Maker soaring today. Now up almost 90 this year. The stock just got a huge upgrade. Its our call of the day Halftime Report starts right now. Welcome good to have you with us our Investment Committee at the table, joe terranova, the brothers are here, and meghan is here as well, Senior Investment strategist at the wilmington trust. One of the best performing large cap tech stocks of the year, microsoft. Beating on earnings and revenues the shares are moving higher pete najarian, everybody owns it at the desk. You get the first crack because youve been the biggest and longest believer. I continue to be a believer this all started with it went in the right direction what has he done we talked about how great the focus has been on cloud but the monstrous acquisition they made with linkedin everybody was critical about and that is starting to be another one of those verticals we talk about when we talk about names like apple and other names we talk about what are some of their areas they will generate great revenue. This is a 25 jump the growth has been spectacular. Theyre slipping in gaming but the overall story is everybody is looking at azure and want to see okay, 64 to 59 look at amazon, aws, that has slipped back down, thats around 37 growth so theyre still growing, yes, its decelerating but you would expect that to decelerate a little bit it will continue to do so. That doesnt mean theyre not winning right now as they go head to head with amazon. Can you answer the question i asked at the top a fair question to ask, is microsoft the best large cap tech stock to own right now . Two minutes into the show youre going to give me a hard time about my answer because my answer would be if youre a Portfolio Manager and you identify heres my choices for technology stocks, amazon, thats consumer discretionary, take it out of the conversation, facebook, alphabet, the communication services, take that out, im down to apple and microsoft. Youre asking me to choose between you dont have to choose. Say its one of them. Its its one of them. Belichick and brady those two distinctively in technology stand out above others i will say this, the defensive quality about microsoft is becoming more evident. If we are late cycle, and who knows economically if were at that point, but cap x and spending in Technology Begin to retreat, i feel really good about being long microsoft because i think thats the one equity name that is so defensive that youll see less selling pressure you might see a little bit more apple. Whats amazing is how the narrative around the story has changed. The stock had a run into the number, revenue guide was a little light, but the narrative today is, theyre being conservative not that theres a slow down with their revenue i bought more microsoft today because if you look at the Earnings Report and think about how we talked about how long everyone was going in, to see the stock here, up over 2 , i think thats an exceptional performance. The risk was to the downside on this given the move, dont you think, steve without a doubt, the risk to the downside it was trading below its alltime high, but when you handicap the risk you have a ceo that has continued to execute, done a great job of guiding the street to his numbers, i thought it was apretty low risk. To me, it is the stock to own. Brady and belichick are in different positions so, of course, you can open them both i would have said brady coach and a coach and a quarterback and a quarterback. Makes more sense. We wont go to you for sports analogy. In any event i think it is the one to own. Im with him on this. It has the subscription base. Linkedin is just an animal i mean remember all the criticism he got for that acquisition so much money he paid, overpaid, whats it going to do. Yeah. So i like it because i do believe, as joe does, that as defensive as you can get here. The only issues are with the stock price, not with the fundamentals who is the marginal buyer now because everybody seems to own it everybody has owned it number one. And then something that cant control as well, which is the market itself which i believe is in trading range but for that you see a stock up a lot more than today. So meghan, you got wedbush going to 170 on the price target that looks to be maybe the high on street on the cloud strength you have others raising the price target across the board. Do you own it . Everybody else owns it. Do you from a sector perspective we do were neutral to technology weve liked software for a while now and i think to steves point, though, its been a go to stock for the market, a darling with the trade tensions and so at this point while we still like the cloud story, cloud spending is anticipated to increase three times that of overall i. T. Spending between now and 2022 thats a good thing for the cloud story of microsoft but valuation and overcrowding is a risk at this point, so you have to be thinking about whether it might be time to trim a little bit out of the software and maybe start to tip toe into semis. Good reason why cramer says you have to put microsoft into the f. A. A. N. G. Group and get netflix out. Hes right. And microsoft belongs there now. Azure, the growth there was 59 . 63 in Constant Currency so its one of the few times im going to disagree with meghan. You have to load up on this one, scott. I mean the diversification theyve got, the fact that operating margins are 38 versus 34 year over year, who else is doing that where can you get that i mean when you look at the guidance for the next quarter, i saw intelligent cloud is going to be between 11. 25 billion and almost 11. 5 billion thats the diversification. What did they used to be operating systems. That and, you know, as far as word and excel and all that. Everybody said google is going to kill them theyre giving it away well thats still a 12 billion revenue number quarter after quarter after quarter for them and again, its reoccurring revenue rather than just a onetime fee that you bought it. Like i say, one of the few times im going to disagree. Fair enough. With meghan such an argument to talk about a slow down in the cloud its the law of large numbers. You cant continue to grow that fast no slouch in terms of the number theyre looking for is it fair to say nadella is one of the best ceos that not enough people talk about . Aside from pete mentioned his name, but its not like to the point he gets mad at me for mentioning his name. Talked about in the same realm as some of the other ceos. Because he made the transformation of a company and those are the guys who deserve to be talked about we bring up ryan cornell not just because targets stock has gone up but because of the fact that he took a company that was broken and fixed it and made it better and then enhanced what they were doing with the 7 billion they put in to redoing all the stores can you imagine. If you look at that and what Satya Nadella has done since hes taper over, so Many Companies that cannot make that turn you look for the ceos who can make that turn thats why nadella is so special. That was a turn that stock was trading give or take call it 40 a share when he started this whole process and said look, were going to the cloud. Think about the cultural change he had to manage and to me that is the ultimate test of a ceo. That he took a culture very stayed at microsoft, even somewhat tired. Tired. Wasnt innovating, right, and just turned it around without massive disruption from the day he got there its been straight up yes, i think hes one of the top ceos lets look ahead to amazon and intel. Shall we sure. What do we want to say about those after the bell yesterday, you know, i talked about micron in terms of we look at different tech going on right now and also the semis in different ways i think intel actually has a chance to put up a pretty good quarter. In terms of amazon thats just the difficulty that they have to prove that aws is not losing to microsoft. If they can put up some strong numbers on the aws side, scott, that will be the important part. Ecommerce we know they own it its about aws and what are they doing there. Thats the margin where theyre making the money. The word margin was just used and if you look at microsofts report that is what was so impressive increasing spending but yet margins rising can amazon do that can they follow that formula we will see. I think its important for amazon in terms of a Price Performance to finally come out and be up 3 to 5 after whatever this report might be because that would be uniquely different than its been the last four quarters i have concerns about both. Intel because of what we saw in texas instruments. They are more like them with some of their businesses, not a dominant part of the business like texas instruments, but i have concerns about that in terms of amazon, its just not been acting well its been hanging there. I would take jims comments one step further i dont think the f. A. A. N. G. Really exists anymore. We call it people call it the f. A. A. N. G. Because they were leading the market higher. They were moving weve had amazon and alphabet stuck in neutral, right. Facebook has its own issues. I would go to a new acronym, which i cant give you right now off the top of my head but microsoft would be in there. You mean you have to think about you dont have a new one, you need to think about it. I dont want to dazzle you with quick thoughts and lose you. Obviously you dont have it he doesnt have the goods. Intel has catchup to do too, right . 10 year to date relative to other names in the chip space. Chips have been a good trade. Chip equipment names. Lam research. Lam Research Report last night was incredible obviously memory which is important im saying like micron and nvidia and amd. Smh. I would and intel running behind the group. You sold it lower and i understand it wasnt a bad play. You made a lot of money and got out. I think it has upside. I think the upside is on the equipment names. What about give me the best equipment name right now . Lam research. Were going to talk about that later tell me why later. Twitter ouch yeah. Brutal. Weiss, you own it . I do. I sold most of it. I said on another show yesterday that i sold most of it. Frontrunner many times the reason being the reason being is that as you go on the site you didnt see the advertising there. And it just wasnt there. You sold it into the number or after the number. I still have a very small part i sold it yesterday morning before the number. The stock was also giving a tell, just wasnt acting well. It wasnt participating at all the numbers really had nothing to do with my selling it it was a different demographic to go to but look, you know, stocks sometimes tell you something and the terrible trading activity in it was so consistent that i just got concerned and i spent a lot of time going on the site to check their advertising levels and they werent there so look, this is one that they say there was a bug. They blamed it on themselves, a bug in the ad product. Its not even that doesnt give me confidence, right. And then they also talked about seasonality. Seasonality happens every year its the same seasonality. How do you ever i never understand what if advertisers are souring about the mud pit . You would have to be, wouldnt you im being nice. You cleaned it up yep. You are correct. I was going to say to your point about that bug or whatever it is thats affecting, this is something that needs to be addressed like when that happens, scott theyre saying its still going to extend into this next quarter, perhaps even beyond that i dont understand how that could how jack could put up with that. How do you do that when this is your life blood. Thats all they have and the fact that instagram is killing them, the fact that certain analysts today are saying boy, snap over twitter right now as far as ads because youre just not getting what youre paying for with twitter and then you mentioned the mud pit which is also pretty accurate i would say yeah, im not saying its a dont touch im saying if theyre not doing anything right, right now. Nothing is right about this report want to give josh josh not on the show, but we got a comment from him because hes been the biggest supporter of the stock on the show, fair to say. He said the quarter doesnt change his opinion about the longterm value of the platform. Theyre trying to clean it up. But this is shortterm earnings negative i guess hes willing to deal with some pain in the short term for some longterm gain. I think the only thing to consider and ive said this in the past six months what if theres social media exhaustion. Potentially that could be the case youre beginning to see the evidence with it both with facebook and twitter the content that is being provided right now on twitter are we as energetic about absorbing that content as we were a year prior, so everyone keeps talking about well, in 2020, the election will play out on twitter i dont know if overall we are really gravitating to get that information. It seems like we want less of it ill use the president as an example, okay, the president aggressively tweets on a daily basis. I dont know if his tweets are being viewed as much today as they were being viewed six months ago because i think theres a degree of exhaustion. Ill take the other side of that real quick, im hearing all the negativity being thrown at it right now the stock is up 35 plus percent going into the number, now its pulling back 5 bucks above the ipo price ad revenue was up 8 . They missed expectations, but that doesnt mean that theyre not still growing. To joes point hes talking about well, i still see this the president tweets people view it they are viewing it. The matter of whether or not hes still moving markets is a different story but whether theyre viewing it, i would say they are were seeing some of the growth thats there and that growth i think this is an opportunity in my opinion creates an opportunity. Maybe people view the discourse, if you want to call it that on twitter theres a lot of negativity and i understand i would otherwise im with you. I see it all theres a lot of trash on there. People are addicted to that. The other issue is data privacy. As i understood it the ad bug was related to consumers not, you know twitter not respecting what the consumer had selected in terms of their data privacy and it seems like they tried to rectify it and stop that issue, you know, immediately, whether it will have spillover effects in terms of ad revenue is another issue this is front and center for policy. Whether you look at the stock today down 19 , do you buy it today . Im looking at it but i dont usually try to buy on day one. Give it a couple days and then i will be staring at this stock an wanting to buy it. Theres a lot of different areas when they reported that were pretty nice. The daus up 17 year over year how do we know if theres still i get it, but i mean im going off the numbers. I did not like this name when it was up there obviously where it was. Thats why i didnt own it now that its pulled back and its taken off a lot of what it had gain this year, i still think that does create an opportunity. All right lets turn to the Broader Market our next joining us at the table saying were not at the top of the market and earnings may be the reason why dan greenhouse chief strategist at sollternative Asset Management welcome back thank you how long has it been since youve been on the network its been a few years what . Good to see you again. You got younger, though we should all be so lucky. Good to have you back earnings is it part of the reason why you think we have upside to go not as bad as feared. Listen, theres obviously a lot about which we all worry every day the environment as cloudy as its been any time in the last ten years you need to think about the investment landscape built on four pilars. First the equity market, defined by the s p 500 has effectively gone nowhere through the better part of a year and a half call it theres been sector rotation underneath but as a headline thats been the case thats not really a topping pattern. Thats generally a bottoming pattern. Thats part one. Part two Earnings Growth obviously not good right now, but the base effect which works against you right now is going to start to work in your favor next year. Number three, you have the Federal Reserve which began cutting rates over the summer as any economist will tell you, Monetary Policy operate with long legs. By the time you get into next year you have a tailwind fourth the wildcards maybe you get a trade deal, brexit works in your favor and some of those macro head wint winds start to fade. Based on the four things if they work in your favor and i think they will that environment is for the upside. Maybe the fed pauses, maybe theres, you know, false optimism out of trade and it doesnt come to fruition the way people think earnings dont recover meaningfully enough to carry the stock market higher. Theres still slowing Global Growth to hold down the overall story. Listen, we can shoot holes in that and i can take the other side of it, but when you listen to what companies are saying right now, 7 organic organic revenue growth, Procter Gamble, same thing, both guided higher for next year, costco, membership numbers are doing quite well, the Home Builders, lennar and pulte, how the decline in Interest Rates is helping to boost home ownership. Caterpillar is on the other side. Texas instruments and the like didnt do well. Again, i think to the point about maybe earnings arent going to be as strong, bottom up consensus around 10 i sell that all day. Probably closer to 4 or 5 if the fed pauses its because things are doing okay and thats going to be good for stocks. And while you can shoot holes in any argument one way or the other to me, when you look at the totality of the evidence so to speak, i dont know why were on the verbal of a recession you have a meaningful and sustained drop in stock prices. Yeah, i mean i think its tough. We think that were still at a crossroads im not, you know, confident enough to say we are definitively heading higher. We think its still kind of in this muddle through where we could inflect frankly in either direction. I think trade remains a big part of that even though we dont want that to be the case we are kind of marginally getting more optimistic on that front. At the end of the day theres still that unpredictability. Were watching three things. Stabilization of global data, which were not really there yet, its more mixed we might be finding a bottom, but i think its too early to say that resilienc