Altimeter's Brad Gerstner on his Current Market Outlook 5/4/26

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**Scott Wapner** (1:01)
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.

**Scott Wapner** (1:15)
Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour, the record-running stocks, the AI trade, continuing to power this market. We will discuss and debate the best plays with the Investment Committee. And in just a few moments, we'll be joined by Altimeter's Brad Gerstner. Our annual visit from Milken. We look forward to that. And what a great time to catch up with him. Joining me for the hour today, Joe Terranova, Amy Raskin, Jim Laventhal, and Brynn Talkington. Take a look at the markets. We are now in the red on those headlines out of the Middle East, but nonetheless, we are focused on this record run. And Joe, the believers, if you want to call them that, are not going to stop singing Don't Stop Believin, because the likes of Ed Yardeni, up up and away, is how he calls it.
It isn't all hot air that is lifting stock prices. It's also earnings revisions, which are increasing. Gross stocks in the Mag-7 have reasserted leadership. Small caps in the Russell are at fresh record highs. Investor sentiment remains surprisingly lackluster, leaving plenty of upside for the balloon.

**Joe Terranova** (2:20)
I think that's an excellent summary, but I think we could simplify it even more. It really has been about earnings, and it's been about earnings in technology and in AI and the halos surrounding the CapEx spending, which is at a record pace. To me, that really has been what the market has been focused on, in particular in the month of April. I think what was very powerful was the setup coming into the month of April, when you think about positioning and institutional defensive retail, tilted kind of a little bit towards the bearish side and systematic trend following, had a bias of basically being neutral. So that allowed you to look at the earnings. Now you want to play the other side, you want to be a bear, you say to yourself, okay, Joe, what do you do when we get past the earnings season here in about 14 days? What are you left with on that side? New Federal Reserve Chairman, does the market get challenged? I understand all of that, but right now the momentum is speaking to you, and the message of the market is to stay anchored and focused on those really strong earnings and technology.

**Scott Wapner** (3:20)
Because you continue to believe that the earnings momentum is going to continue. That's what you do to Joe's question on the other side. By the way, according to Goldman, only 5% of companies have missed estimates. It's the smallest share in over 25 years of the history of the data outside of COVID.
What earnings growth was like 28% relative to 14 back in April. I get it that it's the mega caps that are accounting for the greatest share of that and they just continue to blow away estimates and I mean, I don't know if you tell me.

**Amy Raskin** (3:57)
I'm going to give you three reasons why I'm worried about people hanging their hat on earnings revisions. First, it's narrow as you just said, but second, what we're seeing is a lot of AI spending, which is counted as revenue for the recipients of that spending, but it's being capitalized for over a longer period of time for the spenders. You're having a disproportionate increase in revenue versus expense. That will catch up with you at some point. But the most important reason why I'm worried about earnings revisions is people using that to say, I like equities now, is that they're a lagging indicator. Stocks move before earnings, not vice versa.