Week of December 1–7, 2025 – AI stocks enter a “show‑me” phase as mega‑cap leaders wobble, chipmakers double down on data centers, and new challengers emerge.
Big picture: AI trade wobbles, but the theme is very much alive
The first week of December was another rollercoaster for artificial intelligence stocks. Major U.S. indexes edged higher, helped by softer inflation data and rising expectations of a Federal Reserve rate cut next week. The Nasdaq Composite finished the week up around 0.9%, but tech leadership looked very different from earlier in 2025. [1]
Under the surface, the “Magnificent Seven” – Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta and Tesla – have been losing some of their grip on the market. Bank of America data cited this week showed that more than 60% of S&P 500 components outperformed the index in November, while eight of 11 sectors beat tech, signaling a broadening of leadership as investors question how quickly AI spending will translate into profits. [2]
At the same time, concern about an “AI bubble” hasn’t gone away. Recent surveys show just over half of investors believe AI stocks may already be in bubble territory, even as analysts argue that comparisons to the dot‑com era overlook the fact that today’s AI giants are much more profitable and cash‑generative. [3]
Into that uneasy backdrop, this week’s AI‑stock news clustered around four big themes:
- Nvidia’s deal spree and growing scrutiny of its balance sheet
- A blockbuster Chinese GPU IPO challenging U.S. dominance
- An AI‑driven memory “supercycle” reshaping the chip supply chain
- C3.ai’s headline federal win versus its still‑stubborn losses
Let’s break it down.
Nvidia: still the AI hardware king, but under a microscope
1. A $2 billion Synopsys stake to lock in the AI design stack
On December 1, Nvidia announced a $2 billion equity stake in Synopsys, the electronic design automation (EDA) leader, at $414.79 a share, a small discount to the prior close. The deal comes with a multi‑year collaboration to weave Nvidia’s AI tools into Synopsys’ software for chip design, physical verification and even molecular simulation. [4]
Synopsys shares jumped about 7% on the news, while Nvidia slipped nearly 2% as investors digested yet another big strategic investment. [5] The move is part of Nvidia’s broader push to own more of the AI stack:
- It already plans up to $100 billion of staged investment in OpenAI as part of a data‑center partnership to build at least 10 GW of AI infrastructure powered by millions of Nvidia GPUs. [6]
- In September, it agreed to invest $5 billion in Intel and partner on AI infrastructure and x86 SoCs with integrated RTX GPU chiplets. [7]
In other words, Nvidia isn’t just selling chips; it’s stitching together an ecosystem of design tools, infrastructure partners and flagship customers.
2. The $100 billion OpenAI megadeal? Still not signed
One of the week’s most important clarifications: Nvidia’s much‑touted $100 billion OpenAI framework isn’t final. At the UBS Global Technology and AI Conference, CFO Colette Kress confirmed that the agreement remains a letter of intent with no binding contract. She warned there’s no guarantee the deal will proceed as initially presented. [8]
Regulators and some investors are nervous about “circular” AI deals in which Nvidia invests in startups that then turn around and spend that money on Nvidia hardware. The company’s own filing notes the risks of inflexible long‑term orders in a fast‑moving hardware cycle. [9]
Despite the caveats, Nvidia emphasized that demand forecasts for its Blackwell and Vera Rubin systems don’t even count potential OpenAI orders – a way of signaling that the broader AI infrastructure wave is larger than any single customer. [10]
3. Wall Street doubles down: price targets keep climbing
Even as Nvidia’s share price has sagged – down roughly 9% over the past month – Wall Street’s most bullish voices aren’t backing off. [11]
- Morgan Stanley analyst Joseph Moore raised his 12‑month Nvidia target from $235 to $250, implying nearly 40% upside from current levels around $180. He argued that after visiting Asian customers and partners, competitive threats from Chinese AI chip efforts look “very limited,” and that Nvidia remains the clear hardware leader. [12]
- A separate Motley Fool analysis published via Nasdaq went further, predicting Nvidia stock could “breeze past $300 in 2026.” The thesis: data‑center GPUs remain the “gold standard” for AI workloads, demand continues to exceed supply, and the valuation is still attractive versus the company’s growth and the CEO’s estimate that data‑center operators could spend up to $4 trillion per year on infrastructure by 2030. [13]
Community‑driven models echo that optimism: Simply Wall St’s consensus “fair value” estimate for Nvidia sits around $250 per share, suggesting the stock is still significantly undervalued even after its enormous multi‑year run. [14]
4. Quality status questioned, but “AI wobble” may be temporary
Offsetting the bull cases, a widely read Wall Street Journal piece this weekend highlighted how some “quality” ETFs have quietly dropped Nvidia and other AI names. One S&P‑based quality fund cut exposure after surging accruals and working‑capital swings raised questions about the quality of AI‑fueled earnings, even as an MSCI‑based quality ETF remains heavy in Big Tech. [15]
Yet another column from Barron’s argued that AI’s recent stock‑market “wobbles” aren’t a reason to abandon the theme, pointing instead to a normal digestion phase after huge gains, rising competition and massive capex plans from the so‑called “OpenAI complex” around Nvidia and Microsoft. [16]
The net result: Nvidia remains the center of gravity for AI stocks, but investors are scrutinizing its cash flows, deal structure and ecosystem bets more closely than at any point in the current AI cycle.
China’s Moore Threads IPO: a 425% pop and a geopolitical message
The week’s most dramatic AI stock move didn’t happen in New York, but on Shanghai’s STAR Market. Moore Threads Technology, a Beijing‑based GPU designer founded in 2020 by a former Nvidia executive, surged about 425% in its trading debut, closing near RMB 600.5 versus an IPO price of RMB 114.28. The company raised roughly 8 billion yuan (about $1.1 billion), one of China’s biggest IPOs this year. [17]
Key points from this week’s coverage:
- Moore Threads originally targeted gaming GPUs but has pivoted hard into AI accelerators, in line with Beijing’s push for semiconductor self‑reliance as U.S. export controls limit Nvidia’s ability to ship its highest‑end chips into China. [18]
- The company landed on the U.S. entity list in 2023, lost access to TSMC, and now relies on domestic foundry SMIC – a technical step backwards that underlines the challenges China faces in matching cutting‑edge Western chips. [19]
- Forecasts cited in the Financial Times and other outlets suggest Moore Threads may grow sales from about $58 million in 2025 to $93 million in 2026 – tiny compared with Nvidia, but symbolically important. [20]
Analysts this week were quick to pour cold water on the “Nvidia killer” narrative: technical gaps remain large, and Moore Threads is still lossmaking. But the IPO’s explosive performance – and a pipeline of other Chinese AI‑chip IPO candidates like MetaX and Biren – underscore that AI hardware is now a multipolar race, with meaningful public‑equity action outside U.S. markets. [21]
Micron and the memory arms race powering AI data centers
Behind every blockbuster AI model sits a mountain of high‑bandwidth memory. This week, Micron Technology made one of the clearest “all‑in on AI” statements yet from a memory maker.
1. Shutting down Crucial to feed the AI beast
Micron confirmed it will exit its Crucial‑branded consumer DRAM and SSD business by the end of February 2026, reallocating capacity to fast‑growing data‑center segments tied to AI. [22]
Chief Business Officer Sumit Sadana explicitly linked the move to the “AI‑driven growth in the data center” and the need to prioritize large, strategic customers. [23]
Consumer‑facing coverage painted the decision as a gut punch for PC builders:
- The Verge noted that Crucial has been a go‑to brand for affordable RAM and SSDs and warned that budget PC builders, boutique system vendors, and even projects like Raspberry Pi could face higher component prices as Micron shifts output to more lucrative AI workloads. [24]
- The article also highlighted mega‑projects like OpenAI’s “Stargate” data center, which have lined up enormous DRAM orders with competitors SK Hynix and Samsung, contributing to a tightening global memory market. [25]
Research cited by Barron’s suggests DRAM prices could jump 18–23% just in Q4, and Samsung has reportedly paused quoting some contract prices as spot markets have effectively tripled in a year. [26]
2. A supercycle – and warnings about corrections
The pivot comes as SK Hynix, Micron’s rival and the main supplier of high‑bandwidth memory for Nvidia, has seen its own shares climb roughly 214% over the past year, with production effectively sold out for the coming year. SK Group chairman Chey Tae‑won said at a forum this week that while AI stocks may be poised for a correction after “overshooting,” he doesn’t think the AI industry is in a bubble. [27]
For AI investors, the takeaway is clear: memory makers are becoming central “picks‑and‑shovels” plays in the AI boom – but they’re also increasingly exposed to cyclicality, pricing spikes and capex risk.
C3.ai: huge government win vs deepening losses
Enterprise AI software specialist C3.ai (ticker: AI) arguably had the busiest news week in the AI software space.
1. Q2 FY 2026 results: bookings strong, profits elusive
On December 3, the company reported fiscal Q2 2026 results:
- Revenue of $75.1 million, up about 7% quarter‑over‑quarter but still below year‑earlier levels, with subscription revenue making up 93% of the total. [28]
- Total bookings jumped 49% QoQ, driven by 46 agreements, including 17 deals over $1 million and six over $5 million. [29]
- Federal, defense and aerospace bookings grew 89% year‑over‑year, now representing roughly 45% of total bookings. [30]
- GAAP net loss widened to $0.75 per share, with non‑GAAP loss at $0.25 per share, continuing a pattern of heavy operating losses. [31]
The initial market reaction was cautiously positive: one transcript provider noted that C3.ai shares rose about 4.4% to close near $14.37 after the earnings release before slipping slightly in after‑hours trading. [32]
2. HHS deal: a flagship federal reference for “agentic AI”
The bigger catalyst came a day later. On December 4, C3.ai announced that the U.S. Department of Health and Human Services (HHS) has selected the C3 Agentic AI Platform as its enterprise AI foundation across the National Institutes of Health (NIH) and the Centers for Medicare & Medicaid Services (CMS). [33]
According to the company and secondary coverage:
- C3.ai will integrate disease‑specific NIH data enclaves with Medicare and Medicaid claims and state registry data, building a unified, secure and scalable data foundation. [34]
- HHS plans to use C3’s “agentic” AI to automate complex administrative workflows while enforcing strict privacy and security requirements – a marquee use case for regulated, large‑scale government AI. [35]
- Market reports noted that the news helped lift the stock further as traders framed it as validation of C3.ai’s government pipeline. [36]
3. Analysts split: “narrative turning” vs “better left forgotten”
Analyst and blog coverage this week captured a stark divide in sentiment:
- A Simply Wall St note framed the HHS win and surging federal bookings as potential turning points in C3.ai’s growth narrative – but stressed that widening losses and guidance for lower full‑year revenue than last year keep execution risk front and center. Their internal model pegs fair value around $14.67 per share, only slightly below the current price. [37]
- A separate Simply Wall St piece on Q2 results highlighted that despite beating revenue expectations, net losses rose nearly 59% year‑on‑year, reinforcing bearish views on the path to profitability. [38]
- More bearish takes came from outlets like 24/7 Wall St (“C3.ai: The Forgotten AI Stock That’s Better Left Forgotten”) and other commentary warning investors not to buy until the company shows clearer progress toward sustained growth and profitability. [39]
In short: C3.ai’s federal traction is real, but the stock remains a battleground between growth optimists and profitability skeptics.
Beyond Nvidia: other notable AI stock stories this week
1. Alphabet, Broadcom and TSMC: the “other” AI hardware winners
A widely shared Motley Fool column, syndicated on Nasdaq, highlighted three AI stocks to buy in December that aren’t Nvidia: Alphabet, Broadcom and Taiwan Semiconductor. [40]
Key angles:
- Alphabet (Google) has long used its homegrown TPU accelerators internally and via Google Cloud. The article notes reports that Meta Platforms is in talks to buy TPUs from Alphabet, potentially opening an entirely new revenue stream akin to Nvidia’s data‑center business. [41]
- Broadcom is increasingly the behind‑the‑scenes custom chip designer for multiple hyperscalers building their own AI accelerators. Investors.com separately pointed out that Broadcom shares are up about 73% in 2025, underscoring how custom silicon has become one of the most lucrative niches in the AI stack. [42]
- TSMC, while not marketed as an “AI stock,” was framed as a core “picks and shovels” play, given that it fabricates many of the world’s leading AI chips, from Nvidia’s GPUs to custom accelerators from cloud giants. [43]
2. AppLovin: a software name the big funds suddenly love
In the mid‑cap AI space, AppLovin (APP) was the surprise star of the week. An Investors.com analysis showed:
- Top mutual funds now hold around $20.15 billion of AppLovin stock.
- Q3 revenue jumped 68% year‑over‑year to $1.4 billion, with earnings up 98% to $2.45 per share. [44]
- Wall Street expects full‑year EPS growth of 108% in 2025, followed by another 56% in 2026, helping the stock break out of a bullish chart pattern and earn a near‑perfect technical rating. [45]
What matters for the AI story is that AppLovin’s growth is increasingly tied to its AI‑driven ad‑tech engine, making it one of the few software‑centric AI names with both explosive growth and strong profitability metrics today.
3. AI ETFs: concentrated – but still outperforming
For investors who don’t want to pick individual winners, AI‑themed ETFs stayed in the news:
- Motley Fool highlighted the Roundhill Generative AI & Technology ETF (CHAT), noting that it’s up about 46% year‑to‑date as of December 2, beating major indexes while offering exposure to a basket of AI hardware and software names. [46]
- Quality‑factor and Magnificent Seven‑focused ETFs were in the spotlight too, as the WSJ “quality” piece and flows data showed performance now hinges heavily on how much AI exposure an ETF chooses to keep or cut. [47]
The headline: AI remains a performance driver for diversified ETF investors, but fund providers are quietly tweaking exposure as they weigh valuation, factor rules and bubble risk.
4. Personal‑finance sites and stock‑pickers lean into “AI lists”
Mainstream outlets kept feeding investor appetite for curated AI ideas:
- NerdWallet published “6 AI stocks we’re keeping our eye on in December 2025,” combining a list of heavily AI‑exposed companies with repeated reminders that such picks are informational, not advice – a sign that consumer‑oriented sites are trying to balance enthusiasm with compliance. [48]
- Zacks updated its “Best Artificial Intelligence (AI) Stocks to Buy Now” feature, pairing AI buzz with a separate focus piece on stocks with rising cash flows – a subtle nod to investor worries about profitless growth stories. [49]
- Subscription newsletters such as Insider Monkey leaned hard into the marketing angle, touting AI as a $250 trillion opportunity by 2040 and pitching obscure “backdoor” AI plays in energy infrastructure and robotics as the real winners behind the chipmakers. [50]
Put together, this week’s content shows that AI remains the dominant narrative in retail investor marketing, even as professionals grow more selective.
Sentiment watch: from “AI bubble” talk to a “show‑me” market
Several pieces this week captured how investor psychology around AI stocks is shifting:
- Reuters and others noted multiple high‑flying AI names have seen sharp pullbacks in recent weeks, as investors question when today’s massive AI investments will translate into stable earnings and free cash flow. [51]
- An Investors.com piece framed the current environment as a “show‑me moment” for AI stocks, pointing to Apple’s AI leadership shake‑up and highlighting Broadcom’s performance as an example of investors rewarding tangible AI revenue rather than vague promises. [52]
- Meanwhile, a Reuters interview with SK Group’s chairman and a Barron’s column both argued that stock prices may correct without the underlying AI industry being in a bubble, likening recent moves to a normal adjustment after an extreme run‑up. [53]
And in a sign that the market may be entering a healthier phase, November and early December have seen:
- Breadth improve – more sectors and smaller names participating in gains, not just the AI mega‑caps. [54]
- Investors rotating toward AI “picks and shovels” – memory, foundries, networking, energy – as much as marquee model builders and cloud providers. [55]
In short, the AI theme is maturing from pure hype into a more nuanced stock‑picking environment.
What to watch next for AI stocks
Looking beyond December 7, here are the key storylines for AI‑stock investors and observers:
- Federal Reserve decision (next week): Growth stocks, including AI leaders, remain sensitive to rate‑cut expectations. A softer‑than‑expected tone could extend this week’s rebound; a surprise hawkish stance could re‑ignite volatility. [56]
- Follow‑through on Nvidia’s deal spree: Markets will watch for concrete milestones on the Synopsys partnership and further clarity on the OpenAI framework. Any sign of regulatory pushback or deal downsizing could move the entire AI complex. [57]
- AI memory and GPU supply: With Micron exiting consumer DRAM, SK Hynix sold out and DRAM prices surging, any new capacity announcements – or signs of double‑ordering – could swing both memory makers and GPU names. [58]
- C3.ai’s execution on federal contracts: The HHS win gives C3.ai a flagship case study. Investors will be watching whether bookings convert into revenue and whether losses start narrowing over the next few quarters. [59]
- Global competition: Moore Threads’ IPO success will likely embolden other Chinese AI‑chip IPOs, raising longer‑term questions about how quickly domestic challengers can close the gap with Nvidia under export controls. [60]
Final note
This recap is for informational purposes only and is not investment advice. AI remains one of the most powerful – and most volatile – themes in global markets. Whether you’re tracking Nvidia, newer names like Moore Threads and AppLovin, or diversified AI ETFs, the story of early December 2025 is clear:
The easy, index‑level “AI trade” is giving way to a harder, more selective market where fundamentals, cash flows and deal quality matter as much as the story.
References
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