The AI Stock Surge 1/22/25
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Mom, can you tell me a story? Sure. Uh, this is the story of Redfin. You mean Red Riding Hood? No, I mean Redfin. Once upon a time, there was born a real estate brokerage that was also a magical app. They called it Redfin.

Redfin is on a mission to get people the fairest deal of them all. Like in Snow White? Mm-hmm. With listing fees as low as 1%, Redfin agents charge half of what others often charge, so you have more money to put towards your dream home. And the Redfin app has a clever way of helping you find it. A trail of breadcrumbs? No. They update their listings every two minutes and give personalized recommendations so you see homes that are right for you. And then you live happily ever after? Yep. Time for bed. Mom? Mom?

I heard this word and I want to know what it means. Uh, okay. What is escrow? I'll ask our Redfin agent. I'm sure they'll know. Download the Redfin app to get started. Fee subject to terms and minimums. Equal housing opportunity. CADRE number 01521930.

I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

Carl, thanks so much. Welcome to the Halftime Report. I'm Scott Wagner. Front and center this hour, all about AI. Stocks in that area are surging today. S&P just hitting a record high. We'll trade the biggest winners as mega cap earnings are about a week away. Sorry. Joining me for the hour today, Joe Terranova, Shannon Sikosha, Steve Weiss. I saw that Weiss was on. I got a little tripped up for a minute. I was hoping somehow he disappeared before the welcome. But nonetheless, he's here, as you see.

We'll get to some of his moves coming up, but it's all about AI today, Joe. And it's all about 6100 on the S&P 500. We have a new high. It is. And look, it's been it's been a really good week in terms of yields coming down, in terms of earnings. And then you get this an

announcements surrounding Stargate and the effect that you're seeing here, not just on the AI names that we already know, but it's really, it's expanding beyond that. It's expanding into networking. It's expanding into connectors. One of the names that I own is TE Connectivity, ticker symbol TEL. That's up nicely today on the back of this. So this is positive. This is about

spending and supporting the infrastructure the infrastructure of artificial intelligence these moves I mean it goes beyond these moves sorry to interrupt you here um I mean are these moves astounding to you Oracle best two-day move in three years can we show let's cycle through these again I mean I saw Arista was up a lot today um there's Palantir at four and a half percent Dell Technologies up

up five. A lot of stocks that we've been talking about more lately because you own a lot of them are just ripping today. Arista's up six percent. Amphenol. Amphenol, if you could pull up Amphenol, that's up. APH, that's up about six percent. They've got names like Corning. GLW, that's up, I think, somewhere around five percent today. So it comes on the back of what's been the last several days, some positive momentum in the market. So I think that's adding a little bit of a catalyst effect here that's taking us to new all-time highs. And

And look, the last several days, we've talked about this market broadening out. That's not the case today. You're reaching new highs today with bad breath. You're reaching new highs with a very narrow set of technologies leading the way. Weiss, you asked the bank robber why they keep robbing the bank. And they're like, well, that's where the money is. You asked the investor why they keep buying the AI stocks, because that's where the money is. And that doesn't seem to be changing anytime soon.

Nor should it. And the reason why that's where the money is, because these stocks have been recession resistant. They haven't depended upon the equity markets or the credit markets for funding. They're self-funding despite their massive capex. And that is where the puck is, where it's been and where it's going. Talking terms that Joe understands, hockey terms. So that's

That's going to keep happening and I've been fairly consistent and that's where I want to be for all those reasons. Again, AI has the largest

uptake, the largest hit of any technology, including the web, and that was free. So you're going to continue to see more and more dollars going there because the benefits to business are huge. So that's why I'm staying where I am. I mean, Shan, there are other areas of the market that are working, and we'll talk about some of those later, but this remains the most dominant story in the market.

As I said, the S&P is at a record high, record closing high, about 6,100. It was 6,090. So we're a little bit above that, and we'll see how the rest of the day transpires as we take you through the last stretch on closing bell, obviously. But this story seems like it's going to be dominating for the near future again.

Well, I would be shocked if we didn't in upcoming earnings season for a lot of companies outside of technology for them to still be talking about how not only do they plan to adopt AI, but perhaps more importantly, Scott, how they have already done so. So I think the difference with Oracle, for instance,

is that they weren't on the tip of the spear in terms of the hyperscalers and talking about all the things they were going to do with AI. Instead, they did some things with AI and then they came out and they said, look, we're monetizing it. And so I think what you're seeing now is you're seeing this commitment, if you will, in terms of continued

investment in AI outside of the hyperscalers. And so that's why you're also seeing it broaden outside to all those other names that you talked about that Joe just mentioned that are adjacent, that are complementary to what has happened in the hyperscalers. And so there's still going to be questions in terms of what is this capital expenditure? How does that translate to monetization for the hyperscalers? Those questions aren't going to come to later this year and into '27 and in the-- or '26, excuse me. And in the interim, what you're going to see is that all

of these earnings reports that are coming this quarter, next quarter, the third quarter, I agree with Steve. I think that companies are really looking from financials to industrials, even down to energy and materials companies, looking for ways to increase productivity, which we're seeing, by the way, in the macro numbers, we're seeing this increase in productivity, and that's helping to be driven by AI.

if you can monetize it, I think that there's no reason why investors wouldn't want to be in it. But I think it's also expanding from a breadth perspective the ways that you can play AI over 25. - What I tell you is that this is not new news that other companies are involved. I don't know why the market frankly is waking up to it in such a flurry today. - No, no, but you know what's interesting though? Let me just say this real quick. I do think it's interesting that a lot of these companies got a halo effect

Yeah. On expectations of what they might do. Right. But mostly based on what others were doing. Right. This is actual tangible stuff that you can wrap your arms around and say, well, OK, Oracle's doing this with so-and-so and such-and-such. And all these other companies that are on the periphery now have a little more skin in the game. So like Avertive, for example. Avertive's one of these stocks of yours.

That's up today. It's up 4% today. It's up 10% this week. It's up 180% over the last 12 months. And I was buying it. It sold off in the 112, 115 range just a few weeks ago. And that's my point. This is not a new story. Well,

- Well, when you have $80 billion CapEx budgets dedicated just to AI from the hyperscalers, it's not all going to Nvidia. It's not all going to engineers. It's not all going to investments in open AI, which is not CapEx. - Of course not, but now we get to actually see where the money's going. - Right, because people are doing their work now, whereas they hadn't before, number one. And number two, the valuations

they're arguing, are excessive where they are. So what are they doing? They're going to the smaller stocks. But guess what? Their valuations are more excessive. What's this valuation on this name, BRT? Can we pull that up? I think it's about 47 times. Current P on Vertiv is 98. We hold it in the JOTI ETF. I'm just wondering when you think about...

I'm just wondering when you think about all of this, if in fact this is part of the Trump trade. Because now, yes, we knew that companies like Microsoft were spending on artificial intelligence, but now the new administration's coming in and they have this affinity for crypto. They seem to have a very similar affinity now for artificial intelligence. And this is about...

helping build out that infrastructure. So I agree with you, Scott. I think this is a little bit more than what we previously knew about the thematic investing surrounding AI. And it goes well beyond, you would agree, like whatever dollar amount was bandied about today, right? This is a commitment from a technology perspective that we're not going to stand in the way. Not only are we not going to stand in the way from a deregulation standpoint of progress, but perhaps we're even going to shove it forward and take a

a more, maybe from a policy perspective, a more explicit role in this transformation. Did I just get a license today to buy these stocks again? Like if I thought that Palantir, for example, ran up too much before and the stock came back down to earth, Arista Networks, do I just need to make sure that I have a good enough

position in these names again? I also think earnings have to support the story. I think that that's very critical. And we're in the part of the process right now. So in the case of, let's say, Amphenol, you've got the earnings that are actually supporting it. I believe they reported earlier. So that's critical in this story. Do you ultimately have a free pass to reach for stocks that are rallying to all time highs on a degree of exuberance?

In the interim, that might be a little bit of a challenging endeavor. Over the long run, I think you'll be okay. I mean, I don't have anybody on the desk today who owns Dell. I don't have anybody who owns Arm. Weiss, you don't own Supermicro or Arista. You don't own Broadcom, which is another winner today. Do you need to sort of expand your horizons of the AI trade here? Well, there's a practical aspect of that. And the practical aspect of it is that

I've got a huge waiting and I run a concentrated book. So I've got, you know, 12 to 15 names, sometimes 10 to 12 names. So and they have big gains in them. So what am I going to do? Am I going to sell some of my meta, pay taxes on it and then hope to have, you know, hope that an Arista network catches up when

In my view, a risk networks is good in a moment in time, maybe a year, maybe three years. Whereas I know that if a Meta or Microsoft or Netflix, if the valuation gets ahead of itself, that eventually they'll go into it. So I'm not talking ever about

permanent loss of capital. I'm only talking about the timing of the loss that will eventually be a gain. So that's why I don't feel that I have to go just to, you know, chase the next shiny object because it happens to be a momentum chart today. I don't have room in the portfolio. I'd have to sell something to do it.

I mean, there still is a fair amount of optimism around all these names. I mean, there is a question from yesterday, which I think people are trying to figure out, is the future of Microsoft's relationship with OpenAI. Because it also came out yesterday that Microsoft is losing that exclusivity with OpenAI as its cloud provider. Satya Nadella addressed it this morning with Andrew Ross Sorkin in Davos. Listen.

Our partnership continues. We'll be a tech partner to Stargate, but more importantly, our partnership with OpenAI, you talked about exclusivity. OpenAI APIs are exclusive to Azure going forward even, so nothing changes there.

IP access to Microsoft continues. And in fact, because of this, there will be more IP. And so therefore we'll benefit and we have rev share arrangements that are great. And also OpenAI committed in a very significant way to Azure consumption. And so we're very thrilled about that as well. So all up, as far as I'm concerned.

All right. So that's Satya Nadella with Andrew in Davos. Steve Kovacs following that story for us. Is this just spin or are things really all good? The market today suggests they're all good because the stock Microsoft is up 4 percent. Yeah, it's let's call it spin by omission. How about that? Because, Scott, what we're hearing from Satya just now in that clip that you played is, yes, the opening eye partnership continues. Yes.

Microsoft is going to get access to those open AI technology and models before anyone else. Yes, they're going to be able to use it in its own products before anyone else. What he did not talk about, though, is how Microsoft is kind of losing its grip that it had an open AI. It's losing its exclusive rights to be the sole cloud provider through Azure for open AI. And that means...

At the end of the day, kind of less revenue or potential new revenue growth from OpenAI. Just keep in mind, Scott, all the OpenAI stuff running on Azure, the more activity that happens with OpenAI on Azure, the more money Microsoft makes. And Microsoft has gotten to this point where they literally don't have

the capacity to support all the growth from opening. That's why last year you saw them kind of offload some of that to Oracle. That's why yesterday Microsoft said we renegotiated our contract with opening. I and instead of being the sole provider opening, I has to come to us first and say, here's what we need. Microsoft, can you provide it for us? And Microsoft

can now say, no, you need to go somewhere else. You need to go to Oracle. This also opens up to other cloud providers, too. If I'm Google, if I'm Amazon, if I'm HPE, if I'm Dell, I'm also excited about this, the potential to work with OpenAI to help OpenAI train its models. And of course, it's great for NVIDIA, which is going to be collecting those big numbers that we saw thrown out yesterday, $100 billion, $500 billion. That is all cash-free.

for Nvidia or a large part of that is for Nvidia. Keep in mind, Scott, what Satya Nadella said last year and throughout the last year, that they just don't have the capacity

capacity to meet all the artificial intelligence demand that they're seeing. It's not just OpenAI. They have a lot of open source and third-party models, their own models running on Azure. And so they've had to kind of offload some of that. And that's why you see them spending $80 billion this fiscal year to continue to accelerate and build out their capacity to support all this stuff. But OpenAI has just gotten way too big and they cannot support it. And

And that's why you're seeing them kind of loosen their grip, say, OK, opening eye, you can go off and work with Oracle on some of this stuff. We still get to keep you. We still get to own almost 50 percent of you. We still get to use all your technology first. But the other cloud providers, the other cloud hyperscalers, where all the money is, they're going to get a taste of open AI too now. And that is not exactly

the best thing for Microsoft right now because most of its AI revenue is, and revenue growth, by the way, is coming from OpenAI and that tight relationship these two have.

Nadella is right, what he told Andrew, that yes, the partnership continues and they're getting access to this. They're going to have the best stuff. But at the same time, on the cloud part, where all the revenue is today, there's potential for them to miss out on that growth. Yeah, good reality check from you, Steve. I appreciate your insights very much. That's Steve Kovach. Microsoft reports a week from today.

There's obviously a lot of optimism. Morgan Stanley's bullish on it. They do trim their price target today slightly to 540 from 548. Jefferies is bullish on both Meta and Microsoft coming into earnings. They're confident in Azure's reacceleration. They've got 550. So they're in the ballpark around that number as well. You own the stock.

I do, and I'd love to know the last time that the analysts came that close to executing a price start. It's ridiculous lowering it by eight bucks on that kind of base. But that aside,

Microsoft has a team of 200 people. You know what these 200 people are doing? They're going out to the smaller and the medium-sized and the larger companies, and they are offering some of their tools for free if you commit to putting your cloud business to Azure. So what I'd say is that, sure, you know, OpenAI, they got to write a first refusal here, but OpenAI is

is a big customer. They don't have as much negotiating power with them either. So why tie up so much of your capacity to one large partner who can bid you down and lower your profit margins? Go to smaller companies that don't have the same wherewithal. So that's an investment in today for the future. So I actually think it's a brilliant move, and I think it's counter Steve's argument there that you're losing some growth.

But I don't know what this quarter is going to be. I don't care what this quarter is going to be. I own it for the next quarters and next quarters and next quarters. The stock had been a relative underperformer versus the other MAG7. I don't know. I'm just wondering out loud, does this maybe help

the argument against that the relationship is anti-competitive because that's not going away. Elon Musk is going to continue to have the bullhorn on that and there are going to be regulatory bodies that are going to address that. I don't know if it goes away, but I'm just wondering maybe it offers some relief to that anti-competitive conversation.

- Yeah, I think it was bound to evolve. And I think, I actually agree with Steve. I think that this gives Microsoft a little bit more latitude in terms of having to fund everything for open AI, gives them some flexibility, if you will, to kind of pick and choose what makes best sense for them, knowing that that relationship is gonna evolve over time. - And by the way, Google has the same type of team going out. You know, one of our portfolio companies

They made a deal with them in the Middle East because their presence, Google's presence in the Middle East isn't as they think it should be. So they're hosting them for free if they put all their cloud on Google. By the way, Google... I'm sorry. Go ahead.

Go ahead. Open AI as a public company, it would make it so much easier to understand all of these relationships. The price transparency would do that for us. No, sorry. Google making a fresh investment of more than a billion, by the way, in Anthropic. That's according to the FT. So they're very much a big player in this game. And I wanted to make sure you had that news. If there's a, I don't know, if there's a negative sentiment around anything going into MegaCap next week, it's Apple, right? I mean, why?

What else is it? Everybody else's price target raises, reiterate, outperform, et cetera, et cetera, et cetera. Barclays today, they reiterate their underperform. We have two downgrades yesterday on the stock. We had one last week or a couple weeks ago. There seem to be real questions about iPhone demand in this upgrade cycle. So nobody owns the stock on the desk today. Kevin Simpson just bought more of it, though.

He joins us now to talk more about that. So did you buy it now because you feel like the sell-off in the shares is overdone? What's the story here? Yeah, well, as you remember, we got out of the position in mid-December around $242. And then, of course, by Christmas, it was almost $260 because, you know, why wouldn't it be? Is the selling over, Scott? I don't think so. We really thought anywhere between $200 and $230 would be a good reaccumulation phase. So on Thursday...

We picked up a few shares at 230. Yesterday, we bought a little bit more at 220. I don't know that we were ever able to get the exact bottoms or the exact tops, but here in the 220s and all the way down to 200, we'll continue to reaccumulate the position. And my thesis on it is kind of old school. You know, we often dismiss the share buybacks. We take it as a for granted.

But they declared $110 billion back in May for share buybacks this year. And what that does is it absolutely helps earnings per share. So their growth might be 11% this year, 12% next year, more of a service model, more of a utility type thing. Another criticism against it. But when you look at the cloud and you look at Apple Music, Apple TV, when you look at the App Store and in the revenue stream,

you're talking about a hundred and ten billion dollars of free cash flow that might be boring but that's the kind of boring we like so what's the criticism of the criticism is the hardware innovation isn't there any any apple intelligence rollouts for a little bit of a dud but i don't think they overhyped it or oversold it one thing we do know about apple is when they get something right eventually

the masses are attracted to it. So if we miss a super cycle for the Apple 16, I would expect that we would see it for the iPhone 17. This is a stock that everyone hates. That's when we buy it. When everyone loves it, we sell it. And I feel pretty confident that we'll be able to generate a lot of call premium as we see volatility on this name, because the quarter should disappoint. But we're looking at far beyond that.

Thank you for the update. I appreciate you, Kevin Simpson. Thank you. We'll see you soon. Chart of the day today is Netflix. No surprise probably to all of you, given what happened with the earnings last night and the move that we're witnessing today and the follow through on shares. Look at that up almost 11 percent. They beat subs. Great. Raising prices. Record high.

I would go to Weiss first on this. Like, I know he wants me to. I'll do it. I'll do it. Because you've owned it longer. Joe's list to me very often. He's owned it a lot longer than you. As much of a victory lap as you were trying to take on the Texans.

Texting last night. I'm going to Joe first. Sorry. So Steve made a great call saying that it was going to approach 1,000. Kudos to him. I hope he's happy wherever he is right now. But look, this was an absolutely phenomenal quarter. I mean, this was the largest quarterly subscriber growth at 18.9 million. This is more than they did during the pandemic, the first quarter of 2020. So 325.

million global subscribers right now we talked about the price hike i think about what's up to seventeen ninety nine of course people are going to pay that live entertainment the tyson fight apparently was really what drove a lot of that's a subscriber growth that i thought josh yesterday made some really excellent points in it kinda resolve some of the challenges

that they have as it relates to churn. So I was concerned yesterday about positioning and the bullishness of the extreme nature of that positioning. But when you have this type of earnings report and subsequent to that, the stock's up 10%, I think to a certain extent that alleviates some of that concern. We'll give you credit, Weiss, for the great call you made.

It looks like it's heading to $1,000. What do you do? What do you do with the stock? Because you bought more last week. I did. I did. And the stock had sold off. It had gotten near this level a number of weeks ago and sold off to like $830 or $835. It's a great opportunity to buy. Look, here's what people don't talk about, which is that

The other video services can't compete with them. Yet, a number of them are more expensive. Why can't they compete? Well, Netflix, what I love about it, you talk to people, what others love about it is they drop an entire season.

on one day and the reason why the others can't compete is because they don't have the dollars they don't have the capital to keep putting out product so they're putting out product is let's put out episode two in a week episode three in a week so you're going to go to that more robust content i would tell you that that just as a guess that netflix puts out more content than all the other you know meaningful streaming services combined so that's what's going to drive it

And as I mentioned last week, that they keep putting out more and more non-English language series. So they're growing their international to a very large extent. If you go to your feed, you'll see Spanish, you'll see more Swedish, you'll see just pick a language. It's all there. So to me, it's going on all cylinders and they still have pricing flexibility to go. So let's take the bear argument for one second. Let's say, in fact,

You know, the valuation is high. The price has reached to a certain extent a parabolic level. What do you do with your position? The stock should not go back below yesterday's close, plain and simple. So 869, I think, was yesterday's close. You put a price stop at 869 if you're long. You should not see that stock below there because it invalidates all of the positive effect of today's earnings. For what period does it invalidate it?

Does it invalidate just for the next few weeks, for the next few months? Because the fundamentals are still there, and that's the difference in our trading strategies. Your strategy, which I'm a big believer in, because I am invested in Joe T., is one way to play it. The way I prefer to play it is as long as there's positive momentum in the fundamentals, right? And that positive momentum doesn't have to be a beat. It could be meeting expectations. It could be a few metrics working and a couple others don't. I don't care. As long as that keeps going, I will support.

up through the volatility and use the volatility not as risk, but use it as opportunity as I have on this and Meta and others, because I think that's the way you play it. Remember, I come from a futures background. So you're always thinking about how you're reshaping risk. You're always thinking about if you're in a position where potentially could I be wrong? And I was I was tutored and learned at a very young age

that you have to utilize those price stops. If it goes below there, it should retreat even lower. It doesn't change your bias or perspective that it could be a fundamentally strong company and you'll look to reenter at that point. I've made more money though, longer term. Are you bragging right now? Buying great fundamentals when there's been a momentary dislocation

when the stock probably are invested in a moment you i know it's made a lot of money joseph self-described product prodigy exactly in the in futures trading saying you got anything you want to do with your side and you know i'd i'd you know dot i've got a lot of other than that it's a self promotional activity happening as humble and it's like bulls ever you have to find out what we have also escaped from the market let's do one more thing before we take a break uh...

because industrials are near new highs too. Second best sector this year, you bought more Uber. Tell me quickly about that, please. Well, it's a little Uber. And look, I have some concerns about it. I still have concerns about, for example, Uber Eats.

restaurants have low margins and so competitive there so you can see margins being hacked away also their their labor pool now in 16 states undocumented license again can get a driver's license to drive anywhere in the country however uber does have checks on that in terms of you have to have be have a

a visa and a right to work in the US. But it does give me some concerns there in terms of you lose the undocumented workforce in other areas. Do you lose Uber drivers to go there for others that may pay more? So I think the future's not that certain. But I don't expect him to miss another quarter. And you could argue whether he missed it or not. Stock trade or down, so he missed it. - All right, so you have another, a new buy. - Yes. - And we will take a break.

We'll talk about that on the other side, a new stock that Weiss has added to his portfolio. We have a number of committee stocks on the move as well. We are back right after this. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella.edu.

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, let's document that move I mentioned we had. It's Booz Allen Hamilton. This is a new buy for you. Why so? You know, I've been looking at it. The stock peaked at about 190 in mid-November. And then when Doge came out, it was a little bit more of a buy.

All these defense contracts, including Leidos, and as I've talked about Leidos often, I've been a buyer of theirs because 30% of Leidos' workforce is embedded in the government and in the DOD. And the reason why they like that is because the reason why the government likes it is because they don't want to have to deal with unions when they want to get rid of people. And that, in fact, is what's happening with Doge. So what was thought of to be a negative with Doge is actually being read as a

positive for these companies as government contractors. Now, they talk about the modernization of the technology in the Department of Defense. That's not new. That's JADC2, which the Air Force has, where they're modernizing technology. And you need more of that. And that's what Leidos does, in addition to their health care business and other businesses. And that's what Booz Allen does. So I thought, as a defense contractor, that's part of the new defense.

which is not the heavy metal benders that they will do quite well stock so beaten up and I just want to add to its very high quality name alright some stocks on the move travelers Joe they had a strong earnings beat record level of net written premiums that income up 28 percent

Insurance premiums higher. Anyone surprised by that? Nope. Policy sales higher. Investment income higher. They spoke about the horrific events in Los Angeles with the wire fires.

Their exposure there is some, well, first of all, they've stepped back from California to begin with. They really don't insure the high net worth home. They're not really in that $5 billion market. They're more in more of the higher worth business

type of properties and then at the lower end of home. So the inference was that they have less exposure than potentially some of the other insurance names. And it's being reflected here with strong price performance and the ability to look at this earnings report and say, wow, this is a really strong one. New record high for interactive brokers. Look, I've been talking about this stock for literally the last two years on the show. I've owned it personally. I don't understand why. Don't hurt your back.

pat i don't understand why anyone that heck is going on any would own any other well listen we're on the show with you so we gotta make ourselves i gotta move over his head's really expanding as i'm sitting here why would you own any other brokerage name or any other brokerage name you literally on interactive brokers

could transact on whether it's futures, options, crypto, equities. The customer service is phenomenal. The execution, the management team, they do just an awesome job. The volume, the liquidity is there. I just think the stock is by far in the financial sector one of the clear core holdings that you have to have.

United Airlines is a new record high today. I know you own that, Joe, but I can't resist going to Weiss because I hope he repeats the line that he gave to our production staff because I just want to hear it. Yeah. Remember what you told them? Quote, I've been too ignorant on airlines, frankly. Are you referring to my comments? That's what you said. You've been too ignorant on the airlines because United Airlines was a double last year. Delta's ripped. You buy them now? No.

Now, look, I mean, airlines shouldn't trade at this multiple. They historically don't sustain this kind of multiple if they get to it. They've done a great job. The consumer, what I had thought was that the fire hose of demand coming post-COVID would peter out. But we've not seen it peter out in a lot of areas other than what you paid for staffing of nurses and docs and so forth.

So, look, I missed it. Some you're going to miss. You know, as much as you think I'm perfect, Scott, I'm not. You know, so this is one I just had to miss. All right. Bertha Coombs has the headlines for us. Hi, Bertha. Hey, Scott.

Hey, Scott. Just days after President Trump ordered a ramp up in military presence at the southern border, the U.S. military is sending more troops. Sources tell NBC News about 1,000 active duty troops will be sent this week to help support U.S. customs and border protection.

with tasks such as detection and monitoring, as well as assisting air operations. Officials say this is the first phase of a larger military presence there.

The Trump administration has told federal health agencies to pause communications such as scientific reports and health advisory updates on websites. The Washington Post reporting staff at the agencies, including the FDA, CDC and the National Institutes of Health, were notified but were not provided guidance on what was exactly covered or how long the pause would be.

And baseball great Ichiro Suzuki is now the first Japanese player ever chosen to be inducted for the Baseball Hall of Fame. Suzuki has a two-time American League batting championship and 10-time All-Star and Golden Glove outfielder. He will be inducted in July alongside pitchers CeCe Sabathia and Billy Wagner. Scott, back to you. All right.

Most hits ever, too, if you combine both of his careers in Japan and the United States. Amazing. Bertha, thank you. Bertha Coombs. Up next, our calls of the day. Three bullish calls on three committee stocks, which is why we will trade up next. Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world.

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Go to CNBCMakeIt.com slash AI and register now. Welcome back. Calls of the day. Royal Caribbean reiterated overweight today at J.P. Morgan. Joe T., you own this one. They see it as best in class. So I believe they report earnings next week. Look, most of the...

stocks we're going to talk about and calls of the day. Really, the story is about revenue growth. You could have an opinion, you could have a bias, you got to feel. I did, Royal Caribbean. When Royal Caribbean first went into the ETF, I was skeptical. I said to myself, oh, you know, cruise ships,

How much strength can we actually see in terms of the revenue growth? But the revenue growth there is real. They're doing 17% revenue growth in the prior quarter. They're doing 15% revenue growth in the last eight quarters. Why is it down 2.5% today? You've got earnings that are coming up. And I think ahead of earnings, you see a lot of squaring in terms of positioning. I wouldn't read too much into that. Costco outperformed Bernstein. Again.

Where is the revenue growth? This is a consumer staple name. Consumer staple name that over the last three years gives you 9% revenue growth. Very hard to find that type of revenue growth from a company. You pay up for it, don't you? Why is this take is it's too expensive?

Yeah, well, it's been too expensive. It's just too expensive for me to buy it. You'd make the same claim with Walmart, then, because they've got the same type of revenue growth. That's absolutely correct. I mean, I just think they're too expensive. They've executed. So we're just in such a—it's a comment on the market, really.

is that the focus is on fundamentals. It's not on valuation. You talk, look at, you know, 500 stocks like that. But my question is, Joe, what did you say to yourself on this one since you're talking in the third person today? So you're talking about execution. This is the interesting thing on a serious note. Both of these companies have the ability to utilize artificial intelligence. And we're beginning to see the early stages of that

where these hyperscalers are able to make the experience better for the consumer with the utilization of the technological innovation. Which goes back to my comment on tools. That's exactly what it is. The tools that Microsoft is giving to them, that Google's giving to them, is helping their business. That's just tech. Exactly. Right. So this is a way to buy...

part of your portfolio to build out a staples allocation in your portfolio that is also benefiting from the technological innovation that we're seeing. Let me interrupt because we're getting new exclusive details on what led up to that massive AI infrastructure announcement a day ago at the White House. Our Kate Rooney has been doing reporting on it and joins us now with what she's learned. Kate.

Hi, Scott. So I'm told by a source that OpenAI CEO Sam Altman had a, quote, lengthy phone call with President Trump on Friday. It did focus on AI's potential. They walked through what this technology is really capable of and certain parts of the infrastructure plan that was laid out yesterday. The source here asked not to be named because these discussions were confidential, but they did say it was productive. They described it as amicable.

and Trump publicly yesterday really calling Altman at the White House the leading expert on AI. And then on that call Friday, I mentioned President Trump, according to this person who was in the room, said he was most animated about, Trump was most animated about the actual building aspect here and the importance of this happening in the U.S.,

and not happening in China, what it signaled for confidence in the country under his administration, and then the potential job creation that was also mentioned yesterday. I am told that the OpenAI team first met with the Trump team back in June. This was in Las Vegas to do a demonstration of the technology. It was through the COO of the company, Brad Lightcap, and Greg Brockman, who is the OpenAI president.

I am also hearing that Altman's ties to Larry Ellison, a longtime Trump supporter and founder of Oracle, have helped his standing with the Trump team. He also has the support and financial backing, importantly, of Masayoshi Son, the SoftBank founder. Those two are increasingly close. That relationship has gotten stronger, and Masayoshi Son has already committed, you'll remember, $100 billion to invest in the U.S.,

ahead of this target announcement that came yesterday. Those ties to Ellison and Son are really important, guys. It's given him what appears to be a halo effect, which so far has been outweighing the beef that Sam Altman has with another key Trump ally, Elon Musk. There had been some questions in this administration on how Altman was going to fare, Musk said.

Of course, the co-founder of Tesla, a variety of companies, and also a co-founder of OpenAI, still suing OpenAI over its nonprofit status. Altman responding to Musk's post on social media, kind of ragging on this deal. He responded saying...

wrong as you surely know this is great for the country he says i realize what's great for the country isn't always what's optimal for your companies but i hope you'll mostly put america or the usa emoji first so all men publicly fighting back as well scott back to you let me ask you more about that because there was a little bit more that has since come out and i want you to sort of opine on that

After OpenAI announced the Stargate project on social media, Musk responded, quote, "They don't actually have the money," which I believe he later clarified and suggested he was talking about SoftBank. You tell me if that's correct or not. Sam Altman then responded, saying, quote, "I genuinely respect your accomplishments and think you are the most inspiring entrepreneur of our time." You want to shed some more light on that exchange?

Yes, and I think you're right where that comment was specifically about SoftBank. But this really aligns with some of the public rhetoric we've heard between Sam Altman and Elon Musk so far. Altman has said what's best for the country should supersede any sort of personal animosity. And he has said all of this publicly in interviews. He sort of went over this

in deal book as well and so it aligns with sort of his stance on musk which he's called in publicly a bully he's sort of subtly hit back but i think in the last couple of days we've really seen

proof that the Musk animosity, at least so far, is not getting in the way of his relationship with the Trump administration, his ability to be a big part of these deals, and the symbolism of him being up there with Larry Ellison, with Masa-san. It's just such a win for Altman as CEO of OpenAI at a time when it was really under question if he would have any sort of role, if he would be able to get a seat at the table at some of these big AI infrastructure deals, which are key to the success of this $157 billion company at this point.

I mean, it's interesting, as you said in your reporting, that the president called Sam Altman the leading expert on AI, given the proximity of Musk to him and this whole story with XAI. Yes, the context there is key with Musk. I think we're going to be talking a lot about this, Kate. I appreciate your reporting. Thank you. I think so. It's Kate Rooney. Santoli, he's next with his midday word.

We're back with Senior Markets Commentator Mike Santoli at the desk. How do you read today's trade?

Well, after six days of very, very strong breath, where you really had the majority of stocks doing a lot of the work on the upside, probably needed a rest. You had the banks that were on an upward sprint. They're down 1%. The way you get to the old record highs in the S&P is to have the AI trade just kick back in again. So it's almost like you would draw it up in terms of trading off strength, allowing parts of the market to cool off a little bit. So that's been, I think, a net positive. I don't think you have a real economic message

in the fact that market breadth is negative today except that it's just been very strong for a while. But also, yields ticking higher, that's been where the yield story has really played out, has been in terms of the average stock as opposed to the index. So as to whether this is kind of a last little lunge higher to get to the old highs, and now we have the real test,

I'm not really sure. The market seems back in gear. We did have a good downward reset in optimism that I think can be rebuilt or is being rebuilt from here. We do, you know, risk to some degree another ramp into all of these earnings next week, right? So, OK, now you better put up to justify what we just witnessed. We also have a potential ramp into the Fed meeting. And I don't think any I don't think the stakes are really that high in terms of the economy. But when they don't cut rates.

and you have a president that probably wanted them to cut rates or at least wants to make that declaration, I don't think that the market should get upset about that. But if it's looking for an excuse, if it's kind of out on a distant perch and needs to come back, that might be something to keep in mind. All right. I'll see you on Closing Bill. That's Mike Santoli, our senior markets commentator. We have another move from Weiss to document today. We'll take a quickie. It will come back and we'll tell you what it is.

Hey, Shan, interesting note today. Bank of America, its client flows, 11th week of buying in stocks, record health care inflow. What do you think of that space this year ahead? It's been such a disappointment. Such a disappointment. And we love health care. You know, we really liked it last year. We were overweight for the whole year. I think, Scott, it's, you know, there's two areas that are a little, still a little challenging in health care. Obviously, pharma. You talked about everything that's going to be deregulatory. Now, regulation on drug prices.

And you also have managed care really struggling to figure out what that medical loss ratio is going to look like. Outside of that, though, Scott, you've got biotech, you've got services, you have increased procedure volume, and you have a demographic tailwind. So I think, and valuation is, you know, this is where you can find some really cheap value quality stocks. All right. Weiss, you bought more UNH? I did. Still a small position, but...

the stock got hit as tech moves up and it's down today so part of it is that i believe it's cheap i believe they will figure it out and are the leader in in health care healthcare is not going to do well without unh doing well they do have to get their mlr medical loss ratio under control took hit last quarter that's to be expected with the v28 regulations came in last year and this year so bottom line is i think it's a cheap stock that has been

a permanent compound or i don't see that changing and also it's a hedge frankly against my technology portfolio intuitive surgical speaking of you know the broader space reports tomorrow record high today you want artificial intelligence playing a role here you need to see profit margins well into the upper 60s talking about revenue somewhere around 2.26 billion

American Express also reports tomorrow. You on that? High expectations for sure on this name. EPS growth, mid-double digits, 15%, 16%. Streets expecting revenue coming in somewhere around 10%. Credit card environments, good one.

What do you think about Amex? I think it's been a phenomenal story. And when you talked about the perks they lost, like the mileage perks, which we used it for all the others, and yet they've just grown and grown and grown. So management team, the new management team, the old management team, doing a tremendous job. And you have no reason to believe it's not going to be a good quarter, given the spending for the top half of the consumers, which we've seen some of the retailers that reported already. All right. We will take a break. We'll come back with finals. We'll do it next.

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All right. Three o'clock Eastern time. Closing bell. Adam Parker, Lori Calvacina, Chris Harvey and Stephanie Link will join me. Talk more about this move in the markets over the last couple of days, which is led today again by the Nasdaq, which is up one and a half percent. You want to talk about something? Yeah. Just keep your eye on yields while we're doing the show. Yields are bumping up a little back to four sixty one for a 10 year. So not

Not necessarily out of the woods there just yet. Well, that's not good for the broadening story. No. Right. Which is why, as Mike Santoli was talking about, again, breath in the market. Not so great. Top heavy again with tech as all this money continues to go higher as well. Go back with it. Yeah. I mean, and that's sort of the prevailing thought. Right. Is that dollars going to remain strong and yields are going to remain a little more elevated for a little longer than people had once expected. Correct.

Yeah, absolutely. I mean, that's and that's you're going to see stocks continue to trade on that risk, even though there's probably a ceiling of 5 percent for the 10 year in this range. Let's do some finals. You've got something on Applovin. Yeah, let's talk about that. Last Wednesday, I gave as my final trade Applovin. I said that for a trade, I believed you could buy the stock goes with three thirty six at the time. I said use a stop at three hundred dollars. Here we are.

at 360, 365-ish. You have to raise the stop to the entry price. There is no way that you should lose money on this trade. You're either making money or you're scratching the trade out.

Okay. Shannon, what you got for us? We're a little bit more constructive on discretionary here, especially with the potential ceiling on energy prices, gas prices, and then the expansion of real wage growth, which we think could result from small business optimism and spending, capital expenditure. So we think that's a good spot. All right. Consumer discretionary. And Weiss, last but certainly not least. Never. IBIT, look, 2% volatility either way each day, but I still think it's going to work out. Thank you, everybody. I'll see you on Closing Bell.

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