🧠 The AI Gold Rush Gets Selective

Happy Wednesday!

AI-focused stocks swung wildly in the past 72 hours as macro tailwinds met valuation jitters. Hopes for a Fed rate cut in December lifted overall market sentiment, but even big AI headlines produced mixed outcomes – Alphabet surged on a potential AI chip coup while Nvidia’s weakness held back the Nasdaq

Let’s break down what’s happening, why it matters, and how you turn all this noise into serious returns.

Last Time the Market Was This Expensive, Investors Waited 14 Years to Break Even

In 1999, the S&P 500 peaked. Then it took 14 years to gradually recover by 2013.

Today? Goldman Sachs sounds crazy forecasting 3% returns for 2024 to 2034.

But we’re currently seeing the highest price for the S&P 500 compared to earnings since the dot-com boom.

So, maybe that’s why they’re not alone; Vanguard projects about 5%.

In fact, now just about everything seems priced near all time highs. Equities, gold, crypto, etc.

But billionaires have long diversified a slice of their portfolios with one asset class that is poised to rebound.

It’s post war and contemporary art.

Sounds crazy, but over 70,000 investors have followed suit since 2019—with Masterworks.

You can invest in shares of artworks featuring Banksy, Basquiat, Picasso, and more.

24 exits later, results speak for themselves: net annualized returns like 14.6%, 17.6%, and 17.8%.*

My subscribers can skip the waitlist.

Skip waitlist

_{*Investing involves risk. Past performance is not indicative of future returns. Important Reg A disclosures: masterworks.com/cd.}

🔥 What Just Happened (And Why You Should Care)

• Dell – Shares jumped 4% after Dell forecast Q4 revenue of $31–$32 billion (vs ~$27.6 billion expected) on booming AI server demand reuters.com

• Meta & Google – Meta may spend billions on Google’s AI chips from 2027; Alphabet stock leapt ~4% (nearing a $4 trillion value) while Nvidia slid 3% on the news reuters.com

• Amazon – Amazon (AWS) will invest up to $50 billion to expand AI supercomputing for U.S. government cloud clients, adding ~1.3 gigawatts of capacity reuters.com

• China & Nvidia – Chinese regulators barred TikTok-owner ByteDance from using Nvidia chips in new data centers; ByteDance was 2025’s top Chinese buyer of Nvidia GPUs reuters.com

• Harmonic – Harmonic, an AI startup co-founded by Robinhood’s CEO, raised $120 million at a $1.45 billion valuation to develop “hallucination”-free AI reasoning models reuters.com

📈 Where the Smart Money Is Going Right Now

• NVDA – AI chip king with lofty valuation. Funds remain overweight for its 60%+ growth, but any misstep sparks bubble fears.

• AMD – Riding Nvidia’s coattails as a second-source chip play. Shares up ~50% YTD; seen as a cheaper (but still high-risk) AI bet.

• MSFT – A balanced AI giant (Azure/OpenAI). Growth steady and widely owned; trades at a premium but viewed as less risky than pure-plays.

• GOOGL – Underappreciated AI player now flexing its own chips. Valuation is reasonable and even Buffett’s Berkshire has bought in reuters.com – confidence is rising.

• PLTR – 2025’s retail-loved AI darling (stock ~+170% YTD) on defense contracts, but priced ~250× earnings reuters.com. Institutions are wary of its “too perfect” story.

• C3.ai – A cautionary tale: shares are –54% in 2025 amid big losses and strategy upheaval reuters.com. Heavy short interest; hopes rest on a turnaround or buyout lifeline.

Pet insurance can help your dog (and your wallet)

Did you know 1 in 3 pets will need emergency treatment this year? Pet insurance helps cover those unexpected vet bills, so you can focus on care—not cost. View Money’s list of the Best Pet Insurance plans and protect your furry family member today.

Protect your pet and wallet

🚀 What Kind of Returns Should You Expect?

Analysts see solid upside but with big divergence: core AI chipmakers are still expected to climb on earnings momentum, while safer megacaps offer moderate growth and speculative pure-plays remain a high-risk/high-reward gamble. In general, Wall Street’s 12-month targets are positive – albeit less lofty than this year’s gains – and longer-term (3-year) projections stay bullish if AI investment translates to real profits.

Table notes: Mega-cap platforms have steadier profits (hence lower risk), while chip suppliers and smaller AI specialists face higher uncertainty. For instance, investors are questioning when huge AI outlays will translate into profits

⚠️ Risks You Can’t Ignore

• Valuations: Soaring AI stock valuations are drawing dot-com bubble comparisons reuters.com. Today’s enthusiasm leaves zero margin for error if growth falters.

• Regulation/Geopolitics: U.S.–China tech tensions are escalating – Beijing is pushing companies off U.S. chips reuters.com as Washington tightens export curbs – which could choke key AI supply lines.

• Market Concentration: Just a few AI-driven giants dominate market gains, an unprecedented concentration that makes the broader market vulnerable to stumbles at the top reuters.com.

• Supply Chain: Insatiable demand for AI hardware is straining supply chains. Memory chip prices are spiking reuters.com, and component shortages or cost surges could squeeze margins (or slow AI rollouts).

🔭 What to Watch This Week

• Salesforce (Dec 3): Q3 earnings – investors will watch its “AI CRM” metrics for signs of broader enterprise AI adoption.

• C3.ai (Dec 3): Q2 earnings – a pivotal report for the troubled AI pure-play after a CEO shakeup; guidance could make or break sentiment.

• U.S. jobs report (Dec 5): A key macro read on growth/inflation. A soft number could cement Fed rate-cut bets – a potential boon for tech stocks.

💡 Bottom Line

This week delivered a reality check: the AI boom is maturing, and the market is no longer blindly buying every AI story. As one strategist warned, “ignoring risks doesn’t make them disappear”.

Start now. Stay informed. Build a balanced, AI-ready portfolio with both upside and discipline.