CNBC Halftime Report — Trading the Tech Wreck: NASDAQ's Rough Week

QQQ is an index fund that holds the 100 biggest non-financial companies on the Nasdaq — a one-ticket way to own "big tech." Talkington's point is that it has quietly been the smart way to play this market: it's up about 15% this year even though its most famous members (Microsoft, Meta) are down, because the memory and chip makers inside it (Micron, AMD, Intel) have surged and grown into a bigger share of the fund. So the index's winners offset its losers automatically.

The practical lesson: buying the whole basket beat trying to pick which mega cap would recover. She says active fund managers who bet on the famous names and skipped the chip stocks "are getting their faces ripped off" — a vivid way of saying they badly trailed the index.

Nvidia makes the chips that train and run AI. Simpson bought more under $200 and argues the stock has actually gotten cheaper in a meaningful sense: the company keeps growing its sales and its free cash flow (the cash left after running and investing in the business), so each dollar of stock now buys more earnings than before. It also just raised its dividend (to 25 cents a quarter) and announced an $85 billion buyback — both signs management thinks the shares are good value and a way to return cash to owners.

His framing — "investable, not just a trade" — means he now sees it as a long-term hold rather than a quick momentum bet. The fundamental support: "Blackwell," its newest chip line, is ramping up (selling into customers) faster than any product in the company's history, and demand still outstrips what they can supply.

Caterpillar makes heavy equipment and, increasingly, the engines and gear used to build and power data centers — which is why it's become an "AI trade." A Wall Street firm (Baird) just raised its price target to $1,200, and the stock is up 77% this year at record highs. The bull case from Simpson: unlike the late-1990s suppliers who sold on credit and got stuck with IOUs when the boom ended, Caterpillar "gets paid along the way," so even when the cycle turns it isn't left holding bad debt — and there's still a runway as everyone races to build data centers.

Weiss is the skeptic and is trimming. His worry isn't the company, it's the price: it trades at 36× earnings (it used to be in the mid-teens), and "it's an AI stock until it isn't." His sharpest point is about timing — what matters isn't when the spending boom actually ends, but how far ahead of that the market starts pricing it in. Since everyone now assumes the boom lasts years, there are few new buyers left to push it higher, which "adds to the risk substantially." Both he and Simpson manage it the same way — trim into strength.

This is the "second-derivative" AI idea: instead of buying the tech giants spending on AI, buy the companies that supply what AI needs — here, power. Chevron is partnering with Microsoft to deliver energy straight to its data centers, using gas Chevron already produces and turbine relationships it already has (with GE Vernova and Caterpillar). Harrington's tell: Microsoft is down 26% this year while Chevron is up 12% — the spender is being punished, the supplier rewarded.

Her wider point from the energy conference is that AI is reshaping the entire oil-and-gas business, not just powering data centers: one company described using AI to decide where and how to drill, cutting a 20-month process to 15 days with higher accuracy and far fewer engineers; another cut royalty payments from a months-long, 15-person task to a few days and a few people. Cheaper, faster operations across a sector the market had under-invested in.

Goldman Sachs is Weiss's biggest holding. It dipped on the news that OpenAI is delaying its IPO, because Goldman is the leading underwriter of big tech stock offerings — so its stock tends to move with the IPO calendar. Weiss shrugs that off: those deals (OpenAI included) will eventually have to come public because the companies will need the money, so a delay is just noise. He calls Goldman "the best tone in all the financials" — meaning the highest-quality, best-positioned bank.

A bonus, flagged by Simpson: after passing the Federal Reserve's annual "stress test" (a health check that clears banks to return more cash to shareholders), Goldman raised its dividend from $4.50 to $5 a share — an 11% increase — and JPMorgan raised its too.

Enbridge is a giant "midstream" energy company — it owns the pipelines and infrastructure that move oil and gas around, charging fees like a toll road rather than betting on the commodity's price. Harrington's one-liner captures the appeal: "as long as fossil fuels are flowing, they make money." It pays about a 5% dividend, which suits her income-focused strategy, and it's a steadier way to own the energy theme than a driller whose profits swing with crude prices.

UnitedHealth is the largest US health insurer, and Weiss owns it for two reasons. First, the fundamentals are improving — the company made progress last quarter and is expected to keep doing so with veteran executive Stephen Hemsley back in charge. Second, it's "defensive": people need healthcare regardless of the economy, so the stock tends to rise on days when AI and tech stocks are falling, which balances out a portfolio. His caveat is that healthcare as a sector still faces big political and cost "headwinds" longer-term, so it's a hold for the balance it provides, not a forever bet.

Stanley Black & Decker makes tools (DeWalt, Craftsman). During the pandemic everyone bought tools, the stock spiked, then crashed as demand normalized and the company was left with too much inventory. Harrington bought it years ago around $68 and endured "a long road of sitting and doing nothing" while that hangover cleared. Now it's finally working: they're hitting a 35% gross-margin target (gross margin = the profit left after the direct cost of making the products), it trades at a reasonable 16× earnings, and it's a "dividend aristocrat" (a company that has raised its dividend every year for decades).

Her honest tension: it's done everything right, but after the big move the dividend yield has fallen to 3.6% — too low for her income strategy, which needs juicier payouts — so she may not keep it by year-end despite admiring the company.

Fiserv runs the behind-the-scenes payment and account "plumbing" that banks rely on. The stock is at its lowest since 2016 — caught up in a broad sell-off of software names — but Harrington argues the business is quietly thriving: new management installed about a year ago is executing and hitting its targets, and it's a "huge free-cash-flow story," trading at just 6× earnings with a 16% free-cash-flow yield (it generates cash equal to 16% of its market value each year — very high). She added at $56.

Her key point about why it's safer than other software: "this isn't one you can replicate on your own using Claude." Unlike software an AI assistant might help you recreate, Fiserv is mission-critical infrastructure that banks depend on and can't easily replace — a durable moat the sell-off is ignoring.

Dick's is the largest, most national sporting-goods retailer, and Weiss likes that it's distinguished from rivals — it keeps refreshing its stores and is "in season" (heading into a strong selling period). He acknowledges it trades at a premium multiple (it isn't cheap), but he's comfortable owning the category leader. The stock is at its highest since February 2025.

A REIT (real estate investment trust) owns income-producing property and passes most of its profit to shareholders as dividends. Harrington's favorite is Millrose Properties, a "land bank" that homebuilder Lennar spun off last year — it owns land and supplies it to builders — paying about a 10% dividend yield. Her broader case: REITs have been "starved of capital" for years, so almost no new buildings got constructed; that scarcity pushed up the returns available on property (cap rates — roughly the yield a property earns — rose from 4% to 6–8%). On top of that, AI is slashing the paperwork-heavy parts of running these properties (she cites apartment owner Mid-America and rental-home owner American Homes 4 Rent). She calls REITs a "halo trade" — heavy on hard assets, light on obsolescence risk — though after a 30% two-year run she expects steady gains, not a huge pop.

A BDC (business development company) is a publicly traded fund that lends money to mid-sized private companies and passes the interest to shareholders as high dividends. Talkington holds two — Blue Owl Technology Finance and Ares Capital — yielding around 13%. Her key distinction this episode: she's keeping the BDCs (which make the loans) because "the underlying portfolios are money-good" — meaning the loans are sound and being repaid — while selling the alternative-asset manager stocks like Apollo, whose share prices are being hit by negative sentiment and redemption fears even though the loans themselves are fine.

Ares Capital is the other ~13%-yield BDC Talkington holds for income. Same logic as Blue Owl Technology Finance: she trusts the underlying loans ("money-good") and wants the fat dividend, while steering clear of the alternative-asset-management stocks (like Apollo) that are caught in this week's private-credit redemption scare. Owning the lender, not the manager.

Uber is Talkington's final-trade pick — a short, chart-based call. The stock found support and bounced off $70, and she sees the next move up to about $87. No deep fundamental thesis here; it's a momentum/technical idea on a name that has stopped going down.

Microsoft is the episode's poster child for the "is the AI spending worth it?" debate. Weiss owns it but questions it daily: the company is pouring enormous sums into AI infrastructure (CapEx = capital expenditure, spending on data centers and chips) with no clear proof of the payoff, and even its AI strategy keeps shifting — its Copilot assistant has flip-flopped between AI suppliers (OpenAI, then Anthropic, now reportedly DeepSeek), which Talkington reads as a company that "isn't executing." The stock just had its worst month since December 2000 and is down about 25% on the year.

The other side: it bounced 5% on the day, and Santoli notes it's now only 18× earnings — cheap versus its own history. His added insight: the lower the stock falls, the more pressure builds on management to "modulate" (dial back) spending or otherwise reassure investors that the money is being invested profitably. So it sits in the middle — too cheap to write off, but unproven on returns.

Meta (Facebook, Instagram, WhatsApp) splits the desk. Talkington is negative: she thinks Meta is "burning money" chasing an unclear AI vision and should just focus on its three great apps plus its smart glasses — and adds that "nobody wants" its open-source AI model (the freely available large language model it gives away). The stock, once above $800, is down 15% this year and as much as 30% off its high.

Weiss takes the other side as his final trade — a tactical bounce buy. His reasoning is purely valuation: after the fall, Meta trades at a "low-teens" price-to-earnings multiple, cheap for a company of its quality, "so why not buy it" for a rebound. Negative on strategy, positive on price — which nets to a genuinely mixed, neutral read.

Simpson owns McDonald's but isn't excited here. He half-jokingly calls $300 its "Mendoza line" — a baseball term for a floor level the stock keeps drifting back to. The business is running well: the return of the $5 value meal pulled lots of customers into stores, so sales look good. The problem is profitability — those cheap meals plus inflation squeezed margins, and management's guidance (its forecast for future profits) disappointed. He likes the company's real-estate-driven model long-term but sees no urgency: "I don't know that you need to rush into it."

Netflix is at its lowest since October 2024. The pressure came from rumors it wants to buy Lions Gate (a film/TV studio) — and the reminder that it had already pursued Warner Bros. Weiss's worry mirrors the market's: if the dominant streamer suddenly feels it needs to buy more content, maybe it isn't as self-sufficient as assumed — "not a good look."

But he won't sell down here — "it's too cheap to sell." Netflix is a stock that "trades quarter to quarter" (it moves sharply on each earnings report), so his plan is simply to wait for the next quarter and see whether the numbers justify the worry before doing anything.

Palantir is a data-analytics and AI-software company, and Talkington's point is about sentiment: once the crowd's mood on a stock shifts, even a great company "comes back down to earth." It's at its lowest in over a year and keeps making "lower highs" (each rally peaks below the last — a weak technical pattern), bouncing today only because software names broadly rallied.

She has sold a chunk over time (both above and below current levels) but is keeping a core position for the long term because she genuinely admires the business — "the ultimate original AI software company that's executing," led by Alex Karp. So: trimmed on weak momentum, but a believer who isn't selling the rest.

Apple had its worst day since April '25, and Weiss frames the risk around how iPhones get sold. Today, wireless carriers (the "telcos") subsidize a big chunk of each phone's price to lure customers onto their plans. As Apple keeps raising prices, the question is whether carriers will keep eating that cost — and if not, demand could suffer. He adds a longer-term wildcard: if Elon Musk's Starlink eventually offers consumer mobile service, it could disrupt the whole carrier-subsidy arrangement Apple's sales lean on. It's a cautionary take — reasons to worry, not a reason to buy.

Apollo is a giant "alternative-asset manager" — it runs private-credit funds (lending to companies outside the traditional banking system). Talkington sold it. Her reasoning separates the business from the stock: Apollo's fee earnings are still growing nicely (~20%), but the sentiment around private-credit names has turned sharply negative this week amid "redemption" headlines (investors pulling money out of these funds). She respects what the charts and mood are saying, and money is rotating away from these names toward the big traditional banks (Goldman, BofA, JPMorgan) instead. With a cloud also hanging over the firm (former CEO Leon Black was subpoenaed over his ties to Jeffrey Epstein), she stepped aside — selling at roughly breakeven.

Weiss exited his gold position (held about six months) and explains why gold disappointed him: it's supposed to act as a "hedge" — protection that rises when inflation or fear rises — but it did the opposite, falling while inflation ran hot and only rising later as interest rates came down. Because gold pays no earnings or dividends, it's "tough to value" and trades mostly on sentiment. His technical read: below $4,000 the fast "momentum money" that piled in is now piling out, so he's out again and raising cash. The counterpoint on the desk: BofA's Michael Hartnett thinks the pullback has actually made gold a good entry point.