The Investment Committee Prepares for a Pivotal Week 10/26/26

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0:38At Acura, that means looking closely at how every detail could make your experience behind the wheel more rewarding. Every lesson learned and every idea refined becomes part of what comes next, and it lives inside every MDX, ADX, and Integra. That's precision-crafted performance. That's Acura. 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 very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, this huge week for the markets, the bulk of mega cap tech earnings, the Fed decision.

1:19And now we have Anthropics S1 as it readies to go public. We'll kick all of it around, of course, with the Investment Committee. Joining me for the hour today, Joe Terranova, Anastasia Amoroso, Jim Laventhal, Steve Weiss. Check the markets. We're green across the board. So starting the week on a strong one. But it is it was going to be a huge week under any scenario, obviously, given what's on the plate. But I think with the consternation around the A.I. trade, it takes all the more importance and certainly kicks that level up. And we will get to the Anthropic S1, discuss that coming IPO in a moment.

1:51But, Joe, so Alphabet and Microsoft Wednesday, Fed Wednesday, Amazon Thursday, given everything that we've been discussing for almost every day, what's it all mean? Well, I think it is directly tied to the AI trade. And it is all about hearing from these three hyperscalers and how much capital they are allocating in the direction of compute. I think it's critically important. It's obvious to me. I left here on Wednesday. The S &P futures were at$77.50. subsequent to that, for sure, if you're bullish, you're kind of on your heels a little bit here. So you need to hear something really good from earnings, which the expectation is you're going to hear.

2:31More importantly, though, is the price reaction. So I was thinking of exactly that. The reaction. That it's all about what happens to the stocks. You know that the earnings are going to be good. You know the commentary is going to be good. Everybody's kind of front run that to some respect. Every time you hear about a new deal about compute, this, that, and the other, all you can do is draw a line back to where the spend is coming from. So you feel like that's going to be strong. I'm glad you raised the price action because it's been bad. It's been bad. Companies that have knocked the ball out of the park, they've stumbled running to first base.

3:06Yeah. And look, I'm going to maintain the perspective and bias that I have. I find it very difficult to believe in a year in which the market has done such a phenomenal job vacillating and vacillating in a way that's very supportive from equal weight back to market cap weighted from one sector to another, kind of building these bridges to support the resiliency theme in the market. I have a hard time believing that we're just going to now fall apart as we move towards the end of the year. I've said that. I think in November, we will have a very optimistic, strong push to the end of the year. And I find it difficult to believe that the AI trade would not participate in that.

3:46I like the fact that we're seeing deleveraging. I'm focused on sentiment and positioning. But I will acknowledge from a price perspective, if you are bullish, which I am, doesn't look too good right now. And you need to see some really good reactions to earnings coming up over the next couple of weeks. Weiss, which side of this are you on? Are you on the side of RBC and HSBC who respectively say we remain on guard for a 5 to 10 percent pullback in the S &P in the near term? To near term, we cut equities to neutral. That's one side of the ledger. On the other is Wolf, which says little evidence that fundamentals have deteriorated enough to justify moves of this magnitude.

4:27Mike Wilson, we think the correction that began in June is now in its final stages. Which side are you on? The latter? Well, I'm cautious. I'm cautious. You're on the former. Yeah. You're on guard. I'm on guard. OK. And for me, a lot of it comes back to what's going to happen in the Middle East. Because, you know, if we don't calm it down there, and obviously—and the market's up today because they're saying, oh, diplomatic avenues are being pursued. But they've never paid off and they never will pay off unless we take a subpar deal. But if you go after oil, which everybody says they're going to do, including the U.S., then you've got a disaster in the market.

5:08There's no other way to put it. Now, if you're taking that out, which is impossible to do, you've taken it out in terms of what's going on in the cloud. Again, I'll say it again, even though it's sort of annoying how often I say it. Stocks peak a year before CapEx spending peaks, not stops, but peaks. And when you're seeing like the neoclouds that I think Musk is absolutely dead on, some will survive like a Lambda, you know, great balance sheet, not a lot of debt. They're going to take on debt, but others won't. And what that does, it informs valuation in the rest of the group. So it's not as if pick a stock is going to do poorly.

5:48It's what is the money that's going to be there. And with the finance that we have and rates going up, you're seeing financing much, much tougher to get. Yeah, but you can't equate the valuations of the neoclouds versus the mega caps. No, no longer. I mean, they're still ridiculously valued. Not the mega caps. No, not the mega caps. But that's my point. Right. So on the mega caps, I like the mega caps. I particularly like Alphabet. that stock's been destroyed. It's 315. So I think that's extremely cheap, given their growth, given how they're employing AI, and given their cloud. Now, in terms of the others, I also like Meta quite a bit.

6:25Now, I can't tell you if the next move is going to be lower, because you're right. I mean, Meta had a good quarter. I thought a really good quarter. They tempered CapEx, even though the market, you know, commentators say, oh, they increased CapEx. That's not true, right? They said it's going to be flat. But I still want to - Because they raise like the midpoint of their raise. Right, the raise in midpoint, but top end was same. Right. So, look, I still like the mega caps. I still think they'll do well, whether they do well at the earnings report or not. But like with Meta, if they get crushed, even though they're full positions, I'll buy it.

7:00Well, so let's make a distinction, though. Yeah. Because you're not negative the whole AI trade. No. You can't be. No. Now, you can be as negative as you want towards the ones that have more issues than the others. But we need to be careful in describing how cautious you are because you're not that cautious on the hyperscalers themselves. Nor is like a D.A. Davidson today, which says we believe Microsoft, Amazon and Google will succeed whether AI slows down or speeds up. Why? Because they're trading at some of their most attractive valuations ever. That comes back to my point. Right. So so what will Alphabet do?

7:36Say they report an inline quarter. I think the stock should go up. Look where it's come from. Right now, it's the most unloved of all the mega cap stocks. But I think it's too well. I think, to me, that is a permanent compounder. Now, when I get to others like AMD, I can't justify the earnings there. When I get to a company like Broadcom, which is not terribly expensive, but look at what's happened to that stock. Stock's been decimated. Everybody's tried to buy it. So you're making a good point. And that point is that you need to be right now hyperdisciplined in where in the AI curve you're investing.

8:15Before, it was buy the AI trade or don't buy the AI trade. Most people are buying the AI trade. Right. Now, it's like buy the AI trade, but you better be selective within that orbit or you're going to, you know, you could get hit. That's right. You've got to be selective. And there's so many examples of that. If you look at kind of divergence of performance of hyperscalers, the Max 7 stocks since the last reporting season, you've got some that are up 30, 40 percent. There are others that are down. And, you know, I think the big distinction that investors are drawing right now is how much CapEx are these companies are actually going to have and how much of that is debt fueled.

8:50So, Scott, I am actually fairly optimistic on hyperscalers that are reporting this week in particular, assuming they don't focus on upsizing CapEx numbers necessarily, because to your point, that trade does not actually that does not work anymore. I don't know if it works. I don't know where we are in terms of what was first deemed. We don't want you to spend too much. Now it's like, well, we better see you committing to spending what you said you're going to spend or now we're going to worry that we have a problem. What do you see that we don't see? Why did you promise this? And now you're not spending.

9:21Are we further towards the end than the beginning? All of these questions that were never on the plate are now suddenly on our plate. They are today. And I think the key question is, what are we seeing in terms of cloud revenues? And also, what are we seeing in terms of cloud backlogs? And I will tell you right now, we're looking for about$2.3 trillion, $2.3 trillion in backlog in cloud revenue. So assuming those hyperscalers meet those expectations, I think that's positive. The other thing that I would do if I were reporting earnings this week, I would really focus on the fact that they can't sustain the debt levels.

9:52You know, Investors really worried about that, Scott. But if you look at the interest coverage ratios for hyperscalers, they're significant. And even when we think about the new clouds, some of them, the banks require them to hedge their interest costs. So it's not like interest rates are rising and all of a sudden their finances are deteriorating. So I think to your original point, the markets are really becoming discerning who's got their debt management under control. And I do think the hyperscalers do. So we'll see what the earnings this week do to change the narrative or change opinion about the market at large.

10:26Tony Pascarello has a note this morning which says the bull market is intact, but there are warning signs. He's worried that the market's overly complacent. The bull market should live on, he says, but it will pack less punch and be messier along the way. For the first time since March, a risk appetite indicator has turned negative. So, I mean, the market definitely has a more cautious sort of Weissian tone overall, not towards the mega caps, but overall. I feel pretty good about things, Scott, and I don't want to bury the lead here. Why is the market up today? Because one big risk is being answered today, which is will the funding be available?

11:04Steve, you made a great point about the Middle East. That's a real risk. That's still there. Another real risk is inflation. But there was a third risk of are we going to find the financing? It's not just the S1 from Anthropic. It's also SpaceX that issued$40 billion of debt. It's also that Meta's coming to market for, I believe it's$95 billion in securities offerings. And these are coming because the soft roadshows and the bankers are saying that the funding is there. It removes a risk. Now, yes, there's still the risk. Will there be a return on these investments? Forgive me, but that's a 2028 discussion, not a 2026 discussion.

11:39Underneath those risks, growing GDP, good labor markets, excellent profit growth. You put that all together, I don't know how Microsoft will trade after earnings this week. I'm sure it's going to be a terrific earnings report. I feel equally certain that the markets will rally to new highs by year end. Look, I'm not— Is he too complacent? Is he too complacent like Tony Pascarello says some are? I see the complacency there. I don't see the complacency in the market. I mean, I think the market has been, you know, we haven't hit a new high in months. We're only 2 % off of an all-time high on the S &P.

12:14That, like, literally is nothing. Exactly. But if you take a look at the average stock, and Joe has these numbers typically on tip of his tongue, we're trading at low end, you know. We're not even above the 200-day moving average. So the underlying technical components of the market don't show a market that's 2 % off its high. So there's been a correction. There's not been complacency at all in the market. Why aren't you focused more on that? The fact that under the surface, the markets look like garbage. It has. Yeah. So a couple of thoughts there. First off, I mean, if you look at the equal weight S &P 500, it's outperforming the market cap weight at S &P 500.

12:54Now, something we've talked about, Scott and Steve, for the year to date. Thank you. Year to date. One of the things we've talked about, Scott, Steve, and everyone, is what is leading that equal weight higher? For the last couple of weeks, it's been defensive names. unquestionably. OK, it's been health care, staples, utilities. You can't be painting that as a bullish sign. No, I'm not. But my point is you're seeing the shift right now. Look at what financials are doing. Look at what industrials. I will grant you. I'm going to kind of steal Steve's words to me right now. It's one day. I got it, Steve.

13:22It's one day. However, that is the turn we are looking for. And based on what I said, GDP growth that right now is projected three and a half percent for last quarter, unemployment at 4.2%. I mean, look around here. Go into an airport, go into a restaurant on a Monday night. This is an economy that's hopping. It's unquestionably hopping. I don't think I'm being complacent. I hear the criticism or at least the feedback. I don't think I'm being complacent. I like using data, and the numbers look very good to me, that the turn is coming right now, that the equal weight continues higher because of offense, industrials, financials, not defense.

13:56If I could. So as it relates to the AI trade, I think it's two words, large cap. I think large cap is where the opportunity is. But it's interesting. I'm listening to this entire conversation and everyone knows me well. I'm obsessive, obviously, about markets. And when you on Wednesday sit on this desk, as enthusiastic as I was in the S &Ps in 77.50, and within 48 hours it's at 76.20, you're on your heels. And you ask yourself, where could it possibly go wrong, my narrative that as we move towards the end of the year, we will see the return of optimism and markets will rally. I don't think it's an AI, Scott.

14:30I think AI right now is the ATM. I think the market for the very first time to actually Steve's point is saying, wait a second, the consensus, including myself, doesn't believe the black swan event that you described is actually going to occur. I don't think the consensus believes that oil is going to spike to 150 because there's going to be an escalation of tensions. I think the market believes there's going to be a deal, whether it's a subpar deal, a good deal, or however you want to define the deal, I think a market is priced in a deal. And the black swan event that the market's not ready for is escalation, oil goes to 150.

15:07I think it's always true, though. The market investors don't know how to figure that risk into their portfolio, so they tend to ignore it until it happens. So I'm not so sure that they're saying there's going to be a deal. I don't think people expect that it will. I think people think it is a very slim probability, 1%, 2%, 3%, that you see the escalation in oil prices spike to 150. I don't think the market's ready for that. Honestly, not to overplay that, but I think one of the things hanging over the market was, you know, what's Anthropoc going to come public at? When? And when? Is it going to be two trillion, one and a half downsize?

15:51And what does that mean for sentiment? Well, we got another clue of that today. The S1 dropping. They're going to be on the NASDAQ. ANT is going to be the ticker symbol. Kate Rooney's been following the money force there. Joins us now with everything that we need to know. I think we've had enough time to pick this thing over and figure out what matters most. What does to you? Well, Scott, we'll try to condense it for you guys. It could be one of the biggest IPOs in history, the biggest IPO potentially topping SpaceX back in June, also one of the most complex from a governance standpoint. Anthropic does plan from what we're seeing to plow most of the cash that it'll be raising back into CapEx.

16:27So that is compute, that's infrastructure. We do only have the financials for the first half of this year, but as Leslie Picker reported earlier, we expect an amended version of this S1 to include some of the third quarter numbers. Anthropics costs were more than half of the size of total revenue in the first half. That revenue number was around 16.3 billion. Operating losses just below 700 million in that first half. But that did narrow significantly from the same time a year ago. Anthropics was profitable, at least on an adjusted basis. Revenue grew more than a thousand percent from a year ago and margins were more than 80 percent for this company.

17:02Total net losses for the first half,$81 billion, but the vast majority of that was due to accounting around convertible debt. The lockup dates are interesting too, Scott, and uncertain at this point. The first date will be 27 days post-listing. There are roughly two dozen other dates for lockups through the first year of the IPO. And then over to governance, which really does stand out as one unique part of this listing. Anthropics founders are set to keep majority voting power through a single special share. It is a class F share. It's going to be owned by the seven co-founders, carries 50.1 % of the vote.

17:38Palantir did something similar. Anthropic has five different voting classes, though. There is a class T, so that is most of the board of directors, and then it's long-term benefit trust to help make decisions, elect board members. On top of all that, Scott, Anthropic is structured as a public benefit corporation. So that means it has a dual mandate. It has the interest of shareholders and then the interest of those, quote, materially affected by our conduct. The risk factors, too, are almost 100 pages of this entire S1, ranges from political backlash, the model risk. They talk about self-preserving behavior.

18:12They say there have been attempts to resist shutdown from these models, conceal or manipulate information. They talk about examples where the technology acted coercive, deceptive or manipulative. And then they include behavior resembling blackmail. They also talk about access to compute, debt as a risk, and then customer concentration is standing out, too. Two of the customers accounted for nearly a quarter of revenue, at least last year. Anthropic has committed at this point to spending at least$270 billion on Amazon, Google, Microsoft over the coming years. One risk, though, there's dependencies here.

18:45There's potential conflicts of interest that are spilling out in the S1. Finally, open source, which could add some pricing pressure on Anthropic's AI offerings, Scott. You allude to this in terms of the relationship with the hyperscalers and what's being spent and when. Maybe most interesting in the filing today was the chart. I don't remember what page it was on, but it's been shown multiple times on the network and discussed by you and the folks on earlier programs that they're seeing a significant increase in revenue for every dollar spent on compute. And that is going up at a much faster pace than what they're actually spending.

19:19Now, that brings me to the hyperscalers as well, because one of the concerns there is that the revenue growth is not yet meeting the level of the spend promise. And that dynamic is being closely watched on both sides of the equation. The Frontier Labs versus the hyperscalers, who are all doing business with one another. So on your first point, Scott, it's a great thing to bring up. I mean, that chart revenue per compute is basically going to be this new paradigm as we get the AI labs going public. They're basically arguing that the more they spend on compute, the better it is for their revenue, the better it is eventually for their bottom line, although profitable on an adjusted basis.

20:04We don't know exactly what that looks like. But their argument is the more we spend, the better our business is, the better our models are. And we do expect to see something similar with OpenAI. So in that sense, it does speak to this new asset class and these sort of new paradigms that we're getting. in terms of how companies think about this and how they're trying to monetize compute. I would say on the hyperscalers in that relationship, one thing, you know, we've known for a long time that Amazon is a massive early backer of Anthropic, Google as well, Microsoft to a certain extent. The risk that they're calling out is a little bit of that overlap and reliance on those companies.

20:37And then this conflict of interest where all of a sudden these companies at the same time are competing and trying to build their own models that are cheaper, especially in the case of Microsoft. I mean, Saatchi Nadella has really been loud lately about trying to say customers, you know, enterprises want choice. They want cheaper versions. He's argued for open source. And then on top of that, they are also saying, by the way, some of our biggest competitors out there are these cheaper models out of China. That could add pricing pressure. But I think the undertone of this entire S1 is the amount of huge publicly traded names that are not only investors, but huge customers of this company.

21:15It's really worth, I think, underlining the importance of this company. And any IPO is interesting, I think. But at this point, because it's so tied to the rest of the broader market, there's so many demand signals in here. It's particularly important to our audience. I'm sorry. Aren't we already seeing pricing come down? They're having to cut their token costs, token prices, token prices, because of the very competition of which you speak about. So some have warned about, well, then that's going to ultimately have an impact on gross margins for the labs. How do we think about that? It's a great point that we have seen evidence that they're cutting costs.

21:58And every time they come out with one of these new models, Scott, the headline is, hey, it's at a discount to what we were charging previously. The question is, can usage offset the price cuts? And so that's one thing that Anthropic will argue is, hey, we can cut costs. We are that much more efficient. You're going back to sort of the revenue and compute side of it. We can make ourselves more efficient. Our margins can stay around the 80 percent range, which is really unprecedented for a tech company. And that is something that tech investors are going to flock to. It's a reason why this company has raised so much money in private markets.

22:31if they can maintain those margins, but also not only cut costs, make sure that usage is rising. And so far, they've been able to do that. They've sort of been Teflon in some ways from the pricing pressure. And as they come public, I mean, that will all be much more available to us as outside observers, investors to some extent. We'll be able to look at that more. They just haven't seen it yet. They've been able to cut costs and it's helped them sort of make sure that enterprises aren't just going to leave Anthropic and go to an open source model. They can say, oh, wait a minute, Anthropic has a cheaper discount version and sort of stay within the ecosystem.

23:06Yeah, good point. Kate, we'll talk to you later this afternoon. Thanks. That's Kate Rooney. I mean, you have long had a pretty good view of what's happening in the private markets. I'm wondering how you're thinking about this as it readies into moving to the public markets. Yeah, well, one point to make, we had our entrepreneurial ownership summit last week, and we brought together a lot of our portfolio companies and their CEOs. And I bring this up, Scott, because the number one topic for all of us in private markets is how do you infuse artificial intelligence into your operations and how do you streamline that?

23:40How do you automate that? And, you know, look, this is a race right now. How can you embed artificial intelligence? I think case in point, what we've heard from Anthropic today is incredibly bullish for the state of the AI trade. You know, first of all, there are more and more capabilities. Those capabilities are improving every single day. And, yes, there's more and more competition. But that actually drives all things equal adoption. So I'm incredibly encouraged, Scott, for example, by the fact that Anthropic itself said they had 12 ,000 customers as of September 30th of this year, which is up from 950.

24:13And that tells me that AI trade, public and private markets, is still very much scaling. So back to kind of the original point where we worried about the debt financing of the AI trade. As long as this revenue for the likes of Anthropic and OpenAI is on track, GPU financing works, guarantees work, and the whole AI trade works. What do you think? I mean, somebody who's taken companies public over the years, how would you view this? You know, we also have about 34 companies, private companies in our portfolio. Look, there are so many conflicting reports that have come out. Apollo's report, and then you have Alphabet's report, and they're saying, oh, it's very shallow.

24:52That doesn't trouble me. You know, you're going to see a major uptick in how AI is used. And you're seeing it in health care predominantly. They're using it. So I think that sustains it. And I think that, you know, look, I'm not going to buy Anthropic on. I've had many opportunities to buy Anthropic in the private markets. And I've missed them all. I've just said no to them all. Why? Because you just have to have a discipline. My discipline was never to pin. Or stubbornness. Well, you know, it's both. You're right. You've got to be stubborn about your discipline. So I've not done that. But I bought others, you know, like Nibble Robotics, which has gone up tenfold in valuation, and others.

25:32It's just, I just didn't know what you're betting on momentum continuing in Anthropic. And the story's not going to be over in the IPO. Particularly, you're going to be locked up, so it's going to go for a long time. Yeah, there's a stair step, you know, similar to what we saw in space. Financing is tightening up. It is tightening up, and that will impact it. All right. Let's take a quick break. When we come back, we'll have exclusive reporting on that story we first broke here on CNBC this morning, that big deal Apollo just made. Details next. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture.

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27:44All right. Welcome back. More now on a story we broke earlier this morning. Alternative investment giant Apollo taking a minority stake. I'm told from sources near 10 % in Mubadala Capital. It's the asset management arm of Abu Dhabi's sovereign wealth fund. It is a big deal on multiple fronts. For Apollo, it extends its belief in that region and the investment opportunities that exist there. And for Mubadala Capital, it further validates what it's built. the only scaled asset manager in the region. It's also a deal about scale. Someone familiar with the deal told me, quote, capital as a moat is a big thing.

28:18It also underscores a significant strategic shift for the region itself, as not only viewed as a source for capital, but one where money is now readily flowing into. Let's bring in CNBC wealth editor Robert Frank. You spend a lot of time looking at the alt space, obviously, given your newsletter. What should we know from your perspective about this? Well, Scott, this is a very big deal, and you had it first, and that's because Apollo and Mubatala are both betting on the growing demand for alternatives around the world. Mubatala, of course, has$60 billion in core alternative assets. Those are spread across private equity, venture capital, private credit, and strategic companies.

28:58It has offices in New York, San Francisco, London, Abu Dhabi, and Rio. And they own stakes in everything from the Amon Hotels Fortress Investment Group to a lot of special opportunity funds in Brazil. Now, the alt space is expected to grow as both institutional and wealthy investors. They're seeking diversification and differentiated returns right now. Alt's investments globally expected to top$32 trillion by 2030, up from$20 trillion today. So that is what this deal is all about. Now, for Apollo, this gives them a truly global partner for co-investments and a lot of good deal flow. Apollo, of course, has over a trillion dollars in total AUM with about 70 billion in just private equity AUM.

29:46Its flagship private credit fund, as you know, recently helped finance the$2.6 billion investment in the owner of the New York Yankees. So they are everywhere. Mubadala is everywhere. Whereas you say, this is all about global scale. This will make both of these entities even more powerful, both for investors as well as investment targets. It also underscores why. And I mean, we've obviously seen this develop over the last few years that these are not your father's private equity firms, so to speak. And that the way that we describe them is so wholly different now from the way they were certainly first thought of.

30:29They are much more diverse businesses with investment arms all over the place in different asset classes and availability to larger pools of investors than they've ever been. Yeah, exactly. You know, this isn't just taking a company private or or taking it from private to public. This is private credit. It's sports. It's these special funds that are invested in just about everything in Brazil. And so it's insurance companies. So you're right. It is just about everything that's not a bank is now these asset managers. Yeah, it's interesting, too. It's also, I think, in this case, very much about having the same kind of investment goals and ideals, but also bringing different cultures together, too.

31:15And the fact that these parties have been doing some degree of business for the last 15 or so years, getting to know one another, investing alongside each other and getting to the point where through personal relationships that are developed through that process, you're able then to take it a step further. And I don't think it's going to be the last thing we hear from either one of these parties, if not others in the space. Now, very well said. In an AI world, it's going to be about all who can write the biggest checks. And we're seeing this today with the Anthropic IPO, and we're going to see it more and more with data center buildouts.

31:55Which are the asset managers that can really write those earth moving checks? And Mubatala and Apollo together have got to be now at the top of that list. Robert, thanks. Great to get your insights on this. Appreciate that very much. Great scoop. Robert Frank, you want to thank you. You guys want to kick this around for a minute? What do you think? I will just say briefly that it was a really big deal about this deal is that this is sort of repositioning how the Gulf region is being treated globally. And look, you know, it has long been the destination of where you go to get capital to invest globally.

32:27And what's really critical here is now the move is actually to invest directly into into the countries like Abu Dhabi. And, for example, for us, Scott, a partners group, we've had presence in Dubai, Abu Dhabi, and Kuwait is one of the latest offices we're opening there because we do believe there's a significant investment opportunity in the region itself. And, look, it comes from commitment to technology. And, for example, the data center push, the AI push from Abu Dhabi, it comes from energy. I mean, think about the massive trend that we'll now have to develop to fortify and strengthen the local energy infrastructure.

33:00So that's highly investable. It's manufacturing. It's digital services. So I think that's kind of a trend that has certainly started and I would assume continue to grow for years to come. You know, Scott, I own the shares and I can tell you from interacting with a lot of people at Apollo on the private credit side, the real estate side and the financial institutions group that is responsible for this Mubdala investment, that these are exceptionally smart people. And the reason that you invest, you make a choice of what investment bank, what financial services firm you're going to invest in is the people.

33:32That's what the distinguishing factor is. And I can tell you, I've never. We've invested alongside. Stock's leading the group today, by the way, up two and a third percent. Yeah, we've invested alongside Bob Adala in the U.S. I mean, they write monstrous sized checks in growth companies. They are definitely a smart group. So, look, it opens up another area of investing for them as well, in addition to regionally. But in terms of where they go in, you know, companies evolution. So it's a great deal. Yeah, so they've invested in SilverRock, which is credit strategies. That's Milken's former group.

34:09But I think it speaks to the asset management industry that's going through significant consolidation and scale matters. You have to have the scale. And along with the scale, the requirements are the cost efficiencies, the technology and the distribution. That's why this ultimately works. I also think it speaks a little bit towards the nuance here as it relates to investment opportunities in the private markets and the exceptional ability and the foresight that Apollo is seeing here to go to unique places. Right. Go to places, whether it's sports, entertainment or now geographically go outside the U.S.

34:42because I think there are limitations here in particular for real estate. You go where the money is. I mean, that's that's why people refer to Abu Dhabi, as I learned, as the capital of capital. So this should be no shock on, I guess, many levels. But we'll continue to follow it. Now to Frank Holland with the CNBC News Update. Hey, Frank. Hey, good afternoon, Scott. Ukrainian President Vladimir Zelensky claimed today that he's been waiting for nearly a month for Pentagon Chief Pete Hegseth to sign off on critical missile supplies. Zelensky has repeatedly called on the U.S., which supplies missiles purchased by NATO allies to speed up deliveries ahead of winter.

35:16Six U.S. citizens sued President Trump today over the White House press ban on CNN, Politico and our sister network, MSNOW. In a lawsuit, which also named White House Chief of Staff Susie Wiles and others, they claim that ban violates the public's right to independent reporting about its president and its government. A judge put the ban on hold earlier this month, while lawsuits over it play out in court. And the Southeastern Conference fined South Carolina half a million dollars for allowing fans to storm the field following a 27-24 victory over then No. 11-ranked Tennessee. The school can get the fine reduced to$100 ,000 if it can prove that it fully attempted to prevent that rush from happening.

35:52Otherwise, the fine will be paid to Tennessee in accordance with SEC policy. Scott, back over to you. All right, Frank, appreciate that. That's Frank Holland. Mike Santoli's Market Memo is next.

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37:32All right, welcome back. Senior markets commentator and overtime co-anchor Michael Santoli is right there with his market memo. How are you thinking about writing it for this week? Yeah, well, I have a few hours, so, you know, this is early days. But I would argue, I would say, you know, look, the Anthropic S1 at the margin, probably a bit reassuring. Some of the operating metrics, they're going to be good for the money. They're kind of a customer to the whole kind of vendor food chain. And I think the market's responding roughly in that way. But there's still going to be this big debate over, you know, the leads and lags of when they add new capacity and how fast that turns into revenue.

38:09That's fine. Once it's a public company, everyone's going to have their favorite ways of measuring that. I think broadly speaking, the market really is kind of in waiting mode to figure out where the weight of the evidence are going to fall when it comes to Fed and how the big cloud platforms not just report growth rates and results, but how the market is deciding to reward or punish them. I think that's going to dictate a lot from here. Yes, we have the election after that. But to me, it's much more about these cloud platforms and whether they're going to create any more fans to their side in terms of them being kind of primary conduits to how AI gets implemented.

38:49See you in a couple hours. Appreciate it, as always. That's Mike Santoli. Up next, following a mega deal today in the energy space, we do have ownership. Plus, we'll debate a double dose of upgrades or calls of the day just ahead, too. Two stocks on the move. First one is EQT, buying range resources, 13 billion. Top U.S. gas producer. You own EQT? Yeah. This is a 20 percent premium. This is an all stock deal. This is about the integration in the Appalachia. The Appalachia is critically important because it is the fuel source for northern Virginia, what is known as the data center alley. Incredibly important for AI, and this is almost part of that AI universe type of trade.

39:34EQT has outperformed the last several years spot natural gas because of its ability to be the power source to northern Virginia. This is a shale deal? This is a shale deal. This is Appalachia. This is a shale deal, but it's specifically targeted in that northern Virginia area. All right. All right. Good stuff. Amgen today says its drug combo cuts the risk of death by 58 % in patients with aggressive lung cancer. You on that, too. Yeah, they're going to report a week from Wednesday, I believe. I think it's November 3rd. Look, large cap pharma, which Amgen is obviously part of, is working incredibly well.

40:12We've talked in the last several weeks about Pfizer making a 52-week high, but it goes beyond that. It's Gilead, it's AbbVie, and it's Amgen. And we're going to hear from Eli Lilly on Thursday as well. I know that everyone thinks the orientation of the market right now is it is a defensive play, the reason for the ownership in health care. I also think that we're seeing technology beginning to benefit a lot of these large cap health care companies. And the revenue acceleration is only going to come forward here in the next several quarters because of that. Let's do Lockheed. Guys, throw that up, please.

40:45because the target got bumped way up today. Morgan Stanley goes to overweight from equal weight, and they take the target, Jimmy, to 835. It's a big target. It was at 690. Yeah. 835. That's a big target. I'm not sure it gets to 835, but I very much like Lockheed Martin right now. We see what the order book is doing. 850 F-35s over 10 years being ordered by the U.S. government. We know what's going on with missile production. But very importantly, the market responded positively to last week's earnings, even though there's some margin pressure coming up. That's the market's way of saying they're looking through any margin pressures and realizing it's because they're ramping up production.

41:28I like Lockheed Martin here. I think the estimates are going to continue to go way higher. I really like the defense trade itself. And, you know, I think, first of all, it has taken a bit of a backseat because of the midterm elections and the concern there. But actually, you know, to Jimmy's point, the fact that the U.S. government is committing to multi-year contracts and there's this huge emphasis on reindustrialization and expanding the manufacturing base of defense, that's really bullish, not just near term, but longer term. All right. Coming up, options action. We go to Chicago and the trade has reversed within the last couple hours.

42:02We're going to talk to you about a bunch of bearish bets. Well, he flipped. Now a bunch of bullish ones. Oliver Rennick has found and he'll tell you where next. All right, let's play it. Options action. We go to Chicago. Oliver Rennick from the CBO Global Markets. And I said leading in, this is a little different than what you first saw in the same area. Yeah, Scott, kind of getting bullish for the software stocks, which went on a nice little five-day run. They're now on par with the Magnificent Seven this year as the IGV rallied 5 % the past week ahead of earnings for Microsoft and ServiceNow this week.

42:38Those two stocks make up about 13 % of the ETF. And the options action here is bullish, not from call buying today, but put selling. Of the$5 million in options traded,$3.5 million came from puts, and almost all of it looks initiated by sellers, led by someone who sold$1.5 million of the 107 strike puts expiring December 18th, which needs the ETF to hold here above$110. And then the second biggest trade was similar with a twist. This trader sold almost$800 ,000 of further out of the money 105 strike puts expiring mid-January, but they also sold$300 ,000 of the 130 strike calls for the same expiry, which at face value suggests they think there is capped upside, but a cap that still gives the IGV about an 18 % range to rally before that second trade maxes out, Scott.

43:32Okay. Oliver, thank you. Oliver Rennick. Jimmy, I'll give you the first shot at this one. Mr. Adobe? Yeah, well, I mean, why don't we just go there? Because that's such an open wound in my portfolio. Jim, let's go there. I follow your lead. I have an idea. Let's start with Adobe. You traveled with a cut, man. Let me just do this. Cut me, Nick. Let me just do this. Look, the stock now, this specific stock is in the range it's been in since the SaaSpocalypse worries of the first quarter, which is 250 plus or minus 25. It did recently set a higher low. I don't want to get too giddy on this. They're going to report earnings December 9th.

44:09After that, I'm going to make a decision, and I may well use this as a tax loss harvest, because as I said, it's a wealth in an otherwise very good portfolio where I've realized gains this year. So I may use it as a tax loss harvest, but I'm going to give it one more shot at not just reporting good earnings, but seeing if the market will respect the good earnings. I'm focused on where the relative outperformance is for the software industry. You have a lot. Listen, the next two weeks, we are going to have a significant amount of earnings are going to be reported. I have three names for you. It's Datadog.

44:39It's Palantir. It's Twilio. In the case of Palantir, it looks like it's breaking out. They report next week. Datadog reports next week. Twilio reports this Thursday. Focus on the relative outperformance in the software industry. It's interesting because maybe the fear of the death of software has been one of the most exaggerated fears this year. And if I look at earnings, for example, for software companies, they've held up very nicely. They beat last quarter. They likely beat this quarter. And actually, valuations have reset nicely. So as a result, we're just 6 percent lower from the highs on software.

45:10I think, Scott, longer term, right, this is the benefit, the true beneficiary of AI is what can you do with the models and software may be successful. All right. Finals coming up after this. Hope you'll join me three o 'clock on Closing Bill. Anthropic early investor Jeff Richards is going to join me. Alex Kantiewicz of Big Technology, so we'll kick that story around. We'll obviously look ahead to the big earnings that are coming in the days ahead. Chris Harvey, Dan Greenhouse, Matthew Boss, the number one rated retail analyst on Wall Street, will join us as well. Weiss, you got the first crack at finals.

45:42What do you got? I'm going with Leidos. The stock's had a nice bounce off the lows, but still off the highs. I agree that the defense trade has got some legs and will continue. Farmer Jim. ExxonMobil. They're going to report on Friday, and they have made a lot of money, and they're likely to continue to do so. Your tractor on full gasoline right now? Yeah, on expensive diesel. Wow. Undyed, unmarked, farm use only. Anastasia? Data center is down quite a bit, but the vacancy is only 1%. Let's get past the midterms. Could be a good turnaround. eBay towards the end of the week after earnings. All right, so we'll track the final stretch.

46:19We've got green across the board. I'll see you then. The exchange is now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy.

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47:27Make every moment unforgettable. Find great gifts starting at$250. Jared, make the holiday last forever. Shop Jared Jewelers.