Bubble or no bubble, this is the best stock for AI exposure: analyst
U.S. markets traded mixed on Wednesday as traders digested fresh signs of labor market weakness and mounting skepticism toward artificial intelligence valuations. The S&P 500 (SPX) slipped 0.2% to 6,831.83, the Nasdaq Composite (IXIC) fell 0.4% to 23,383.59, and the Dow Jones Industrial Average (DJIA) hovered near flat at 47,584.63. The November ADP report shocked markets with a 32,000 drop in private payrolls, far below the consensus for a 40,000 gain. Small firms shed 120,000 jobs, while large corporations added 90,000, revealing an uneven employment landscape. Bond yields retreated, with the 10-year Treasury at 4.065%, and the U.S. dollar index (BUXX) weakened to 96.51 as markets priced in an 89% probability of a December Fed rate cut.
Tech stocks led the retreat as Microsoft (MSFT) plunged 2.47% to $477.89 after reports it lowered AI-related sales quotas, triggering fears that enterprise adoption is lagging hype. The news sent ripples through the semiconductor space: Nvidia (NVDA) dropped 1%, Broadcom (AVGO) fell 2.3%, Micron (MU) declined 3.7%, and TSMC (TSM) slipped 1.9%. The Nasdaq Composite turned negative, reflecting investor hesitation to sustain elevated valuations. Analysts warned that the market’s AI-driven rally—responsible for much of 2025’s 30% Nasdaq gain—could face its first true correction phase as investors await stronger profit validation.
Marvell Technology (MRVL) soared 9% to $98.83 after announcing a $3.25 billion purchase of Celestial AI, potentially expanding to $5.5 billion if revenue targets are met. The company forecast 25% data-center revenue growth next fiscal year, with management highlighting efficiency gains from Celestial’s photonic networking technology. The acquisition aligns Marvell directly against Broadcom and Nvidia in the data infrastructure space. A warrant agreement with Amazon (AMZN), allowing it to buy Marvell shares tied to photonic fabric orders through 2030, bolstered confidence in long-term scalability. Marvell’s rebound marks a pivotal turnaround after a 16% year-to-date decline, positioning the firm as a renewed AI hardware contender.
Retail performance diverged sharply as American Eagle Outfitters (AEO) jumped 15.27% to $24.01 following robust Q3 earnings of $0.53 per share on $1.36 billion revenue, both above estimates. Same-store sales rose 4%, with Aerie up 11%, driven by strong demand across digital and in-store channels. CEO Jay Schottenstein cited “record-breaking Thanksgiving results” and increased Q4 projections for 8%–9% comparable sales growth. Meanwhile, Macy’s (M) sank 7%, despite a surprise profit of $0.09 per share on $4.71 billion revenue. Comparable sales rose 3.2%, the best in three years, but weak guidance and store closures weighed heavily. Macy’s continues struggling to stabilize amid discount retail competition and margin compression.
Oracle (ORCL) added 0.8% to $202.71 after Wells Fargo began coverage with an Overweight rating and a $280 target, implying 39% upside. Analysts highlighted Oracle’s pivotal role in AI-enabled enterprise software and its expanding partnership network. Apple (AAPL) gained on expectations of record iPhone 17 shipments—estimated 247 million units in 2025, a 6.1% rise YoY—driven by 17% sales growth in China. The company’s leadership reshuffle, replacing AI chief John Giannandrea with Amar Subramanya (formerly of Google and Microsoft), marks a strategic pivot toward integrated on-device AI. The restructuring is viewed as a full reset of Apple’s AI ambitions ahead of the anticipated iPhone 18 launch in early 2027.
AI firm Anthropic, supported by Alphabet (GOOGL) and Amazon (AMZN), initiated IPO preparations targeting early 2026. The company hired Wilson Sonsini to manage the process, with talks valuing Anthropic above $300 billion and a potential $15 billion funding round led by Nvidia (NVDA) and Microsoft (MSFT). The move underscores a critical evolution in the AI market—from closed private financing toward public exposure. Anthropic’s Claude chatbot has gained institutional traction, and its alignment with major cloud providers signals a shift toward commercial AI monetization at scale.
Silver (SI=F) surged 0.8% to $58.97/oz, marking a record high as ETF inflows added 200 tons to global holdings—the sharpest increase since 2022. Gold (XAU/USD) advanced 0.7% to $4,250.40/oz, supported by a weaker dollar and expectations of Fed rate cuts under the incoming Trump administration. Traders anticipate further monetary easing as Jerome Powell’s term nears its end. The combination of falling yields and renewed investor demand pushed the S&P GSCI Commodity Index up 0.51%, its fifth consecutive gain.
Crude markets rose on improving geopolitical sentiment and reduced supply fears. WTI crude (CL=F) climbed 1.3% to $59.40/barrel, while Brent (BZ=F) advanced above $63/barrel, both supported by optimism over Ukraine-Russia peace negotiations. Traders also cited stronger refinery demand in Europe and renewed import activity from India and China. Energy equities mirrored the move, lifting the S&P Energy Sector Index 0.6% higher as traders rotated toward cyclical names amid broader tech weakness.
Bitcoin (BTC-USD) extended its recovery, up 1.77% to $92,245, after touching $93,965, the highest level in two weeks. The rally follows a correction that erased over $1 trillion in crypto market capitalization since October. Bitcoin ETFs saw modest $59 million inflows, signaling cautious optimism. Crypto-linked stocks such as Coinbase (COIN) and Robinhood (HOOD) gained as risk appetite returned. Despite the rebound, analysts described sentiment as “fragile,” citing limited liquidity and persistent macro uncertainty heading into 2026.
The WSJ Dollar Index slipped 0.28% to 96.51, its weakest reading since October, amid growing rate-cut speculation. The Indian rupee (INR/USD) hit an all-time low above ₹90 per USD, pressured by 50% U.S. import tariffs and capital flight. In Europe, Inditex (ITX) soared 10% and Airbus (AIR) climbed 4.5%, pushing the IBEX 35 to record highs. The Euro Stoxx 50 rose 0.6%, benefiting from expectations of ECB easing in early 2026.
Investors looked to Salesforce (CRM) earnings due after market close, with AI integration progress under scrutiny. CrowdStrike (CRWD) slipped 3.5% despite beating Q3 EPS, as management narrowed full-year guidance. Okta (OKTA) rose 4% on strong $742 million revenue and positive AI commentary. Dollar Tree (DLTR) and Five Below (FIVE) delivered stable results, signaling resilience in the discount retail segment. Aggregate S&P 500 EPS growth for Q4 now sits at +6.4%, led by technology, retail, and communication services.
U.S. equity markets enter December positioned at a critical intersection between monetary easing expectations and deteriorating macro data. The ADP employment report, showing a 32,000 decline in private-sector jobs, was the weakest print since mid-2023 and confirmed a clear deceleration in small business hiring. Yet rather than spark panic, the figure reinforced investor conviction that the Federal Reserve will move to cut rates at its December 10 meeting, with Fed funds futures now pricing an 89% probability of a 25-basis-point reduction.
The S&P 500 (SPX) currently trades at 6,831.83, down slightly on the session but still up more than 14.7% year-to-date, with strong sector rotation cushioning broader losses. The Nasdaq Composite (IXIC), last at 23,383.59, has cooled from November’s peaks as investors trim exposure to high-valuation AI names, while the Dow Jones Industrial Average (DJIA) holds at 47,584.63, supported by defensive components such as Johnson & Johnson (JNJ) and Coca-Cola (KO). Bond yields continue to decline—U.S. 10-year Treasury yield at 4.065%, down from 4.23% earlier this week—amplifying the appeal of equities, real estate, and dividend-generating sectors.
That’s TradingNEWS.com