Mega Cap Moment of Truth 1/30/25
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All right, Carl, thanks so much. We'll follow that breaking news, obviously, make the transition to covering the markets for you this hour. Stocks, they are higher today. Welcome to the Halftime Report. I'm Scott Wapner. Front and center for us this hour, the aftermath and the look ahead. We're talking mega cap earnings. Meta and Microsoft are in the books, moving in opposite directions. And now Apple is on deck. We'll trade all of it with the investment committee. Joining me for the hour today, Josh Brown, Liz Young-Thomas, Kevin Simpson,

And Jim Labenthal, I just told you we are green across the board. In fact, we are, but we are also reacting to those mega cap earnings. Last night, looking ahead to the one that looms large this evening, we will begin with Microsoft, which is the big loser at this moment because it's falling on its cloud guidance. By now, you know the story. You've seen the stock move. What you haven't heard from is Jim Labenthal, who owns that stock.

and who, like all of you, is thinking about what this now means for the trajectory of those shares. So I'll toss it to you first. Sure. I mean, let's just come out and say the obvious. This is still Microsoft. This is still the juggernaut in software and cloud services that it's always been, to the extent that there was a disappointment last night. For somebody like myself, who's been underweight to stock at less than half of what the S&P 500 weighting is, it now becomes quite tempting. We know, we've talked

for quite some time, Scott, on the program about how Microsoft has underperformed for quite some time. We also talk quite often on this show that valuation is not a catalyst, but in the end, valuation does matter. It's just a question of when. It was simply too expensive in the mid-30s. Now we're looking at a forward multiple that's in the high 20s

and I will wait for this stock to stop going down, but then I will add to it. This is still Microsoft. It's going to be a huge part of any passive ETF flows. And that's it. So one quarter disappointed. This does not mean that there's something fatally wrong with Microsoft. Far from it. You know, guys, I'm going to make a turn for just a moment because I like to keep you up to date on things that are moving right now. And we're going to have more reporting on this. But let's show shares of Juniper Networks if we could.

uh, at this very moment because the Department of Justice, uh, has sued to stop HPE's billion dollar deal to buy Juniper. Uh, and you can see the instant reaction here, uh, as we see shares sell off. We do have Dom Chu, uh,

who's up for us on this news. What are we learning here, Dom, as we see the obvious reaction in the stock? Sure. I mean, forget billion, multi-billion. It's a $14 billion deal, Scott. $40 per share in cash. It was almost a year ago, a little over a year ago, that Hewlett Packard Enterprise announced that they were going to buy Juniper Networks. What this would do is create a computer networking behemoth, if you will. Some of the commentary coming out of the now Trump Department of Justice with regard to this particular deal

suit to block this deal. This idea that there would be a consolidation of what is currently now three major players, so says the statement from the DOJ.

that it would consolidate from those three players, HPE, Juniper Networks, and Cisco Systems, down to just two, creating an effective duopoly. So aside from that, what we do have now is the shares of Juniper are now at $34.20. So below that $40 per share cash offer for the company, Hewlett Packard Enterprise as well is reacting to the downside to the tune of about 2%.

So, we will dig into the overall filing, but the headline is, this is an interesting move from a DOJ perspective because a lot of pundits out there over the course of the last several months

have identified a more merger-friendly possible Trump administration with regard to how it would treat some of these types of deals. This one here apparently did not sit well with the DOJ. We'll bring you more as we know more. But again, $14 billion deal, $40 per share in cash from HPE to buy Juniper. Now, seemingly on the rocks. Scott, I'll send things back over to you guys. I think your last point there, Dom, was perhaps the most salient one. An administration that was deemed to be more business and merger-friendly, at least,

So far, there's the decision that we see suing to stop this deal. So we'll follow that story for the rest of the day, obviously, and beyond. Back to the conversation about Microsoft. Kevin Simpson, I toss it to you. So stocks down, Azure revenue, the

The growth is down. That's what one of the problems is. You sold a covered call in Microsoft ahead of the number. Yeah, we didn't think the number was going to be great, but we didn't think it was going to be this bad, Scott. So I think I agree with Jim. If anything, it's a stock that we've been looking to add to at this point. We wrote a call going into it. Obviously, we're going to collect that premium. I think that there's tremendous opportunity still with Azure.

It's slowing down. That's problematic. But I think it's because they can't keep up with the demand. And you've been raising the red flag on this stock for a while. And I think at this point you were right. And I think we're looking probably to get back into the names. OK, so we'll watch it, obviously. What are you thinking about, Josh, as you see a stock down near 6 percent? I mean, if there was a question about.

Look, there's a lot of questions about Apple. We'll get to that. But if there's a question about one of the hyperscalers directly in the AI game, maybe this was the one that had the most to live up to, given DeepSeek and the questions about Microsoft's already sort of changing relationship as it relates to OpenAI.

Yeah, look, I think there was a moment where we all collectively kind of agreed, oh, wow, Microsoft made this early equity investment in OpenAI. They kind of wrapped up Sam Altman, and they are in the driver's seat for this technological revolution.

And as a result, the stock galloped ahead, got a big valuation, and then all of the plans to spend and spend and spend like there's no tomorrow started to ultimately weigh on this company. And I've pointed this out before, if we're worried about the AI-driven market advance, then this would be ground zero. When does Microsoft decide

it's time to spend a little bit less. We didn't get that this time, but what we did get was slightly less good guidance going forward on the Azure business. And as a result, we have the worst individual trading day for Microsoft since 2022. I think it's notable. I think the company's okay. Stock price might not be okay.

It's been consolidating since April of last year. Now it's at the lower end of that consolidation range. And you really don't want to see it break below meaningfully because what that would imply is not that there's some fundamental issue with the company, but it would imply a downward re-rating. And we're no longer excited about the AI prospects here as a shareholder base. Now we're more concerned at what the cost is going to be and where is the ROI as a result. So forward revenue outlook guidance cuts are almost all

always negative in the short term i don't think that i would be playing the stock for a quick bounce but i think longer term it'll be okay so it's if you're like a trader

I think it's off your list right now. If you're a long-term investor and you don't own it, it should be on your list. And that's the different perspectives that I think are worth having after what we've just heard. You know, we've wondered what the CapEx fallout might be, Liz, as it relates to DeepSeek. The CFO of Microsoft said CapEx would be similar.

for the next two quarters. It's probably too soon for them to kind of reassess how much the goalposts might have moved, how much the game may have changed, but at least it's not changing in terms of the spend right now.

Yeah, well, CapEx is going to come under scrutiny, I think, for the entirety of the year. And it has been since the middle of last year for all of these AI names. And Microsoft is obviously not immune to that. To Jim's point earlier, the flows into passive ETFs, and I want to be clear, software was one of my calls and still is one of my calls for 2025.

So if you look at a software ETF ticker IGV, Microsoft is a top holding in that ETF. So it's pulled down today. I still believe software will be a beneficiary of this, but there's obviously going to be some bumps in the road and sort of this handoff between software companies that could be the next phase beneficiary and the ones that are benefiting perhaps today, semiconductors,

and that theme. So this CapEx question continues to be the thing that investors will queue on. And the other piece that I want to mention about this particular earnings season, companies are getting punished a lot more than usual for missing even on some of those just little line item details. And I think that will continue as well. So these expectations are high. I'm glad you brought up the IGV. And we can show ServiceNow. We can show Snowflake. We can show Salesforce today because if you want to see where some of the

more significant losses are, it is related to software, cloud, ServiceNow down almost 12%, Snowflake's down almost three. You see Salesforce as well. It takes me to Oracle, you, because you're trimming some. As you suggest, there are now perceivable threats. That's interesting because...

Larry Ellison was recently in the Oval with the president or wherever that news event was at the White House. And Oracle shares were up a ton. Right. So where's the perceived threat?

Well, the perceived threat is deep seek. I mean, I think that's obvious. I mean, let's just go back a week ago, right? Nobody saw any threats, including me, right? Riding Oracle up last week was amazing with Project Stargate and NVIDIA, for that matter. And then all of a sudden over the weekend, the threat landscape changed. Now, the weird thing about trimming, and I'm looking at the camera, but I'm kind of talking to you at the same time, Scott. The weird thing about trimming is the day after you trim, you're really not sure what you're hoping for. You still have a position in both Oracle's

and Nvidia, which I trimmed as well. So it's not like you're hoping for them to go down, but you took money out so you are to a certain degree voting with your feet. At the end of the day, I have to characterize this as simple risk management. That's all it is. The threat landscape is different now than it was a week ago. It's higher. I'm still in both positions.

but I have to respect the fact that it's not as free and easy as it was a week ago. And also tying into this, and this is what I think what you were talking about, at least as I perceived it with the software trade, is there does seem to be a leadership change in the market for the last several weeks, maybe even the last couple of months. We know the Equal Weight is outperforming. This doesn't mean that tech is now going to be consigned to the dustbin of history. Far from it.

Tech should do just fine. But it is a time that somebody like me who has believed in the broadening for quite some time is willing to not only reduce risk, but take it from those areas where he thinks the puck has been great to where it's going to be going, which is the rest of the market. He's talking in the third person again, Judge. Did I do that? Did I do that? Yeah. Referring to yourself as he? What's going on here?

I'm actually proud of myself. All he asked you was why did you sell Oracle and you went biblical on us. I don't know. It's a lot. Did I smite him? I find, look. Smote. I'm thinking back to a tariff threat cell GM. Yeah. Don't wait for the details. Yeah. A deep seek threat.

Trim Oracle don't wait for more details How do you know that it is in fact the threat that you claim it is and how the game has changed like you suggest it has okay, I Love your question. Let me be really clear. I don't know what you did. I like it better when you don't but it's okay That's okay. I'll give you something to fight with Jim doesn't know don't know anything with certainty about the future now

like there does anyone else. Again, risk management with GM. I had a little bit of insight, to be honest. I mean, Trump, Trump, the first administration was just awful. The trade wars were terrible for GM. I'd love to get back into GM. I mean, honestly, if the tariffs don't come through, that stock's what, 20 percent lower than it was before that news came out. And they're

going to make, what, $11 a share? I know we're not talking about GM. Here's the point. You don't know with certainty, so you have to evaluate and always balance risk versus reward. With GM, I sold the whole position. With Oracle and Nvidia, I still retained between the two of them seven percentage points in my portfolio, so I'm really exposed. I'm in that no man's land vis-a-vis Scott, who, if it goes down, will say you own it.

And if it goes up, you'll say, well, you trimmed it. I love this. No, no, no. It's not a matter of that. It's a matter of I'm thinking to what Tom Lee told me the other day on Closing Bell about how the market reacted to the deep seek news. It was like ready, shoot, aim.

So it was like there was a panic in the market where all of these stocks got hammered on a headline or the conversation about DeepSeek when we really don't know other than the fact that their model is being praised.

Anything else about the story? I am not an IT expert. Reading all the IT experts, this idea of distillation, where somebody like DeepSeek can basically glom on to open AI, use open AI to create its own model, that seems to me to be a risk. I mean, I'm sorry, I don't mean to chuckle about it. That seems to be a risk that needs to be dealt with. And until it is, and I'm not sure that it will be, as I said, I think the threat landscape has changed.

Still in the names, but I'm really quite comfortable taking some money out on the perception that notwithstanding what Meta, Microsoft, everybody said about CapEx, that could change. The threat landscape is different now. You want to talk about Meta, which is going the opposite direction, which seemed to, I don't know, it's positioning going into this number because of open source, the reason why DeepSeek

sort of generated the conversation that it did. Well, there's Meta up 2%. Now, it's not a huge move, obviously. But nonetheless, Kev, you got the stock. It's your number one MAG7 pick. Is it still after this report and what this company had to say as it hits a new record high today? Yeah, this continues to be our number one MAG7 play for 2025, even in light of what happened with the Chinese AI companies earlier in the week. We think that the $60 to $65 billion spend is a lot.

But when you listen to the conference call, you feel like they have it under control in terms of their massive game plan. And it's not just a one-trick pony anymore. I talk a lot about the hardware that this company has competitive with Apple to the degree in which it works and operates. And the advertising is something that I feel like no one will ever get better. So if this AI play becomes a monetization story for real, this stock will continue to move higher. 50% earnings growth. It's unbelievable. You want to give the download from your perspective on Meta?

I just loved Zuck cold open on the call last night. Like, I just thought that was so hot. He's like the opposite. First of all, you get the opposite reaction that you got in Microsoft. Zuck gave you the same reaction that Tesla shareholders got.

when they listen to Musk do the same thing. This is what it takes now. You want to run one of these, one of these Mag7 names? You want to be the CEO? You have to be part of the entertainment too. You have to come out early on the call and say things about 10Xing and 100Xing and what Zuck said about agents.

and this being the year not two years five years this is the year that a billion people utilizing one of the meta platforms will have their own um personal assistant i don't know if he could deliver that the stock price certainly thinks he can and i feel like that's a really big ingredient here that was missing from satya nadella uh zuck does not feel like he's playing defense in fact it feels like open sourcing llama early on was the right move

And so I think that that's why you got a way better reaction here, obviously in addition to the fact that they're finding tons of growth in reels and videos and et cetera, et cetera. He knows what audience he's playing to as well in terms of the commentary that he had regarding

regarding the new administration and how Meta's role and his own perspective has sort of dramatically morphed into something that wasn't there in 1.0. They all bent the knee, but he put on the red hat. And shareholders were interpreting that as good. That's what we need you to do right now. So I mentioned Apple has a lot to prove tonight. There's no question about that, just given what the stock is.

has done and the way that Wall Street has really turned negative on it over the last couple of weeks. You've had a number of downgrades, the likes of which you really haven't seen before going into a print. I can't remember when the street has been this negative going into the print by this many different analysts, all because they're uncertain about AI and what it's going to mean for the upgrade.

You own the stock too. So this is one of the three that we just talked about that you do own. How do you view this going in as you get another downgrade yesterday from Oppie to perform from Outperform? So I candidly, I think I sort of disagree with it's all because of AI.

I think there was a narrative shift in the wake of the deep-seek stuff where people thought Apple is screwed, they're building on OpenAI's platform, they don't have their own AI, the phones aren't selling, they can't sell AI in China, blah, blah, blah. Then when that news came out and they whacked all the AI stocks, Kevin's nodding, Apple caught the biggest bid we've seen all year.

because I think the narrative now shifts to, oh, wait a minute, maybe Tim Cook played it right all along, did not commit to spending $50 billion to build out a large language model, knowing that those LLMs were susceptible to becoming commoditized

And instead, Apple is now in a pole position to do something new in the aftermath, benefiting from cheaper, more efficient versions. So that's kind of like what we saw in the stock price. I don't know how long they'll hold on to that aura that they obtained by

accident, but that's where it landed. I think the bigger issue for Apple is, number one, China. Number two, the refresh cycle is nothing special. Number three, it's unclear what the modernization is going to be from smarter Siri. By the way, Siri is still stupid. And Apple intelligence, which clearly is not getting people off their couches to upgrade their phones at a faster rate than in previous model refresh cycles.

and that's a bigger issue for the stock it looks once again like it's twenty twenty three twenty twenty four slow to no growth and uh... that's got away on this name at a thirty something times multiple i was a we could do about this long-term shareholders quite frankly and i said this at the beginning of the year i'm not excited about apples prospects in q one here you go steve kovac uh... you've got a long time shareholder who says i'm not excited

gives you all the reasons why tonight in in in very many ways is its moment of truth

That's exactly right, sir. We're going to get finally some answers to the questions we've been asking since Apple Intelligence first debuted right behind me back at WWDC in June of last year, where they and basically to Josh's point here, how much they're spending on artificial intelligence capital expenditures to train their models. That almost doesn't matter as much as if it doesn't result in growth in iPhone sales. And so far, the third party data we've been getting

hasn't been that great and hasn't really played out this narrative that people have been hoping that Apple intelligence will launch on these new devices. If you want to experience Apple intelligence, you need to run out there and buy an iPhone 16 or one of these newer devices. We have not seen evidence of that. And that is why we've seen four downgrades so far just to kick off this year, playing up

all of these concerns around Apple intelligence launch, the middling reviews around Apple intelligence, these concerns of, you know, there's notifications that we've seen. They've had to make changes to how it displays news because it's been putting out false information, things like that. That has been...

A real headwind for them. Also, just these concerns about weakening demand in the current quarter that we're in right now ahead of the iPhone 17 launch in the fall. I will say, though, services has been kind of picking up the slack here. That is expected for a double digit percentage points. But still, the iPhone is the big question. And everyone's going to be wondering from Tim Cook on the call today is whether or not he is seeing this evidence of Apple's

intelligence driving sales or not. I'll also mention the China angle here too. There is a deep seek factor here as well. Apple intelligence is still not in China. We don't know when it's going to launch. Last we've heard from Apple is there are discussions to get it out there. But they need the government's approval not only to bless and approve Apple's

intelligence they have to find a Chinese partner in AI in order to put that into their Siri chat bot like they have done with ChatGP here in the United States. So these are all challenges and headwinds that I have to talk through today. Scott. And we'll see what happens and we'll obviously hear from you later as well. Steve thank you. Steve Kovac, Cupertino right outside in Apple Park. As you see the other stock that we need to address here is Nvidia because it's the worst week since November of 2018.

It's been a no good, very bad week, as you know, down 17 percent. Leads me back to Jimmy Jitters. You trimmed NVIDIA. You trimmed NVIDIA now, too? I'm sorry. That was pretty good. Yeah, I did. Look, the stock's been a home run. I mean, what has it done? Tripled for me in about 15 months. Maybe you should trim it somewhere around here, not like after it falls off the curve.

this ski slope and gets hit with the avalanche? I'm going to say this again. It's up like three times in 15 months, and I'm going to give full credit to Josh, who's been in it forever and is up like a thousand times in it. But I have absolutely no hesitation on this. I'm amused and, you know, I'm amused by the pushback on it. I still own it, but

I think we have to take seriously the possibility, not the certainty, the possibility that CapEx, maybe not 2025, but 2026 starts to disappoint. I'm not saying that's definitely the case. If I thought that were definitely the case, I wouldn't have a position in it at all. But I think the

The possibility has increased over the last week that CapEx, particularly in 2026, will be lower than expected. 27 times earnings, though. This is the cheapest you've been able to buy forward earnings. This is the cheapest you've been able to buy NVIDIA, probably since I've been aware of the stock. I'm not hating on it. Not quite in Jenny Harrington territory, but it's in Jim Labenthal territory. Yeah, I mean, the PEG ratio, I think, is probably less than one. Why aren't you buying more?

Why is this a trim down 17% on the week and not by more of what still is at the forefront about where this whole movement's going? I think everybody in the market, particularly in the leadership names, at which the top of which is Nvidia, got a shot across the bow. I think there's a shot across the bow, and when you take a shot across the bow,

The next move shouldn't be to continue on so that you take a shot in the engine room and get sunk. It's a time to pull back and think about it. I'm trying to find different ways to say the same thing, which is this is just risk management. I'm not hating on the stock. I agree with the valuation comments that Josh has made. I do think, though, that the probability that earnings disappoint has been brought forward in time from what might have been a 2027 event. So I...

I can't say with certainty. I'm not actually hoping to be right. I still have almost a 4% position in Nvidia. So, Liz, why don't you wrap this up for us in a sense of has anything that's happened this week caused you to reassess in your own mind

where the clients that your company is advising as it relates to the market on how to think about the mega caps. Have the goalposts moved related to these stocks? - I think the competitive environment has changed.

And that's something that we should have expected at some point in this AI theme. The AI theme is not a months-long theme. This is a years-long theme. And we should always expect when an innovative technology player is in the marketplace, it's going to change the competitive environment. That's, I think, what happened

this week. I don't think we found out that something suddenly was wrong with the U.S. players in the market. It's just that competition changed. So to answer your question directly about the clients that we have, we have mostly younger investors. We've got a lot of our investors between the ages of 20 and 40. They are interested in technology names. They are interested in these mega cap names, the headline makers, the disruptors. They're probably over leveraged to these kinds of names. So perhaps.

perhaps, I mean, not all of them, right? We do have an ETF that tracks the top 50 holdings on our platform. But what I would tell them and what I have told them is that you have to make sure that you're diversified into the stuff that you think is probably kind of boring. I mean, even last year, gold was beating the S&P up through the middle of the year. That's not something that typically younger investors are usually clamoring to buy. Now you have to look at sectors in the equity index because I don't think investors are going to rush out of equity

They're just going to continue buying other places within equities. So you look at sectors like health care. You look at things like industrials. You look at materials. You look at some of the stuff that still should have earnings strength this year because I think it's all about fundamentals this year, but that isn't trading at all-time highs. All right. Good stuff. We'll take a quick break. We come back. We have many moves to get to from Kevin Simpson. We'll document all of those. Plus, coming up, 5G.

Top five new names have just hit Josh Brown's best stocks in the market list. We will tell you what they are a little bit later.

What's at stake when administrations change? From the first 100 days and beyond, EY brings insights on the issues that matter. Executive orders, regulation of AI, the fate of billions in tax credit, global trade and workforce stability. No matter the policy shifts, EY helps business and government leaders remain resilient and seize dynamic growth. EY, navigate the geopolitical and economic landscape with confidence.

Learn how to use AI to be more successful with CNBC Make It's new online course. We'll give you examples that can help you master AI. Go to CNBCMakeIt.com slash AI and register now. As we come back, we continue to follow the latest on that deadly mid-air plane crash near the nation's capital, in the nation's capital. Eamon Javers is live at Reagan National Airport with the very latest. Eamon.

Scott, the tragic reality here at Reagan National Airport is that earlier this morning this investigation moved from a search and rescue investigation to a search and recovery effort. That means there are no survivors here. 67 people have apparently lost their lives in this incident last night, and now the effort begins.

to recover all of the bodies from the frigid Potomac River here and also to bring up some of that wreckage and get a sense of what exactly caused this tragic incident. I want to show you some pictures that we shot, Scott, from our vantage point. Take a look. We shot these just a short time ago and you can see some of the activity that we saw here. FBI teams, D.C. Fire Department teams. We also saw teams of divers going into the water. It is

brutally cold out here and was overnight. There's still ice on the Potomac River. You can see there some of the water vessels making their way out to the wreckage and just how cold that ice is as the Coast Guard officials begin to look for bodies, to look for wreckage of the plane, to figure out what exactly happened here. The folks who responded to this responded within the first 10 minutes of the crash last night, and they have been here overnight and through the morning. As of right now, Scott, I can tell you

that one of the ironies here is that life does go on. Reagan National Airport has reopened as of 11 a.m. this morning. They are launching flights here. They're taking in landings here. We just, we're talking a little bit about the congestion of Reagan National Airport. We just ran a timer here. We were clocking landings

just about every 65 seconds here this morning at Reagan National Airport as they work through the backlog and that gives you a sense of just how busy an airport this is and how many flights are coming in and out of here on a minute to minute basis throughout the day and night, Scott. So they are getting things underway here. Travelers are moving through the airport now even as that

recovery effort. We can see from where we're standing here, some of the boats in the Potomac River just over my left shoulder are still continuing to look for the bodies of some of those victims of last night's tragedy. Yeah. Eamon, thank you. It's Eamon Javers, the latest there at Reagan National, just outside Washington, D.C. Let's return to some more of Kevin Simpson's portfolio moves. As I said, we would. These are in your Devo. You bought more

Agnico Eagle Mines, yeah? - Yeah, we actually reinitiated this as a new position. It was a stock that we owned last year, Scott. Really, really great name. Small Canadian mining company, much more gold than copper.

We were writing calls against it. It got called away. We pivoted into Freeport Mac Moran, which is more copper than gold. And we just haven't been able to get the stock to move or do anything for us. We've been writing calls, writing calls, writing calls. We're going to rotate back into Agnico Eagle. It's at a 52-week high today. Strong dividend growth. Nice share buybacks. We like the name a lot.

You sold covered calls in Amgen, in TJX, and Freeport. Why those three? Specifically with Freeport, we went out of the stock, so we wrote an in-the-money call. I've been writing calls just out of the money, and the stock keeps going down, so it's hard to get out of it. This time we just said, you know what, we'll write an in-the-money call and ensure that we're out of the position. We like the name long-term, not short-term. TJ Maxx is just a little bit of a hedge on half the position.

heading into earnings in case there's any pullback in retail. We love the name long term. Amgen, it's a covered call that we don't think will get called away. It brought in a real nice premium, but it's a 295 and the stock's at 283, so we should be good there.

Okay, now these other moves are in the Qdevo. MongoDB you bought and Toast as well. Yeah, this strategy is a lot more fun to talk about on TV. I got Toast from Josh and it was a stock that I started following when he brought it up and we talked to a lot of restaurant owners that are just embedded in that ecosystem. I think you got stopped out of it or sold it last month. I'm actually buying it as an ADR. I'm buying French toast.

Continue. We can write US-based options on that, so it's still fine. We really like the ecosystem. The customers are growing at a very rapid clip, and they're stuck in that ecosystem. They can't get out of it. So a little bit more speculative, a little bit more vol, but it allows us to write really great option premium against it. MongoDB, same thing, just tremendous volatility. It's down today. We're probably going to add to it a little bit. It's a really, really tiny position, but we own it because it's got such robust call premiums that we can generate a lot of cash flow on this volatile name.

Still like toast? I do. I got stopped out of it after 100% gain in the stock during 2024. But, like, it's on my screen. I probably should be back in it. This thing is going to go. Looks like it's going to challenge that old high from December.

And I'm going to keep my eye on it. We'll see if the trigger gets pulled. OK, straight ahead, we'll tell you those new stocks on Josh Brown's best stocks in the market list. One of his names just crushed earnings. It's pacing for its best day ever, which is why you want to know what it is. I'll tell you next.

What's at stake when administrations change? From the first 100 days and beyond, EY brings insights on the issues that matter. Executive orders, regulation of AI, the fate of billions in tax credit, global trade and workforce stability. No matter the policy shifts, EY helps business and government leaders remain resilient and sees dynamic growth. EY, navigate the geopolitical and economic landscape with confidence.

Learn how to use AI to be more successful with CNBC Make It's new online course. We'll give you examples that can help you master AI tools. Go to CNBCMakeIt.com slash AI and register now. All right, here we go. Let's do the best stocks in the market list according to Josh Brown. IBM is number one. It is hitting a record intraday high following earnings today. He mentioned it

last week, I think, as being on your list. What is your take today? Look, IBM has completely transformed its business. It popped onto the list a short while ago. Obviously, you're not chasing the stock after today's huge move.

But I think it deserves to stay on your radar because it's in the new sweet spot of the market, which is AI, but from an IT and services perspective. We actually brought a guest on the show, Dan Dolev, last summer, Scott, if you remember, from Mizuho, who laid out the case for why you need to follow the IT stocks. They are at the crux of where this AI thing, where the rubber's actually going to meet the road for business customers.

All of these stocks are on fire. I got a bunch of them on the best stocks in the market list. Do you want to go through them one by one? Let's do that. Gartner. Yeah. Tell me about Gartner. Ticker symbol is IT. I mean, can it be more on the nose? Look, did you know that of the $100 million in revenue plus companies in the United States, 88% of them are not publicly traded?

which means you've only ever heard of 12% of them because they have ticker symbols. The nation is filled with companies that are huge and going to spend tons of money on AI, and companies like Gartner are in position to help. The ticker is IT. It's the right place to be in the market, and this is one of the market leaders. And if you pull the chart back, I know we're doing intraday here, you can see this is obviously a stock that's on the verge of breaking out above those old highs. Okay, thank you for that one. Cognizant is the next.

Yeah. CTSH, although they spell cognizant with a Z, which is sort of off-putting for me, but we'll get past it. Up 11% below the all-time highs. 71 RSI, so slightly overbought. Big rally, 52-week high as we speak. But it's a 16 forward PE. Of the five names I'm talking about today, it's the cheapest of those five, looking for 7% earnings per share growth. And I'm betting the estimates will be going up.

uh... based on all of this i_t_ spend same story as i_t_ accenture same thing the third i_t_ name on the list accenture is perhaps the largest of them all acn is the ticker pull that chart back here's a name that is breaking out uh... it i mean it looks unstoppable to me if it can get above uh... three ninety there's really no resistance there and again

AI contracts with small and large businesses as far as the eye can see. Companies don't know how to implement LLMs. They need to pay Accenture to come in and help them do it. And that's the bull market that doesn't go away, deep seek or otherwise.

Okay, Cloudflare. This is a cloud data play, similar to Snowflake, but does not have a habit of blowing up every other time it reports earnings. So that's obviously a plus. This is a stock that still hasn't fully recovered from the bear market of 2022, 37% below those all-time highs, but

It looks like it wants to continue to rally. Stock has been absolutely ripping this past week, up 10%, up 23% in the last month, 62% in the last 12 months. And I still think it's being discovered. Most people don't know what this company does. And if you're a new long, that's your advantage. Go, daddy. Okay.

Back to the Super Bowl for the first time in eight years. We're getting a GoDaddy commercial. Walton Goggins is going to be playing a small business owner trying to sell goggles, get it, using GoDaddy's new AI product for small business, AIRO. I think it's pronounced Airo. Anyway, GoDaddy's at 24 times price to free cash flow, so not cheap, but it's less than 1% below all-time highs. This is AI.

And if you look at the last few earnings reports, they have absolutely blown estimates out of the water. That's why this name is working. And if they become the go-to AI provider to small business, all the people that buy their domains and manage their web properties through GoDaddy, that's a really big business. And most people aren't giving them credit yet for getting in there. Okay, good stuff. Additions to the list, as we try and do on most Thursdays.

Up next, we debate more committee stocks that are on the move today. A big sell call on one of Josh's names, a pop for one of Jim's, a drop for one of Kevin's. All right, welcome back. Let's show you our shares of CAT because they're lower today. Profit falling, tough at equipment demand. We could show the stock. There it is down near 5%. Kevin, you own it.

It's still up over 20% for the past 12 months. We didn't think the earnings were going to be great, but admittedly, we did not think they would be this bad. Two weeks ago, we wrote a covered call, brought in some nice premium. We'll be able to close that out today. I don't know that I'd be a buyer at this level if you don't own the stock. It's probably not the best entry point. Still a little bit expensive for us, but we're going to hold it. We've got nice option premiums on it that we'll be able to drive as we wait for it to recover. Still a great company.

Jimmy, you own Wynn, which shares last we saw were up following strong results from LVS, which is Las Vegas Sands. So Las Vegas Sands represents Macau, so they're better than expected results in Macau. Whether I agree with it or not, Wynn is and has been for the last two years measured on Macau results. I'm of the opinion that it is far more than Macau. Las Vegas has been killing it. They've got a growth opportunity in Dubai that will hit next year.

And frankly, when I look at Wynn and I see a company that's been growing EBITDA, it's quadrupled EBITDA over the last two years, granted the pandemic hit them, I think this is a very undervalued stock. I'm frustrated that it's been flat for so long, but as I continue to see them execute well and buy back shares, I really think it's just a matter of time. What's the stock done over the last year? I'm

I'm asking. I don't have it in front of me. Call it flat, but there's times it's been up. There's times it's been down. It's been a disappointment. I'm not going to sugarcoat it at all. A disappointment from the share price point of view. From an operational point of view, they kill it. And what that means, by the way, Scott, you've heard me say this many times before, they take their excess cash flows, they buy back shares. When this hits, it's going to have leverage from a lower share count. Starbucks reiterated sell today at Redburn. Price target to 78. It was 77.

The stock did hit a new 52-week high. What's your assessment here after earnings? We suggested going in that, you know, Brian Nickell has gotten a pass to this point for obvious reasons. But now he's got to show me.

Show you, you're the shareholder. I'm in the name. So I obviously didn't expect that to have this big of a jump. After the news, I basically went into the call like, okay, this is probably the last of the bad quarters. It looks like that's what the street has kind of coalesced around that idea that, all right, the last four quarters have been terrible. And this last quarter is the last time that we really don't have Nickel in there putting his imprimatur on every aspect of what's wrong with this business.

Again, I did notice the baristas are writing people's names with Sharpies on the cup. I know people are giggling about that, myself included, but there's a bigger idea there, which is getting back to the roots of people actually thinking that this isn't just an assembly line where they have to walk in and pay $11 every day.

there's some meaning again to that experience when you're in the store. I don't think that that single-handedly will turn the story around, but the stock is winning. So it's now 14 above its 20-day moving average, 84 RSI, so it's definitely overbought. Let it pull back if you missed it. Maybe you'll get it at 106, 107, but I think the name can work from these levels, and I do not want to be out of the story. - Okay. The setup is next.

We have a developing story for you. OpenAI's Sam Altman addressing the deep-seek threat for the very first time publicly. Our Kate Rooney is live in Washington with the very latest. What's he saying, Kate? Scott, so CEO Sam Altman addressing that deep-seek threat on stage to lawmakers, to Trump insiders, to some administration officials, calling it

A consequential moment for OpenAI and for AI, he says, it shows very real competition in the world, speaking about China there, and that compute and computing power is more important than ever. DeepSeek has sparked some conversations around cost, as you guys have been talking about, and some of the spending commitments. If costs do come down, someone asked Altman what DeepSeek is going to mean in light of Stargate and what could be a $500 billion level of spending on data centers. Altman saying, quote, this shows that

That's a really good thing to be doing right now. OpenAI, as backdrop here, is accusing that Chinese competitor to chat GPT of essentially ripping off their AI models to build another version at a fraction of the price. I spoke to Chief Product Officer Kevin Weil. I'm going to paraphrase what he told me. He said there are a lot of legitimate and concerning questions around the origins.

basically said what it means and the takeaway is that China is here. He said, we knew this AI is gonna be not just competition between US companies and Chinese companies, it's ultimately gonna be competition between the US and the PRC. Says it's kind of the first big salvo in this. Also said it's the first time, not the first time rather, that China has tried to copy US IP. So they're ready for it and that they have a new model coming, he said, that is head and shoulders above anything else.

that's out there today. I am hearing from a source as well that OpenAI is in the middle of raising up to $25 billion additional dollars from SoftBank, which would make SoftBank the largest shareholder in that company, upping Microsoft there. They would replace Microsoft as the biggest shareholder, Scott. Back to you. All right, interesting stuff, Kate. Thank you for that. That's Kate Rooney, as you see, down in Washington for us. We will do finals next and try and maybe squeeze in some setup names too.

Jimmy Jitters is not on closing bell. Anastasia Amoroso is, though. Malcolm Etheridge is. Rich Saperstein, Brent Talkington, and Stacey Raskin as well. Final trade. Jimmy, you're first. Jimmy, the bull likes alphabet. The bull likes alphabet. All right, Kevin Simpson.

RTX, incredible free cash flow, almost 55% higher than last year, 31 years in a row of dividend growth. Okay, thank you. Liz Young-Thomas. Software, I think it's the next beneficiary of this AI theme, and CapEx dollars will flow there. Josh Brown. My Baker Hughes reports before the open tomorrow. I'm already pre-clenching to get ready. All right, good. See, I told you we'd get a little setup in there. Thank you for that. Thanks for watching. I'll see you on Closing Bell. The exchange is now.

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