Strong earnings lift stocks: How should you trade it

Watch on YouTube ↗  |  May 05, 2026 at 18:49  |  11:15  |  CNBC
Speakers
Joe Terranova — Senior Managing Director, Virtus Investment Partners
Stephanie Link — Chief Investment Strategist, Hightower
Josh Brown — CEO, Ritholtz Wealth Management

Summary

The Investment Committee discusses the strong earnings-driven rally, noting tech and AI capex as the primary drivers, but also debating market breadth and factor performance. Joe Terranova favors momentum over quality, while Stephanie Link is highly bullish on AI infrastructure names like Amazon, Google, and Microsoft, viewing the theme as still early. Concerns about excessive speculation in some segments are raised but not universally shared.

  • Earnings growth is the key market driver, with Q1 growth at 28% and margins expanding.
  • Tech and communication services lead sector performance, but broader market participation remains uneven.
  • Lower oil prices are seen as a potential catalyst for broadening the rally into value and consumer discretionary.
  • The AI infrastructure buildout is described as being in the early innings, with massive cloud backlog.
  • Momentum factor is sharply outperforming quality factor year-to-date.
  • Some panelists warn of excessive speculation in memory chip stocks like Micron.
  • The Mag-7 companies are cash-rich, differentiating the current environment from the late 1990s bubble.
  • Overall sentiment is bullish, supported by improving economic forecasts and upward earnings revisions.
Trade Ideas
Joe Terranova Senior Managing Director, Virtus Investment Partners 9:53
Prefer momentum over quality factor.
Quality factor is not being rewarded while momentum factor is strongly outperforming. He wishes his portfolio had more momentum and less quality, implying a tilt toward momentum and away from quality is appropriate in the current environment.
Momentum Factor (e.g., MTUM) MED
Joe Terranova Senior Managing Director, Virtus Investment Partners 9:53
Prefer momentum over quality factor.
Quality factor is not being rewarded while momentum factor is strongly outperforming. He wishes his portfolio had more momentum and less quality, implying a tilt toward momentum and away from quality is appropriate in the current environment.
Quality Factor (e.g., QUAL) MED
Stephanie Link Chief Investment Strategist, Hightower 10:14
AI infrastructure early innings, strong earnings.
The AI infrastructure buildout is still in early innings, driven by massive cloud backlog ($1.3 trillion at Amazon, Google, Microsoft) and supply constraints. This is where earnings growth and investor dollars are flowing, making these companies core beneficiaries.
AMZN GOOGL MSFT HIGH
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This CNBC video, published May 05, 2026, features Joe Terranova, Stephanie Link discussing Momentum Factor (e.g., MTUM), Quality Factor (e.g., QUAL), AMZN, GOOGL, MSFT. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Joe Terranova, Stephanie Link  · Tickers: Momentum Factor (e.g., MTUM), Quality Factor (e.g., QUAL), AMZN, GOOGL, MSFT