Technology stocks head into the Christmas-shortened week with a familiar tug-of-war: the market wants a year-end “Santa Claus rally,” but investors are increasingly demanding proof that the AI boom’s massive infrastructure bills will translate into durable profits.
As of Sunday, December 21, 2025, the backdrop is still supportive—U.S. equities have logged a strong 2025, and the S&P 500 remains on track for a third straight year of gains of at least 10%. But December has been choppier than the seasonal script, and the AI-heavy tech complex has been at the center of the turbulence. [1]
For the week ahead (Dec. 22–26), three forces matter most for technology stocks and the Nasdaq:
- Holiday-thin liquidity that can exaggerate intraday moves,
- A pile-up of delayed U.S. economic data (including GDP) arriving into that thin tape, and
- Ongoing scrutiny of AI capex, data centers, and funding, especially after a string of headlines that rattled the AI trade in mid-December. [2]
Below is the week-ahead playbook for tech stocks—what just changed, what investors are looking for next, and which themes could define the next set of winners and laggards.
The calendar that matters: a shortened week and a dense data dump
The week is holiday-shortened, with U.S. stock markets closed Thursday (Dec. 25) and closing early Wednesday (Dec. 24) at 1 p.m. ET (bonds close at 2 p.m. ET). That matters because liquidity tends to fade into holidays—making tech, one of the market’s most crowded and rate-sensitive groups, prone to sharper swings. [3]
At the same time, investors are set to digest several economic reports that were delayed by the federal government shutdown, led by an initial third-quarter GDP release, plus durable goods orders and industrial production/capacity utilization (including releases covering October and November), followed by consumer confidence and weekly jobless claims. [4]
Why tech investors should care:
- Stronger growth data can push yields higher, pressuring “long-duration” tech valuations.
- Softer data can revive rate-cut optimism, often helping mega-cap and high-multiple tech—unless the weakness triggers risk-off selling.
- Shutdown-related quirks and late data collection can muddy the signal and increase headline risk. [5]
Two narratives are colliding in tech: “Santa rally” optimism vs. “show me the AI ROI”
Seasonality is trying to reassert itself. The “Santa Claus rally” is typically measured as the last five trading days of the year plus the first two trading days of January, and Reuters notes that, historically (since 1950), that window has averaged a 1.3% gain for the S&P 500. For 2025, Reuters says that window begins Wednesday (Dec. 24) and runs through Jan. 5. [6]
But the bigger driver for technology stocks right now is AI spending scrutiny—not whether AI is transformative, but whether the scale and financing of data centers, chips, and cloud infrastructure can deliver returns on a timetable that justifies valuations.
Reuters flags two themes behind recent swings:
- More intense scrutiny of massive corporate spending for AI buildout, and
- Shifting expectations for the Fed’s rate path in 2026. [7]
That is the key setup for the week ahead: tech stocks can still rally into year-end, but the market is increasingly selective about which AI-linked names get rewarded—and which get punished for capex-heavy plans, margin pressure, or funding uncertainty.
Theme 1: AI capex and data centers—Oracle’s “Stargate” spotlight is a broader warning sign
The market’s latest AI-capex stress test has been Oracle—not because demand vanished, but because investors are getting more sensitive to financing structure, timelines, and payback.
Reuters reported that Oracle said talks for an equity deal supporting its Michigan data center project (more than 1 gigawatt) remain on schedule without Blue Owl Capital, after reporting suggested negotiations stalled with the key partner. Reuters also notes the project is part of the “Stargate” AI infrastructure push tied to Oracle and OpenAI, with construction previously slated to begin in early 2026. [8]
The broader takeaway for the AI trade is not “AI is over,” but “AI infrastructure is expensive—and markets now care about the capital stack.”
In a separate Reuters analysis, investor concerns flared after back-to-back troubling updates from Oracle and Broadcom, rekindling debate about frothy valuations and whether the market is drifting into an “AI bubble” dynamic. Oracle, Reuters reported, warned that fiscal 2026 capex expectations were $15 billion higher than what it estimated in September, while Broadcom flagged profitability pressure tied to sales mix (including lower-margin custom AI processors). [9]
What to watch this week:
- Any fresh disclosures (or credible reporting) about AI data center timelines and financing.
- Whether investors keep treating capex increases as bullish (“growth”) or bearish (“cash burn and debt risk”).
- Spillovers into adjacent infrastructure names—servers, networking, power, and cooling—especially during thin holiday trading.
Theme 2: Semiconductors—Micron’s forecast is a bullish counterweight to “AI jitters”
If Oracle is the cautionary tale on AI financing, Micron’s latest outlook is the reminder that parts of the AI supply chain remain tight—and pricing power is real.
Reuters reported that Micron forecast second-quarter adjusted profit far above Wall Street expectations, citing strong memory pricing amid tight supply and booming AI data center demand. Reuters also highlighted Micron’s position as one of only three major suppliers of high-bandwidth memory (HBM)—a crucial component for training and deploying generative AI—and noted Micron increased its 2026 capital expenditure plan to $20 billion (from an earlier $18 billion estimate). [10]
For technology-stock investors, Micron’s readthrough matters beyond a single ticker:
- HBM and advanced memory demand is a key bottleneck in the AI stack.
- Stronger memory pricing can lift sentiment across semis, but it can also raise costs for hyperscalers and AI model builders—feeding back into the “who earns the AI profits?” debate.
- Capex increases in semis can be bullish when they signal demand—until the market fears oversupply.
Week-ahead implication: Semiconductor stocks may trade more like a “barbell” than a single theme—names leveraged to confirmed demand (HBM, leading-edge compute, select equipment) may stay supported, while companies tied to more speculative infrastructure buildouts may remain volatile. [11]
Theme 3: AI funding jitters—why the market suddenly cares about “circular” spending
Mid-December trading showed how quickly sentiment can shift from “AI leaders can do no wrong” to “where is the return on investment?”
Reuters reported that U.S. indexes fell sharply on Dec. 17 as worries about the AI trade dragged technology shares, citing concerns about AI spending, debt, and funding questions. Reuters also reported that Amazon was in talks to invest about $10 billion in OpenAI, underscoring how deeply Big Tech is intertwined with the AI ecosystem’s capital needs. [12]
In practice, this is what “AI funding jitters” looks like for tech stocks:
- Investors start questioning whether AI spending is self-referential (big players funding each other’s capex) rather than generating near-term cash flows.
- Stocks that rallied on “AI narrative” alone face sharper downdrafts on any uncertainty around timelines, contracts, or financing.
- The market shifts from “buy the theme” to “buy the cash-flow proof.”
That mindset is likely to persist into the week ahead, especially with year-end rebalancing and thinner liquidity. [13]
Theme 4: The Fed and rates—tech’s quiet driver heading into 2026
For mega-cap and high-multiple technology stocks, rates remain a crucial second lever. This week’s data releases—and Fed commentary—matter because they shape whether the market expects more easing, less easing, or a prolonged pause.
On Sunday, Reuters reported that Cleveland Fed President Beth Hammack signaled there may be no need to change rates for months, with the fed funds range currently 3.5% to 3.75%, and said waiting until spring could allow better assessment of inflation dynamics (including the effects of tariffs working through the supply chain). [14]
Meanwhile, Reuters’ week-ahead preview emphasizes that investors are parsing the path ahead for the Fed, especially because some data may be distorted by shutdown-related delays. [15]
Why this is a tech story:
- A “higher for longer” narrative can compress valuation multiples, particularly for unprofitable or heavily reinvesting tech companies.
- Rate-cut optimism often boosts long-duration tech—but only if growth fears don’t dominate.
This week’s GDP, durable goods, and confidence numbers may do more to move tech stocks than any single company headline—precisely because they feed directly into the rate narrative. [16]
Theme 5: Cybersecurity and enterprise software—mega partnerships and M&A are reshaping “AI security”
While AI chips and data centers grab the spotlight, the enterprise software layer is delivering its own set of catalysts—especially in cybersecurity, where AI is accelerating both attacks and defenses.
Google Cloud + Palo Alto Networks: “approaching $10 billion”
Reuters reported that Google Cloud and Palo Alto Networks expanded their partnership in what a source described as Google Cloud’s largest security services deal, with a value approaching $10 billion over several years. Reuters said the expanded partnership includes migrating Palo Alto offerings to Google Cloud and building new AI-involved services—an unusually explicit sign of how hyperscalers and cybersecurity leaders are locking in long-term demand. [17]
ServiceNow and the Armis talks: the market punishes expensive growth
Investopedia reported that ServiceNow shares fell more than 11% on Dec. 15 after a report said it was in advanced talks to acquire IoT cybersecurity startup Armis for up to $7 billion, potentially its largest acquisition ever—highlighting the market’s sensitivity to deal size, price, and growth durability. [18]
Clearwater Analytics: AI capabilities as a buyout thesis
On Sunday, Reuters reported that Permira and Warburg Pincus reached a deal to acquire Clearwater Analytics for about $8.4 billion, with a price of $24.55 per share and minority investors including Francisco Partners and Temasek. Reuters said Clearwater’s ability to integrate AI-driven tools on its single cloud platform was viewed as a key attraction in the take-private thesis. [19]
Week-ahead implication: Enterprise software and cybersecurity could be an underappreciated source of tech-stock leadership into year-end—particularly if investors rotate from capex-heavy AI infrastructure toward “AI monetization” stories with clearer contract structures. [20]
Theme 6: Platform regulation—Apple’s Japan shift shows the App Store model keeps evolving
Regulatory pressure remains a slow-burn catalyst for platform tech.
Reuters reported Apple opened iPhones in Japan to alternative app stores to comply with new competition-focused laws. Reuters said Apple’s new rules allow Japanese developers to launch their own marketplaces and pay Apple as little as 5% of sales in some cases, while also enabling certain outside-payment links with commissions still attached. [21]
For Apple investors—and the broader “platform tolls” theme—Japan is another reminder that:
- App store economics are being pressured jurisdiction-by-jurisdiction, and
- The market may increasingly discount “policy certainty” in services revenue models.
This likely won’t dominate Christmas-week trading, but it contributes to the longer-term narrative investors carry into 2026. [22]
Theme 7: Robotaxis and autonomy—Tesla vs. Waymo headlines can move sentiment fast
Autonomy remains one of the most sentiment-driven segments of technology and mobility stocks—capable of moving shares on timelines, permits, and expansion headlines.
- Waymo: Reuters reported Alphabet’s Waymo is in talks to raise money at a valuation of at least $100 billion, with the financing potentially exceeding $10 billion, and noted Waymo has more than 2,500 vehicles and is the only operator in the U.S. offering paid robotaxi services with no safety driver or in-vehicle attendant (per Reuters). [23]
- Tesla: Business Insider reported Tesla aims to roll out robotaxi service in California and Arizona as early as 2026, following an initial launch in Austin. [24]
Why it matters for the week ahead: Even in a shortened week, a single credible update—funding, approvals, safety incidents, or expansion milestones—can swing these names sharply, especially in thin holiday conditions. [25]
The week-ahead checklist for technology stocks
Monday (Dec. 22): Positioning and liquidity are the story
Expect lower volume and “marking the book” behavior into the holiday, with outsized moves possible on modest headlines. Watch for rotation: Reuters notes that in December, some non-tech areas have helped pick up slack as money moved away from tech. [26]
Tuesday (Dec. 23): GDP and “growth vs. rates” repricing risk
Investopedia highlights an initial Q3 GDP release and delayed durable goods and industrial production data. Tech’s reaction will likely be through rates and recession probabilities, not just the prints themselves. [27]
Wednesday (Dec. 24): Jobless claims + early close
Jobless claims land into an early close. The combination of labor-market headlines and thin liquidity can be combustible for the Nasdaq—especially if the market tries to front-run the “Santa rally” window Reuters flagged as starting Wednesday. [28]
Thursday (Dec. 25): Markets closed
No trading, but headlines still happen. Any major tech news can turn into a gap move on Friday.
Friday (Dec. 26): Re-open, thin tape, and year-end narrative control
This is when exaggerated moves can occur—especially if investors decide to lock in profits after a strong year or chase performance into year-end. Reuters notes profit-taking is a plausible force after 2025’s solid run. [29]
Base case, bull case, bear case for tech stocks this week
Base case (most likely):
Range-bound or modestly higher tech trading, with leadership rotating between mega-cap “quality AI” and select semis/cybersecurity names—especially if GDP/confidence data doesn’t shock rates. [30]
Bull case:
Data supports the “soft landing + easier policy bias” narrative, yields cooperate, and investors lean into the historical Santa window—lifting the Nasdaq and Big Tech into year-end despite lingering capex questions. [31]
Bear case:
A renewed wave of “AI funding jitters” (data centers, capex, financing) hits into holiday-thin liquidity, pushing the market back toward selling crowded AI trades and forcing another rotation away from megacap tech. [32]
Bottom line: This is a “quality and cash-flow” holiday week for tech
The coming week is short, but not necessarily quiet. The most important signal for technology stocks isn’t whether AI demand exists—it’s how markets price the cost of building AI (chips, power, cloud, data centers) versus the speed of monetizing it (enterprise software, AI security, usage-based cloud revenue).
With GDP and other delayed macro prints hitting during holiday-thin trading, and with investors increasingly sensitive to AI capex math, the week ahead sets up as a classic year-end tech test: do buyers keep paying for the future, or do they demand near-term proof? [33]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.investopedia.com, 4. www.investopedia.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.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. www.reuters.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.investopedia.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.businessinsider.com, 25. www.reuters.com, 26. www.reuters.com, 27. www.investopedia.com, 28. www.investopedia.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.reuters.com
