Deep Dive
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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.
All right, Carl, thank you. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, Momentum's moment as several widely held names hit new highs today. We will trade them, of course, with the Investment Committee. Plus, we have some new moves to tell you about. And that man, Al Michaels, he'll be with us today on the Super Bowl, on stocks, and he's going to get a new stock pick from our very own Josh Brown. Also with us for the hour today, Stephanie Link, Joe Terranova,
We will go to the markets, show you what's happening today on Wall Street. Mixed picture, Dow's negative at the S&P, and the NASDAQ is a fractional winner. But I want to stay on this momentum story because I think it's an interesting one. Many names that are probably in all of your portfolios, certainly in a bunch of ours as well, whether it's the JOTI or whether it is the MTUM, those ETFs,
At least 52-week highs. The MTUM is hitting an all-time high, Joe, today. Names like Goldman, which are in there. There's some cross-ownership, too, between this and yours. JPM, Costco, Robinhood, NASDAQ, ICE, Walmart, Gallagher, Palantir.
Well, we're calling Momentum's moment. Why? Why? Because in a bull market, you are going to see that investors are going to pay a premium for where they could find confidence, confidence reflected in strong technicals. And what's interesting about that is that the market is becoming more and more non-discretionary oriented. You have all these algorithmic funds that are populating the market right now. So in a bull market,
it is only natural that when they're observing price more than anything else, and their timeframe on how they're observing price might be somewhat different than each other, but ultimately the center of gravity is looking at price itself. That's when you're gonna see this factor perform remarkably well. And what's interesting, Scott, it almost can be a leading indicator for a bull market reaching an inflection point, because if you look back on the end of 2021,
Momentum peaked in November of 2021 and the market rolled over right after. So this doesn't look like it's in the process. By no means. Necessarily. By no means. Josh, you know, you, J.P. Morgan, one of yours, NASDAQ, for example, which you've talked about before. Why don't you weigh in on this, too? Well, part of my strategy when we talk about the best stocks in the market on the show frequently, you're looking to hang around the goal.
And you get lucky, Joe comes from a hockey household, so he's nodding. You get lucky when you hang around the goal.
You get more shots on goal, number one. Number two, you find yourself in the right place at the right time. It's why I love the strategy that Joe has built in ETF form, and it's why I try to bring these ideas onto the air. And you just, like, when you just take a look at some of the highest quality names right now that have momentum, that are close to highs, that are above their intermediate term trend lines, what I love so much, Judge—
is that the range of industries and sectors and sub-sectors these names come from, it's all over the map. There's no specific theme. It's not, oh, these are all AI stocks. Yes, you have a lot of AI stocks,
but then you've got um your lpl financials your willis tower watson baker hughes 100 decker's outdoor there's no ai it's it's uggs relax so i love a market like that where you don't have to just be an expert or key on one or two themes and if you miss that theme you missed everything this is an
unbelievable market environment right now. You get dips, you get nasty days, you get opportunities to buy in, but the strong stocks remain strong. NASDAQ's a great example, 83. Look at the follow-through in Palantir. A lot of people wanted to come in, oh, it's up 22%, fade it, LOL, fade you. There are a lot of those types of names here. Follow-through after great earnings, not just a one-day pop.
And I hope it stays this way throughout earnings season because people are doing very well right now. Steph, crowd a record high as well, up 5% on the week. Speaking of where momentum is in a wide range of stocks, and this one's yours.
Yeah, I mean, CrowdStrike has been a nice recovery story, and that's because the fundamentals are so strong. This company is going to grow revenues at about 30 percent and earnings about 40 percent. Subscriptions are running at about 30 percent. And the retention, that's the most important thing in my mind. The retention is about 98 percent.
in spite of the fact that they had that security issue. So I think it's not cheap. It's had a nice recovery, but it's certainly one that I really want to be involved in for the long term, Scott, because
Cybersecurity, we've talked about this many times. I think it's just as big, if not bigger, than AI. And I think as a result, the big five are going to get bigger. And this is the number one player in the industry. Gallagher, Joe, a record high there. We talked about insurance yesterday. I believe this was a new addition in your rebalance. AJG? Yes. East. Welltower. We said Walmart. We said ICE. We said Robinhood.
You want names like Netflix and Paychex and Baker. Live Nation is one. You want to hit on JPM? I mean, it's just one of those that's on this list that is in yours. But to what Josh was saying, if you look at the strength in a sector like financial services, which has a lot of these. Six months ago, we were sitting here saying, where are financial services going? They're not doing anything. What are we going to do? Well, they're leading, and they're leading across a range. So, Josh, to your point, it's not just money management firms.
or asset management firms, it's insurance companies, it's exchanges, it's a whole wide variety. - Payments, data, it's incredible. - And it's not just momentum, it's actually earnings growth. - No, it is. - So you've got a combination of not just price, but earnings and cash flow, which is not just for the next six months to a year, but you can look out a couple of years now and say, hey, what is the true valuation for these? - Can I say one thing about that? It's such a great point. One of the things that happens when you have an actual positive interest rate,
And I don't just mean nominally, it's 4%, it's 5%. But when you have an interest rate that net of inflation is positive, all of a sudden, it kicks this whole financial services cycle into gear, where you've got like a steeper yield curve, you've got people making money on lending, you've got issuance. We're going to talk about a name later in the show that is like the perfect name for this moment. But the entire sector, to Surat's point, companies have ways of... So this idea that, oh, they're raising rates, it's bearish for the market.
Actually, no. It's really good for the financial services sector for there to be a real rate of return on fixed income and all of the knock-on effects that come as a result. You know, I said yesterday I feel as though we're pushing the limit in terms of our weighting. We increased financial sector exposure up to 31 percent right now. But to your point, we're combining two factors. We're saying, OK, momentum.
technical confidence and quality, looking at fundamental confidence as well. And whether it's Bank of New York Mellon, which we own, 10% revenue growth recently. I think Steph owns that name as well. Interactive Brokers, we purchased this name in October of 22. We're up 185% in it. Do you know how many times, myself personally, I would have sold out of that position? The rules are saying, no, Joe, sit in the sidelines, don't touch it because...
because it's working. And look at Capital Formation and look at the companies like Blackstone and Apollo and KKR. They're also all participating in this. So I think you're really being spread wide and it's not an inch deep. It's actually real relative value being created. Steph, what other names, I mean, they may not be on this list, but that should be on our viewers' lists.
Well, within financials, I think Truist has done the best job of the super regionals in terms of cutting costs and improving profitability and a little bit better loan growth. Their capital levels are great. They can return cash to shareholders. They're doing about 500 million in buybacks a quarter. I think that number gets raised when we get Basel III endgame rules. And you
You guys were just talking about, in terms of yields, the industry has not seen net interest income and net interest margin expansion in many, many years. And last quarter, we actually heard from many companies, Wells Fargo said this as well, that they thought that net interest income and margins have
bottomed and it will be a 2025 story to see a recovery. These stocks still trade, truest trades at under book, which I think is insane. And so that's my biggest position. But I think Wells Fargo, they had a catalyst with the asset cap lift.
That's coming sometime, we think, this year. And I think the stock will be rewarded really well when that comes out. But I still like Morgan Stanley as well and Bank of America for M&A, capital markets, deregulation of the whole nine yards. So I'm very overweight financially. I mean, momentum cuts both ways. And that's the reality. As all of you know, from however long you've been investing in these markets, that brings me to what's taking place with the chip stocks.
which have been hit, as you know, lately because the deep-seek news.
We made a wall just to show you the deep-seek sink for many of these names. Nvidia is still down 11.5%. This is since January 27th, the day that all this really unfolded. AMD had news this week which wasn't good, stock down 10%. There's Taiwan Semi and Broadcom, which you had ARM Holdings today cutting the guidance. The stock was lower earlier. Josh, how do we view what's happening with some of these chips?
There's been a rotation. They're moving out of the chip companies. They're moving into the chip equipment companies. Semi equipment is on fire. So we didn't have any of those names in this graphic. - Like AMAT and LAN, KLA Corp. - Let's do them right now, real quick. Let's do them right now.
Out of the top five best performing holdings in the semiconductor holders index, three of them are semi-equipment. Here's KLA 10 core, plus 20%. Guys, the year-to-date number I'm giving you, 20%. It's February, what is it, 5th? Lamb Research up 13, AMAT up 11. The median return for the semi-equipment names year-to-date is,
the ones that are in the S&P 500 is plus 12%. So it's not a bear market for semis. It's a mentality shift. It's like, oh, all right, wait a minute. Maybe this whole thing is not just about GPU sales, but it's about all the supporting businesses that are involved in companies maximizing the yield that they get out of the chips that they are buying, will buy. And so I think the cycle doesn't have to die for you to make money in chips. You just have to think bigger.
We've owned KLA Corp since November of 2020, since inception. Josh, you're spot on just in terms of the semi-equipped names. We also own Applied Materials. I'm disappointed that right now the strategy is not LAM Research. Just personally, I think it's ridiculously cheap and the fundamentals support it. But we have been cutting back our semi-exposure. We're only down to 4% right now. In semis, we were up at 11%.
just one year ago. And I also think beyond the rotation that Josh was talking about, semis into semi equipment, if you observe the relationship between semiconductors themselves and software, go back to July 11th, you're going to see a remarkable, remarkable outperformance in the software names. The IGV since July 11th of 2024 is up around 22%.
You've got the SMH, which is down 12%. So that negative correlation trade is in play with a lot of hedge funds and speculators, and it's going to work until it doesn't. Steph, Broadcom is your principal chip name, correct?
Yeah, I've been pretty selective in terms of semiconductors just because they've all had such a nice run and they seem to be pretty crowded, which is why you're seeing the corrections that you're seeing. But just think about it, Scott. NVIDIA is still up 86% in the past year. Broadcom up 88%. TSMC up 75%. SK Hynix up 50%. You get my point.
These stocks have had enormous runs, and they are beneficiaries of AI and the spend. And we didn't get any CapEx spend. In fact, we got increases from a lot of the hyperscalers. So I don't think the semis are done. I just think you want to be a little bit more selective. IBM had an analyst meeting, Scott, this past week.
And they said that they expect spending from enterprises on AI to go from 245 billion this year to 835 billion by 2028. They said 98% of enterprises
have been examining and working on AI, but only 26% have processes in place. So the trends are still very favorable. And in any given quarter, you're going to see mixes and mix shifts from semis, maybe to semi-cap equipment, maybe to software. But the pie is really big and it is growing and you want to have exposure. Broadcom is just, like I said, up 88% in the past year. So I'm waiting for it to pull back more because it hasn't pulled back enough. But it's a pretty fairly
fairly big position for me because it has a diversified total revenue mix between AI, software, and some of the cyclical end markets that haven't seen a recovery just yet. And their free cash flow is enormous. So they're going to continue to buy back stock, et cetera. It's just not as cheap as when I bought it initially. So I'm just watching it, but I still like it, but I'm remaining selective overall on semis. I know, but I'm just reminded of those famous words, past performance, past
is not indicative of future returns. I mean, almost, Surat, I'm like, okay, the stocks were up a lot. Great. If you're in them, great. But is now the time to reassess it if the goalposts related to these names have moved? Like, who cares that they were up a lot? If the goalposts have moved...
they could be down a lot. - Scott Martin: Yeah, and I think you saw that with Arm, and we'll be interested to see what Nvidia says on their call because if they give any hint of, hey, demand has slowed or all this CapEx is not coming our way, even though the stock's trading in the high 20s, you could see a pullback. However, I still think Nvidia is one of our largest holdings. We've cut it back over time, but I do think the secular tailwind there, and you could have a couple quarters, and we know Nvidia can be down double digits, so it'll be up.
So you want to also pick high quality companies and I think for us, Nvidia is one of them. What's your read on Qualcomm and the report? So really strong report. I mean, it's kind of one of those things where
Good news was bad news for them. The overhang is at the end of this year, will Apple finally pull away and say we're not using your chips? And that's what the stock is now reflecting. So I think this uncertainty, once it's taken away, will really do much better for Qualcomm. It's trading at 14.5 times earnings, which is a lot.
with a strong balance sheet and dividend. So I do think you don't have, I mean, to Joe, your point, you're not going to have any momentum or catalyst right now until that happens. Do you think there's a bigger problem, though, with smartphone exposure when you're looking at the semiconductors like Qualcomm? What do you mean, like Skyworks, which is getting destroyed today? Yeah. Jenny, by the way, Jenny Harrington owns that. She's traveling. She is.
with us, I think, this week. Maybe tomorrow. Maybe next week. Better not let that go for us. No, we tried. We tried. Believe me. She's pulling us a ride. Well, at least she responded. True. She responded. True.
Remember the last time you tried to hide. You know when they say ignore bad behavior? That's what I do, okay? But this is why it trades at 14.5, right? I mean, the SMH trades at 22. So you've got a 33% discount for a stock like Qualcomm that's discounting not just Apple, but saying, hey, do the Android phones. Can you maintain that amount of royalty? And I think, you know, this stock has proven over time to do it. So it's like a value play in semiconductor, which is just a contradiction in terms by itself.
So I want to hit a bunch of names before we take a break. And they're important stocks, too. Amazon tonight. How are you feeling about this? I'm going to tell you right now, for me, this is the Super Bowl of the Mag7 reports. To me, I think it's going to be more exciting than NVIDIA. They're expecting $187 billion in revenue. That would be a 10% year-over-year number. EBIT of $19 billion, which is 40%.
44% growth year over year. People don't think of Amazon that way, but they really should. The earnings per share, $1.48. You ready for this? 49% year over year growth. AWS should be 19, not too high of a hurdle.
More interestingly, out of the Mag 7, Amazon is expecting the second highest earnings per share growth for 2025. 77% is what the street's expecting. Only Nvidia is higher at 127, which is like from another planet.
Amazon is expecting the second highest earnings per share growth in the next 12 months out of all of the top 75 market caps in the S&P. So I told you last year, 170, 175, this is a $250 stock in disguise. I think she wants 300. I don't think I get it on one earnings report or two earnings reports. It might take the course of the year, but that's where I think ultimately this trajectory could be.
I love the enthusiasm and I agree. I spoke yesterday about the fact that you can't have it both ways with revenue growth as it relates to the Mag 7 and Amazon, what they have done in the last several quarters is say to the street, okay, here's the revenue growth and we're going to accelerate that revenue growth. It's clear. Cloud business is going to be interesting tonight.
because you've heard from Microsoft that the cloud business wasn't so good. You've heard from Google. But here's the giant. Here's the biggest cloud business there is. Are they able to defy what we heard from those other two Macs? Guys want to hit meta real quick, which is up again, again in capital letters, because today will be 14 straight days of gains for
Syrah shares of Meta. Well, it's been an incredible run. I mean, you have a couple of things going on here. Their AI usage in Instagram is doing really well. And also they, you know, as the deep seeks of the world do well, they do well because it's not proprietary for them. And I think you've got, you know, this huge tailwind behind it. And Zuck said he's going to spend CapEx the last time he did. He got killed. But now people are believing that he can have a return because he's actually done it. So this is the key point on Meta.
And I talked to Dan Ives about this last week. Their LLM was open source from day one. They never pitched the LLM to the Lama as like, this is by itself the cash cow we're going to sell this, like chat GPT. The idea was people are going to build on top of this, which is what's going to give it value. And that's why the stock was unscathed. Which gives them the network effect. 100%. Which is exactly what they've always been trying. That's why they didn't beat this thing up last week with all the deep sea casualties. I totally agree with you.
Feel the same way about Amazon. Sorry, I know we're trying to get to a break. No, it's all right. I got to get to a couple other names. Bedrock AI is Amazon's LLM platform. And they're saying, bring your own. We don't need to sell you Amazon proprietary LLM. You want to use Lama? You want to use ChatGPT? Do what you want to do, which is, I think, the right strategy.
in the wake of deep sea. Two more quick names. Oracle, Morgan Stanley Wealth Management, adding it, Surat, to its U.S. all-cap growth model portfolio. That means it's going to be in your portfolio if you are a wealth management client of Morgan Stanley more than likely. What about that? You own that stock. I own the stock. I mean, it is really done well. It's turned a corner. It's got application software, AI usage, data center growth, which is going to be solar.
and nobody's cutting back on that. And this was a sleepy CRM software company, and now it's actually got some growth drivers to it. Okay. So not technically a tech name, an industrial, but it is a big NASDAQ name. It is Uber, which has had a tumultuous week, as we know. I wanted you to weigh in on this, Josh. The price target gets raised today at $1.
at B of A, which reiterates its buy. So they had the earnings. The stock was down a lot. You're getting a nice rebound, as we see here. What's your take? You said this was the most mispriced stock in the NASDAQ 100, right? I don't understand this. I honestly don't understand the sellers at all.
I listened to the call in real time. I used the quarter app to do that. So I'm looking at the slides. I'm looking at the live transcript. There was like not one thing discussed on that call, either by management or the sell side, that gave me any difference of opinion in terms of what the opportunity is here. The numbers were fantastic.
The guidance was within the range, not soft. It's just like the first idiot that wrote an article wrote soft in the headline, and then the algorithms did what they did. But look at the comeback today, because people are stupid short-term, not long-term. Any seller of the stock below 70
You couldn't come up with a justification for why it was down to the degree it was yesterday. So that does not explain what happened to my face, by the way. So I don't want anyone to think that I got hit with the Uber earnings call.
and that's why I have a stitch. But it really felt like a punch in the face. I'm gonna tell you though, this company is the best positioned autonomous vehicle player. I think it's better positioned, quite frankly, than Waymo or Tesla because it's not enough to just have autonomous vehicles when you wanna ride. You need a network so that if an autonomous isn't available but a human is, those things are interchangeable. Dara laid out that strategy beautifully on the call
And I think if you didn't listen to it yet, that's what you want to do. Whether you own the stock or you're looking for an entry, that's the right move is listen to his explanation on AV. I think they're going to win. I was wondering a little bit about the stitch. I was wondering if someone tried to get between you and a camera or a microphone. I was thinking maybe eyebrow stitching. Chick-fil-A. Chick-fil-A.
All right. Thanks, buddy. We're going to take a quick break. And when we come back, we do have a lot of committee moves to hit yet. We have new trades from Josh and Stefan Surratt. And later, remember this halftime highlight when Josh pitched a new stock to broadcasting icon Al Michaels? The name of the company is eBay. Ticker symbol, believe it or not, eBay.
Well, Al bought it and the trade worked. Now Al's back. It is the Super Bowl right ahead of us. And he's going to get a new pick from Josh as well. Coming up.
Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson Report.
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. All right, we're back. Let's take care of some moves here. You sold Bristol Myers already. Yeah.
Yeah, it was a technical trade. It had a tight stop. Reported earnings. The earnings were fine. The stocks were selling off in the pre, recovered somewhat, came out of the name. Look, if you're buying something where you think you're about to get a breakout and then price tells you, no, that's not happening this time, right at resistance, it failed, it doesn't mean it can't go higher. It just means there are better places to be. I mean, you bought it on Monday, just to put it into perspective for people. Surat, they did have earnings.
You see what the stock is down. They did. The earnings were fine, by the way. The earnings were fine, and the pipeline is stronger. So it's a question of when does that catalyst come in, given the overhang of the nomination in Africa. I can see why in the short term people don't want to own it. But I think longer term, it's a very cheap stock. Put that chart back up. You can very clearly see 61, 62 is meaningful resistance here.
maybe a little bit further back, guys. You can very clearly see the stock failed at the same level multiple times. Call me when it's 61. I'll take a fresh look is the way I would phrase it. Since we're talking healthcare, Steph, how about Lilly, the mixed quarter that they reported? We can see what the stock is doing here, but do you have a take?
Yeah, I mean, I thought it was a very solid quarter. Earnings beat. I think the revenue was really in line. And thinking about it year over year and growth up 45 percent. I don't know any pharmaceutical company that's growing 45 percent. Monjaro grew 60 percent year over year. Zepfan grew 52 percent sequentially and almost 100 percent year over year. And gross margins expanded by 90 basis points. Very solid quarter against low expectations.
But the underlying revenues and the mix, really very strong. And by the way, you also bought more UnitedHealth, correct?
Yeah, I did. And I've been nibbling every time it kind of pulls back. Yesterday, it was down 3% on kind of a silly story about profits maybe misrepresented. I do not buy that at all. This is the number one company in the industry with huge market share, growing revenues and earnings double digits. They have an $18.2 billion buyback. And it's trading at 12.5 times EBITDA. Historically, this thing trades at about 15 times. So I think I'm getting a bargain here.
It's a longer-term story, 2025, but I'm going to stay patient with it. Bought more Chipotle, too.
Yeah, I mean, I thought the quarter was very good and the story remains very much intact. They've got a new product cycle coming. They have digital that is accelerating that's going to help margins. They have solid unit growth. So I thought the quarter itself was fine. I think any restaurant company would love to have a 5.4 percent same store sales number with a 4 percent transactions pricing power as well.
and margins that are beating the street. So I think January seems like it's a little soft. I think it's a one-off. So I bought it when it was down 6%.
Good to buy more Chipotle here? I think so. I agree with everything Steph said there. I think over the course of time, they'll work some of the challenges that they're having in the near term out, and they will continue to have the premium that's being paid for them. One other thing on health care real quick, which we have a 5% weighting towards, so we're underweight on health care. There's one name out there that we used to talk about all the time on this show, and that's Merck.
Merck is down 33% from its June high. Merck right now looks like a literal ski slope that you could ski down from the left to the right. That's a name I've been interested in in the past. I don't know if anyone else has it, but that's a very popular name to own, and it's not performing well. Falling knife. Look at this thing.
That's rough. Speaking of doing the downhill, Edison International, 52-week low today. You're out? We got out a few days ago. The overhang, you know, it's very unfortunate what's happening in California, but the overhang on this stock, until they really figure out what happened, it's going to take a long time. And then the fundamental structural issues of owning this stock going through, it was just too much. So we took it off the table. Okay. Let's get the headlines now with Bertha Coombs. Hi, Bertha.
Hey, Scott. Democrats on the Judiciary Committee have pushed to delay the vote on Kash Patel's nomination for FBI director as they call his fitness for their job into question. They held a press conference moments ago demanding the Senate block the nomination, saying his appointment would be dangerous for the country. The committee vote will now be held next Thursday.
President Trump's social media company is taking steps toward launching a Bitcoin ETF. The product will have to be approved by regulators or pointed by the president. The Trump media company says it applied for trademarks and three ETFs under its new Truth.Fi brand. The company says it plans to launch the products later this year.
And the public in 44 states can now get a test that claims that it can help doctors rule out autism in children using a strand of hair. A New Jersey startup, Linus Bio, launched the test called ClearStrand today.
which uses the hair strand from children one to 36 months old to identify biomarkers associated with autism.
That test has not been cleared by the FDA. And Scott, even with a biomarker, obviously there are also environmental factors that often go in with these things. All right, Bertha, thank you. Bertha Coombs. Up next, sports broadcasting icon Al Michaels. We will talk football ahead of Sunday's big game. We'll break that down for us. Plus, Josh has a new stock recommendation for Al. We reveal it next.
Are you still quoting 30-year-old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to discover. Learn more at discover.com slash credit card based on the February 2024 Nelson Report.
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.
All right, welcome back. The Kansas City Chiefs go for three in a row this Sunday in Super Bowl 59 down in New Orleans when they meet the Philadelphia Eagles. Who better to size up the game and talk some markets than broadcasting legend Al Michaels? There he is. It's good to see you always. Welcome back.
Judge, this is my favorite show on television. I feel like I'm looking at my extended family. Love you guys. We feel the same. You're welcome at our dinner table, Al, anytime. And you know that. And it's great to have you ahead of this game. What do you think the deciding factor might be here for whether the Chiefs get this three in a row or the Eagles get redemption against the Chiefs? Defense. Defense.
Everybody's looking at Jalen Hurts, Patrick Mahomes, Saquon Barkley. I get all of that. I think you have two of the best defensive coordinators of all time, Steve Spagnuolo with the Chiefs, and you have with the Philadelphia Eagles a man who's been there for a long, long time in Vic Fangio. So I think if it comes down to one thing, apart from something crazy really, determining the outcome of the game at the end,
It's the defense that dominates. It's the defensive line that I think can put the most pressure on the offensive line. You know, you're always talking about keeping Mahomes in the backfield and all that. It's the same scenario for every game. But I think defense prevails on Sunday. Spread's pretty tight. Kansas City's given a point and a half. You've seen so many of the great quarterbacks play, Al. Where does Mahomes, in your mind, rank if he gets this three in a row?
Well, he's near the top to begin with. And it's like, you know, what do you want for dessert? You have two great desserts to pick from at the end of a fantastic meal. So, you know, you look at Brady and you look at going back, obviously, to Joe Montana and the other great quarterbacks. And Mahomes is right there. I mean, he is certainly in every conversation about the greatest quarterback of all time. And I know people like to...
delineate. This guy's got to be one. This guy's got to be two. I don't feel that way. I enjoy both of them. I think they're both terrific. And I think it's very hard to separate them. But, you know, Patrick is right there, obviously, with Brady. He's already there right now. He doesn't have to win another Super Bowl as far as I'm concerned. Yeah. How about Hurts? You know, he doesn't get the love, so to speak, that a lot of these other, you know, upper echelon quarterbacks do. I assume that this Sunday's game can change a lot of the conversation around him.
It can. And don't forget, even when he lost a couple of years ago, he had a phenomenal day. So they gave up, I think, 38 points. You know, he was responsible for 35 points. I mean, that's about as good as a quarterback can do or is expected to do. So obviously, you know, this is a feather in his career cap if he can pull off a win. And I think before his career is done, he'll win one, at least one.
We played the clip a little while ago in our tease of Josh giving you that eBay stock pick back on September 12th, which did quite well, we must say. You sold out of that recently, correct? You took your money and ran.
Only because I had to avoid a margin call on some other stocks that I had, including, as Josh Lowe knows, a day trading stock I bought in 2010 that's still in the portfolio 15 years later. So I'd like Josh to come up with a day trading stock I can buy that I can hold for the next 15 years. Go, Josh. You're in luck. He has a new name for you. I'm going to turn it over to Josh and you guys can have a moment here.
good afternoon al this is josh brown from ritt holtz wealth management we made a commitment to get back to you only when we isolated the situation that we thought had maximum near-term upside potential if you have a pen i'd like to give you the ticker symbol go for the gold all right name of the company is moody's the ticker is mco this is a 499 stock that i think when it breaks 500
All bets are off. You've got price targets across Wall Street. Goldman Sachs, Citigroup, significantly higher than today's price. And Berkshire Hathaway owns 13% of the company. This is one of their longest-term holdings. They've been in it for about 25 years. What's happening with Moody's, Al? Very simple story to understand. Two companies in one. You've got the investor services side. You've got the analytics side.
The analytics side is blowing up into a full-blown AI data business for Wall Street professionals. You name it, private equity, private credit, hedge fund, investment bank, asset management, everybody's using Moody's data. The market's on fire. This company sits in the sweetest of sweet spots.
I'd like to put you down for 1,000 shares just to get to know each other. If this trade works out, I want to promise you'll work with me much larger in the future. What do you say? You're already moving the stock. You had it at $499. It's $501 when we had that. There it is, $502. Look at you, Josh. You're moving the market as we speak. They report next week, Al.
uh uh uh uh february 14th is the earnings valentine's day be my valentine take a thousand shares i'm telling you i won't let you down be careful now because i'll be your valentine but you know in in uh how would you like to tell your account joint or individual so let me ask you a question a 500 stock is a you know it's it's a hard stock to buy if you'd like to buy you know a lot of shares would you buy calls
This is a function of what your timeframe is. What I would tell you is, this is how I handle it. I like to reduce the price by a decimal point. And I like to say, instead of thinking about the stock was 41 and now it's 410 and now it's 500, I say, ah, it's a $41 stock that went to 50, no big deal. You'd still buy it. So I do that kind of mental math in my head all the time. And I find that it's a good framework to think about these triple digit share prices.
I want to know if Joe Terranova also agrees with you. And can we get Farmer Jim? Farmer Jim is probably out on the farm somewhere. No, no, no, no, no. If Jim buys it, forget everything I said. No kidding. No, that's... I didn't want to bring up Cleveland Cliffs, but I can't go on this show and not bring up Steele. That's right. You know that. Come on. Of course. We're all brothers in arms. We are.
Amazon reports tonight. I was told you want to talk to Josh about that as well, or the guys. Because everybody here owns Amazon. Me too. And you must as well. So what are you thinking about here ahead of these earnings? And I work with them. Somebody explain this to me. Oh, that's true. You do. I saw Josh before. Josh thinks it's a $300 stock in disguise. I hope it is. But the thing is that I can't figure out is...
When stocks come out with earnings and they beat by 10%, all of a sudden you notice, wow, and there's a pop early on, and then they have the call, and the thing tanks 10%. The reverse also happens. Stocks don't make the number, and they go wildly up. Why does that happen?
That's a macro question, but I'm curious. Forward guidance. Because they put out the press release and tell you how they did over the last 90 days, and you get one reaction. Then they tell you what next quarter or full year is going to be, and everybody says, oh, I don't care about last quarter anymore. Now I like it, or now I really hate it. So that's why you get that effect.
um which is why i think so many of the the hottest tools that are coming out for investors have to do with instant transcription of um of conference calls steph i want to get stephanie link's take on this too so you know al's getting those amazon paychecks we know that but he wants more steph he wants this stock to do well on earnings what does he need to see tonight uh well i think that all the focus is on aws their cloud business
The expectation is for imprint at 19 percent, but I think the whisper number, Al, is 20 percent. So they probably have to do 20 percent plus for the stock to react favorably. But the other thing that's really, really important is the profitability. The company in 2024 grew operating income 85 percent. That's just enormous. So it deserves the higher multiple that it gets.
But the guidance going forward, as Josh just mentioned, it's likely to be conservative. They typically are. But when I like a stock, I actually kind of root for it to go down so that I could get a better price action for it. And I do think that if this stock were to be weak on AWS, I think you want to own it and buy more on the dip. Are you in Josh's corner? Is this a $300 stock by the end of the year or maybe middle of next year?
I think it goes a lot higher, Al, because there's three ways that this company wins. Retail, we know they have the dominant share in e-commerce. I think that grows upper single digits to low double digits growth for the foreseeable future. AWS, as I just mentioned, and by the way, AWS margins
are very high. They're going to do something like 35, 36 percent margins versus low single digits on retail. So that's why we root for AWS to do well. And then ad monetization is also very important. And that's being improved by AI. And the channel checks have been very good. And again, as I mentioned, profitability, this company has gotten religion. They're not just spending wildly.
Yes, they will increase their capex for AI initiatives, but other parts of the business, I think they're going to be much more prudent. And that's why people are more excited about this story for the next couple of years. Here's a shout out to Andy Jassy, who's the ultimate boss. Andy created AWS, of course, and that's why he ascended to the Bezos position. And I've gotten to know Andy extremely well because Andy is a gigantic sports fan.
And when you're in the sports end of the Amazon universe, what better than to have a man who loves sports? And as you know, Amazon is getting more and more and more into sports. There's a story today that's out there somewhere about maybe Amazon buys Madison Square Garden Network. I just saw that someplace. I have no idea where I saw that.
But anyway, there's a lot of stuff that's out there. And Amazon is probably the case with Netflix, and they proved that on Christmas Day. More and more, these streaming giants are getting into the sports world, and that's great for me, obviously.
Yeah. I mean, you saw it firsthand, Al. The ratings numbers for your broadcasts on Prime were up just huge numbers. The commissioner himself called that out in his annual press conference down at the Super Bowl the other day. I heard him do that. So continued success. We got to do this in person sometime. You got to come sit on the desk with us, even if it's a special trip to the New York Stock Exchange, because we'll have you anytime.
Well, at the Milken Conference, you guys come out. I'll come over to Beverly Hilton. A much easier trip for me. It's much easier for you. All right. All right. We'll see what we can do. Al, you're the best. We appreciate your time so very much. I'll have those account forms out to you shortly, sir. Love you guys. You as well. That's Al Michaels. Take care, man. We'll see you soon.
Straight ahead, what we're calling split decision. Honeywell, the latest company to announce a spin, got us thinking. Are spinoffs good for investors? Seema Modi is standing by. Our expert Stephanie Link is, too. We're back after this.
All right, welcome back. Honeywell shares lower today. The company officially announcing plans to split into three. It's the latest big-name company to announce a spin. And that got us thinking, are they good for investors? Seema Modi has some answers for us. Seema? Scott, Honeywell splitting into three separate companies, as you just said, Automation Materials and its crown jewel, Aerospace, motivated in part by GE's successful spinoff of GE Renova, shares of both the parent and the
spin co up over 45% since that deal closed last April. That's motivated other companies like 3M, DuPont to separate their businesses and simplify their story to Wall Street. Intel, Lennar, Western Digital, FedEx among the companies with plans to spin off a business in the next year. And get this, analysis from Morgan Stanley shows that spinoffs tend to outperform the market by 10.2% two years after completion, while parent companies underperform on average by 8%, Scott.
All right, Seema, thanks for setting us up. We go to our guru, our spin guru. Stephanie Lake, what do you think about this? You have so much experience in a lot of these names that have turned out to do pretty well.
Yeah, I mean, I think the spin co absolutely works, but I think the parent company also works. So spin co works because they get a fresh beginning, new management and focus 100 percent of their time on the company and more growth investments. So you should see margins improve over time and growth improve. Parent co, the management gets to focus on their core business without any distractions.
are a distraction. They don't work. So I like the spinco. By the way, the best spinco was Zoetis when it spun out of Pfizer in 2013. And the stock was up, has been up 500% since. And you're finally reaping the benefits of your patience, too, with GE and all that it has done. Steph, thank you. Final trades are next. Join me, closing bell. We'll run you right up to Amazon with Adam Parker, Mark Mahaney, Ankur Crawford, Jason Snipe, Stephanie Gill. Let's do final trades. And we start with our own Stephanie. Stephanie Link.
Boeing. Thank you. Mr. Satie. Oracle. Joe T. Zoom video. Thank you. Josh Brown. Uber. HODing right now. I'm staying long. All right. Thank you very much. Again, I'll see you at 3 o'clock on Closing Bell. It'll do it for us. The exchange is now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.
Thank you.
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