The AI Correction, Tech Earnings and the Rally 10/27/26

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1:09Scott Wapner: We record this live weekdays at 12 Eastern. Listen in.

1:16Scott Wapner: All right, guys, that was good. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour, the latest in the A.I. trade. Ahead of some key earnings reports, we'll discuss and debate with the committee. Joining me for the hour, Joe Terranova, Stephanie Link, Jenny Harrington, and Josh Brown. Speaking of the AI trade, it's looking pretty good today. In fact, the NASDAQ looks to be around the highs of the day. It's good one and a third percent, as we see. We're going to get to all of that, trying to game out the earnings and everything else. But we do have breaking news on this very topic.

1:46Scott Wapner: It's related to OpenAI and Oracle, and Seema Modi has that for us from Las Vegas. Seema. Hey, Scott. Oracle announcing that it is adding OpenAI's AI tools, including ChatGPT, to its application stack to make its data more accessible, more actionable. We're expecting OpenAI CEO Sam Altman to join Oracle co-CEO Clay McGurk on stage momentarily here in Vegas at AI World. In addition to this news, you have Oracle Cloud Infrastructure expanding the number of accelerators or chips that can run on its cloud, including Google TPUs. And we're told that this is the first time that Google AI chips will run on a hyperscaler's cloud that isn't Google.

2:32This announcement also including OpenAI Jalapeno, which is the Frontier Labs chip, and Cerebris. They're also part of the announcement. when I spoke to Oracle's head of cloud about whether this marks a potential departure from NVIDIA GPUs, and he said that's not the case. NVIDIA is still considered the strongest chip on the market. But at a time where chips are incredibly scarce, the market wants more options and that Oracle is hoping by offering more chips to its customer that that increases demand, especially as the market, Scott, moves from training to inference. As soon as Altman gets on stage, we'll get you his remarks.

3:06Scott Wapner: Yeah, you'll let us know, please, those headlines as he makes them. Seema, thanks for bringing us the news. We'll watch all of it. It's impacting some stocks, especially Oracle, which is getting a nice lift up 4 % in its own right. We'll watch NVIDIA and sort of everything else in the orbit as we really do dive in to this trade, which has been acting much better this week. There's no doubt about it. Got the Anthropic S1 out of the way. Broadcom got a big upgrade today. You can just cycle through, show the shares. We'll talk about them later, but nonetheless, a big winner. The semis are up. Most of the hyperscalers are doing quite well.

3:36Scott Wapner: How about Corweave, too? It's notable because the CDS is the narrowest it's been in about a week. So that's taken a little bit of the edge off the market related to all those funding concerns. Rates have relaxed a little bit, too. That has clearly helped heading into a Fed meeting this week where we really don't expect anything at all. So there's the tenure, which has come down. It's still below 5 percent, as you see. And by the way, positioning is a lot cleaner as well. And that's significant. That's where I want to begin with you, Joe. You've been talking a lot about that on our show. Wells Fargo today says, interestingly, correlations versus semis for hyperscalers and software have flipped positive over the past month, unlike in July.

4:18Scott Wapner: We read that as a sign that the market has treated AI tech indiscriminately and see opportunities in hyperscalers and infra software. Still, the market's going to want to see capital discipline. But nonetheless, the positioning environment looks and feels cleaner. It does. And I think that's an excellent setup for this return of optimism that I'm anticipating us to close 2026 out with. I think you want to focus on the large cap names. I think that's where you exert the discipline that they cite there in their report. What I would like to see this week, and we're getting a glimpse of it today, and I feel good about that, is when we get good news surrounding AI, I want there to be a good reaction.

5:03I didn't like the reaction that we had last week from Western Digital. I didn't like the reaction we had from LAM. I didn't like the reaction in September, subsequent trading in October from Micron. Today, you hear the news about this collaboration with Oracle and OpenAI, and you see Intel's up 4%. You see Cerebus is up 8%. You see that NVIDIA is rallying. That's what is important. I like that type of reaction. I want follow through for the remainder of the week as we hear from Microsoft and from Alphabet and from Amazon and really the industrial heavyweights. I mean, Steph, I know you're going to be watching this as well.

5:43We're going to hear from Qantas Services. We're going to hear from GE Vernova. We're going to hear from Vertiv. I want to hear some good news, some good guidance, but I want good price reaction afterwards.

5:53Scott Wapner: Yeah, I mean, let's not kid ourselves. The movement lower in rates has definitely taken, Steph, the edge off of this market. It's helped that this story in general, if you, you know, again, the CDS, which has been more focused on in some names, including Oracle, by the way, over the last handful of months, has certainly looked a little bit better. And there's a good example of what we're talking about here. There's the core weave story. So you're getting the benefit of that and maybe some optimism around it. Adam Parker says we doubt the AI trades over, even if it ends up being a seven to eight year investment cycle.

6:28Scott Wapner: but we're only halfway through it now. We highly doubt selling the exposed securities this far in advance is prudent. Yeah, I think we're in the fourth inning in AI, and I think we're in the third inning in cybersecurity and the first inning in robotics. And those are my three favorite themes. They continue to be. They have been for years. But I totally agree with you on the rate story coming down. I think we needed rates to come down. They have about 42 basis points. That's a lot for the 10-year. It's kind of like, you know, now it's not front and center at this very moment. That's right. It will be again at some point, but it's not front and center.

7:04Now front and center is the earnings, tech earnings. Now, I know only 20 percent of the earnings companies in tech have reported. Tech has reported 200 percent earnings growth. Com services, 48 percent earnings growth. Those numbers are going to move around a lot, but it's good. That's my point. Earnings, stocks will follow the earnings. And I expect the semiconductors to have very good results. I think the hyperscalers are continuing to spend. And now the good news is they're getting financing, whether it's debt, whether it's equity, whether it's private markets. And they're telling us it's not going to end.

7:37And yet the stocks are hanging in there. And monetization. Last week we saw SpaceX see monetization in their AI rental business up 700 percent. We even saw Meta see monetization up 26 percent in total revenues. And so overall, I feel better. I think the setup is really good. I think we're going to lights out tomorrow and this week on the industrials, no question. And they're down 20, 30, 40 percent, too. So I like that. And I agree with you. I want to see a good price reaction. And I think we will because they sold off so hard into the prints.

8:09Scott Wapner: The key is, Josh, that the setup is just better. The stocks, some of them have come down a fair amount all around the AI universe. And positioning is better set for maybe a more positive reaction to some of those earnings reports than we got, like the ones Joe was talking about, that really started with Micron, had really good results, not good price action. Lamb, Western Didge, you can even throw Meta in that group if you really want to. What do you see? I love the setup. I was on the air two weeks ago when I think rates were peaking. We didn't know it was peaking at the time. But I asked the question rhetorically.

8:48I said, no one's asking the most important question, so I will. What happens when rates back off? Remember, when something is at a high, it looks like it's going to keep going up forever. And when something's at a low, it looks like there's no end in sight. But that's not how markets work. Things get taken too far. And I think in that moment, we were looking at five and change percent rates on the two year and pondering six. And now we've got rates backing off and almost like somebody blew a dog whistle. All the hounds are barking again. And you see action coming back to some of these areas. And I agree with what you said about the setup.

9:29Here are the three cheapest stocks in the market using PEG ratio. I know Farmer Jim's not on today, but he would appreciate this. SanDisk is currently selling at a PEG of 0.08. So people who have been investing for a while, when they hear a number like that, it almost sounds unbelievable. How could that be? It's true. Micron, 0.10 PEG. Western Dig, 0.13. Earnings expectations for tech are not coming down. They're going up. We have an anti-bubble in valuation. NVIDIA is selling at 15.3 times forward earnings. NVIDIA is 15 times earnings. So I do think the setup looks better. Any kind of relief on rates and oil and that whole mishigas is greeted with a triple digit rally for the Nasdaq.

10:20Every time you could you could set your watch by it. So I think we're in a better place. You've got momentum. The momentum area of the market has taken a big step back. That's what sets up the next move higher. And right now, when you think about the type of earnings that we're about to get, like what we're going to hear from Amazon on Thursday after the close, could be absolutely explosive. And I know we'll do more there. Last thing, Stephanie's right on cyber, being in the second inning or the third inning, whatever it is, people don't even understand the degree to which these cyber securities are poised for the next five to 10 years.

11:01I was talking to George Kurtz from CrowdStrike yesterday. They have just laid out a credible plan where they get to 10 billion in ARR one year earlier than expected in 2030 and potentially 20 billion dollars in ARR by the middle of the next decade. and it does not require a ton of mental gymnastics to understand how that happens. It's just the growth rate that's happening right now in AI, agentic, etc., and all of the work on safety and security that will be required if any of that comes to pass.

11:36Scott Wapner: Jenny, I'll give it to you as Josh puts an overhead smash on the market bears. He just went full Boris Becker on the group. So I think what time is your court time, by the way, you have time until the end of the show or what? What one 15, one 15. I'll stick around for finals. All right. Just making sure. So I think I think we're doing a disservice to be focusing so narrowly because I think this positivity could be a lot broader. You know, and as Steph said, she thinks that the industrials could be really good. I think the reason when Josh talks about the peg ratios being so low, the reason is, is that there's so much skepticism over the growth rates.

12:17So we could have a blowout report from Amazon, but you could see a muted response, which is what we've seen happen to NVIDIA over and over. Well, anything could happen. Why would you do?

12:26Scott Wapner: Why would that happen? Let me finish what I'm saying. So I was smacked in the face this morning when I read the earnings roundup that I read in Vital Knowledge. And here's what I read. Hilton solid upside. Coke strong upside. Polaris solid upside. Royal Caribbean upside. S &P Global. TransUnion. HCA. Freeport. Kirk. Hubble. Johnson Controls. Panthair. Corning. Everyone has strong upside. And so I think we need to broaden the lens on realizing that maybe all of this economic activity from AI is bleeding out further. Well, it's about time you got bullish, Jenny Harrington. Well, you know what? Do you have like a pint of ice cream this morning for breakfast?

13:05Yeah, and six coffees. No, just kidding. But I just think it's an interesting thing. I think we need to be careful with expecting the big upside responses in the share price to come from just the tech trade. I think it could be broader because there's expectation in the Amazon, right? And there's skepticism about those growth rates. But that huge list that I just mentioned, no one's paying attention, right? And so there's not expectation for those growth rates. A lot of those names are momentum names.

13:33Scott Wapner: It's interesting. Coca-Cola is a momentum. By the way, momentum's coming off its best day since September 21st. It sure is. And I think the setup for momentum as we move towards the end of the year is excellent because you had that positioning and sentiment recalibration in Q3. Is that what caused most of the volatility in the market, as some have suggested over the past few, two, three weeks, just a sort of changing of positioning, which made people question the story when it wasn't really worth questioning? But people started asking all these questions about crunch for cash. How are we going to fund all this?

14:15Scott Wapner: Look at Corweave every day and on and on and on building, trying to build a more negative case by the hour when nothing fundamentally changed, did it? Yeah. So the correlation to the delta for yields is what impacts where the momentum factor goes. If you think about 22, the momentum factor had an awful, a very punishing year because of that rapid rate of change and where yields were. And in August and September, it was a very punitive environment because yields spike so high for the momentum factors. And by the way, when yields came down the way they did, that was unprecedented, too, in that one day.

14:58Scott Wapner: Yes. So what did you have, like a 20-plus basis point move in the 10-year yield? Yes. So there's a very strong correlation that I continue to watch between the rate of change in yields and what the momentum factor ultimately does. And it's one of the reasons why I've been over the last week as bullish as I have been for the setup for momentum into the end of the year because I'm seeing the relaxation in yields. What about Broadcom, Steph? Let's hit that because it's one of the reasons why the market looks as good as it does today. It's certainly one of the stocks that's getting a nice move of near 4%.

15:32Scott Wapner: A couple of catalysts here. DA Davidson goes up great on this to buy from neutral. $400 is the new price target. It was$350. It's on the doorstep of that. They take it even higher. Then they have the debt deal with Anthropic. Why don't you just talk about what you see in that name? They've been guiding their AI revenue for 2027 to be$115 billion, to grow to$230 billion by 2028. Now that they've done the Anthropic deal, that has secured about$60 billion in revenues for 2027. So that was the thing. Could they actually do these numbers? And this is what the company guided to on their conference call.

16:07Nobody believed them. So I think that is the catalyst, number one. Number two, they de-risk gross margins and operating margins. They're not falling off a cliff. Gross margins at 73 percent. Operating margins at 66 percent. Very, very healthy. You add it all up and you have something like$22 in earnings power by 2028. That puts this stock at 15 times. It is down 2 percent on the year. The stocks is up 60. So to me, the reason I also bought NVIDIA, same thing. Like, I don't understand. These companies are putting up such great numbers. Estimates are going higher. They've definitely taken a pause year to date.

16:40I think there's opportunity here. I think there is, but I also think it comes with a lot of risk. And I think that's why it's down 2%. And this goes back to the AI trade being on and me saying, like, I actually would like to pick on the word indiscriminate because I think it's been very discriminant, right? And there's different things being picked on. And Scott, not with respect to momentum, but you said, has something fundamentally changed And I think something fundamentally in the bigger landscape has changed, which is that for the NeoCloud players, right? Funding has dried up. And I think there's a problem.

17:11And I don't know what the problem is, but I think there's a problem when the CEO of Broadcom needs to intervene in the funding of another company. Because what that says to us is several months ago, right, you could just get as much money as you wanted to. But now you see NeoCloud funding drying up. You see the need for an intervention. That might be fine for Broadcom, but it says something about the bigger industry. You're talking apples and oranges. You're talking apples and oranges, Jenny. I'm saying there's something out there. CoreWeb has a horrible balance sheet. For sure, Steph. And guess how much cash Broadcom is generating every quarter?

17:43$18 billion. And that's why I'm not sure there's— And same thing with NVIDIA. They're generating$48 billion a quarter. Their balance sheets are great. They can fund if they want to, and they obviously want to. And there's real demand there. But CoreWeb, that's a different animal. My point wasn't on Broadcom. My point is just that the statement that Hawk Tan needed to intervene says to me that something has fundamentally changed out there. And he can, because he's got the balance sheet to do it. Yes, but the fact that Anthropic needed him to, right? That one Anthropic needed them to. I've been talking about this for a long time.

18:14I think there's a weird, to me, like vibe from the word intervene, that he needed to intervene to get that done.

18:20Scott Wapner: I knew your bullishness was too good to be true. What I didn't realize is that it would unravel in merely two minutes and 30 seconds. I think that's unfair, too, because what I'm saying is that there's nuance. You know, and this is what I've been saying for a while. There's nuance that you need to be careful with. So you can't go all in on AI. You need to flesh it out. I think you're right. Broadcom's cheap. You know, it's cheap on every measure. But there's something saying that you need to go all in on AI because I haven't heard that from Joe or Stephanie. Josh, you're derailing. I'm just saying I think there's something out there.

18:49I just think there's something out there that has fundamentally changed. And I think we need to keep an eye on it. And it has to do with cost of funding and liquidity and availability of funding. And I think I think it's weird. But like, OK, this is obviously where I am anyway. You know, I'd rather put my money in those in the companies that the kinds of companies that I listed earlier. Right. Which is frankly where your money is, too. In these like cash cows, you know, slow instead, like not even slow and steady, but steadier growers. I think all I'm saying is, like, I think there's a pocket of toxicity lurking out there and that we've seen a couple of highlights or maybe spotlights on where things are brewing this week.

19:27The market's doing a very disciplined job of doing exactly what you're talking about. The market, Stephanie, which is why others others are not going and suggesting, OK, core weave is the opportunity. In the case of Broadcom, what they're doing, I would say Anthropic is a completely different relationship than a core weave would be. The need for capital for core weave versus Anthropic is totally different. I don't think we're missing the point. I think we're all saying basically the same thing. The market is narrowing the AI opportunity, and it's exploring where there are better balance sheets, and capital is going in that direction.

20:05It's very clear. None of us are saying, none of us. I haven't heard anyone say, go buy a neocloud, go buy CoreWeave. No, I'm just saying something out there shifted. Like, I wanted to latch on to something fundamentally changed. Yeah, something fundamentally changed this week. You're right. Something has shifted. The cost of capital has gone up. And do you know where the benefit of that idea is found? In the traditional hyperscalers who are selling mops and brooms and have the cash flow from their other businesses to fund in a way that the neoclouds don't. And the market has sussed that out. And I think it's very obvious when you look at the performance of the neoclouds and the volatility there.

20:44And by the way, they don't just go down every day. Some days they go up a lot. But the volatility there versus the steadiness of Alphabet, Microsoft, and Amazon in the last four weeks. The market has correctly surmised what you're suggesting. We're not arguing, so you don't have to have the last word. Trust me. I added, and to that end, as you know, a few weeks ago, I added the Google, the Alphabet Google convertible preferred end. because I want to play that traditional hyperscaler part. I think it's undervalued. I mean, it's down 10 % in the last week or so. I think it's silly. I think the valuation is right.

21:14So let me finish my thought. Let's all be aware that we're not playing in the same field that we have been. Okay, great. And in a market with pockets of toxicity, which sounds like a Drake album title, I like it. In a market with pockets of toxicity, thank God we all are observing these things and pointing them out as they happen incessantly in the case of core weave, incessantly in the case of the private credit names. Like this is not some sort of situation where like everyone just buys everything every day and valuations don't matter and blah, blah, blah. We have substantial de-ratings happening in the SMH.

21:55We're not seeing SMH names at 52-week highs, despite the fact that semiconductors will be the biggest single contributor to earnings growth this quarter. We're not seeing wild moves in Oracle, which, by the way,$1.92 versus$1.74. Solid beat. Western Digital,$4.64 versus$4.11 expected. We're not seeing these stocks do cartwheels. So I think the market is fairly chaste. Sure. But I think this goes back to like you need to treat a peg ratio, a P.E. to growth ratio differently in this moment. Maybe then you have historically because the growth is suspect. Right. Like even for Western Digit and Sandisk, there's a reason.

22:38Growth is always suspect. We don't know what the future is. Why is Micron still trading under 10 times? Because like, you know, with the numbers that they're putting out, they're amazing. Why? Because everyone's skeptical about the growth. I'm just saying, let's pay attention that we're in a market that's that's different than it has been.

22:51Scott Wapner: I mean, it always trades under 10 times, doesn't it? It's trading five times actually right now. But that's the thing. You'd think with the growth being like, what, 200%, 300 % earnings, you'd think like, oh, shouldn't that multiple expand? No, because they're so skeptical, everyone's so skeptical about what the earnings growth is doing at. It's up 222%. Why is that bad? So, I mean, they have delivered. And people have gotten rewarded for owning it. And then people are like, oh, and it's down 25 % or whatever off the high. They've got$5 billion of debt on the balance sheet. They're generating a huge amount of cash flow.

23:19It's trading at five times earnings. Historically, it trades at 10 times earnings. Yeah, maybe they are skeptical about the growth over the long period of time. But I mean, they've got over$100 billion secured between now and 2030. I think it's just a matter of time that the stock does rebound. And in general, just the higher quality semiconductors. Can I give you two potential new AI trades? Go ahead. Wow. Off of Cadence. I thought Cadence's quarter was phenomenal. The stock is pulled back. It's very obvious that we have significant demand for chips, and they are designing the chips. I'm always looking to see what we don't own in Jyoti that we could own.

23:57We don't own Synopsys. Synopsys will be reporting in December. You like Synopsys, right? I think off of Caden's report, you want to own Synopsys. Teradyne will report tomorrow. Watch Teradyne. That has been under the radar. That semi-equipment name has struggled mightily. off of that report. I like Teradyne. Again, we don't own in the ETF. Therefore, personally, I'm interested in it.

24:20Scott Wapner: Let's get one more name in before we take a break. It's SpaceX. Bank of America puts it on its US one list. Stock's up near 30 percent in the past three months. So you got sort of through the initial gauntlet of lockup expirations. And now what? Well, it's still down 25 percent from its highs. And, you know, I own this for the very long term. But I thought the quarter was really validation that they can win in many different ways. And right now it's AI compute that they're renting out, which grew substantially. I said over 700 % growth year over year, but their connectivity business grew 70 % year over year.

25:00I think that's another way that they will win. And I think they're on path to see something like 200 million subscribers in Starlink by 2030. So that's another place that they can grow. And of course, it's space. And we have no idea what they're going to do in space, but they do have the low cost advantage, first mover advantage. And I think they can be a long term winner there, too. So this is a buy and hold it for a really long time. And if it continues to pull back, Scott, maybe I will nibble over time.

25:24Scott Wapner: OK, we'll take a break. We had some good volleys. Get it. We're up six love going into the second set. Next, Stephanie Link has a trade update. Number of committee names are on the move. Josh has best stocks in the market as well. Don't go anywhere.

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27:22Scott Wapner: Okay, a lot of talk about what might happen in the midterms here. You saw what happened in Brazil. You had already owned the EWZ. Yes. And that dropped like a stone. right after the results surprised and you bought more. Yeah. Right. It's been so volatile for an ETF. It was up 13 percent when Bolsonaro looked like he was going to win it. And then it fell 25 percent yesterday that that Lula is going to win it. So first and foremost, I didn't buy it for either candidate. I bought it because the demographics are enormous. They have 214 million people that are seventh largest country in the world.

27:59They're the largest in Latin America. They do have good fiscal and monetary policies under Lula. The currency has strengthened under him. Stocks have outperformed. Inflation is still high, but it's coming down. And they have record unemployment. So that's the reason I own Brazil, because I think there's a lot of growth yet to be had. I like the fact that they have agriculture as 23 percent of their GDP and also that they have power. That's what everybody in this world wants, and they have it. And so, to me, I think this is a setback. Short term, I think it's way overdone. And I'll continue to add at these levels.

28:32OK.

28:32Scott Wapner: Can you say something on that? Please. Thanks. So we run our international strategy also. And it was an interesting day because we jumped on Brazil yesterday. We didn't actually make a new investment. But we didn't have any investments in Brazil going into it. And the immediate response was kind of the same, which is like opportunities being created here. And you have the government's a mess and like whatever's happening. But there's phenomenal companies in the country of Brazil. Why don't you do anything? Because it's like 24 hours. You know, it takes a little bit more time to work. I think we'll be OK.

29:02But there's Petrobras. There's Embraer. There's just like really great. There's Vale. But there's great companies there. There's a number of fintech companies there, too. And I think it also is a reminder heading into the U.S. elections and into the midterms, which is that companies are frequently, you know, successful regardless of who's in power at the government.

29:21Scott Wapner: So Morgan Stanley downgrades it today, by the way, to equal weight. see a highly likely policy continuity scenario, increasing pressure on fiscal risk. Brazil could face an increasingly challenging macroeconomic setup, weaker currency, higher interest rates, slowing economy in need of an unlikely fiscal rebalancing. I mean, I just cited all those things in terms of growth and unemployment and the demographics and what the currency did under Lula. Like, I mean, it's been good. It's been OK. I mean, I know Bolsonaro would have been much better. They obviously had agreed with you, which is why they didn't have it at equal weight.

30:01Scott Wapner: But now they're like, OK, there's increasing pressures that are going to force changes. I don't think so. And I think we haven't seen it under this administration in the past. I think this is where I do diverge from you a little bit. I think there's opportunity there. But I'd rather pick off individual companies rather than take the broader. Let's talk about different companies, individual companies, if you will. So fun. It is, right? I know. It is. It's my favorite topic. I'm going to give you UPS first thing because of your unbridled optimism on all things, but especially this. UPS, beat Q3 estimates, hikes full year guidance for the second quarter in a row.

30:43Yep. How do you like that? How do you like that? So UPS, right? Their strategy is working, and the strategy is focusing on higher profitability business. When we first got into it, it was right when they were figuring out like the workers union stuff. And we've almost forgotten about that as an overhang. So, you know, so the union business is in the past. They're using technology super aggressively. They're focusing on higher profitable, higher profitability packages. And you see it actually starting to work. And so now you've got a company that trades at 12 and a half times earnings. Earnings growth for the next three years is in the high single digits, kind of 10 percent, 7, 10 percent range.

31:21got a 6.5 % dividend yield. It's up like 8.5 % on the year, so you don't have a big cliff that has climbed. But I think it's a great place to be. And if you believe in the U.S. economy, right, like this benefits when the U.S. economy holds up.

31:34Scott Wapner: How about Coca-Cola? They did raise guide, but I think we saw the stock earlier was red. It still is. You have that. Yeah. Right? Look, there were a lot of expectations built up. This is a consumer staple name on a day in which the market is being led by momentum and AI. So it's not going to grab the headlines very much. Back this out a little bit too, guys, please. Let's back it out two years, actually, because if you look at Coca-Cola, I think it's up 35 % year to date. I think in 2025, it did about 15%. What's remarkable here is you have a consumer staple company that's been growing its revenue at a clip of 12 % over the last four quarters.

32:10That is excellent. It's about introducing zero sugar, sparkling soft drinks, and they've now lifted away KFC from Pepsi. They really are sitting in the sweet spot. They have that 60 percent global exposure, too, which is working well.

32:26Scott Wapner: What I was trying to show is what the chart does at the very right is the staples have ripped. So the stock being off a fraction off of raising a guide after a rip move in the market, I don't know if a one month is going to accurately show it or not. But well, there's three months, but you can show one month. It kind of tells at least a little bit of a story. What about Boeing, which beat the narrow the lost stock was down a lot, right? Like 10 percent. Yeah. Yeah. What's up with that? Well, they beat revenues, but in the wrong places, defense and services, not in commercial aviation. So that's one.

33:03Two, they had higher cost production costs and also supply chain issues. And three, the biggest thing is free cash flow, because that's how this stock trades. They beat on the quarter free cash flow, but I think it's going to be really hard for them to get to the$1 to$3 billion of free cash flow for this year, and I'm not alone. And it's disappointing, quite frankly, Scott. I don't know what I'm going to do with this stock because I've held it for a really long time. The turnaround was gaining momentum, and it stalled. I much prefer GE. They had a great quarter, and that stock fell on the news, and I actually added more to that one.

33:36Scott Wapner: All right. Mackenzie Sigalos has a CNBC News update for us. Hey, Mac. Hey, Scott. Here are the headlines we're watching this hour. The CDC's deputy director has reportedly resigned after just six months on the job. According to The New York Times, Dr. Jennifer Shuford says she was leaving to spend more time with her family. Dr. Shuford's departure comes as the agency faces criticism over changes to childhood vaccines and its response to a measles outbreak in Pennsylvania. Ukraine's foreign minister says a ceasefire that began today in the town of Oleschke could be a step forward in the wider peace process.

34:10The pause in hostilities, which was brokered by First Lady Melania Trump, is set to last until November 1st. The local ceasefire comes as the Russian-occupied frontline city faces a food crisis. And Kalshi announced new safeguards today for young traders. The prediction market platform said that users between ages 18 and 20 will start with a$2 ,500 monthly deposit limit and will be encouraged to diversify if they allocate more than 25 percent of their funds to a single trade. It comes as CalShay faces criticism over setting its minimum age to 18. CBC and CalShay have a commercial relationship that includes customer acquisition and a minority investment.

34:48Scott, sending it back to you.

34:50Scott Wapner: All right, Mac, appreciate that. Thank you, Mackenzie Segalis. Coming up next, Josh Brown. Best stocks in the market. We'll find out what he's serving up next.

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36:35All right.

36:36Scott Wapner: What are you serving up here for best stocks in the market, Boris? Thank you, Judge. We wanted to revisit two names that had been on the list and were caught up in the AI funding crisis of 2026, which took place approximately, I don't know, seven to 10 days ago. The first one is Meta. This stock is now off the list. So we came on at the end of September. When it had just been added to the list, the stock was about 750, and it was rocketing higher on the launch of Muse. Unfortunately, they followed it up with massive equity issuance and more questions about their funding, et cetera, et cetera. and the stock just couldn't hang on after they reported earnings.

37:20What we're telling people now is if you followed where our risk management was, you were stopped at 685 on October 22nd. We are not reentering. The name is off the list. I think if you want to get constructive here for a trade, you need to see the stock take back its 50-day, which is about 664 before you do anything. The investor stop was 626, which also took you out of the name. And I just think there are too many stocks that are going up right now to worry about when is the meta bounce going to take place. So I'm not talking about it as like a long term hold. I'm talking about the intermediate term.

37:59My best guess is this name's in the penalty box. The other one is still on the list and I like it. Cloudflare. Let's put up any T. So they run this global network that sits between the Internet and the customers. meaning the companies that put up websites and apps. They sell security and a developer platform all in one so companies can not only build applications, but they can run it on the same network. The growth is explosive here, and a lot of it now is agentic. Management said non-human traffic on their network is now more than 50 % of all traffic. AI agent requests are up 1 ,700 % year over year.

38:41Cloudflare is sitting right in the middle of that. So this name is pulled back with the other AI stocks, but it caught itself. It's in the midst of a little bit of a V-shaped recovery. They're going to report earnings on November 5th after the close, so keep an eye on it. The stop for traders we're giving people is$2.99, which is the top of the doji it printed on October 20th. A close below that means the bounce failed. If it stays above, I think you want to remain constructive in Cloudflare.

39:09Scott Wapner: Hard to find anybody who's negative on anything cyber-related, especially with the last name Terranova and Link. Cyber has been remarkably powerful, and I think it's broad-based. It is companies that are well-known like your CrowdStrike, your Palo Alto. It's lesser-known companies with great balance sheets like Fortinet. And then there's the one that I believe is the takeover target, which is Okta. to me, that's a tremendous opportunity as well. I just recently bought Zscaler because it's only up 15 % year to date. But Palo Alto and CrowdStrike are up over 100%. And I think the stock, the valuation at a 50 % discount to EV sales really doesn't make a lot of sense.

39:52And their RPOs are growing 27%. And their ARRs are growing 25%. So I think it's going to play catch up. I don't know if it plays catch up to 100%, but I do think it plays catch up. All right.

40:02Scott Wapner: We'll do Santoli's market memo next.

40:19Scott Wapner: Senior markets commentator and overtime co-anchor Mike Santoli has his market memo, which is a headline today. We're nearing a now or never moment for this A.I. trade to rebound. Tell me more. Well, we actually arguably are getting the reassurance that this that this trade was poised to sort of require, I think, just in terms of the repositioning that you saw, you really do have the makings for what should be a tactical bounce. You know, hedge fund tech exposure is way down, the leverage way down, all the carnage we've seen, the valuation compression. And so, in other words, if they can't rally on this kind of washed out conditions, that would be a little bit of an issue.

40:56So for two days, we're seeing it happen. I say we get reassurance on something on the financing side, as you guys were talking about. To me, it's like the hose was kinked a little bit. It's opened up somewhat. That being said, you know, I'd like to see the semiconductor ETF, you know, at least maybe get back to its 20 and 50 day moving averages, which are both sloping down, which are 5 percent up from here. Meta. Great. They did the deal. Guess what? The stock was 770 two weeks ago. They priced at 625. OK, so congrats. And then, you know, even things like SpaceX's debt issue, the price talk. Yeah, we're investment grade rated.

41:33But you trade like junk, and so does Oracle. So I'm saying that we have not really cleared the field of those concerns at the same time that you still have rates higher, obviously oil where it is, and defensive leadership running into this phase.

41:48Scott Wapner: We've got some injured players back, though. Well, sure. There's no doubt about it. And look, the pendulum always swings in terms of the storyline and the narrative, and less changes than we think it does on a day-to-day basis on the underlying fundamentals. But I do still think you stub all these companies investing at a scale where they think it's winner take most. And it can't be winner take most if there's five of them trying to do it. What do you think? What do you think of Brown's look going on center court after the show? What do you think? I do have to turn around to look. You can't see it anywhere else.

42:18Scott Wapner: There it is right here. Just get there. It's it's it's what it's ready for the hockey hair season. Is that what's going on? Yeah, we like it. I love you, too, Michael. We could have a hair off someday. We'll play options action next. All right.

42:40Scott Wapner: We'll go to Chicago. Oliver Rennick is playing options action from the SIBO Global Markets on some stocks that are going to be reporting this week. What do you see? That's right, Scott. Alphabet options flows today. Look a little more optimistic as the stock finds some support at 320, which is Google's low from July. 170 ,000 calls traded today, more than double the 70 ,000 puts. And it looks like more of those calls were initiated by buyers. That said, there was one big money trader very active in the November 20th expiry, mostly selling calls against that flow with a core position built around selling almost$8 million of the 337.5 strike calls, which still gives Google 4.5 % to stretch higher.

43:25And that's a bit below the implied move of 5.5 % that's currently being priced in for market makers after its report. In Microsoft, volume is very low today, about a third the usual. But some of yesterday's call buying did reverse with a few big sellers of high premium calls from the 500 to 600 strikes for expiration stretching from November to early next year. But like the call seller in Google, these are more neutral than bearish, but not hugely confidence inspiring either way, Scott.

43:57Scott Wapner: All right. Nervous but leaning bullish. Oliver, thank you. Talk to you later. That's Oliver Rennick. We think about what the options market is trying to game out here. I think the problem for Alphabet was the fact that it went up and caught so many from surprise from June 1st of 2025 to June 1st of 2026. It was up 116%. So let's put some context to the pullback that we have seen since the summer, since they had their last earnings report, and they raised the guidance on CapEx. I think Google, over the long term, will be fine. I agree. And it actually goes to a point that Steph and I were talking about in one of the breaks, where when we talk about companies like Micron, you need to remember it's still up 220 % year-to-date.

44:40So some of these pullbacks are so meaningless, actually. I want to show you some video.

44:44Scott Wapner: I'm going to interrupt you just for a second. Please forgive me for doing that. Sam Altman is taking the stage right now at Oracle's AI World Event in Vegas. I think we're going to show you a picture of that. It's just happening as we speak. And we'll monitor. Obviously, that's not him. We'll monitor that. And, of course, we will bring you any headlines from any of this. But this relationship between Oracle and OpenAI, which was announced right at the top of our program today by SEMA. Let's show you Oracle shares if we can instead of my face. because you can see that that stock's gotten a nice little move.

45:17Scott Wapner: There you go, up 4 % on this news. And, you know, let's see what he says. Obviously, a day after we got the Anthropic S1, I can go back to the shot. And, you know, whatever head, there he is, and whatever headlines perhaps are made in Las Vegas, we will gather those and bring them to you as they happen. We'll do finals next.

45:40Scott Wapner: Three o 'clock Eastern, closing bell, take you to the final stretch. Mike Wilson has a new note talking about the correction in AI stocks, whether it is finished or not. He'll tell you later. Mark Lasry will join us. Haven't talked to him in a bit, so we look forward to that. And Lo Tony as well. Day after we got the Anthropic S1, we'll see what Sam Altman says today in Vegas. React to all of that with all of you. Final trades. Josh Brown, what do you got? We see what happens to the market when weights come down, if and when oil comes down. Delta is going to act like it's on a trampoline. They've just absorbed$6 billion in energy costs, fuel costs this year.

46:20It won't always be this way. Jenny. OK, American Tower, great growth prospects even before SpaceX became a customer. UnitedHealthcare. Apple.

46:29Scott Wapner: All right, good stuff. I'll see you at 3. The exchange begins right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.

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47:18Scott Wapner: There's a fire inside you, you can't ignore. Stand still, not a chance. You're a lifelong learner who's come this far. Now we're here to help you keep going further. Capella University, what can't you do? Visit capella.edu to learn more.