Friday’s market story is a familiar one for late 2025: the “AI trade” is back in the crosshairs.
Just one day after U.S. benchmarks pushed to fresh highs, stocks turned sharply lower on December 12, 2025, as investors backed away from the highest-valued technology names—especially chip and cloud companies tied to the artificial-intelligence buildout—while money rotated toward more defensive and value-oriented pockets of the market. [1]
The result: the S&P 500 and Nasdaq retreated meaningfully, with the pullback led by a renewed wave of selling in AI hardware and infrastructure plays. [2]
Wall Street recap: From record highs to a sharp Friday reversal
On Thursday (Dec. 11), the S&P 500 closed at a record 6,901.00 and the Dow also logged a record close, helped by strength outside mega-cap tech. [3]
But on Friday, “tech-first” positioning became a headwind again:
- The S&P 500 fell about 1.3% from Thursday’s record level. [4]
- The Nasdaq dropped roughly 1.9%, with the biggest pressure concentrated in AI-linked stocks. [5]
- The Dow slipped about 0.6% after recently setting its own record. [6]
Earlier in the session, the tape was choppier—the Dow initially held up better than the tech-heavy indexes—but the selling broadened as the day progressed. [7]
Why tech is tumbling: Broadcom and Oracle reignite “AI bubble” anxiety
Broadcom: strong results, but a margin warning spooks investors
Broadcom became the day’s key catalyst—and a symbol of the market’s mood.
Even after reporting adjusted EPS of $1.95 on record revenue of $18.02 billion for its fiscal fourth quarter, Broadcom shares sank in Friday trading, leading declines among AI hardware names. [8]
The core issue wasn’t demand. It was profitability.
Reuters reported Broadcom shares fell more than 11% after the company warned that growing sales of lower-margin custom AI processors could squeeze profitability, reviving worries that the AI boom may not translate into the kind of margins investors have been pricing in. [9]
Adding to the market’s nervousness, Reuters noted increasing scrutiny of “circular deals,” a structure where companies invest in (or around) their own customers—an element some investors say echoes past boom-era behavior. [10]
Broadcom’s AI relevance is also increasingly concentrated in massive contracts. Reuters highlighted that Broadcom secured $21 billion from Anthropic in recent quarters for custom AI chips connected to Google’s “Ironwood” program, underscoring how large and interconnected the current AI infrastructure ecosystem has become. [11]
Oracle: AI spending, guidance pressure—and now data-center delays
Oracle, already under pressure after a steep drop earlier in the week, remained a major weight on sentiment across megacap tech.
Reuters reported that Oracle has pushed back completion dates for some data centers being developed for OpenAI to 2028 from 2027, citing a Bloomberg News report that attributed the delays largely to labor and material shortages. [12]
The same Reuters report emphasized why that headline matters: Oracle has vaulted into the AI infrastructure race this year on the back of a $300 billion OpenAI deal, tying Oracle’s narrative closely to the future scale (and financing) of AI compute demand. [13]
And the market reaction spread well beyond one ticker. Reuters noted that shares of Nvidia, AMD, Micron, and Arm were down between 3% and 6% alongside the Oracle news. [14]
Nvidia and the “AI leaders” take another hit
As fear rippled through AI-linked hardware, the selloff pulled in even the biggest winners of the cycle.
In the U.S., Nvidia fell 2.9% in the risk-off tech move described by the Associated Press, reinforcing how sensitive the market has become to any sign the AI spending wave could slow—or fail to generate near-term profits commensurate with the capital being deployed. [15]
The bond market adds pressure: yields rise, growth stocks feel it
Another piece of Friday’s market puzzle: higher bond yields.
The Associated Press reported the 10-year Treasury yield climbed to 4.19%, a move that can mechanically pressure high-growth stocks by raising the “discount rate” investors apply to future earnings. [16]
The bond move also fits the broader macro tension the Fed is trying to manage: inflation is still elevated enough to keep policymakers cautious, even as the central bank has already started cutting rates.
Fed fallout: rate cut delivered, but internal dissent is driving debate
The Federal Reserve’s December decision is still the backdrop for every market move this week.
The Fed’s official statement confirms that on December 10, 2025, the central bank lowered the target range for the federal funds rate by 25 basis points to 3.50%–3.75%, while describing inflation as “somewhat elevated” and acknowledging downside risks to employment. [17]
But on Dec. 12, that decision sparked fresh headlines of its own.
Reuters reported that two key Fed officials—Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid—publicly explained their dissents, citing concerns that inflation remains too high and that policymakers lack up-to-date data after a 43-day U.S. government shutdown disrupted economic reporting. [18]
Goolsbee argued the Fed should have waited for more inflation and jobs data, while Schmid said inflation was “too hot” and policy should remain at least modestly restrictive. [19]
Reuters also noted that the Fed’s projections show a median expectation of just one quarter-point cut in 2026, but with a wide spread—some officials expecting no cuts, and some even seeing potential hikes. [20]
For markets, that split helps explain why rate-cut optimism can coexist with jittery trading: investors are trying to price a 2026 path that is still unusually uncertain.
Canada: TSX hits a fresh intraday peak as cannabis and mining lead
While U.S. tech dragged major indexes lower, Canada’s TSX had a different mix driving performance.
Reuters reported that on Dec. 12, Canada’s benchmark index hit a fresh intraday peak, with the TSX up 0.2% at 31,731.35 in early trading, and the index set up for a weekly gain. Reuters also noted the TSX is up about 28% for the year, outperforming U.S. peers thanks to strength in mining and materials. [21]
What powered the move?
- Cannabis stocks surged after a Washington Post report said U.S. President Donald Trump is expected to push the government to dramatically loosen federal restrictions on marijuana. Reuters highlighted big moves including Curaleaf, plus Canada-listed Canopy Growth and Tilray. [22]
- Gold and mining shares rose, with Reuters pointing to silver hitting a new record and gold reaching a seven-week high (while copper eased below its peak). [23]
- Canadian tech names were not immune: Reuters noted the TSX technology sector lagged, citing declines in Celestica and Shopify. [24]
Canada’s monetary-policy context also differs. The Bank of Canada held its policy rate at 2.25% on December 10, according to the central bank’s statement. [25]
And Canadian macro data turned slightly more supportive: Statistics Canada reported a $153 million merchandise trade surplus in September, flipping from an August deficit as exports rose and imports fell. [26]
Global markets: Europe gives up gains as AI nerves spread
The tech shockwave wasn’t confined to North America.
Reuters reported European shares ended lower on Friday as renewed concern about a potential AI bubble—amplified by Wall Street’s tone—erased earlier gains. [27]
What investors are watching next
The next catalysts are already lined up—and they’re not just earnings.
1) Key U.S. inflation and jobs reports
Reuters reported that delayed government data releases are expected to restart next week, including major U.S. reports on employment and inflation for November—numbers that could reshape both Fed expectations and bond yields. [28]
2) The durability of the “rotation” trade
Even as tech stumbles, recent sessions have shown a willingness to bid up non-tech sectors—financials, materials, and other “value” exposures—especially when investors believe rate cuts (even slower ones) improve the 2026 growth outlook. [29]
3) AI profitability, not AI hype
Broadcom’s slide after strong results is a reminder that the market’s new question isn’t “Who is exposed to AI?” but rather “Who can convert AI demand into sustainable margins?” [30]
And Oracle’s OpenAI-linked data center timeline adds another angle: investors are increasingly sensitive to whether the AI buildout is constrained by real-world capacity limits—labor, materials, power, and construction—alongside the financing required to keep scaling. [31]
Bottom line
December 12, 2025 delivered a clear message for markets: AI-linked tech remains the most powerful driver of index-level direction—up or down. A margin warning at Broadcom and a fresh round of Oracle-related AI infrastructure questions were enough to pull the S&P 500 and Nasdaq away from record territory, even as other sectors tried to stabilize the broader tape. [32]
At the same time, Canada’s TSX showed how different leadership can look when commodities and sector-specific catalysts (like cannabis) take the driver’s seat—especially in a market that’s already been rewarding rotation away from U.S. mega-cap tech concentration. [33]
References
1. www.reuters.com, 2. apnews.com, 3. www.reuters.com, 4. apnews.com, 5. apnews.com, 6. apnews.com, 7. www.reuters.com, 8. www.investopedia.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. apnews.com, 16. apnews.com, 17. www.federalreserve.gov, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.bankofcanada.ca, 26. www150.statcan.gc.ca, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. apnews.com, 33. www.reuters.com
