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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, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour. Two down, two to go. Big tech earnings in focus and driving stocks higher today. We're trading all of it with the Investment Committee. Joining me for the hour, Josh Brown, Joe Terranova, and Jenny Harrington. We're all at post nine. We're going for eight straight today on the S&P, and we are looking pretty good right now. We're about 1% there. NASDAQ, no surprise to anybody, is leading the way after Meta and Microsoft, by the way.
Look at this day for Microsoft. Now you take out that massive rebound we had post the Liberation Day sell off and you don't often see a move of this magnitude for Microsoft near 9%. Azure growth, Josh,
Joshua Strong price targets going up 515 520 in some cases even higher than that in in many ways this took the edge off the whole group really that's right Scott let me put some meat on those bones Microsoft being up 10 percent today is so notable that there have only been 13 other days of a 10 percent single-day rally for Microsoft since the company's inception
as a publicly traded stock in 1986. So this is really something that you've only seen a handful of times in the last 40 years. Of those 10% upside days, one of them happened in early April when it became clear that tariffs would not apply to technology names. So that was a big exhale. Stock had a huge single day. And then to have another one today inside of 30 days, this is just really, I think, a highlight of the
notable moment that we're living and trading in the numbers were spectacular um 346 versus 322 revenue was 70 versus 68 expected like what else would you want to see if you're long the name what would make you sell it here uh revenue up 13 net income up 18 year-over-year think about how mature this business is and still finding ways to deliver top line and bottom line growth
Everyone was salivating for this capex number. You got exactly what you wanted, excluding finance leases, $16.75 billion. That's a 53% growth in capex, which not only made people in Microsoft feel better that they would continue to invest and were not worried about the environment, it made everyone in every NASDAQ stock feel better, given how much is riding on this continued capex.
boom supporting the current valuations in the space. So look, this is an extraordinary comeback. It's a magnificent company. I think it's a little bit dangerous to look around and say, oh, there are probably 500 other Microsofts. There aren't going to be. This is a very uniquely positioned company at a specific moment in time in this technology revolution. And I think everyone involved deserves a feather in their cap.
But I don't think that should extend to the next, you know, 200 names in the NASDAQ, in software, in semis, etc. We should just take this for what it is. Joe, what was already the best mega cap performer year to date shows you exactly what's going on. A big sigh of that's a sigh of relief rally, not only for the stock, but it's a sigh of relief for the space.
for this space. The hyperscalers are still hyperscaling. And that's the bottom line. DataDog, ServiceNow, Oracle, take a look at all those stocks today and you can see exactly what you're speaking towards. Lifting the software cloud stocks name. The Azure growth at 35%, well ahead of the consensus, which was somewhere around 29 to 31. But I think what's most important about this is that I suggested the concept a few weeks ago about first in, first out.
And why I believe first in first out really does work, in particular in an environment where you have a market correction, is it allows for the rebuilding of positions. And think what you have now. You have a huge price gap, $397 to $428 in Microsoft.
You gapped. We came in below the 100-day and the 200-day moving average. So I would characterize positioning as incredibly lean in Microsoft relative to the other MAG7 names. That allows for a tremendous amount of portfolio rebuild. And I believe that's exactly what's happening. And guess what?
Price is not giving you the chance to do it at your convenience. Price is going to ultimately make you chase, but I think you'll be rewarded for that. Lean, to your point on lean ownership, lean ownership on the desk. Nobody owns it, but you guys can speak smartly enough on it because you know the story, which brings me to Meta, which does have pretty widespread ownership. Jenny, you've got that stock. It's only up almost 5% today. Beat there.
They're, you know, Meta AI's got nearly a billion monthly users. They increased their CapEx range for more data center investments. They're not slowing down in any way. Maybe if anything, you can call it doubling down. Jenny price targets to 690 in a couple of places. And then, you know, you've had a bit of a reset, obviously, as people have reset their expectations. Pivotal is still up at 830. They dialed theirs back a little bit, but they're still that high.
What's your thought here on this quarter? So I think, you know, our starting point is always today. And when we look across the MAG7, for all of them, I still see Meta as one of the most compelling. Even after this, it trades at about 22 times earnings. It's got mid to high teens earnings growth ahead of it. I think what
What to us really differentiates Meta2 is that the free cash flow generation is still high. And you know, for our growth strategy, the bar is a high free cash flow yield. But one of the things that's differentiating too is they're very efficient at growth. So they actually increased their operating margin from 38 percent last year to 41 percent
This year. That's really significant. And this is something, you know, Scott, that we've talked about when I've said we've taken some off. And if we got in, you know, we got in way back. And then when was it? End of 2020, right? Was it end of 2020 or end of 2021 when Mark Zuckerberg said, I'm going to have our year of efficiency. And finally, the stock took off. And one of the things- 22. Oh, boy. It feels like 100 years ago. After the stock crashed. Yeah. I just, you know, it all-
Everything around them just blends together. - Well, it's the mix of Meta had its worst year ever followed by its best year ever. - Right, and then off to the races. - And it was because of what Josh was talking about. - Right, but what's interesting then was, or rather what we worried about is if Mark Zuckerberg was very keen on efficiency when the shares were at $89, when they're 400, 500, 600, 700, will he still be keen on efficiency? And I think the answer is yes. And he's proving that to be yes over and over, which is why we continue to hold the shares.
but the valuation isn't crazy, so. - He's spending more money than ever, but here's what's different. - It's efficient. - Well, he's-- - He can spend the money. - That's number one, you're 100% right, but more important to the investing community, what is he investing on?
The bet on AI is a bet that has an ROI attached to it today. Correct. The bet on metaverse in 21 was like sniffing glue. It was like people buying virtual land and buying and selling JPEGs. Nobody was into the metaverse. The shareholder base loves the investments meta is making. And you can see that as evidenced by the share price. And in defense of the metaverse misstep, you need to kiss a lot of frogs.
You know, and props to him for at least trying and staying ahead of it. And now he's getting it right. But yeah, to your point. 100%. You got to swing. I also think you have to credit the management team for the acquisitions that they have made. Because that's actually what is funding the AI spending. If you think about WhatsApp, Instagram. Once you start, of course it was.
and they were all bought at just bargain basement prices, you could say, relative to what their value is today. But when you start bringing those things up,
up, then you introduce the risk around the regulatory issues. And you really don't know what the outcome of that is going to be. You know, people like Stephanie Link would suggest, OK, worst case scenario, they, you know, you look at the sum of the parts, you spin, if you have to divest of certain things, it's worth more anyway. So that was her take on the other side, which sets the stage for tonight.
Amazon and Apple. Let's start with Amazon. It's down three straight days. Now it's got a lot going on between the tariffs. And then you had the controversy about the prices, the White House criticism. Kate Rooney joins us now. There's really been nowhere to hide. And that's the focus of your reporting today.
Yeah, you haven't had this hedge. You know, in the past, it's been the e-commerce business and cloud. And there's been a little bit of this offsetting factor. We haven't had that lately with all of the tariff noise. But Amazon's guidance and forward looking comments with that in mind around tariffs is going to be key today. So investors have already been shaken up by the tariff impact. Stocks down double digits on the year than e-commerce. Of course, the hardest hit in that category, half tariffs.
of third party sellers on amazon are based in china at least according to william blair there has been a lot of chatter around the advertising drag as well from china and then politics you mentioned scott that may come up andy jassy the ceo is expected if asked we'll see what happens on the call but that back and forth with the white house on tariff costs this week he will need to address that and then
there is the all-important cloud business you guys have been talking about 17.6 percent growth for aws that is the number to beat but citizens jmp this morning writing that investors are now expecting closer to 20 growth after what we saw from microsoft and that strong cloud quarter watch for any changes in capex as well what that means for the ai story
Last count was $100 billion in spending. And then any update from Amazon on what AI is actually contributing to AWS. Possible bright spot, Amazon Prime, the streaming service, has been rolling out ads and moving deeper into live sports. We'll see if they get any sort of Netflix effect there, Scott. Back to you. All right. Good stuff. Thanks. Kay Rooney with a good setup for us to talk about Amazon. And we'll do it in the context of the rebalance of the Joe T., which obviously happens at the end of every quarter.
Your move is that you sold Amazon from the Jyoti. Yeah, that's correct. You know, it's interesting because, look, it's very difficult when you have 125 stocks that you have to buy because it's 100% equity holdings in this type of environment. So it's kind of measuring someone hitting 35 home runs in the juiced era in baseball where everyone was hitting 35, 40 home runs. It's basically 180 degrees different. So
Amazon, we purchased it in July of 2024. The entry price, which does matter for us, was $186.98. So if you think about that since July of last year, it's gone nowhere. Now, you can make the argument, you can say, okay, basically you bought it at the right time.
uh the wrong time rider rather um and i'm okay with that argument but for what we look at when you have a stock that literally over a nine month period doesn't go anywhere then that momentum score is going to fall off dramatically i am holding the position in the near term personally i'm going to hold
the position. One of the reasons why is I like their score on the revenue growth. So I've got these two conflicting positions. We'll see if the rules-based nature ultimately is going to be right in the JOTI, or basically neither one of us could be right. It could just basically move sideways. But that was the reasoning behind moving out of Amazon. You own it too? Josh, what do you make of the move?
Well, fortunately, the position that I have here is personal and not part of a rules-based strategy. So I understand why Joe's fund would be forced to sell it. It's not sell it and do nothing. It's sell it to buy stocks that are better on his screen. But from my perspective...
Amazon is a core holding number one. Number two, it's one of my biggest conviction longs. I've said this before. And I used the opportunity of the massive sell-off two weeks ago to add to it in the 170s. If the stock has a negative reaction to earnings, I'll probably do the same thing again. I would not go into tonight thinking about
that the odds are in your favor for some sort of explosive move a la Microsoft. Of course, it could happen. I have no idea what the earnings will be, but I will tell you, Amazon has experienced negative one-day returns following 60%
of its earnings announcements over the last five years. So this is not like a great buy the stock for earnings name. The median negative return during that 60% of post-earning sell-offs has been minus 6.1%, which means a lot of them were much worse. The worst one was negative 14. So I'm not going into tonight saying like,
That's it, this is the trade. From my perspective, if there's an overreaction to something that the market doesn't like, I'll probably use that as a chance to buy more. Here are the big things that we're looking for. 100 billion in total 2025 CapEx is the expectation. I think everybody wants to hear them reaffirm that.
They reported 24% growth for the advertising business, advertising revenue last quarter when they reported to 14.6 billion. Bank of America is looking for 18%. So again, maybe it's 17, maybe it's 19. If they can come in on that ballpark, people will feel better. The last thing I want to point out
And we did a chart about this the other day. Amazon and Walmart's P.E. ratios have crossed. Amazon is a cheaper stock. Wrap your head around this. Amazon is now a cheaper stock than Walmart. Over the last five years, Amazon's averaged an 82 times trailing P.E. And today it's 34 times. Is that...
Absolutely cheap? No. Is it relatively cheap? Hell yes. So I would point out, this is not a huge expectation story, which does give you room for a rally post-close. So that's where I stand on the name, and I'll be opportunistic if it doesn't work out tonight.
So we've actually done a tremendous amount of work on Amazon for our growth strategy over the past few weeks. And you may remember I was on a couple weeks ago and I said, I think we'll probably get the chance to add this. And I was all excited. As it turns out, we're not adding it. And it's very disappointing and frustrating because we love this business. You know, number one in e-commerce, number one in cloud, and obviously everyone knows that. Why aren't you adding it? No, we're not.
I said, why aren't you? Oh, why aren't we? Because here's the problem, and it drives us nuts, which is we think they're going to continue to pour money into those businesses. And what that does is it reduces their free cash flow. So when we look at a meta, the free cash flow is high enough for us. But on Amazon, it's not because they've got operating cash flow of $150 billion. They're saying CapEx of $100 billion.
which leaves free cash flow of only $50 billion, which leaves it at a 2.5% yield. And when you have this super tight discipline like we do, you can't justify that. And it's really frustrating. Why are they pouring that much money into CapEx? Oh, because they know it's profitable. And they know it'll grow. So why not anticipate the free cash flow will come? It's not here yet, and that's why the stock's at a historically low multiple. This is where you bump into valuation. And so in the case of Uber way back,
It was very clear that that free cash flow was not just going to come, but come in short order and render the free cash flow yield. It's too early to say that. It's too early to say that. And so I just want to say, you know, it's frustrating to not own it. Do you want a better capital allocation strategy? You want them to buy back more stock? No, no, no. You know what I want? I want the market to tank and take the share price down for 15 minutes so I can get in at a free. It might.
It might. It might. What do you want? Because it was 160 like 10 days ago. Right. What do you want? And so we've been working. I don't remember the exact number that it has to be at. 159? It's got to be about 20% lower. It's got to be 20% lower to justify. But I mean 160 relative to where? It was 161 on April 1st. I want to say this, though. To your point. You know what? I bet happened.
I bet happened is when it went to 161, the market looked like garbage. You were afraid to buy it then because you thought it was going low. No, no, no, no, no. Pulling you out, girl. Okay. As the market looked like garbage, nobody wanted to buy anything. No, you know I was buying. I was buying Ryman on iPhone 4. Yeah, but you weren't buying this one. No, because the work was being done and the numbers still weren't there.
And I'm saying it because I think a lot of people don't own it and it's frustrating. But here's an important thing to remember too. To your point, Josh, the valuation is relatively cheap but not absolutely cheap. Agreed. We need to remember that Amazon, and valuation matters, Amazon has tripled
tripled their EBITDA in the last few years. Meanwhile, the stock's only up 10%. That's right. So valuation matters. And this is one where what I want to have happen is I want the shares to trade down. Here's where you might get your wish. Because of no mistakes by the company. If you ask somebody, what are you worried about? Well, not much. But the big thing is...
Not the results of the tariffs because they're reporting Q1 numbers and it wasn't a problem. - The power of yet. - Morgan Stanley talked about this. 18% of the products on Amazon are imported from China. 60% of the third party sellers on the platform, and by the way, third party sellers are like 62% of all e-commerce for Amazon.
60% of those sellers have, quote, some China exposure. And where that really, where that rubber hits the road is the third party sellers doing the advertising is
is where that ad business comes from. So you get hit twice. You lose the transaction and you lose the ad revenue. So if you're going to get your opportunity to buy this thing significantly lower, it's going to be because of that, in my opinion. That's part of the reason that Kate Rooney said there's nowhere to hide. And if I move the ball forward a little bit, obvious tariff impact directly on Apple. How will they navigate that? The stock's up seven straight days. We're coming off that.
into the print. So does that raise the bar? Steve Kovac joins us now from Cupertino, where he always is on earnings day with what the big issues are going to be here.
Yeah, and you nailed it, Scott. It's tariffs. This is what we're expecting to really dominate the conversation on earnings today and expecting, in addition to that, the first comments from Apple today on how it's going to manage tariffs. Now, here's what we know so far going into these earnings report about all of this. Now, the Financial Times reporting last week, Apple is planning to shift production of all
All iPhones sold in the U.S. to India from China, already making some in India, of course, but still China is heavily dominant there. India, though, is exempt for 90 days, unlike China, from those tariffs, and China still has the so-called 20 percent fentanyl tariffs on that country, even though Trump gave Apple
that exemption on the Liberation Day tariffs from early April. But it's still going to take a while for Apple to ramp up production enough to fulfill the demand for all those US iPhones. That's up to 65 million units a year. That's according to the research firm IDC's estimates. And we're expecting this to really be the theme of the earnings call today. Are we going to see price increases? What will this do to earnings and margins?
The plan has to be in place pretty soon, though, Scott, because the new iPhone lineup is expected in just four months. And many of those are going to be made in China. Scott. Hey, Steve, it's Josh Brown. You are wearing the hell out of that shirt jacket. And I love it. I wanted to just start there. In the first quarter, Apple shipments in China fell eight to 12 percent. And that's pre tariffs. Now,
Now you've got three substantial phone players domestically. You have Xiaomi, you have Honor, and you have Huawei, of course. And they have made substantial inroads in that country at the high end for smartphones. And again, that's before all this tariff stuff. We saw with Tesla...
in Europe and in Asia, when the populace of a country turns against the brand that's looked at as a symbol of America or a symbol of Trump's trade war belligerence, you really could have a downside surprise. And that, as an Apple shareholder, is the thing that I'm worried about. What are you hearing about the potential for Apple to see even continued loss, despite the fact that we have carve-outs and all of these other kind of loopholes?
Yeah, that's exactly right. And Josh, thanks for I call this a shacket, by the way. It's part jacket, part shirt. But look, besides that, what's going on in China? The Huawei story is nothing new. I mean, we've been seeing this for a couple of years now since Huawei came back on the scene and started making phones again. Every quarter they eat into Apple's market share. There are some of that could be nationalism and wanting to buy a Chinese homegrown brand. We've been seeing that trend for a number of years now. And of course, that could accelerate.
At the same time, though, a couple of things that could be a little bit positive in China, Josh. One is the iPhone 16E. That's that cheaper model of the iPhone 16 lineup. That is for sale in China. There's some ideas that maybe that could boost things. And then don't forget, Josh, there's also those government subsidies in China that is going to apply to some of the iPhone models. Tim Cook did hint last quarter that they might be seeing a little bit of a lift
from that. But again, you are totally right, Josh. China has not been growing. That's been the story for many quarters now. And it does not seem to be anything on the horizon, at least, that seems to be improving. One other thing that is putting a barrier to that or a headwind to that is Apple Intelligence, which still has not launched in China. And that is obviously seen as a big catalyst to potentially boost sales there, while all these other Chinese brands
have their own AI solutions. Chinese customers are really into the specs and technical aspects of all this stuff. So without launching Apple intelligence in the country, that is another headwind. But Josh, you nailed it. There is just no out right now for Apple in China.
All right. The fashion forward, Steve Kovach, thank you very much. We will see you throughout the day and certainly afterwards when these numbers do hit the tape. So the strategy of yours, Joe, sometimes it taketh and sometimes it giveth. Yes, sir. And in this case, it has giveth. You have bought Apple for the strategy. In October, we sold it at $225.91. We bought it back $225.91.
And the reasoning behind buying it back was specifically related to momentum. It's had a very strong near-term recovery off of that low of nearly 23 percent. That obviously contributed to a higher momentum score. I share some of the concerns that Josh suggested to Steve surrounding what revenue growth is going to look like, in particular coming out of China.
And I look at this addition really in the totality of the portfolio and saying, okay, we're adding to the portfolio stock that has a 6% weighting, right?
We are eliminating from the portfolio Amazon, a stock that has a 3.81 weighting. And we'll get to another Mag7 name later on that we eliminated from the portfolio. So I kind of look at it... We can do that when you're done with this, as a matter of fact. So I kind of look at it like, all right, we're stripping away 5%. We're adding 6%. And guess what? We still don't own Microsoft. So from portfolio construction, I'm kind of okay with this, although fundamentally...
I share the concerns that others have about how, in fact, Apple could accelerate the revenue growth without receiving significant exemptions from the administration. Okay. You sold Alphabet. Yes. That's the other move that you have. And that strips away about around 2%.
We bought Alphabet at 171, I believe, in January. So obviously selling out of that now that that rings a register as a losing trade. We hold four MAG-7 names right now. We held five previously. And the one that's kind of puzzling to me is we are still in possession of Tesla. I never expected that. Never expected that we maintain the position of Tesla. But again, Tesla had a remarkable recovery in the near term.
off the lows. And I would say this, Scott, if you were going to rank the 125 stocks based on momentum, Tesla comes in at 125. Yeah. You got a quickie on Alphabet?
- No, I wanted to point out that we are heading toward LODs on all three major averages. I'm not aware of anything breaking. It just like, it looks like, okay, you have these earnings, everyone was all excited. And the fade is, I mean, it's not crazy, but it's notable. - Yeah, well, because you still obviously have the overhang issues, which we really didn't talk about in any economic magnitude, only really what it is as an overhang.
to an Apple or a Microsoft to some of these mega cap names too. But let's do this. Let's squeeze a break. Your NASDAQ is still obviously the leader today, up one and three quarters percent. It's good for 300. We're back after this with Committee Stocks on the move today. A big sell-off in one of Jenny's names. She needs to discuss and tell you what her strategy is now. We'll do it next.
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All right, we're back. Let's show you shares of Organon. Look at that. Yikes, down 26%. It's the worst day ever. Oh, it's terrible. For the name that Jenny owns. What's going on here? So this one leaves me with a special version of angry. If you can feel my anger straight through the screen, like that's real.
So they announced earnings and they were fine. They beat by a penny, sorry, they beat by three pennies. They reaffirmed this year's guidance. They said we're gonna deliver 900 million of free cash flow. By the way, the dividend's only 300 million, so it's completely covered. They've got like $3 in change of earnings, dividends a buck. And then they went ahead and cut the dividend from $1.12 to eight cents.
Now, this is why I'm so angry. I'm so angry because three months ago on their earnings call, this is what the CEO said. He said, we're committed to our regular dividend as our number one capital allocation priority and for delivering on the promise of our growth products and pipeline. You do not say that and turn around three months later. What you see usually when these things happen is the language starts to get a little bit squishy. They start to call the big shareholders and say, hey, this is what's coming up. Oh, and by the way, the excuse they're giving on this is that
They want to do it from a position of strength. And so they're going to deleverage. Okay, fine. You are already going to deleverage. The balance sheet is at four times leverage. And they want to buy their way to growth. Are you selling? I'm going to have to, but I'm not doing it today. It's a $2 billion market cap. Hold on. Just hold on for one sec. Where do you find something like this? I got to keep riffing. Don't take me off my track. Please, go ahead. The anger needs to come out and be channeled somewhere. Go ahead.
- I actually said I wanted to pick something very, I am. You know in the old days you'd pick up a phone and throw it across the trading floor? - Keyboard for me, but yeah. - Like, ah, here's my phone. Okay, so Jim Cramer was on two weeks, three weeks ago talking about this, and he was quite negative on it. And even in his negativity, he said, "I gotta stress this.
The dividend is not an immediate concern. The company is not saying anything when talking about the dividend. So even Kramer, who's negative when I was positive, was very much of the belief that the dividend was safe. Kramer's criticism was that the balance sheet had a lot of leverage. There wasn't a lot of growth ahead. There are maturities coming in 2028 and they need to deal with them. For me, where my primary focus was on the dividend, that was okay. That was surmountable. This is inexcusable. So to answer your question, Josh, what do I do? I don't sell today.
What this company did that was so dumb was underestimate or misunderstand who their shareholder base was. The shareholder base is dividend owners. You wouldn't own this stock for anything else. It's like a 3% grower. So they've completely flushed out this dividend shareholder base. Can I ask you one question? Yeah. Does anyone, you know this way better than me, does anyone ever cut their dividend at a point of strength? Yes, actually.
Yes. No. No. Yes. Sometimes like there was this. OK. OK. Not in other words. Not often. Not really. Not really. But the answer is occasionally. So there was like farmland partners. I know. But whatever. You get my point. Fair enough. You're right. They try and say it's a point of strength. You're exactly right. Fine. Fair point. Well taken. Like.
you know me, I go in the weeds. I'm like, okay, well, I can talk about, you know, why farmland did it four years ago. But you're right. No one really does it from a point of strength. So extra BS on that. So, okay, so what do you do? You sell it. You sell it, but you don't... You're spending too much mental capital on it.
We're spending too much time on it. So give us a quick, what are you doing? People have followed me into this and I've used it as a final. I think what's going to happen is right now it is trading at three times earnings and they will buy their way to growth. And so the shares are not reasonably priced at $9 or $10. And I think if you say,
Should it be at 12? You know, should it be at 13? Then you can say, yeah, there's 20 or 30% upside from here. It's hard to find that in a market like this. So I sit patiently and wait for, yeah, a little bit of a dead cat bounce. And I'll tell you one other petty thing that I do. I take a lot of solace in the fact I go and I look up what the CEO owns in terms of shares and equity compensation. He's getting roasted today too. So that makes me feel a little better.
Okay. All righty. You good? Want to know how I really feel? You good now? You feel good? I'm a little better. I'm a little better. All right. Should we get him on the phone? All right. I don't think he'd want to. Yeah. Leslie Picker.
Bail us out with the headlines, please. No phone throwing here, Scott. A federal judge just ruled the Trump administration cannot rely on the Alien Enemies Act to speed up deportations. The Trump-appointed judge finding the administration went beyond the limits of the 18th century wartime law it used to deport people it said were alleged members of the Venezuelan gang. The Justice Department has yet to comment.
The Department of Health and Human Services is working to develop a universal vaccine to target multiple virus strains such as influenza and coronavirus. HHS officials said today the vaccine would be an accountable alternative to the COVID vaccine and other treatments, but didn't say how much the project would cost, though the Wall Street Journal, which first reported the story, said there would be a $500 million federal investment.
And more than 80 Harvard University professors are pledging to take a 10% pay cut to support the school in its fight against the Trump administration's move to freeze billions of dollars of federal funding. The faculty said they were aware Harvard faces financial difficulties in, quote, its defense of academic freedom. I'll send it back to you. All right, Leslie, thank you. Leslie Picker, straight ahead. Josh Brown's best stocks in the market list. New name just hit the radar. Halftime back after this.
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All right, we are back and this is exciting. Starting today, CNBC Pro subscribers can get access to Josh Brown's best stocks in the market. They are names that Josh and his team at Ritholtz Wealth Management have identified based on a number of factors like the stock's relative strength. Josh has a new name today that just hit the radar.
Yeah. What is it? So Spotify, and we wrote it up today. It's available on CNBC Pro. But one of the reasons why I think it's so important to talk about the best stocks in the market, my friend, dearly departed John Borman once said, if you want to buy a stock because it'll go up,
Buy one that's already going up. Spotify looks incredible right now. It's under substantial accumulation. It is acting exactly like Netflix has been acting, and there's a really good reason why. But I want to talk about that outperformance because I think that that sets this up for a really good second half.
This is the best year-to-date performer out of the 20 communication sector stocks that trade on the New York Stock Exchange with a market cap above 10 billion. It is the second best one-year performer behind only Reddit. It's doubled in the last year. It had this post-earnings pullback.
the earnings were phenomenal this is now a company that has approximately 700 million monthly average users there are almost no companies on earth with a user base that size and they are monetizing which is really key free cash flow has been taking off their premium subscription business is 254 million of those subs
And I like the setup here, both for a trade or for an investor. So from a trading standpoint, you can use that key support level at 540. That's the bottom of that candle wick from right after they reported earnings. The stock recovered immediately the next day.
That's a nice pivot for traders. For investors, what I would do is look at the 50-week moving average. That has acted as a guardrail to the downside since early 2023. If it gets below there, something has materially changed. So long as it stays above, I think you can ride this name. RSI is 54, so a lot of relative strength here, but not overbought. And I think it can get back to those 52-week highs. It's not far away. Jim?
Joe, this is a stock we talked about yesterday, this week, earlier, isn't it? We've been talking about it. Bill Baruch came on and he said he bought it. Malcolm F. French bought it. And then the stock went down a bunch. It did. Right back, though. Yeah, right back. Came right back. Still own it. Josh, how many names are on the best list?
It changes every day. But on the case of Spotify, it's been on the list for 23 straight weeks. OK, so we're looking at this. We're looking weekly and we're looking for stocks that break down because either an earnings report or something, they may get eliminated. They may not. What's notable in the case of Spotify didn't even come near the 200 day.
No. And has held that uptrend. I'm using a weekly for an investor, a weekly average, because what I don't want people to do is get whipsawed, as they might have after that earnings report. The earnings report was good, the reaction was stupid, and it was rectified immediately. So this is why, here's why I love it, and obviously I love it, because I believe that you buy stocks that are going higher because they'll continue to go up. I believe you buy the confidence. And one of the reasons you buy the confidence is because the industry is
is moving towards systematic trend following. It's moving towards looking and observing price. Sorry, Jenny. Those funds are not looking at different folks. So in the case of Spotify, we purchased this stock on Halloween. It was clearly a treat at that time. We're up 54% on it. And when we initially bought the stock, you
you saw the momentum begin to build, you saw the revenue growth begin to build, and then from there, the acceleration happens. But the critical point of all this is, you have to have stocks like this in your portfolio where you ride the winners. That is the only way you defend against an environment where markets correct. You have to be able to ride winners, and it's been proven that non-discretionary rules-based strategies are better at it than discretionary. All right, good stuff. We will do Shaq.
and the earnings. I'm doing a chat right after the show. I know you are. Well, we're going to do it before the show's over. All right. And you can feel even better about what might happen after the show. Can I go too? You're in. Thanks. Be sure to sign up, by the way, for CNBC Pro for Josh's best stocks in the market. You will get insight into each name plus exclusive market commentary. Go to cnbc.com slash Josh Brown or scan the QR code right now on your screen. It'll take you right there. Santoli is next.
We are back. Senior markets commentator Mike Santoli is here at our desk. As I said at the top of the show, two down, two to go. Yes. So far, so good. And we talked about it before the close yesterday. There was a chance that some of the mega caps that had sort of taken their medicine, had their valuations compressed, maybe could protect the market.
protect this tape again and take control at least on a one-day basis. That's what's happening today. Breath is so-so today. The S&P went up and just tagged that April 2nd level. Maybe it's enough for now in terms of the rally, but if the mega caps hang in there, they're not tariff impacted. I guess you can say you're supported, even though we now need some more hard progress before you get much upside in the cyclical stock.
And we'll see what happens, obviously, with Amazon and Apple after the bell. We can look ahead to the jobs report, too. We'll do that at three today. But since Josh is here and you're going out to the Berkshire annual meeting with Becky, I thought, you know, I wanted to get your expectations and have Josh, you know, sort of give you his ideas on where things might be going from here. What you really want to hear more than anything else is what?
It's an interesting moment. The stock has done so ridiculously well relative to the market. It's been kind of quality on top of quality and defensive on top of defensive. Probably means it's expensive.
But because of the cash holding, they're not getting the benefit of that. What I would want to hear maybe a little bit is if there's going to be a roadmap. I mean, there's a lot of optionality built into this balance sheet right now and built into the way the company is structured. They always say they're looking for businesses. They haven't made a significant acquisition in quite a long time. So I almost feel as if they're in this. We're happy to sort of sit there and let opportunities go past because we're not being penalized for being super conservative. They're cash heavy.
and they're somewhat equity light, I guess you could possibly say. They've been selling down some positions and raising a bunch of cash, and it's proved to be really prescient in this period of uncertainty and volatility. - Look, if this stock were in like a 20% drawdown because people chose to focus on the negative, which is like a slowing consumer and the railroad business,
the conversation about how much cash they have would take a much different tone and the move to make would be obvious buyback stock it's literally not the case this name made a new all-time record high like within the last six weeks that's number one number two um just versus the s&p 500 you could you could chastise them for not buying businesses or doing transactions but
Honestly, this thing has beaten the S&P three-year, five-year, 10-year, and not by a little. It's not neck and neck. It's five-year number. I think it's 170 versus 100.
So it's really hard to say that the cash position is penalizing shareholders in any way when you have T-bill yields still 4% plus. And they own 5% of the outstanding T-bill. Here's a theory. I'd love to hear what people say this weekend. The theory is he wants to set his successor up with...
a clean slate. Like, why would you at 97 years old or whatever he is? Almost 95, yeah. Almost 95. And by the way, here's one other thing no one's talking about. Might have just done the greatest trade ever done by any human being outside of Jesse Livermore proportionally with Apple. Yeah. Bought the absolute bottom eight times earnings netting out cash and then sold the absolute top
Nobody's talking about this. And Buffett doesn't call himself a trader. He still owns a bunch, but you're right. He reduced that overweight significantly. I mean, sold almost most of it. That's literally maybe dollar-wise the greatest trade that any human being has ever done ever. Proportional to like the world. And that could be a, you know, maybe a final flourish as opposed to some people thinking he wanted to do one last kind of eye-catching deal. Do me a favor. Say what up for me. You got it. Yeah.
I'll see you at 3. All of this, obviously, a big reason why you should tune in this Saturday. Mike, as I said, and Becky will be in Omaha. It's going to be live on CNBC, 8.30 a.m. You can catch that, the entire meeting. It's going to stream on .com and Plus. Don't miss it. It's a master class any time you get a chance to hear from the greatest to ever do it, Warren Buffett. Coming up, we're breaking down the Shake Shack quarter with Josh next.
- Shock reported, which is why we're gonna talk about it. Stock's not doing too much, but what'd you make of the report? - 321 million versus 328 million expected. So very, very slight revenue miss. Earnings per share, 14 cents versus 16 cents, but the stock's okay.
because restaurant level profit is increasing. That was the promise when the new CEO came in, that they were gonna look at those unit level economics and boost them. 17.3% year over year restaurant level profit growth. That's the most important thing
So when you think about this business expanding from a few hundred stores to a few thousand stores, which is the plan, and you ask yourself, like, is this the kind of thing where they can execute along the way, not just make investments and wait years for them to pay off? There's your answer. It's coming from that specific number. So I'm still in shock, staying long, ride or die, et cetera, et cetera.
And that's the story. All right. And on a day when many are looking at McDonald's and talking about that, we go Shaq for obvious reasons. We'll take a break. We'll do finals next.
Let's do final trades. Josh Brown, you start us off. I want to talk about Uber hitting 81 today. It's backed off with the market, but has not seen that level since February. This is a stock that's up 35% year-to-date. Looks incredibly strong. So he's talking about momentum. Yep. You front-ran it. I couldn't even make the segue. You're so excited about adding it. I'm so excited about it. Added to JOT yesterday. How could we not own the top industrial stock year-to-date? Yeah.
All right. You still own it or no? Yeah, still own it. Love owning it. Yeah, all right. A lot of love for Uber. What's your final then, Jo? Okay. Wait, Jo. Oh, Jo, sorry. Final trade is because I know Josh is... He was so excited about Uber, he forgot about his final trade. Josh is going to be door dashing a lot of Shake Shack to his house. All right, enough already. ETF strategy yesterday entered a position in Dash. Take a look at the chart.
All right, Jenny. All right, this one lowers my blood pressure. Shell. It trades at 10 times earnings, has a 4.3% yield, is down 12% on the price of oil. But meanwhile, the majority of their revenues come from LNG, which is on super long-term contracts. So good price right here. So it doesn't necessarily matter if oil continues to stay in this range? Not really. Okay. We'll keep our eye on those stocks. Obviously, today we see Uber move in a little bit, and the market is green across the board. I'll see you at 3.
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Sitting through a lecture won't sharpen the people skills required to lead a company. That's why at UVA Darden, the moment you set foot on grounds, you're immersed in a dialogue-driven environment that simulates real-world business scenarios and calls for real leadership action. Our top-ranked faculty design a curriculum that empowers you to lead your peers, manage teams, and drive measurable results. Ranked the number one public business school in the country, Darden stands apart not just for what we teach, but how.
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