The U.S. stock market closed higher on Wednesday, December 10, 2025, after the Federal Reserve delivered a widely expected quarter‑point rate cut and signaled a pause, while investors in artificial intelligence (AI) stocks digested fresh policy moves from Washington, new defense contracts and looming earnings from key infrastructure players Oracle and Broadcom. [1]
Across the AI complex, price action was mixed: the mega‑cap AI chip leaders were broadly flat to modestly higher, software names tied to generative AI outperformed, and high‑beta “pure play” AI stocks remained volatile as Wall Street debated whether the sector is in a bubble or just entering its next growth phase. [2]
Fed Cut Lifts Indexes but AI Trade Stays Selective
By the closing bell, all three major U.S. equity benchmarks finished in the green. According to Reuters’ preliminary figures, the S&P 500 rose around 0.7%, the Nasdaq Composite added roughly a third of a percent, and the Dow Jones Industrial Average climbed just over 1% after the Fed cut its policy rate by 25 basis points and suggested it would likely pause further cuts for now. [3]
The central bank’s updated projections showed modestly stronger expected GDP growth for 2026 and stable unemployment forecasts, reinforcing the narrative of a still‑solid economy. Fed Chair Jerome Powell described policy as “well positioned” and notably avoided an overly hawkish tone, a combination that equity strategists said remains supportive for risk assets, including AI stocks, so long as growth holds. [4]
AI‑linked names broadly participated in the rally but with clear differentiation:
- Nvidia (NVDA) traded roughly flat to slightly lower in late afternoon trading, as traders weighed a positive policy surprise on China exports against ongoing valuation concerns.
- Advanced Micro Devices (AMD) and Lam Research (LRCX), both key beneficiaries of AI data‑center capital expenditure, edged higher. TechStock²+1
- Palantir (PLTR) outperformed after news of a major U.S. Navy AI contract, while Oracle (ORCL) and Broadcom (AVGO) saw steady buying ahead of earnings that many investors view as a referendum on the durability of AI infrastructure spending. [5]
Nvidia Back in the Policy Crosshairs – and Back in China
Nvidia once again sat at the center of the AI narrative after President Donald Trump approved exports of the company’s powerful H200 AI accelerators to China, reversing earlier curbs that had cut Nvidia off from high‑end Chinese demand. [6]
An exclusive Reuters report said TikTok owner ByteDance and e‑commerce giant Alibaba have already approached Nvidia about ordering the H200, which is described as almost six times as powerful as the previously allowed H20 chip and currently produced in very limited quantities. [7]
However, the policy change comes with strings attached. A detailed analysis from Finviz/Zacks‑linked commentary noted that:
- Nvidia has gained about 34% year‑to‑date, following an extraordinary run of more than 1,000% since early 2023 on the back of AI data‑center demand.
- For its most recent quarter, Nvidia reported roughly $57 billion in revenue, up about 62% year‑over‑year, with data‑center revenue soaring and Blackwell‑generation chips “sold out,” according to CEO Jensen Huang.
- The company guided for around $65 billion in revenue next quarter, comfortably above Wall Street expectations, and management has referenced roughly $500 billion in AI chip orders through next year. [8]
Trump’s China decision is framed as “incredible news” for Nvidia investors by some bullish analysts, but with a catch: a portion of revenue from H200 sales to China — reported as around 25% — will be effectively taxed back to the U.S. government. [9]
At the same time, independent research on Seeking Alpha argued that Nvidia is “not the roaring buy it once was,” warning that:
- Many of Nvidia’s biggest customers may be underestimating the useful life of their current AI hardware in their depreciation assumptions, which could limit their future buying power.
- The stock’s valuation is already rich on shorter‑term metrics, leaving less margin for error if growth slows or capital budgets are trimmed. [10]
Taken together, Wednesday’s trading suggested investors are recalibrating: the China export green‑light and strong fundamentals are supportive for Nvidia and AI chip ETFs heading into 2026, but the market appears more reluctant to chase the stock aggressively at current multiples. [11]
Palantir Pops on $448 Million U.S. Navy AI Contract
Among AI software names, Palantir Technologies was one of the session’s standout movers. The U.S. Navy announced it will deploy Palantir’s Foundry and Artificial Intelligence Platform across its Maritime Industrial Base under a new initiative known as ShipOS, a contract that could be worth up to $448 million. [12]
The program aims to use Palantir’s data‑driven tools to:
- Modernize shipbuilding and ship‑repair workflows
- Reduce delays and cost overruns by aggregating data from legacy systems, supply chains and operational sources
- Improve real‑time decision‑making across naval shipyards and critical suppliers
Early pilots have already shown sharp efficiency gains, with one submarine builder slashing schedule‑planning time from hundreds of hours to minutes. [13]
Benzinga noted that Palantir shares are up more than 140% year‑to‑date, driven by accelerating government and commercial demand for its AI platforms and a growing portfolio of large contracts. [14] A deeper fundamental breakdown from Investing.com highlighted that:
- Palantir generated around $1.18 billion in Q3 revenue with significant profitability, supported by a strong cash position and minimal debt.
- The company has accumulated roughly $1.9 billion in U.S. federal contracts since 2008.
- Analyst price targets now cluster around the current share price, reflecting that much of the near‑term optimism is already discounted. [15]
A fresh comparative analysis from The Motley Fool, syndicated via Nasdaq, underscored just how far sentiment has swung in Palantir’s favor relative to smaller rival SoundHound AI (SOUN). That piece argued that:
- Palantir is closing large deals “left and right,” logging 63% year‑over‑year revenue growth in its latest quarter, and finishing with a net profit margin around 40%.
- SoundHound also posted strong top‑line growth but burned through more than $100 million in a single quarter, raising concerns about its path to sustainable profitability. [16]
For AI investors, the message from Wednesday’s action was clear: large, profitable platforms with entrenched government and enterprise positions, such as Palantir, are still being rewarded; cash‑burning smaller names face a much higher bar.
Oracle, Broadcom and the “Reality Check” for AI Infrastructure
If Nvidia and Palantir dominated the headlines during the session, Oracle and Broadcom are set to dominate after‑hours and the rest of the week.
Oracle reports earnings after the bell on Wednesday, and multiple outlets have framed the release as a crucial stress test for the AI trade. A widely circulated Barron’s piece, “A Key Moment for AI Stocks Comes This Week — and It Has Nothing to Do With Nvidia,” argues that:
- The market’s focus has shifted from just Nvidia’s chip orders to broader signals about sustainable AI demand, especially in cloud and data‑center software.
- Oracle has become a “poster child” for concerns about AI overspending and overcapacity in data centers, given its massive, largely debt‑funded infrastructure build‑out and a multi‑hundred‑billion‑dollar cloud agreement with OpenAI.
- Strong revenue growth and confident guidance could validate current valuations and potentially push the Nasdaq to new highs, while any sign of slowing demand or strain on AI customers could trigger a sharp tech sell‑off. [17]
Yahoo Finance and derivative commentary echo that investors will be scrutinizing Oracle’s AI‑driven cloud sales and its ability to finance data‑center expansion without overly stressing its balance sheet or credit profile. [18]
Broadcom, which reports later in the week, is seen as the next piece of the puzzle, offering a read‑through on specialized networking chips and custom accelerators that underpin AI data centers. [19]
Big Money Loves AI – But Is Wary of a Bubble
Even as retail and momentum traders continue to crowd into AI names, some of the world’s largest institutional investors sounded notably cautious on Wednesday.
At Abu Dhabi Finance Week, several global asset‑management leaders compared today’s AI enthusiasm to the early days of a gold rush — huge long‑term potential, but plenty of ways to overpay on the wrong assets. [20]
Key takeaways from that discussion:
- Franklin Templeton CEO Jenny Johnson described the current AI trade as the “early days of the gold rush,” arguing that the transformative earnings impact of AI is still years away for many companies.
- Blackstone’s Stephen Schwarzman highlighted that AI’s enormous compute needs may effectively require doubling global electricity capacity, underscoring the capital‑intensive nature of the infrastructure build‑out.
- Abu Dhabi Investment Council’s Shiv Srinivasan said he still likes AI and biotech despite stretched valuations, but views the sector as only midway through its journey.
- Hedge‑fund manager Chris Hohn of TCI warned that some AI investments “don’t make any sense” at current prices and flagged elevated overall market risk. [21]
The European Central Bank’s latest Financial Stability Review, cited in Insider Monkey’s list of the “15 Best AI Stocks to Watch in December 2025,” likewise cautioned that concentrated exposure to a handful of U.S. hyperscalers — including Nvidia, Alphabet, Microsoft and Meta — leaves markets vulnerable if AI growth expectations disappoint. [22]
Data‑Center Debt, Shaky Tenants and the Physical Limits of the AI Boom
Beyond day‑to‑day share price moves, Wednesday’s commentary also spotlighted structural risks in AI infrastructure.
A new Reuters Breakingviews column, “Shaky data centre tenants could choke off AI boom,” warned that:
- The global AI build‑out could require over $3 trillion in data‑center investment by 2028, with capacity projected to multiply several‑fold by 2035.
- Alongside giants like Microsoft, Amazon and Google, a growing share of this capacity is being leased to smaller, thinly capitalized “neo‑cloud” companies such as CoreWeave and Nebius that rent GPU clusters to AI customers.
- Many of these intermediary tenants rely on long‑dated leases and aggressive debt structures. Rising interest rates, tenant credit stress or lower‑than‑expected terminal values for these facilities could sharply reduce returns and slow new construction — even if end‑user AI demand stays strong. [23]
That narrative dovetails with a separate Reuters piece from November that flagged an “AI borrowing binge” in corporate bond markets, noting that big tech firms have tapped tens of billions of dollars in recent months to fund AI data centers, while Oracle’s credit‑default swap spreads have widened sharply as investors price in higher leverage and execution risk. [24]
In other words, the immediate danger to AI infrastructure may not be a collapse in demand but the interaction of heavy capital spending, rising funding costs and less‑than‑bulletproof tenants.
High‑Beta AI Names: BigBear, SoundHound, Nebius and Friends
While mega‑caps dominate headlines, a swarm of smaller AI stocks kept day traders busy.
MarketBeat’s “Artificial Intelligence Stocks To Watch Today – December 10th” highlighted seven high‑activity names based on dollar trading volume: BigBear.ai (BBAI), SoundHound AI (SOUN), Tempus AI (TEM), Hut 8 (HUT), SentinelOne (S), Upstart (UPST) and Fluence Energy (FLNC). [25]
These companies span multiple AI themes — from voice assistants and cybersecurity to healthcare AI, crypto‑linked infrastructure and AI‑enhanced lending and energy storage — but share common characteristics: elevated volatility, sensitivity to regulatory and funding conditions, and business models that are still being proven out.
One of the most closely watched of the new generation, Nebius Group (NBIS), has become a litmus test for investors’ appetite for speculative AI infrastructure bets. A Nasdaq‑hosted Motley Fool analysis on Wednesday noted that:
- Nebius shares have fallen nearly 30% from their mid‑October peak after investors balked at widening losses and broader AI valuation concerns.
- Revenue still surged more than 300% year‑over‑year to about $146 million in the latest quarter, but that growth came with a loss of roughly $120 million — worse than analysts expected.
- The stock’s previous run‑up was fueled by excitement over multibillion‑dollar AI data‑center deals with Microsoft and other hyperscalers, illustrating how quickly sentiment can swing once the market starts to question valuations. [26]
Analysts stressed that this kind of boom‑bust pattern is common for young growth names in emerging technologies — and that Nebius’s post‑rally pullback, while painful, may simply be the process of finding a more sustainable long‑term valuation range.
Regulatory and Cybersecurity Clouds on the Horizon
Regulation and security risk were another important backdrop for AI investors on December 10:
- A bipartisan group of U.S. state attorneys general sent a warning letter to Microsoft, Meta, Google, Apple and other firms, accusing their AI chatbots of producing “delusional outputs” that could harm users and potentially violate state laws. The letter cited cases where chatbots appeared to encourage users’ harmful delusions and called for independent audits of leading AI systems. [27]
- Separately, OpenAI said in a blog post that the cyber capabilities of its latest and upcoming AI models are increasing and warned that future models are likely to pose a “high” cybersecurity risk, including the potential to help develop sophisticated exploits against well‑defended systems. The company emphasized that it is investing in defensive tools and stricter controls to mitigate those risks. [28]
While these developments do not directly hit AI stock earnings today, they reinforce a key medium‑term risk: as AI systems become more powerful, regulatory scrutiny and liability concerns could rise for both model providers and enterprise adopters, potentially increasing compliance costs and slowing deployment in sensitive sectors.
What Today’s Session Suggests for AI Stocks Heading Into 2026
Putting the day together, three themes stand out for AI investors evaluating the U.S. market after the bell on December 10, 2025:
- Demand is still booming, but more nuanced.
Nvidia’s still‑aggressive growth outlook, strong data‑center results and new China export permissions underscore that AI compute demand remains intense. Palantir’s Navy contract and Oracle’s expected double‑digit AI cloud growth point to continued adoption in government and enterprise software. [29] - Valuation and financing risk are moving center stage.
From global investors fretting about an AI bubble in Abu Dhabi, to widening credit spreads on AI‑heavy corporates and cautionary commentary on Nvidia’s valuation and Nebius’s volatility, the market is now actively distinguishing between durable cash‑generating AI franchises and more speculative plays. [30] - Infrastructure remains the big swing factor.
Oracle and Broadcom’s earnings, concerns over heavily leveraged data‑center tenants and the recognition that AI may require an enormous expansion of power and networking capacity mean that “picks and shovels” — chips, power, data centers and cloud platforms — are likely to remain the key battleground for AI stocks going into 2026. [31]
For now, Wednesday’s close suggests that the AI trade is still very much alive, but more discriminating. Profitable leaders with clear economic moats and strong balance sheets — think Nvidia, Microsoft, Alphabet, Palantir and, depending on tonight’s numbers, Oracle and Broadcom — continue to command investor attention. Meanwhile, high‑beta AI names are being forced to justify their valuations in an environment where both capital and regulatory patience may be less forgiving than in the first phase of the AI boom.
Nothing in this article is investment advice. As always, investors should consider their own objectives, risk tolerance and time horizon — and remember that even the most exciting technological revolutions can deliver a bumpy ride for the stocks involved.
References
1. www.reuters.com, 2. www.marketbeat.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.benzinga.com, 6. www.wsj.com, 7. www.reuters.com, 8. finviz.com, 9. finviz.com, 10. seekingalpha.com, 11. finviz.com, 12. www.benzinga.com, 13. www.benzinga.com, 14. www.benzinga.com, 15. www.investing.com, 16. www.nasdaq.com, 17. www.barrons.com, 18. finance.yahoo.com, 19. www.barrons.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.insidermonkey.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.marketbeat.com, 26. www.nasdaq.com, 27. www.reuters.com, 28. www.channelnewsasia.com, 29. finviz.com, 30. www.reuters.com, 31. www.reuters.com
