Managing Risk in a Volatile Market 10/19/26

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Scott Wapner (0:57)

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.

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Scott Wapner (1:14)

I'm Scott Wapner. Front and center this hour of the AI trade. Whether fears are justified or overblown, we debate that with the Investment Committee. Joining me for the hour today, Joe Terranova, Jim Labenthal, Stephen Weiss. Check the markets.

Green across the board, led by the NASDAQ, which is up one and two-thirds percent, so a nice bounce there.

Let's just get right into this, because it feels like, you know, as all the Neo clouds are higher, as the Neo clouds go right now, so does at least the tech trade, if not the, you know, the overall sort of sentiment. And you do have calls today from the street defending CoreWeave, whether it's Goldman or JPM, or even Wells Fargo with their own, you know, words about why a lot of this has been overdone. But what do you think the impact is here forward on this trade and where you think we currently stand? Answer the question I asked at the top. Justified or overblown, these fears?

Joe Terranova (2:07)

Well, I think there's two things. Number one, I think this signals in 2027, you have an AI capex slowdown. So I think you have to reprice your allocations in the direction of the AI trade accordingly. Your expectation as it relates to earnings, you have to moderate, you have to temper that enthusiasm. I think that's exactly what the market is doing right now in front of us. As it relates specifically to Core Weave, I'm going to stay away from the equity side. It's never been a quote unquote momentum name, which might be surprising.

So it's not an area I'm going to focus on the equity. I could tell you on the debt side, keep in mind the unsecured debt, the pricing of it and the trading of it. The liquidity is thin.

Let's remember that. It's very thin liquidity. So that marketplace has extreme volatility in its translating into the equity price itself. I think looking forward, this has been a favorable shakeout over the last week of the AI oriented trades. A lot of people over the last week have said, okay, here we go back to the broadening. I don't carry that perspective. I still think the AI trade is in place. I think you want to be bullish on it. I think the degree of ownership got extreme. I think we're working it off. And clearly what's going on in the unsecured debt of CoreWeave is the catalyst.

Scott Wapner (3:34)

So you said something right at the beginning there that kind of caught my ear.

Are you suggesting that you, like some others, think that earnings for these big tech spenders are peaking and that start preparing now for a more sizable slowdown in those earnings into 2027? Did I hear you say that?

Joe Terranova (3:57)

Yes, you did. And I think the example for that is NVIDIA.

I think NVIDIA is the perfect example of that. Two years ago, you were talking about a company growing its revenue triple digits, 200 percent Moderation on the other side goes through a period of consolidation before ultimately it could have this pause that refreshes again. That's my expectation as I look at the 2027 for the AI trade.

Steve Weiss (4:24)

But isn't it?

Joe Terranova (4:24)

I don't think you can anticipate, I don't think you can anticipate the rate of growth that we've seen over the prior three or four quarters. It has to moderate.

Steve Weiss (4:33)

But isn't that true of any company that has experienced that growth? The ability to drive growth at those levels are for much higher higher. revenue base. They have nothing to do with whether the AI cycle is peaking, the capped cycle is peaking or not.