AI Relief Rally, Nvidia Governance and CoreWeave Earnings

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0:55Scott Wapner: I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Carl, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour, AI Relief. After CoreWeave's earnings and guidance today, we'll trade the whole space. NVIDIA is trying to bounce back, and one analyst making a first-of-its-kind call on that company today. We'll have more on that in just a moment. Joining me for the hour, Joe Terranova, Anastasia Amoroso, Rob Seachin, and our veteran, Jim Laventhal, a man who never flinched when he was in uniform and wore the great uniform of the United States Navy.

1:42Scott Wapner: And we honor you especially today, and we certainly salute your service every day, Jimmy. Scott, you're always so respectful, as is the entire CNBC family about military service. Thank you for that. But also, I just want to say it was a privilege to serve. It was a privilege. I am grateful to the nation for allowing me to serve. First thing I did this morning, check the doc. I was like, make sure Jimmy's, please have him on today because you always are because it's important to us to honor you on this day. So it's great to have you with us today. I'm going to start with you because it is a NASDAQ bounce today.

2:15Scott Wapner: Obviously, Coral Weave's playing a good role in that. NVIDIA is now down about$400 billion in market cap from the slide we've seen. It's a nice rebound today of some 5%. Our headline, though, is this downgrade. I said a first-of-its-kind call from an analyst today on the street because it is an analyst by the name of Tristan Guerra from Baird being the first on Wall Street to suggest that Mr. Wong might have to step down as CEO. They downgrade the stock. They cut the target to 200 from 500, from 500 to 200. Here's the quote, really the money quote from this analyst today. We want to show you. We contend a new CEO is needed to establish internal safeguards to align with existing and upcoming U.S.

3:02Scott Wapner: policies, enforcing restrictions to China's access to U.S.-made AI technologies, and to reestablish trust both externally and internally. goes on to say odds favor an outsider in his mind if that was to come to pass. I'm curious, again, shareholder, you know, how you're thinking about all this? It certainly is possible, Scott, that Mr. Wong does not serve out his tenure as a CEO. That's not my base case, and it's not my hope either. But to start with, there are countless examples of CEOs who have had romantic affairs that have lost their jobs because of it. We can look at Intel. We can look at Boeing.

3:40We can look at McDonald's. The list goes on and on. Mr. Wong may get special treatment because of his importance to not just NVIDIA, but to the AI industry and by extension to the economy and the financial markets. And I'm not going to I can't overstate that. He is very important, not just to NVIDIA, but to the state of the industry. Some talk like, you know, they use the words too big to fire. You know what I'm saying?

4:04Scott Wapner: OK, now. But let me throw it to you this way. Yeah. So staying away from that, because who knows about that? And you have to wait for whatever investigation is underway to do its course. The target cut. OK, focus on that. Whether you as an investor need to rethink your trajectory for this stock like they are. What was 500 is now 200. It's not that far from where you are now. Yeah, 500 seemed pretty aggressive. I think 200 is too low. I own the stock. I'm not selling the stock. We're having very robust discussions at Sarity Partners about what we should do with it. Where we come out of it is looking at the forward multiple right now, just under 12.

4:42That's the lowest it's been in 10 years. The growth rate in earnings is projected at about 75 % in the year ahead. I'll remind everybody that at the last quarter, they projected 80 % top line growth in the coming year. And they said they're supply constrained. If supply weren't a constraint, they might grow higher than that. We'll see what happens in earnings next week, but I don't expect any change from that. I'm not going to calculate the peg ratio. It's very, very low. $300 billion plus of free cash flow being generated in the next 12 months. Scott, do you know that that amount is greater than all but 32 companies in the S &P 500?

5:17$329 odd billion of free cash flow. The company is in strong financial position. Its customers want its products, can't get enough of it. This news from Mr. Wong is unwelcome to be certain, and I hope he stays. If he has to go, as you pointed out, intelligence services, the board of directors, they'll do their job. That's not my job. I hope he stays. If he doesn't, it may already be priced in, is what I'm saying.

5:40Scott Wapner: The bigger news in the hours, days and whatever ahead is finding out more about what the government knew, when it knew it and what it did about it. And you continue to get headlines coming out regarding that, which some of which were reported within the last hour. You just bought more of the stock personally. You told us that yesterday. Morgan Stanley takes it off its top pick list. The North Dakota Senator Kevin Kramer, he's on Senate banking, says to Politico that Mr. Wong should resign. There was another Reuters report today, an exclusive that Chinese University bought H200s despite blacklist.

6:16Scott Wapner: Just goes sort of to the government question, questions about commerce. Haven't really heard anything from them or the secretary yet regarding this issue. But I think for our purposes, really the only question that matters is, do you rethink what the stock can do? Because I think most of the people who watch this program are thinking the very same question. If I have the stock, how worried am I? If I don't have it, do I use the weakness because this is going to pass one way or the other? So we voted as a company by being an owner and not selling it. And I voted with my PA by doubling down on that bet.

6:56So I'm obviously a fan of the stock. I will tell you that if there is a replacement in the CEO seat, I think that CEO will inherit one of the best jobs in America. Because while you can replace the CEO, you can't replace the CUDA architecture. Every developer builds on it. you know, and the market for AI rallied enormously this week, regardless of what was happening to NVIDIA early in the week. So this is not a demand issue. This is not a business issue. This is a governance issue, one that I think you have to take seriously. We have to understand that. And there might be an elongated overhang over the business.

7:41But I think the next CEO should be able and navigate through that because of the dominant market position we see that NVIDIA has, 90 % share of advanced chips.

7:52Scott Wapner: Yeah. I mean, part of the rebound today of NVIDIA, maybe you could say is due to CoreWeave. The companies obviously have a business relationship together. And I think, I mean, there was the beat, there was the raise, but then there was also the reveal. And the reveal came to a question that David Faber asked the CEO when he was on within the last hour and a half about stock sales from Mr. Intrader and then top executives to which he answered the question by saying he had canceled his time stock sale program. The stock got an undeniable lift as he said that. And there it is up 25 percent today.

8:34Scott Wapner: It sets the stage in some respects for Nebius, which reports tomorrow, I thought Joe, JP Morgan summed everything up. You could almost hear, quote, the sigh of relief in the AI market as Corweave posted solid results that extended the margin story that took hold last quarter. It was all of the neoclouds. It injected a very strong shot of confidence. Look today at Lumentum. You can see the price action that is reflected there. The announcement on pausing the previously announced stock sale for CoreWeave, I think that without question was a powerful catalyst. And it reignited once again the momentum factor.

9:15I kind of anticipated this one month ago. I was a little bit surprised by the tremendous volatility and the correction that we had in front of it. But here we are, And this type of news is exactly what you need. Scott, you're right back now today into the trading range for the S &P 500 the day after the midterm election. We've basically recovered everything that we had lost at the end of last week. And we've restored the S &P's place right there. And it's built upon the foundation of these neoclouds, the AI story, and most importantly, the momentum factors back.

9:52Scott Wapner: Sigh of relief, right? there. Just speaking up to what JP Morgan's talking about, you could almost hear it as the market reacts to CoreWeave. And as CoreWeave gets stronger, the Nasdaq gets stronger today. A lot of stocks are up as a result. Nas good for 2%. That's right. I think it is definitely CoreWeave, which I'll talk about in a second, but it's also Anthropic. And the fact of the matter is, if you kind of look at the layers of AI infrastructure, all of these things have to work, including Anthropic, OpenNI, and others. But starting with CoreWeave, I am really encouraged by the revenue beat, the EBITDA beat, and also the operating margins as well.

10:22And clearly, Scott, this has been the epicenter of what investors have worried about. Too much leverage, higher cost of capital, and can they actually deliver all that contracted backlog? But what we got today, margins are improving, the backlog is actually rising, and it doesn't seem like they're sort of walking away from the ability to deliver that compute that has been contracted. So that's incredibly positive. And by the way, if you look at the cash flows of some of the neoclows too, I think there's also a market appreciation that something like 16 percent operating margin and there's still wiggle room, even if rates go up for that.

10:55And then the other thing, Scott, I do want to point out, it is about on Throp. You know, the fact that we are seems like on target for 80 billion dollars annual revenue run rate, open AI, 50 billion dollar run rate. These things have to work. And I do think we're the seminal moment for AI. We've got adoption, you've got innovation, you've got lower cost and higher intelligence and all things equal. this drives more adoption. So this confluence of core weave and anthropic is really positive.

11:19Scott Wapner: Yeah, I'll go to that in a second. That's jumping ahead to what I wanted to do. I'll get there. Oracle. Look, see Oracle today. A little sympathy. Sharp. I mean, cyber names. Sort of everything within the orbit of AI is having a good day today. What do you what do you what's your read on that? Well, it's just the implication that these levered, highly levered companies in the AI build out trade probably are going to make it. Now, I particularly am focused on Oracle. I mean, CoreWeave, there's still going to be discussions. They're kind of shut out of the debt market, but Oracle is not. Now, I know where the credit default swaps are on five-year paper from Oracle.

11:55They're just under 300 basis points. And to a certain extent, that's a lot, but it's nothing like what CoreWeave is. Oracle certainly still has access to the capital markets. We saw that with$10 billion of equity issued two weeks ago. And by the way, they say they're pretty much done. So I look at Oracle, and I think it's just a stock that's been looking for an excuse to go higher. CoreWeave gives it that excuse. But at the heart of CoreWeave, at the heart of Oracle, is this concept that the data centers that are currently being brought online and currently being built are spoken for in terms of demand.

12:27And we've heard that from the big companies, from the Microsofts, the Alphabets, the Amazons. Sure, we may gripe about Alphabet's search business, but one thing that's growing like a weed is their cloud business up 100%. The demand is there, and ultimately that's what matters. So that's really important. It is not a demand issue. It is an execution and financing issue. Well put. That's it, period. So if you can execute. Well, it really is, but that's why Anthropics is so important. It answers some of the questions as to whether the capital markets are going to be as forgiving. These are huge. If you if you look at Corweave's debt and I'm not by any means picking on them, it is enormous.

13:11So I could pick on them because the market's been picking on them.

13:14Scott Wapner: It is what it is. But I'm not going to fly off the top rope with an elbow right now. The reality hurt yourself. I might, Jimmy. Go ahead. So the reality of it is, is you do need to be able to access the capital markets to meet that demand. And the capital markets have to stay friendly towards that. I know there's a lot of circular financing, but it seems like there's enormous belief from the customers in willingness to finance that demand. I don't think there's going to be a change in that personally. Yeah. But it's certainly something you have to pay attention to and you want to move up the quality.

13:51Scott Wapner: I think Anastasia is right about the sentiment around anthropic being a layer to the I feel better about the story thing. I think that's kind of undeniable as it marches towards the IPO prices literally a week from today. The FT says demand looks so strong that they could push the valuation up to one and a half trillion. Remember, you started what you thought was maybe was going to be two. Maybe it's one and a half to two. And then it was a sort of steady come down to that. But maybe they push it based on demand. I thought Mellius asked a really good question today. Can the Anthropic IPO boost some semis at a P.E.

14:28Scott Wapner: bottom? The stocks have gotten annihilated off of their 52-week highs. Broadcom's down 33. AMD's down 22. And the chip equipment names are all down 30, 40, 50 almost percentage points. How do you want to address that, that you've got such a compression in these names for their PEs by virtue of the fact that the stocks have gotten absolutely crushed? Yeah, I think the first thing that happened, and we spent last week debating it, positioning has been cleaned out. I think we now have the confidence to state that. I think if you look today, you could show these intraday charts as I'm speaking. Look at Micron.

15:09Look at Marvell. Look at Western Digital. Marvell's a big... You could see the double-digit gains in all of these names. What that represents to me is that the speculative community, the hedge fund community, they pared back aggressively the leverage exposure that they had in that area of the market that was underperforming since the end of June. I'm going to put you on the spot. Do you think we bottomed? Do you think Semi's bottomed? Yes. Did people got too bottomed for the remainder of the year? Yes. Do I think we roll over at some point in 2027? I think that's possible. But do I think the selling pressure of the fall has seen its worst?

15:45Yeah, I do. Well, because last week the question was, have Semi earnings topped? Have they peaked? And by the way, I want to answer your question and just follow up. We don't talk about this a lot. I came on air about a week ago. I said I bought Teradyne. Remember that? Send me equipment name. I got stopped out in all that violence, that volatility on Thursday. I didn't just sit there and not return capital into the market. I bought a bunch of Jyoti. I'm not going to sit here and continually tell the viewers I bought more Jyoti. But I'm buying more Jyoti to answer your question because I do believe that it's that momentum factor that leads us higher into the end of the year.

16:21Oh, so you think momentum is bottom too? Oh, absolutely. Absolutely. I think momentum has seen its worst moment in the fall. On semiconductors, Scott, to answer your question, I don't think the semiconductor earnings have peaked. You know, I think that is going to continue. And I think what has happened, though, over the last couple of months, we've priced that in. You know, we've priced in the fact that earnings for semiconductors are going to grow something like 110 % year over year, another 30, 40 % the year after that and the year after that. So we've pressed in a bulk of that. But now, given the repricing, given the P multiple, which is back to, by the way, the lowest level since 2022, I would say, and I agree with Joe, that I think the setup looks a lot more attractive.

17:01But I do think going forward, you have a couple of nuances to consider. First of all, what kind of chips do you actually need? Maybe you don't need as many GPUs versus CPUs. And actually, when we look at agentic workflows, 88 % of the agentic workflows is actually chip dependent or memory chip dependent, I should say, CPU and storage. So I think you have to be careful where you actually position within that trade. And then sort of the last thing I would say, look back to hyperscalers. Hyperscalers' backlogs continue to move higher, and the return on invested capital is something like 25 % to 50%.

17:34So as long as that's the case, I don't think semiconductor earnings have peaked.

17:38Scott Wapner: AMAT reports tomorrow. So you get a good read from another chip equipment name. These stocks haven't traded all that well lately. Now, today, they look great. All the charts look the same. Kind of the whole market looks the same around AI, you know, respectively. One basket, one trade. Well, think about it. Circular trade. Think about it. We raised the pricing on Anthropic today. If Anthropic goes well, the market starts to look for who gets paid. This is who's getting paid. The AIM for names are getting paid. Scott, Joe just had a little bon moe, and I want to seize on it, when he said one basket, one trade, and it's one heck of a crowded leverage trade.

18:17Excuse me. Has been. One heck of a crowded leverage. I was going to say, maybe it's less leverage than it was. Amen. That's exactly what happened. And we know this. This isn't me just sort of licking my finger and putting it in the air. We know that major long, short hedge funds, these pod-based hedge funds, by the scores had a terrible, terrible October as this highly concentrated leveraged AI trade, particularly in semis, unwound. It's also happened in South Korea, but that leverage has been unwound. It sets the stage. When we talk about consolidations or corrections as being the pause that refreshes, this is exactly what we mean.

18:52There's been a technical force that's been out there selling, and it looks like it's coming to an end.

18:57Scott Wapner: I don't know. Let me just jump in real quick because coming to an end, I don't know. You look at the client flows from B of A, for example, not related to semis, generally speaking, but let's say industrials, big industrials like the power names that have sold off as well. Again, one trade essentially going in the same direction up or down. Clients sold stocks in five of 11 sectors led by industrials. Wolf on the industrials. How much worse can it get for AI sentiment? That's all the kind of stuff that, you know, they're thinking about. You know, I see opportunity there. Scott, I forget if it was last Friday or last Thursday, but I came on air.

19:40I told you I doubled up on Amazon, but I initiated in Qantas services. Absolutely what you said is right. It's more than semis. It's everything that's peripheral to AI, and that definitely includes these industrials. But my point being is there has been a lot of heading for the exits through a narrow exit, a lot of money. And while that may still have some repercussions, there may still be volatility. Something like a Quanta or something like an NVIDIA or a Micron is an opportunity now.

20:08Scott Wapner: JPM initiated, by the way, on some of these things as neutral. I mean, you can be bullish, the AI power story, thinking that data centers are going to get built. It's just going to be a more elongated thing. That was the point that I was just going to make. But that doesn't mean then that you don't need to rethink the near-term trajectory for either earnings or stock price. That is exactly correct. That is the point that I was just going to make. There's haves and have-nots in this. And I think the haves accrue to those who have compute in the ground and can price that compute more highly. The builders of this are now being questioned as to how long it's going to take the build out to happen, whether it be because of policy, whether it be because of financing.

20:58And as such, they've re-rated. Maybe they don't come back as quick. What I can assure you is I think because the demand's there, I think this compute does get built. It's a timing issue, not a demand issue. I got to agree with Rob, both on the power side and also the data center side. We do absolutely think the scarcity of premium for existing data center providers who have the permit, who have the lease, who have, you know, who have the compute in place, that scarcity of premium has absolutely gone up. And I think you've seen some of those data centers trade relatively better in the market. By the way, the vacancy is about 1 percent.

21:34So so not surprisingly, that's the case. And then on the power side, Scott, this is a long term issue. If you look at the interconnection queues, it still takes now five or six years to be in line for connection to the grid. So anything you can do to resolve the bottleneck, to bring your own power, to invest in the companies that are trying to resolve that, I think it's a long-term trade not to give up on.

21:56Scott Wapner: No, I get it. But I just go back to the comment that I made to Rob. I don't think you can be as bullish the near-term data center story today, post-midterms, as you were before. I think that was an inflection point. You can still be bullish on the long-term story. I don't think you can be as bullish on the near-term trajectory, just simply based on the result. But I believe that's what last week's price action was all about, recalibrating the expectations, moderating the enthusiasm. Assuming you think that's done. I think that's done because I always am looking at the market from the asset management perspective, from the speculative hedge fund community, and what do I see today?

22:41Look, I could be totally wrong, but I'd be hard-pressed to believe that what I see is the beginning of a rotation back towards the basket of the AI trade is going to be a one-day event. I think it's got further in duration than a one-day event. It's taking from what today? What we believed was going to be the dominant theme for the remainder of the year. Show the S &P equal weight. S &P equal weight is only up 63 basis points. You don't have to show, Joe T. Show the MTM. Show the momentum ETF. That's up 4.5 % today. So the belief that we were broadening out and we were going areas outside of the AI trade, the market tends to have these baskets.

23:25And I think the basket is moving back to the AI trade. Joe, I have to point out. I have to point out. Let me explain. Equal weight has absolutely crushed market cap. Absolutely. So I don't mean to be too aggressive to you. I understand you're talking about today. But today, to me, is just a little give back. No, no, Jimmy, I'm saying the follow through from today. I don't think today is a one day event where you see the outperformance from the AI trade. I think this is going to have some follow through over the coming days. How about this line? Guys, what's happening today and yesterday? The market's repricing in higher interest rates.

23:58What are higher interest rates bad for? A broadening out trade right now. So we are reacting over the last couple of days to what has actually happened. Markets are acting rationally. And the bond market's closed today. Correct. It would be even worse. We saw a bond move yesterday that was gigantic.

24:16Scott Wapner: Well, because as you said, rate expectations or hike expectations are once again recalibrating. Yes. Right? Based on, you know, Waller was hawkish yesterday. Bowman was, or I can't remember who the other one was, so forgive me for that. But there was other hawkish Fed speak yesterday. And people are rethinking it. Goolsby today says the October CPI was borderline disturbing. You have Goldman looking at a third hike into March of 27. Yardeny says could do 50 basis points in December. So the market's trying to figure out where it should be. Let them do 50. I'd love it if they did 50 basis points in December.

24:58Got in front of it and stopped. Because I think what you're going to see here, we all know diesel's working its way through trucking and food and everything. But look at where crude oil is. It's down about 15 % in a matter of about a week. That's going to eventually trickle through. So get the 50 in and then you're done. But that sounds too complacent almost.

25:18Scott Wapner: Reckless? I'm not going to judge whether it's reckless by them or not. But I'm just saying it could be reckless to say, hey, I believe in the broadening. I'm super bullish. Do 50. No big whoop. You don't think there would be a cause and effect to what the trade market would do? There always is. But, however, when we just put up the 10-year at 5.0%, that's pricing in yesterday's news. That's already priced in. The bond market was open yesterday. And 5.0 on the 10-year is 30 basis points lower than where it was a month ago when we were wringing our hands, It's all of us, rightfully so. It's also back higher to where it was once it moved lower.

25:55Not a punitive level. It went from$4.85 to$5.0. It's a move. It's not like a—I'm not writing home about it. There is no key basis point hike into falling oil prices. There won't be. There will be$25. It depends on what we see in PCE. It depends on what we see in oil prices. And then you'll be able to tell me whether they should do$50 or$25. 50 is effectively admitting that October pause was a mistake. I don't think they do that. But if oil prices are really high, maybe they do.

26:26Scott Wapner: We're going to take a break. We'll come back. Our calls of the day. We do have analysts' actions today in health care and energy and the financials, too. Debate all of it next.

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28:45Scott Wapner: Let's talk some energy. Conoco, Diamondback, Devin, all downgraded to market perform. That's Bernstein. We have a lot of ownership here, including Joe. You have Conoco, you have Diamondback, you have Devin. Yeah, so I'm looking for the exit on Valero, which I've held for a very long time. I own it personally, and it is owned in the Jyoti. My belief is consistent to what Rob and Jimmy have expressed as it relates to the price of oil. On October 20th, it was$110.48. On the day of the election, it was$96. As a result of the election, it has fallen precipitously. And I think that is going to continue.

29:27I think the trend is reversing in oil. Myself, personally, I'm looking for the exit door. And for the viewers, I don't know that I would be adding to energy exposure here, except for natural gas.

29:38Scott Wapner: So you just spoke specifically to Valero. Yeah. But I was talking about ConocoDiamond back in Devon. And they're all in the JOT ETF. I know. That's why I brought it up. And unfortunately, the correlation. Well, let me give you this. It's funny how that happens, huh? Let me give you statistically what's going on. That was the call. So statistically right now, the energy names have risen to a 0.97 correlation trading with each other. So whatever the price of oil is doing, all of these energy names are just trading in one direction. I got you. You have Devin. I do. Right? There's no question. They're right.

30:15Scott Wapner: You want to take Devin or you want to talk about Exxon? Devin. Talk about Devin. The easy money, Bernstein's right, easy money in oil has been made. but this was never an oil price bet. It's a cost bet at eight times earnings. Low-cost Permian barrels make money at prices that hurt others. They also give them the opportunity to buy back shares, pay dividends. I think there's a lot of financial flexibility in a company like Devin that makes it an easy hold if you want to maintain exposure to the space. What about EQT? EQT is having its best week since July 24th. Yeah, and EQT has been in a precipitous downtrend.

30:55If you could pull that back, please, on a one-year chart, you'll see that it really hasn't performed. Natural gas has not performed. I said yesterday was my final trade. I'd like to buy it. I think this is the right level to buy it. Wait, wait. Hold on real quick. Yeah. You own it personally, don't you? Yes. Okay. What do you mean, I like to buy it? I said yesterday for the viewers it was my final trade. I'd like to buy it here at this point. Oh, okay. I just wanted to make a point. You already own it. Absolutely. Yeah, I own it personally.

31:19Scott Wapner: I'd add to it right here. Okay. All right, thank you. Some semantics, but it makes a difference. No, it does. You're doing a job. Well, it's getting a little hard. Corning. See, you can't just be nice. Getting a little hard. Mentioned a call on Conoco Diamondback. Devon starts talking Valero. Mentioned EQT. But I gave you the correlation. All right, you did. That correlation, by the way, is the highest it's been in the last 16 months. Can we talk? That's a lot of joke. Corning. Let's go, Corning. All right. Initiated by 134 Jeffries. Okay, so what's interesting about optical fiber, Rob talked about the slowdown in the data center buildout.

31:57Optical fiber has been scheduled for a company like Corning over the next two years. So the slowdown, even if the restrictive environment begins and you see a pullback in the buildout, they've already put through the purchase orders on the optical fiber. Over the next two years, it's going to be delivered. It's a problem in 2028 and 2029. Corning has been down, obviously, since June when you had that parabolic move higher.

32:24Scott Wapner: I like where it sits right here. Okay. You get Amgen, Rob, target to 490, Daiwa today, best year since 99. You get AbbVie, target to 305 at Berenberg, fifth positive week in six. Give me Amgen first. So, again, you said it, best year since 1999. Nobody's talking about it because of AI. That's exactly why we own it. We thought health care, the other side of this barbell, which has had a terrific year, was going to do fantastic. They have a durable base franchise, growing obesity franchise, healthy dividend. Another example of a company outside of AI infrastructure that continues to perform incredibly well.

33:08In terms of in terms of that. No, no, he gets happy. Oh, he does. Yeah. You get followed directions. Well, I make it clear. The ball hit me in the face. What is going on? What is up? Good job. The sole part today. Did I make it clear? If AbbVie had a mascot, it would be a Belgian draft horse. Just plowing the field one hoof at a time, okay? Every year this stock does well. Five-year return, 25%. S &P, 11.5%. Beta, Joe, I know you like thinking about numbers. The beta on this stock is 0.33. Let me just say this. You're getting twice the market return for one-third of the market risk. That's what you want in a stock.

33:47Scott Wapner: OK, Frank Holland has the CNBC News update. Please, Frank, I hope this is the CNBC News update. Belgian draft horse. I'm going to remember that term. Scott, good afternoon. I'm going to go to the news update right now. President Trump, Vice President J.D. Vance and others, they marked the Veterans Day holiday with a wreath laying ceremony at the Arlington National Cemetery today. The president's appearance comes as his administration fights to construct a 250 foot arch in a traffic circle outside that cemetery's entrance. A federal judge last week ordered a 14 day pause before any work can start on the monument.

34:19The driver of a minivan that crashed into a busy intersection in Los Angeles yesterday has now been arrested on three counts of murder and suspicion of driving under the influence. Police say the 61-year-old was driving at an unsafe speed when he veered off the road and hit several pedestrians and food vendors on the sidewalk. Three women were pronounced dead at the scene. And a federal judge rejected the BBC's bid to have President Trump's$10 billion defamation lawsuit dismissed. President Trump called that ruling a huge victory. He sued the BBC over its editing of a speech that he gave on January the 6th, which the BBC has acknowledged mistakenly gave the impression that Trump made a direct call for violence.

34:57Scott, back over to you.

34:58Scott Wapner: Okay, Frank, thank you. That's Frank Collin. Mike Santoli, his market memo is coming up next.

35:08Scott Wapner: All right, Mike Santoli, senior markets commentator, of course, the overtime co-anchor as well, joining us now with his memo that the headlines It's got to be Corweave and Relief, right? For sure. You know, and I also think that it built to that point where Corweave could give this extra dose of reassurance. And it also, I think, is important that maybe the NVIDIA reaction was the final little purge of a lot of the crowded positioning that started to get cleaned out late last week. So I think all that working together is certainly positive. And it's certainly allowing the indexes to make the case that this is more than just kind of a reflex relief rally.

35:48So, you know, if you dial back and you say, OK, the S &P 500 held the summertime lows. It didn't break its 200-day moving average. You still have this uptrend preserved while you did get a very thorough rinsing of the AI trade and a lot of the tactical players in there last week. So all that, I think, cleans things up. I don't know that it means that the highs are very much in sight just yet because those highs, especially in things like semis, they were made on levels of crowding and leverage and liquidity that we're probably not going to rebuild towards very soon. But, you know, that doesn't mean, you know, upward progress isn't possible.

36:24We're burning off the oversold conditions. We're burning off the negative sentiment. Once we do that, then you have to see if you have real, I think, stronger hands coming in as buyers.

36:33Scott Wapner: It's going to be an eventful march up to NVIDIA earnings next week, right? Well, for sure. I mean, a lot of suspense, I guess, will build toward that direction. I've been pointing out, too, it'll probably once, if nothing else, once the numbers are out, they can restart their buyback. That could be consequential. So, yeah, I don't know if anyone's going to completely, you know, have these high conviction, you know, longer term theses that are going to be formed right now. It's much more about maybe we overdid it on the downside and let's make sure we're exposed in case things go right. Yeah, we'll wait and see.

37:06Scott Wapner: And I will see you later this afternoon. I look forward to that as always. It's Mike Santoli coming up. What about consumer concerns? We'll debate the state of the retail trade as we head into the holiday shopping season. Some new data is out that you don't want to miss and some stocks are moving. All right. Welcome back. Discretionary Red today. But let's talk to consumer a bit, because according to a CNBC and National Retail Federation retail monitor, consumers are showing signs of strain even as they keep spending. I don't know. Maybe that's been the story for the last couple of years. Credit card debt record high, according to Axios.

37:44Scott Wapner: Yet the XRT looking at eight straight weeks up. Best quarter in three years. Oil's down. That's got to help. Right. Morgan Stanley says, We think that rotation has the next leg, only, though, for the right names. AutoZone, Dick's Sporting Goods, Depot, Lowe's, O 'Reilly, Wayfair on the list. You have AutoZone, you have Depot, you have Lowe's. Rob? And I think we still may have some legacy exposure in O 'Reilly as well. Okay. So when consumers get strained, they fix what they have. And AutoZone, O 'Reilly, that's the repair versus replace trade. I like those. I find it a little more difficult, even though we own the other two, to believe in the environment that we're in with rates possibly rising as much as they are, that you're going to see the same benefits in the home stocks, the Lowe's and the Home Depot's.

38:41Although you could see some benefit from repair versus replace there too, but that is the whole thesis that we have there.

38:48Scott Wapner: I'm surprised Jimmy doesn't own Home Depot or Lowe's. Well, Home Depot or Lowe's, you've got a lousy housing market. You've got an interest rate problem there. I wouldn't mind owning it. It hasn't stopped you with other stocks in other places. I feel like that's a little bit of a gratuitous hint, but allow me to field your line drive. I was a little up and in. I was a little up and in. Not going to lie. Not going to lie. Fair. Not going to lie. Okay. You know, in your preamble when you said credit card debt is at a record high, I did think to myself, you know what? So is U.S. GDP. So is U.S. population.

39:24I mean, things go higher. Some things go higher. I'm in a lot of retail adjacent stuff, consumer discretionary stuff. If you've been in an airport recently, you've been to a steakhouse in any city on a Tuesday night recently. Sure, the consumer is feeling strained, but it's not stopping the consumer from consuming. Period. End of story. That's because the jobs market. I mean, the jobs market is incredibly strong. Jimmy's leveraged to the moon. He was talking to me about it before the show.

39:49Scott Wapner: Just waiting for the next pitch. You know which name I had in my head as I was channeling that. I mean, there's a long list. Beginning of the alphabet. Oh, no. What are we talking about? I don't even want to know. What are we talking about? Like, I'm having a good day. What are you doing? Starts with an A. Alphabet? No. D-O-B-E. Apollo? Adobe. Adobe. Oh, for God's sake. That's not retail adjacent or retail. I didn't say it had to be. You were complaining a minute ago about people not following your lead. I mean, how does Adobe connect to retail? I don't get it. No, it wasn't connected in any way.

40:32Scott Wapner: Can we talk Costco? Let's do it. $30 dividend, buyback$4 billion. Deutsche says it's$1 ,082. They have$30 reasons to like Costco, they say. and that's obviously reacting to the dividend. You have that, right? Special dividend, first time in three years, doubling what they did last time at$15. This totals$3.3 billion. What is this? This is about confidence. This is about a company with strong cash flow generation. This is really a holiday gift before the holiday to the shareholders. And I think Costco, if you pull that lens out a little further, you will see the high in May. Let's go back. There we go.

41:11There it is. I think Costco is going to take out that high. And by the way, Costco is a momentum stock.

41:16Scott Wapner: Okay. It was Jimmy adjacent, not retail adjacent. Okay. You know what I'm saying? It was funny. Once I got the joke, it was funny. It took a long time. Sometimes you got to write it down and, you know, mail it. You almost got it while we were in the break. Oliver's after this break. Did you know that psoriatic arthritis may progress over time and could cause permanent joint damage if left untreated?

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43:32Scott Wapner: Let's play some options action. We'll go to Chicago. Oliver Rennick at the CBO Global Markets. Where are you looking? SpaceX, Scott, kind of interesting it's not taking part despite the big bounce back and it being a fan favorite for many. But at the same time, it's actually fitting with the stock's volatility the past three months as it's traded in a fairly tight 20-point range. Implied vol in SpaceX is now about 20, which by comparison is also Nvidia. as imply vol. SpaceX bulls seem to think that's cheap enough to buy some high probability call options now. Notably, in the money 139 strike expiring Friday, where two traders today each spent a million bucks.

44:13A week ago, those calls were less than a buck when SpaceX was below 125. And today they're trading for a little over$6, which is still cheaper than they were at the start of the month. And by the way, there are still lots of speculators around the fringes too. In fact, those fringes added up to about$6 million today spent across 40 ,000 calls at the 160 strike, expiring NOV20. Pretty far ways away, Scott.

44:37Scott Wapner: Okay, Oliver, thanks. I'll see you this afternoon as well. We'll play options action once again. The setup is next. All right, let's talk some Cisco people. Tomorrow after the bell, we're going to have earnings. You want this first shot? Sure. Conservative guidance was the problem for this company last earnings report. Stock made its high when most of the parabolic AI names did in the month of June. I still think you're going to see strong demand here on the AI side for networking. And I think the stock is close to a valuation and a price level that I think is attractive. Conservative guidance, Joe, because it is a conservative company.

45:18I've owned it for probably 12 years now. It's been much like AbbVie, just a stock that performs year after year. I expect that they will. And in terms of the valuation reset, it's now at about 18 times forward. So there's been a lot of re-rating here, and I think it leaves room to the upside, significant room.

45:35Scott Wapner: Rob, you don't have this one, right? That's all you got. He's very expressive. You know, it's rare that he doesn't have anything to say for those who know him. You are trying to catch me off guard because when you see me not paying attention, you deliver a ball to the face. That is always be ready. That is exactly what you're doing right now. We'll do finals next. Be ready. I'm ready.

46:05Scott Wapner: Three o 'clock Eastern closing bell. Dan Greenhouse, Stephanie Link, Malcolm Etheridge. We'll see what the last hour of trade does today. See if NVIDIA can stay where it is. Coral Weave's obviously a huge story, and it's helped sentiment. It's helped lift the entire AI orbit. What do you got? Monolithic power systems. Easy bounce pass to you. Easy bounce pass. I got it. Monolithic power systems. Every AI chip needs power delivered precisely. Monolithic power is the one doing it. Thank you very much. Our veteran again. Oh, my God. You pick Walt Disney on today? Jim Laventhal. Jim can pick whatever he wants.

46:48Scott Wapner: It's his day. It's about 1 % from an all-time high. Don't let them give you a hard time, Jim. I would never do that. Well, he'll buy it in the Joe T when it's about 10 points higher. Anastasia. Anastasia. QQQs. Valuation reset. I think the upside can't continue here until your end. I would love to buy Disney. Amphenol. All right, I'll see you at three.

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