the tone is one of, yeah, we're probably going higher.

We should go higher. Just focus on the fundamentals. The Atlanta Fed tracker yesterday came out 4.6%, 4.6% growth for the quarter. I mean, I don't think we're there, actually, but better than recession, which is what some of these negative strategists are talking about. Maybe you're running at about 2%, 2.5% kind of growth. Personal income, that number still is on my mind. That came out on Friday. It was three times expectations. That is good. And then consumption, if you average the last two months, 0.4%.

That's good, too. Solid. But that means that savings rate is actually going higher. Today, we got the JALTS numbers up month over month. The total hirings are also up month over month. And then the inflation numbers are coming down. I'm looking at the PCE. I know that the Fed looks at super core and I know we should be looking at core to smooth things out. But overall, inflation at 2.1 percent is very healthy. What does this mean? Why is the market going up?

because the economy is hanging in better than hanging in it surprising people to the upside and that boats well for earnings overall we just completed earnings and they can twelve point three percent in the quarter that was higher than I thought I'm not hot nine ten percent 12 percent this year I think yours you can actually see 10 to 12 percent for the full year that's actually better than what I thought even a couple of weeks ago there's still though you know those who say

The worst of this trade war and the uncertainty is to come. The soft data is going to end up, and in some cases already ending up, in various parts of the hard data. The OECD today said the Trump tariffs are going to sour the global outlook. They cut the forecast for U.S. growth sharply, downwardly revised to just 1.6 percent this year and 1.5 percent next year. JPMorgan's trading desk, Jay Snipes, says tariffs are a net negative.

When does this become fully apparent in the macro data, they ask? Well, our best guess is either July or August. If we get to the point that nonfarm payroll is printing materially below 100K and there is no change to the trade war rhetoric, this is a market that will crumble. Those are their words directly. Now, the big...

question mark is the and there is no change in the trade war rhetoric, that that's what you're going to get. You believe that as we think about what the summer is going to hold here? A couple of things. I think Steph makes a great point just in terms of earnings. Earnings are obviously very positive, close to 13 percent earnings growth in addition to a 78 percent beat rate. You know, when I think about just the S&P 27 percent

27 plus percent mega cap earnings growth rate. That's very significant. The other 493 were up around 9.4%. From a technical perspective, about 48% of the S&P is trading above the 200-day. So that was a very different number a quarter ago. So I think that's important to note. So I think that the

bias is absolutely to the upside. I think the fundamental story is playing. Obviously, Steph mentions inflation. Inflation was very positive. We've been talking about that for a while. But what I will say is a theme that played out in earnings for me was the lack of guidance and some pausing of guidance, which speaks to some of the revisions downward in terms of the next couple of quarters. So I think it's going to be an interesting summer. I think we'll trade in a range. But I think the fundamentals are positive, which is

keeps me constructive on the market. This idea that you've got these cracks lurking in the bond market under the surface, and at some point, as Diamond said late last week, there's going to be a crack in the bond market. We saw one. As I said, we've had a tremor

of sorts once already that did not develop into a full-blown quake because the White House backed off that level of tariffs on that day. And then the market certainly calmed itself. Is that still lurking? Or is the market going to doesn't seem to care at all or really want to focus on that until it absolutely has to, if it ever does have to? No, right now the market is responding to, as Steph said, better than expected

eco data, very strong earnings, strong revenue growth. In some places, maybe you had some earnings subtraction related to margin compression. And yields have kind of calmed. And the market's looking at that. But I don't think that you could ignore

that in the third quarter we're going to have challenges as it relates to issuance. And it's not just issuance here in the United States. It's going to be global issuance. And it's going to be difficult, I think, for global bond markets to digest that properly. So if there's going to be a period of consternation on this journey through 2025, I think it's ultimately going to be in the third quarter. You've heard me say, I think we push to all-time highs. I'm not of the belief that we break out significantly above

those highs in the near term, in the third quarter, because to your point, there's going to be issuance challenges. There's going to be bond market contention that I think has to be wrestled with. I don't think we're done pressing a 30-year yield towards five and a quarter. I don't think we're done with the conversation that a 10-year yield could go to 5% as well. Don't you think, though, that yields are going higher because the growth is actually better than expected? I mean, I understand the debt

concerned. I do. I really do. But that's not new, Joe. I think it's a combination of both. I do. I think it's a combination of both. I also think we have to see where this bill lands, where ultimately what does the bill look like in terms of spending and what's the effect on deficits. To Joe's point, I mean, I do feel like that is alive and well in the market, that yields are elevated more so

Look, it's an issue. Nobody knows the exact reason, okay? And I'm not going to pretend that I do either.

I've talked to a number of people who are watching what's happening within the bond market and are fixated on where the deficit is. Not that those concerns are new, but that there's no wherewithal to do anything about it. And all we do is deficit spend and deficit spend and deficit spend. And now we're talking about a $4 trillion bill that compensates.

Congress doesn't really want to deal with the deficit in any way. It's a kick the can down the road until the can gets run over by a truck. For sure. And I have said for a long time, unfortunately, we are going to kick the can and it's going to be our children that actually have to deal with this, not us, because no one in office or in Congress

has any wherewithal to get anything substantially done. No, but you may have to deal with the ramifications of already escalating debt, the cost of funding it, no wherewithal to do anything about it. Oh, by the way, the trade war and the tariffs on top of it, which you saw what happened that day in the bond market.

You know, there are some who were saying as that was unfolding, we weren't that far away from a crisis in the markets as a result of that policy. But what if faster growth in the economy, faster GDP growth, what if that actually helps at least somewhat offset some of this deficit and debt concerns? I mean, we can outgrow our way out of a lot of things. Of course, but not while potentially you are hurting growth with your tariffs. OK, tariffs certainly.

But, you know, M&A, M&A is coming. Deregulation is coming. M&A is up actually 17% year over year. Yeah, I know, but it's terrible, though. And lower taxes. It's funny.

But it's getting better. That's like saying your favorite football team got three wins this year. Last year, they got one. Mine did, actually. No, I'm kidding. No, honestly, though. You know what I'm saying? I do, but you have to start somewhere, Scott. Now you have the third pick. You had the number one pick last time. Great. Congratulations to you. Thank you, Jet fan, yes. No, I honestly, I mean, I do think that

that the growth is going to be above trend because of the other parts of the policies. We just got to get through the tariff thing. They started with the tariff thing. None of us thought that they were going to start with the tariff thing. We didn't think it was going to be nearly as bad.

There's a lot of unknowns. I understand that. We're all worried about it. We're all thinking about it. But I do think there's light at the end of the tunnel on the other parts of what the administration is trying to achieve. And I think we're starting to see little small green shoots, at least on deregulation. When in doubt, buy tech. That apparently seems to be...

which, by the way, the MTUM hits a new record high today. I presume that the JOTI is doing well also on a day when momentum continues to be off the charts. NVIDIA, by the way, surpassing Microsoft in market cap. It's the most valuable company. No one seems to care much about anything if you're going to continue to buy tech. NASDAQ is trailing the Russell today. It's still having a great day. We told you it's up more than 10% in 2020.

the month of May. And it's been pretty remarkable. NVIDIA. Yeah. Yeah. It's been a really good story over the last couple of weeks. Obviously, now...

You know, the stock is up a little over 5% for the year. So it's finally positive. And I think one of the important news, you know, that over the last couple of weeks is this new chip for China, right? Which is a go-around. I think early part of the year was all about export controls and what is the story in blocking some of the semiconductor sales. But now that they're introducing this B330 chip, right?

and they're producing about a million of them, I think is positive. I think these are the stories that are important, I think, for investors to know. Listen, it was a double beat in terms of the print. Revenue was up 69%. Data center was up 73%.

somewhat of decelerating from some of the higher numbers we saw quarters ago. But again, bellwether, all roads continue to lead back to NVIDIA, and I think they continue to. What do you guys make of this fact, according to Bank of America's equity client flows? We're talking about institutional flows. That tech is nearing record underweight by active funds. That tech saw the biggest outflows for the third straight week.

Positioning work suggests that tech is close to a record underweight. What does that say, if anything? What I would share with you, and I could do that from the perspective of, okay, what's the personality of our strategy, which, remember, it's equally weighted. So I'm in trouble if the mags ever are going to do what they did in 2023 and the early part of 2024. But our ownership of semiconductors has come down dramatically.

It has been more of defensive technology where you've seen the positioning over the last six months. It feels as though we are in the midst right now of a little bit of a pivot. You're seeing a pivot away from that defensive technology, not in totality, but back towards semiconductors. Look today, you have semis up about 2% again. What's defensive technology? Because when you say defensive technology, I start thinking mega cap. Yeah.

It was up 10% in May. I think mega cap has really become its own class of technology itself. Tell me what you're talking about. An example would be Intuit. Intuit is an example of defensive technology. Those type of old school, if you would, names seem to be where capital has been flowing to. IBM, another example of that.

Right now, it looks as though we're making a little bit of a pivot. And I think what's important is if I'm seeing in our momentum strategy that we're not really there on semiconductors as the pivot's coming, I know a lot of hedge funds are carrying very similar type of positioning because they're looking at the same things that ultimately we are looking at. So I think right now,

That arguably is one of the most important industry trades occurring in the marketplace. Where do we go on semiconductors? Is there follow through here? And if there is follow through, then for sure we're going back to all time highs. - Let's see what Broadcom does this week, right? NVIDIA was good enough to keep this going.

Where does Broadcom do on Thursday? It's a record high today. Why did you have that reaction when I said Broadcom? Because it's up 75% from the April lows. Nobody wanted it in April, right? Everyone was selling it. And now all of a sudden it's up so much. Shouldn't you be happy? You sounded pained. I'm happy because I was buying it in February, March, April, May.

I'm just a little nervous that the expectations are super high. I think it's going to be a very good quarter. I love the diversification of this company. 31% of the revenues is AI. They're definitely going to benefit. 41% is software. VMware, we've talked about, very synergistic. That's going to be positive too. I think it will be really interesting to see their kind of old school networking, broadband, cyclical businesses that haven't really done anything in the last several years. Does that start to turn? I think if that does,

then the stock can continue its momentum. But if it doesn't, if it's just kind of a little bit of a small B, small raise, which is what they usually do because they're very conservative, I think the stock sells off. That's not to say it's Armageddon. I would probably buy it if it fell another 10% or 15% or so. But I just think expectations are very, very high. I've cited the gross margins are industry high, 79%. Their operating margins at 65%, industry high.

if they don't materially beat those numbers again it might just be a sell the news kind of thing so that's why my reaction is what it is has nothing to do with the long-term fundamentals it's i've done well with the name yeah you have just a little nervous on expectations city goes to 276

today. I think, where was the stock at? $250? $254. $276 from $210. And Cantor Fitzgerald says it's their top AI pick. So we've maintained positioning in NVIDIA and in Broadcom. And those are almost defensive semiconductor plays, if you think about it, because of the strength of their balance sheet. I almost wonder...

If semis continue to have this position rebuild, if you see capital begin to move to other areas of semiconductors, as example, AMD, right? AMD is a stock that's had a very difficult six-month period. Do you begin to see positioning rebuild in those areas

at the expense of positioning in broad power. I also think, though, if you get any good news on tariffs or just get past tariffs, I think that the semiconductors can do better because they are the most exposed to China and to tariffs in general. So I think that's what will...

define how they do going forward. There's a good feeling that's been restored to semis, and the question is, does it follow through? Let's hit that meta story today, because we didn't get to it yet. That first of its kind nuclear power deal, meta's had a great run of its own. I think it was up around 18, 15, 18% in the month of May.

Pippa Stevens is here with us at Post 9. It's good to see you. This is a really interesting deal. Tell me more. Yeah, Scott. So this is Meta's first nuclear deal. The company will buy all of the power generated from Constellation's nuclear reactor at the Clinton Clean Energy Center in Illinois as part of a 20-year agreement. Now, the plant had been in danger of closing, but this deal gives Constellation the certainty and the money

to invest in the plan and even possibly add another reactor. This is just the latest instance of big tech teaming up with nuclear. Driving these deals is, of course, AI's insatiable need for power. Alphabet and Amazon are backing small modular reactors, while Microsoft signed an agreement last year to restart Three Mile Island.

Now, Constellation is well off its highs after rallying as much as 15 percent earlier. Segra Capital's Arthur Hyatt said it could be due to the lack of price disclosure for the deal, adding it's been a very crowded trade here. But, Scott, the bottom line is that this is likely not the last deal of this kind that we're going to see.

Pippa, thank you. Stay for the conversation, too. So you're a huge believer. This to me is more of the power play side of rather than the mega cap side of. So rather than trade meta, I'd rather trade

the Eatons and the Quantas and the Vernovas and the Constellations and the Vistras, which you just bought Vertiv today, correct? Yeah. So in the quarter, the hyperscalers free cash flow fell 11%.

collectively because they all spend so much money on AI and they're going to spend, we've talked about this many times, $300 billion plus this year alone, up 40% on AI. Many of these companies are doing power deals, as Pippa just mentioned. We also have NRG. They bought 18 natural gas power plants. We had Blackstone, private equity, get into the mix in New Mexico in their utility purchase. So you're going to see many more of these, in my opinion. And it all

has to do with if you believe, and we've talked about this, there are four themes within the big theme. It's AI, you need more data centers, you need to upgrade the grid, and you need power. It's all those kinds of same themes, and you can play it any way you want, Scott. And I have chosen to play it on the industrial side because I think that actually is my favorite theme for the next 10 years. But I think maybe they're over-owned, but they're not as...

as owned as something like Nvidia. So Eaton said that there are 1.7 trillion megaprojects out there that are ready to be built. Only 16% have started. There's going to be $4 trillion of spend on electrification between now and 2050. 70% of the grid is over 25 years old. All of the companies that you mentioned had record backlogs.

and strong margins. So you can play it any way you like. Vertiv, I picked because it's down still 23% from its highs. I'm shocked this thing isn't up 10% today. I'm shocked actually the whole group isn't up more. But this company has a total addressable market of $52 billion. They're an end-to-end solution provider.

So they capture a lot of various different customers. And I think that they are going to outgrow the industry, which is going to grow about 9% to 12% compounded annually. They're going to outgrow the industry 300 to 500 basis points, very strong margins. And Dave Cody is the executive chairman. We all know what he did at Honeywell. And that was the other reason why I bought the stock. Joe, you own Constellation.

uh... and this for two yes uh... the independent power producers are right now in the sweet spot in what you're describing and that is really where scott the emin a is unfolding the emin a is actually happening from companies like anarchy constellation and this trip they are out there acquiring assets because they understand there is this incredible need for power

related to AI. And to that end, you'll probably be reporting on this sort of stuff more often. This is just, and not that this is the first deal, but it's likely, as Steph said, to lead to many more companies thinking about the same type of thing. And what's interesting here is that this is the first deal with an existing, already operational reactor. And I think what it shows is that

that time to market the premium for existing power is what's so valuable now. And so for the IPPs like the Constellations, the Vistras, the NRGs, they have that opportunity to capitalize with existing assets because while there is so much buzz around SMRs, that's really a 2030 and beyond story. What data center companies need is power right here, right now, and that's what these IPPs offer. All right. Steven's here at Post 9 with us. Good to see you. Thank you.

The other big story, CrowdStrike reporting after the bell today, a new record high. Talk about trades that have been working. Stephanie Link, back to you. Both you and Joe own CrowdStrike. Target today to 525.

was 475 at Wedbush. That's Dan Ives. Greater confidence in the CrowdStrike growth story. He says his recent checks are showing the cross-selling and monetization story is hitting its next stage of growth. Yeah, and the stock's up 41% year to date. It's at 30 times price to sale. So as you know, I've been trimming it just to take some gains, but

I actually am putting it into Palo Alto, which is only up 8% this year, and it trades at half the price to sales multiple. But I do think the first quarter, net new annualized recurring revenue, it could be as high as $200 million plus. And if so, the momentum is going to continue. Their goal is to get that number to $10 billion by 2029. And I think they're going to prove today that they are going to get there eventually if

if they can give us the path to that growth. The margin story for CrowdStrike is very impressive. Profit margins running 74, 75%. Now you're looking at them creeping up towards 78 EBITDA margins, which are running in single digits. You're looking at those now moving up to 20%. So, you know, in the cybersecurity trade,

trade. We basically have them all, whether it's Zscaler, Okta, Fortinet, Checkpoint, which was one of my favorite names, Palo Alto, and of course CrowdStrike. I think there's very strong momentum here. And for certain, the spend is going to continue in this space.

And that's the reason why we remain committed to being invested there. And on pullbacks, we want to buy more. Software in general has worked really well, too, in concert, really, with Semi. Speaking of, you bought Snowflake. We haven't seen it in a minute. Yeah. But you bought it ahead of the earnings. I did. So tell me more. I did. 52-week high today. Yeah, yeah, yeah. Which is generally not a story for us. Yeah, generally not a story for us at all in buying into earnings, right? So we got in around 180. But there's been a lot of momentum in the stock. The stock's almost over.

almost up close to 40% year to date. But, you know, really what I like about this particular story, they pool all your data. They're a clouded data and analytics platform that pools all your data. So you think about all the software platforms. And again, I think what folks are looking for is actionable insights. And this is exactly the stream and play that

snowflake is in, right? So when I think about the total addressable market, it's going to be a $350 billion market by 2029. It's currently about $140 billion market. You know, the revenue growth is up 26%. And this is, again, another company that $70 billion market cap, but they are experiencing margin expansion. That's why we continue to like this. Good stuff. We'll take a break. Up next, our calls of the day, including two committee names hitting new 52-week highs. We are back in two minutes.

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

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Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same premium wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today.

I'm told it's super easy to do at mintmobile.com slash switch. Upfront payment of $45 for three-month plan equivalent to $15 per month required. Intro rate first three months only, then full price plan options available. Taxes and fees extra. See full terms at mintmobile.com. Calls of the day. We mentioned this string of 52-week highs and stocks that have just been full of momentum. Joe mentioned Netflix earlier.

And rightfully so, it is a new high today. The price target to 1400 at Jefferies, reiterating buy, it was 1200. So they continue to bump it up. There's the stock. So it hit their target. Now they're like, well, not stopping here. 1400. Joe? Execution, costs coming down. Content is something that they're delivering on. I mean, it's literally the sweet spot of consumer entertainment.

I still believe that this stock has more upside to go. And in addition to that, I always, or I should say more recently, and Jason, I think you have this as well. Spotify. I think you put Spotify literally in the same category in terms of the way the execution's going, the way that the consumer is utilizing the product, the way that they're delivering on the margin story. Let's get a three-year chart here, guys, please. And the way in which...

Ultimately, it seems as though consumers are now almost looking at these companies like staples. They're looking at Netflix, they're looking at Spotify as something that is critical to their personal entertainment. Is that a run?

Is that a run or what? 500% in three years? It's crazy. It's crazy. Remember when that thing was at $400? Yeah, I do. After it was at $7. Yeah, yeah. And I think it was a great quarter, 23% EPS growth, 12% revenue growth. But I think in the theme that I mentioned earlier, in this earnings season where companies are removing the guidance, pausing guidance, they reiterated full-year guidance, which I think is

very important to note. I think the other thing is advertising. They expect advertising revenue to double again this year. So it's just been a great name. It's been, to Joe's point, a staple in this environment where we're kind of concerned about the consumer. Yes, it has. And they've done such a great job

executing internationally. Look at the revenue. Look at their exposure internationally. You're talking about 59% for Netflix. And I'm going to mention Spotify again, because I think it's important to do so. It's 60% international as well. They've got the levers now, too. You don't want to pay full freight. Well, we get to add tier. You pay less, but you get to add tier. They won streaming, right? Boeing, top pick. $249 is the price target at Bernstein. New 52-week high.

Stephanie, we talked about it earlier. Joe said, well, you had to wait a while. Here we go. Well, it's still down 19% in the past two years, so they have a lot to go, I think, under the new CEO and the turnaround, the better execution. I think the reason why the stock has done well so far is because their 737 build rates are actually outpacing expectations.

38 per month now, going to 42. They've got to get FAA approval, but apparently the company has a new management team that is more friendly with the FAA, so I think you're going to get that 42 per month. And then also you're seeing deliveries by the end of this year, something like 500. That's well ahead of what I was expecting. It's a free cash flow story, so you want the

the planes delivered. We're at negative $2.2 billion in free cash flow now. I think you're going to get to $12 billion by 2027. That's the reason I own the stock. What about SLB, Steph? There's a call on that. $44 is the target at UBS. I think it's $34. Yeah. $34 and change. Named a top pick over there. Yeah, and this is actually not at a 52-week high.

Yeah, it's down 11.5% year-to-date, down 23% over one year, and it's 33% off its 52-week high. Not everything can be trading at a 52-week high, okay? I know, I know. And I think it is a buy here because of the valuation, but...

I think energy just trades so horribly at this point. And if you have a president, an administration that wants lower oil prices, I think it's really hard to fight that, to be honest with you. This is best in class. They're the ones that are doing the best on margins, on free cash flow. They also have a buyback program in place. So they're doing what they can control, but you can't control activity, unfortunately. And that's not where it's been. OK.

A break, and up next, we take you inside the rideshare wars. But first, Silvana now has our headlines today. Hi, Silvana. Hey, Scott. Good afternoon to you.

New York, New Jersey Mayor Ross Baraka sued the state's top federal prosecutor today over his arrest for trespassing at an ICE detention center last month. The charge was later dropped. Now, the mayor, who is also running for governor, is claiming malicious prosecution and false arrest in his suit against interim U.S. attorney Alina Haba. That's a former personal lawyer for President Trump.

Klarna is testing out debit cards in the U.S. as it looks to broaden its business beyond its popular buy now, pay later business. The fintech company announced today it is piloting the Klarna card ahead of a countrywide rollout. It will be a debit card by default, but will allow users to toggle to one of Klarna's pay later offerings.

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We're back around the highs of the day for stocks. The rideshare war is heating up between Waymo, Uber and Tesla. Deirdre Bosa is following that story and joins us now because there was some, well, there was a call today about Waymo and there's been chatter about the others lately too. What do we know?

There's been a lot going on, right? And, you know, really, RoboTaxi, as you know, Scott, they've been a staple of the roads here in San Francisco for years, thanks to Alphabet-owned Waymo. But now you've got Tesla's big debut in about a week. The industry is gaining more mainstream attention. And you referred to this Wall Street interest. In that note today, Truist calls Waymo one of the most exciting businesses within Alphabet, which today is a

effectively being allotted no value in our view. Now, when I sat down with Waymo's co-CEO a few weeks ago, I asked her if they'd benefit from being spun out from Alphabet, if they'd get more recognition, a higher valuation. But she said that it was important to have the financial support of that mega cap, a large part of how they got to $10

million paid rides and are rapidly expanding while Tesla is just getting off the ground. Now, Waymo success already impacting the ride share complex. This is a slide that I wanted to highlight from Mary Meeker's latest AI report, one of the most closely watched reports in tech.

Data shows that Waymo has gone from zero to 27% of gross ride share bookings in San Francisco in just under two years. That is now ahead of Lyft and it's gaining on Uber. Now in a few markets, we've talked about this, Scott, Waymo is partnering with Uber, but even as a platform, Uber faces new pressure. Both Tesla, Waymo, they have the technology, maybe the incentive to go it alone. It's a good race to follow. Dee, thank you for keeping us up to date on who might win it or who thinks they might.

If nothing else. All right, Joe. And Joe and Jason own Uber. So how are we thinking about this from a shareholder point of view? From a shareholder point of view. From a shareholder point of view, I think what you have to be

excited about is the remarkable turn of the balance sheet for this company. Uber's on a four-day losing streak, by the way. Okay, so they announced a new COO. That's the first time they've had a COO since 2019.

um yeah the momentum is kind of pulled back it's on retreat but look long term i want to look here long term multi-year period in 2022 this company was not really throwing off any cash this company is now investment grade that's how much they've had the dramatic improvement in their balance sheet free cash flow was 2.3 billion dollars in the first quarter in 2026 the estimate is that that's going to be 10 billion dollars so as a shareholder

You have to like that. Why? Because you continue to see that you're rewarded and you're going to be rewarded with continued elevated buybacks. I think that's the story for this company is the quality of their balance sheet. Is it an Uber Tesla race? Do you think of Alphabet as the Waymo?

Angle, Dan Ives, within the last 24 hours, I think it was, said that Waymo will, quote, be at the kids' table compared to Tesla when it comes to autonomous. Yeah. I think it's somewhat of a separate story. When I think about Uber, obviously, I think about the platform, double-digit gains in mobility and delivery. The stock is up 38% year-to-date. And when I think about Waymo's growth in San Francisco, now Austin, Atlanta as well, I

The rollout seems to be positive. But Steph and I were just joking about Uber is a verb these days, right? So as it relates to a platform, I think that's where you want to be, because there will be other products and other stories just like Tesla, but they're all running to Uber to get and secure that ride. All right. Up next, Mike Santoli. He joins us with his midday word. We'll be back right after this break. Senior markets commentator Mike Santoli is here at Post 9 with his first word for

Yeah. I mean, we're hanging on trade headlines, I suppose. Jobs report. What's top of mind to you? The market looks pretty good today. We're hanging on trade headlines, but I think the market is migrating in the direction of if there is restlessness and eagerness by the administration to book wins, then that starts to look like it's easier. It's a shorter path. It looks more like the administration folding or something like that, where you're just getting a fig leaf deal, like a UK type deal.

Who knows if that's real? But that's happening at the same time where everything else is pretty benign. The character of this little pullback we've had over the last couple of weeks, we've now made a new recovery high. The AI trade is back on. And by the way, the Constellation stuff, all that, that just completely activates the sort of super aggressive alt-

all powers stuff which is a very big part I think of like the retail trader kinda hunting yeah grounds at this point so all that fitting together I think makes sense and then the jolts numbers what the retailers are saying is kinda like no real change in the hard data the economy's kinda hanging in there fine and that if that's the case and volatility comes in what everybody has told us for weeks is

Big money still has to re-risk. They're still under-invested if this market is going to be calm and it's a don't short a dull market type of take. Well, how about that stat I had at the beginning of our program from B of A, their flow show? Active funds are like the most underweight tech. Yeah. When we're talking all about, tech continues to go up. Yeah, there's been a big whipsaw in positioning there. Now, I'm a little skeptical of the whole like active managers are underweight, the MAG7, because...

Concentration limits prohibit them from owning 6.5% of Nvidia, 6.5% of Microsoft. They're always going to be structurally underway, but now more than usual. And obviously, there's a bid there post-earnings. Yeah. Monday, too, let's not forget WWDC, which we'll be live at, is a significant event. Apple needs to live up to the hype. It's a big and highly owned stock. It may not be the most valuable one anymore. Thank you, Nvidia, today. Eclipse is Microsoft.

But, you know, that matters. Right. If it sort of stops acting as a drag because the mag seven is really diverged within it. And so I do think that, yeah, if it holds the ground at 200 and and it stops being a thing to worry about in terms of the mega caps, then that is a net benefit. That said, look, we're at some point you might say, wow, we're back to six thousand on the S&P already. What's changed? And that means you're pricing in a little bit more of a happy scenario that may or may not.

Yeah, thank you. I'll see you on Closing Bell. That's Mike Santoli coming up. The sector spotlight today on what is working in this market, discretionary stocks. They keep moving higher. Find out where the committee stands next. All right, discretionary is doing pretty well today, better than 1%. It's the third best sector, Steph. Dollar General is higher today. Cignet is jumping on a beat, and their guide as well. Discretionary, year-to-date, is down 6%, whereas Staples has gone the other direction.

What about from here? Yeah, I mean, if you think the economy is growing a little bit better than expected and the consumer is hanging in, more than hanging in, as we talked about earlier in the show, and we have talked about the consumer for a very long time, I don't see why this part of the cyclical trade could not work, right? I think it could. And some of these stocks are extremely cheap.

And a company like Chipotle, that's not cheap, but it is down substantially this year, 20%. They have the traffic, they have the products, they have the digital innovation. And it's trading at a multiple that it hasn't traded at three years ago, right?

To me, there are opportunities. Jason and I were just talking about the housing trade. I mean, it's been very, very frustrating. You need lower rates for that to work, period. DR Horton, I'll stick with. Home Depot, I'm actually thinking about taking the gains that I have at very small gains, but I'm thinking about that because that's not cheap.

Interesting. The lack of momentum got you out of Chipotle. It did. After many, many, many years. Yes. For many, many years, I've had the stock. I believe in the company. I believe it's as it relates to quick serve. What do you mean believe in the company? What does that mean? Because I've owned the company before. You believe in the company. You either own it or you don't.

I believe in the company. I owned it before the inception of the ETF because they have owned Quick Serve. They've owned the Quick Serve restaurant. They've had the ability to attract the younger generation, and that younger generation goes to one place. They go to Chipotle. Dale?

They only go to one place? That's the place in Quickserve they go to. They have the traffic. They're not going to McDonald's, the younger generation. They go to Kava? They go to Shake Shack? Not really. They go to Raisin Cane's?

Have you ever been to Raising Cane's? No. Not publicly traded. Not that I know of, anyway. Jay Snipe, what about discretionary? Yeah, so I really like, you know, for me, AutoZone, obviously, is a nice play. You know, when I think about how they've managed this kind of tariff story, you know, lots of concern. You know, we're in China, Mexico, you know, they continue to grow the commercial business. And

And when I think about also used car inflation, which is starting to come down, used car auto sales are picking up a little bit. And folks are just holding onto their vehicles for longer. So stock's up 16%. You would think that they'd be in the eye of the storm, which they are in some respects, but they've managed it well.

there was a positive call in royal caribbean today too oh that's such a great turnaround story it really is the balance sheet has completely improved and now you're seeing that they are getting the customer base from asia they're getting the customer base from europe you believe in that company not as much as i believe in chipotle interesting yeah okay he believes in leadership we'll follow that we'll follow that final trades are next

All right, we're still at the highs of the day. We'll see where this day ends up with Dan Greenhouse. Tom Lee, a lot of strategists are saying we're going to a new high. What do you think he's going to say? Do you have any idea? You'll find out at 3 o'clock. I don't think there's much mystery, but we'll have a good conversation about it. Malcolm Etheridge with me as well, so I'll see you then.

Final trade, Jason Snipe. I like AXP here. Credit losses came in the lowest level in 80 quarters. I'm long AXP. Okay, thank you. Stephanie Link. I like KKR, number one in the space, down 18%. I think you want to have private markets exposure. Thank you. Joe T.?

That younger generation, when they get their Chipotle, they're using Dash to get it. Dash is about to make another all-time high. Another company that you really believe in. I believe in it. Amazing. I believe in the company. Because that matters. We own it in the ETF. Of course it does. If you don't own the stock, at least they know that you really care about the company. When you believe in it, at some point you're giving the inference that you're going to own it again. Just buy it, John. We'll see the exchanges now.

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