Palantir Nvidia See Shorts as OpenAI Drives Oracle Debt

Recent market activity shows a complex picture for investors, with both record highs and significant concerns, particularly within the artificial intelligence sector. The Dow Jones Industrial Average and S&P 500 recently surged to new records, fueled by robust economic data and optimistic corporate profitability outlooks. However, this rally has been punctuated by volatility, including a notable tech stock exodus on Wednesday, driven by investor shifts away from growth stocks and worries about potential overspending in AI. Concerns about an AI bubble are growing, with Liz Ann Sonders, Schwab's Chief Investment Strategist, drawing parallels to the dot-com era. She highlights negative free cash flow growth among the "Mag 7" and notes Michael Burry's short positions in companies like Palantir and Nvidia. Oracle's recent earnings report intensified these worries, revealing higher-than-expected capital expenditures for fiscal 2026 and lower margins in its AI cloud business. Johnny Rice of The Motley Fool specifically warns about Oracle's reliance on significant debt to fund its AI growth, primarily to serve a single customer, OpenAI, suggesting high leverage could be problematic if AI enthusiasm wanes. Broadcom also faced a stock decline despite its fast-growing custom AI chip business, as it anticipates a 100-basis-point shrinkage in gross margin. Despite these cautionary signals, optimism for AI's long-term potential remains strong. Goldman Sachs strategist Ben Snider forecasts a 12% jump in S&P 500 companies' earnings-per-share next year, driven by wider AI adoption. Experts like Cathie Wood of Ark Invest identify promising investment areas such as embodied AI in transportation, predicting an $8 trillion to $10 trillion autonomous taxi market, and healthcare technology, naming 10x Genomics and Tempus AI. Hong Kong's exports are also projected to grow 8% to 9% in 2026, largely due to robust demand for AI-related electronics. For investors seeking broader market exposure beyond core AI plays, Josh Brown of Ritholtz Wealth Management recommends the Invesco S&P 500 Equal Weight ETF (RSP). Meanwhile, specific AI innovations continue to attract significant funding. Prime Security, for instance, recently secured $20 million in a Series A funding round led by Scale Venture Partners, bringing its total funding to $26 million. The company leverages autonomous AI agents, including its Agentic Security Architect, to streamline security design reviews, identifying flaws at the planning stage and drastically reducing manual effort and risk resolution time for clients like PayPal and Qualtrics.

Key Takeaways

• Liz Ann Sonders of Schwab compares the current AI boom to the dot-com bubble, noting negative free cash flow growth for the "Mag 7" and Michael Burry's short positions in Palantir and Nvidia.
• Oracle's shares slumped after reporting higher-than-expected capital expenditures for fiscal 2026 and lower margins for its AI cloud business, raising concerns about an AI bubble and debt-financed growth.
• Oracle is using significant debt to fund its AI growth, primarily to serve OpenAI, which could pose risks if AI market enthusiasm decreases.
• Broadcom's stock fell due to an expected 100-basis-point gross margin shrinkage, despite its custom AI chip business growing quickly.
• Goldman Sachs forecasts S&P 500 earnings-per-share to jump 12% next year, driven by wider AI adoption and strong economic conditions.
• Cathie Wood sees significant AI investment opportunities in embodied AI for transportation (predicting an $8 trillion to $10 trillion autonomous taxi market) and healthcare technology, including companies like 10x Genomics and Tempus AI.
• Josh Brown recommends the Invesco S&P 500 Equal Weight ETF (RSP) for investors looking to profit from the broader market beyond specific AI stocks.
• Hong Kong's exports are projected to grow 8% to 9% in 2026, primarily driven by strong demand for AI-related electronics.
• Prime Security raised $20 million in Series A funding, led by Scale Venture Partners, bringing its total funding to $26 million.
• Prime Security utilizes autonomous AI agents, such as its Agentic Security Architect, to conduct security design reviews, reducing manual effort by over 60% and speeding up risk resolution by up to 30 times for clients like PayPal and Qualtrics.

Schwab Expert Liz Ann Sonders Discusses AI Bubble and Mag 7

Liz Ann Sonders, Schwab's Chief Investment Strategist, spoke at the Schwab IMPACT 2025 Conference in November. She discussed the "Mag 7" investing myth and compared the current AI boom to the dot-com bubble. Sonders noted that while the AI boom is largely financed by cash flow from large companies, free cash flow growth for the Mag 7 has recently turned negative. She also mentioned Michael Burry's short positions in Palantir and Nvidia, and concerns about Oracle's margin compression and increased debt-financed deals.

Experts Reveal Top AI Investment Opportunities for 2026

Bloomberg gathered insights from four experts, including Cathie Wood of Ark Invest, on where to invest in AI for 2026. They see opportunities in areas like identifying gene mutations, developing therapeutic solutions, and making robotaxis safer. Experts also suggest investing in copper as a hedge against inflation from data center spending. Cathie Wood highlighted embodied AI in transportation, predicting the autonomous taxi market could reach $8 trillion to $10 trillion in 5 to 10 years. She also pointed to healthcare technology, naming 10x Genomics and Tempus AI as promising companies.

Dow and S&P 500 Reach Record Highs on Broad Market Rally

On Thursday, the Dow Jones Industrial Average surged over 650 points to a new record high. The S&P 500 also reached a record, climbing above 6,900 for the first time. This broad market rally was fueled by strong economic data and positive corporate profitability outlooks. However, technology stocks faced some pressure after Oracle's earnings report raised concerns about potential overspending in the artificial intelligence sector.

Tech Exodus Causes Major Stock Market Decline on Wednesday

US stocks tumbled on Wednesday as investors moved away from technology and growth stocks. The Dow Jones Industrial Average fell over 500 points, and both the S&P 500 and Nasdaq Composite saw significant losses. Broadcom's shares dropped sharply after a weaker forecast, adding to worries about the AI boom's future. Rising Treasury yields and mixed economic data also contributed to investor uncertainty, with the VIX volatility index increasing.

Josh Brown Recommends Equal Weight ETF Beyond AI Stocks

Josh Brown, CEO of Ritholtz Wealth Management, suggested on CNBC that investors can profit from the broader market beyond AI stocks. He recommends the Invesco S & P 500 Equal Weight ETF, or RSP, as a simple way to invest in the overall stock market. While the tech-heavy Nasdaq Composite retreated and Oracle, Nvidia, and Micron Technology shares fell, the RSP was up 0.8%. This ETF gives equal weight to companies like Nvidia and Home Depot, showing that many other investment opportunities exist outside of the big AI trade.

Hong Kong Exports to Grow 8-9 Percent in 2026 Driven by AI

Hong Kong's exports are expected to grow by 8% to 9% in 2026, according to the Hong Kong Trade Development Council. This growth is mainly due to strong demand for AI-related electronics, which make up over 70% of Hong Kong's total export value. A trade agreement between the Chinese Mainland and the US in November has reduced concerns about US tariffs for Hong Kong exporters. The HKTDC's Export Confidence Index shows positive outlooks, with most exporters focusing expansion plans on the Chinese Mainland and other Asian markets.

Goldman Sachs Predicts 12 Percent Earnings Jump for US Stocks

Goldman Sachs strategist Ben Snider forecasts that US stocks will reach new records next year. He expects S&P 500 companies' earnings-per-share to jump 12% next year and 10% in 2027. This growth will be driven by wider AI adoption and strong economic conditions. Snider notes that large companies are making more progress with AI, and the tech sector, especially the Magnificent Seven, will be a key driver of earnings. Other firms like Morgan Stanley and Deutsche Bank also predict significant stock market gains for 2026.

Oracle's AI Spending Concerns Hit Tech Stocks Yet Optimism Remains

Oracle's shares slumped 16.5% on Thursday after the company reported higher-than-expected capital expenditures for fiscal 2026. This news, along with Broadcom's margin warnings, reignited concerns about an AI bubble and stretched valuations in AI-related stocks. Despite these worries, many investors remain optimistic about the AI trade. Experts like Chuck Carlson believe Oracle's issues are unique to its strategy of becoming a hyperscaler without sufficient cash flow. The S&P 500 still managed to reach a record high, and some fund managers believe fears of a bubble are overblown.

Broadcom Stock Falls Despite Fast Growing AI Business

Broadcom's stock is falling even though its custom AI chip business is growing quickly. Investors are concerned because the company expects its gross margin to shrink by 100 basis points this quarter. This comes as Wall Street closely watches tech earnings due to worries about high stock valuations and too much spending on AI infrastructure. Oracle also previously reported lower margins for its AI cloud business compared to its traditional software. Despite these margin concerns, Bank of America analysts still raised Broadcom's earnings estimates for 2026 and 2027, expecting faster revenue growth to offset narrower margins.

Prime Security Raises 20 Million to Scale Security Reviews with AI

Prime Security raised $20 million in a Series A funding round led by Scale Venture Partners, bringing its total funding to $26 million. The company addresses the cybersecurity professional shortage by using autonomous AI agents to conduct security design reviews. Its flagship product, the Agentic Security Architect, identifies design flaws at the planning stage, covering 100% of planned work. This approach reduces manual effort by over 60% and speeds up risk resolution by up to 30 times. Prime Security works with major companies like PayPal and Qualtrics, helping them fix design flaws in minutes instead of days.

Avoid CoreWeave and Oracle as AI Hype Could Fade

Johnny Rice from The Motley Fool warns investors about CoreWeave and Oracle, suggesting they are risky if the AI boom slows. CoreWeave, a "neocloud" operator, is rapidly growing but relies heavily on over $10 billion in high-interest debt. Oracle is also using significant debt to fund its AI growth, primarily to serve a single customer, OpenAI. Both companies are making large, expensive bets on continued AI demand, and their high leverage could become a major problem if the market's enthusiasm for AI decreases.

Sources

• Schwab’s Sonders on the Biggest Mag 7 Investing Myth and AI
• Where to Invest in AI in 2026
• Stock market today: Dow jumps 650 points to post record, S&P 500 climbs above 6,900 for first time
• Stock market today: Dow, S&P 500, Nasdaq sink amid tech exodus on Wall Street
• Josh Brown says this ETF is a good way to play the broadening out of the market away from the AI trade
• 2026 Hong Kong Export Growth Of 8-9% Forecast, Sustained AI Product Demand Lays Solid Foundation For Future Expansion
• Goldman’s Snider Sees AI, Strong Macro Driving 12% Earnings Jump
• Oracle's stumble hits AI trade, but many remain bullish
• Broadcom's AI Business Is Growing Fast. Here's Why the Stock Is Tanking Anyway.
• Prime Security Raises $20M to Scale Design-Stage Security Reviews with AI Agents
• The Biggest Risk to Your Portfolio Isn't Missing AI -- It's Holding These 2 Stocks When the Hype Fades