The artificial intelligence sector continues to drive significant shifts across the tech industry and financial markets, with major players like Alphabet, Microsoft, and Palantir seeing substantial gains. Alphabet's stock has surged 60.5% this year, largely attributed to its new Gemini 3 AI model, which Morningstar analyst Malik Ahmed Khan believes outperforms OpenAI's ChatGPT. Gemini 3's ability to generate video, images, and text gives Alphabet a strong competitive edge, contributing to robust third-quarter earnings and easing concerns about its Google Search business, which Morningstar values highly. However, risks such as potential slowdowns in Search and Cloud growth, alongside high AI spending, remain. Microsoft's AI strategy is also yielding impressive results, attracting significant investor confidence. Billionaire Chase Coleman of Tiger Global Management has invested 10.5% of his portfolio in Microsoft stock. The company's Azure cloud computing business grew 40% in the first quarter of fiscal year 2026, while its Copilot product boosted Microsoft 365 commercial sales by 17% and consumer sales by 26%. Analysts project Microsoft's revenue to grow 16% in fiscal year 2026 and 15% in fiscal year 2027, reflecting strong expectations for its AI integration. Palantir Technologies Inc. has also experienced a notable year, with its stock rising approximately 140% in 2025. Despite a recent 0.4% dip to $180.18 on December 31, 2025, due to Federal Reserve rate concerns, Wedbush Securities named Palantir a top AI pick for 2026, setting a $230 price target. The company, known for its data analytics and Artificial Intelligence Platform, anticipates strong fourth-quarter revenue between $1.327 billion and $1.331 billion. Meanwhile, Alibaba's cloud intelligence business saw a 34% revenue increase last quarter, with AI-related products showing triple-digit growth for nine consecutive quarters, and the company is investing heavily in AI chips. The escalating demand for AI infrastructure is reshaping investment priorities, with SoftBank planning to acquire DigitalBridge for $4 billion to secure power and space for its large-scale AI data centers. This move, following Alphabet's $4.75 billion purchase of Intersect, underscores the critical need for electricity and land to support AI growth. This demand also benefits energy companies like NextEra Energy, which has increased its dividend by 10% annually for three years, and Vistra. Vertiv Holdings, a provider of power and cooling systems for data centers, has seen a significant surge in demand and raised its dividend in 2024 and 2025. Amidst this AI boom, financial institutions like the Bank of England, IMF, and OECD express concerns about a potential stock market crash akin to the dot-com bubble of 2000. The 10 largest US companies, largely AI-driven, now constitute 39% of the American market's total value, posing risks to investors and UK pensions, which hold 45% of their assets in US shares. In other AI-related news, Reddit's shares dipped after its CTO sold 14,000 shares for $3.27 million, though Needham analysts maintain a 'Buy' rating, recognizing Reddit's value as a source for AI-generated answers. Additionally, SentinelOne, an AI-powered cybersecurity firm, reported annual recurring revenue exceeding $1 billion, reaching $1,055.3 million, despite Morgan Stanley's cautious outlook.
Key Takeaways
- Alphabet's stock surged 60.5% this year, driven by its Gemini 3 AI model, which Morningstar analyst Malik Ahmed Khan considers superior to OpenAI's ChatGPT.
- Billionaire investor Chase Coleman allocated 10.5% of Tiger Global Management's portfolio to Microsoft, confident in its AI strategy, including Azure's 40% growth and Copilot's impact on Microsoft 365 sales.
- Palantir Technologies Inc. stock rose approximately 140% in 2025, with Wedbush Securities setting a $230 price target for 2026, despite a recent dip due to Federal Reserve rate concerns.
- SoftBank plans to acquire DigitalBridge for $4 billion to secure power and land for its global AI data center infrastructure, mirroring Alphabet's $4.75 billion Intersect purchase.
- Alibaba's cloud intelligence business saw a 34% revenue rise, with AI-related products experiencing triple-digit growth for nine consecutive quarters, and the company is investing in AI chips.
- The AI boom is increasing demand for energy, benefiting companies like NextEra Energy (10% dividend increase for three years), Vistra, and Vertiv Holdings, which makes data center power and cooling systems.
- Experts from the Bank of England, IMF, and OECD warn that the AI investment surge could lead to a stock market crash similar to the dot-com bubble, with the 10 largest US companies making up 39% of the market.
- Reddit's shares dipped after its CTO sold 14,000 shares for $3.27 million, but Needham analysts maintain a "Buy" rating, recognizing Reddit's value as a source for AI-generated answers.
- SentinelOne, an AI-powered cybersecurity company, reported annual recurring revenue exceeding $1 billion ($1,055.3 million) and total revenue of $258.9 million in Q3 FY26, despite Morgan Stanley's caution.
- Google Search remains a significant portion of Alphabet's business value, according to Morningstar, highlighting its continued importance amidst AI advancements.
Alphabet Stock Soars on AI Success
Alphabet stock has seen a big jump, rising 48% since September 1 and 60.5% this year. This growth is mainly due to its new AI model, Gemini 3, which Morningstar analyst Malik Ahmed Khan says is better than OpenAI's ChatGPT. Gemini 3 can create video, images, and text, giving Alphabet a strong edge. The company's strong third-quarter earnings also helped calm fears about its Google Search business. However, risks remain, such as potential slowdowns in Search and Cloud growth, and high spending on AI. Morningstar values the stock at $340 per share, noting that Google Search makes up a large part of its business value.
Alphabet Stock Soars on AI Success
Alphabet stock has seen a big jump, rising 48% since September 1 and 60.5% this year. This growth is mainly due to its new AI model, Gemini 3, which Morningstar analyst Malik Ahmed Khan says is better than OpenAI's ChatGPT. Gemini 3 can create video, images, and text, giving Alphabet a strong edge. The company's strong third-quarter earnings also helped calm fears about its Google Search business. However, risks remain, such as potential slowdowns in Search and Cloud growth, and high spending on AI. Morningstar values the stock at $340 per share, noting that Google Search makes up a large part of its business value.
Billionaire Coleman Invests Heavily in Microsoft AI
Billionaire investor Chase Coleman, who runs Tiger Global Management, has put 10.5% of his money into Microsoft stock. Microsoft's AI strategy is working well, especially with its Azure cloud computing business, which grew 40% in the first quarter of fiscal year 2026. The company's Copilot product, which adds AI to Office software, also boosted Microsoft 365 sales by 17% for commercial and 26% for consumer segments. While some question Copilot's value, analysts expect Microsoft's revenue to grow 16% in fiscal year 2026 and 15% in fiscal year 2027. Despite its high stock price, Coleman's long-term investment suggests confidence in Microsoft's future AI success.
AI Boom Raises Dot Com Bubble Fears
Experts are worried that the current excitement around artificial intelligence could lead to a stock market crash, much like the dot-com bubble of 2000. The Bank of England, IMF, and OECD have all warned about a possible sharp drop in the value of major US tech companies. UK pensions are especially at risk, with 45% of their money invested in US shares, many of which are tied to AI. The 10 largest US companies, mostly driven by AI, now make up 39% of the American market's total value. If the AI investment case weakens, it could cause big losses for investors and retirees.
Palantir Stock Dips Amid Fed Rate Concerns
Palantir Technologies Inc. stock dropped 0.4% to $180.18 on December 31, 2025, as investors reacted to new Federal Reserve meeting minutes. The minutes showed caution about future interest rate cuts in 2026, which can affect high-growth tech stocks. Despite this dip, Palantir's stock has risen about 140% in 2025, and Wedbush Securities named it a top AI pick for 2026 with a $230 price target. The Denver-based company sells software for data analytics and its Artificial Intelligence Platform to governments and businesses. Palantir expects strong fourth-quarter revenue between $1.327 billion and $1.331 billion.
SoftBank Buys DigitalBridge for AI Data Center Power
SoftBank plans to buy DigitalBridge for $4 billion to secure power and space for its large-scale AI data centers. This move will help SoftBank speed up its global AI infrastructure plans by giving it access to data center projects, funding, and land with power. This follows Alphabet's $4.75 billion purchase of Intersect, showing that AI growth now depends heavily on getting enough electricity and land, not just computer chips. DigitalBridge manages over $100 billion in digital infrastructure and has a "power bank" of about 22 gigawatts. Building new AI facilities is often slowed down by getting power and permits, making this acquisition key for SoftBank's AI ambitions.
Reddit Stock Falls After CTO Sells Shares
Reddit Inc. shares dropped 0.55% to $233.36 on December 30, 2025, after its Chief Technology Officer, Christopher Slowe, sold 14,000 shares for about $3.27 million. This sale was part of a pre-planned trading schedule. Despite the stock dip, Needham analysts kept a "Buy" rating and a $300 price target, highlighting Reddit's strong role as a source for AI-generated answers. Reddit's communities are often cited by large language models, making it a key information source. Investors are watching to see if Reddit can turn this AI visibility into more advertising and data-licensing revenue.
Alibaba Stock Could Soar with AI Growth
Alibaba, known for its e-commerce, is now seen as a strong artificial intelligence stock that could grow significantly. Its cloud intelligence business saw a 34% rise in revenue last quarter, with AI-related products showing triple-digit growth for nine quarters in a row. Alibaba is also investing heavily in AI chips to compete with companies like Nvidia. The stock has already climbed 75% in 2025 and is considered a bargain, trading at less than 16 times next year's expected profit. This makes Alibaba a promising investment for those looking for AI growth.
Dividend Stocks Benefit from AI Energy Demand
The growing demand for artificial intelligence is creating a big opportunity for certain dividend-paying energy stocks. NextEra Energy, a large utility company, has a new contract in Florida to meet the energy needs of new technologies like AI, and it has increased its dividend by 10% each of the last three years. Vistra, which sells electricity on the open market, also benefits from rising power demand. Additionally, Vertiv Holdings, a company that makes power and cooling systems for data centers, has seen a huge increase in demand due to AI and has significantly raised its dividend in 2024 and 2025.
Morgan Stanley Cautious on SentinelOne Stock
Morgan Stanley remains cautious about SentinelOne stock, even though the cybersecurity company reported strong financial results for the third quarter of fiscal year 2026. SentinelOne's annual recurring revenue passed $1 billion, reaching $1,055.3 million, a 23% increase from last year. Total revenue also grew 23% to $258.9 million. However, concerns about a change in the Chief Financial Officer and longer sales times for big businesses are making Morgan Stanley hesitant. SentinelOne offers AI-powered cybersecurity to protect against cyber threats.
Sources
- Alphabet Stock Has Surged on AI Momentum. Is It Still a Buy?
- Alphabet Stock Has Surged on AI Momentum. Is It Still a Buy?
- Billionaire Chase Coleman Has More Than 10% of His Holdings in 1 AI Stock Well Positioned for 2026
- The danger beneath the AI boom powering your pension
- Palantir stock today: PLTR edges lower as Fed minutes and year-end trading test the AI rally
- SoftBank stakes $4B on securing AI data center power and capacity —DigitalBridge purchase indicative of AI industry's increasing investments in energy supply
- Reddit stock (RDDT) slips after CTO share-sale filing; traders weigh AI-citation thesis
- This Artificial Intelligence Stock Is an Absolute Bargain Right Now, and It Could Skyrocket in 2026
- These Dividend Stocks Could Profit From the AI Power Surge
- Morgan Stanley Cautious on SentinelOne (S) Despite AI Growth, Revenue Beat Due to CFO Transition, Enterprise Sales Cycles
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