Closing Bell - Closing Bell: How Far Can Stocks Go? 12/11/25

Episode Date: December 11, 2025

What could be next for this record setting rally? Fundstrat’s Tom Lee reveals his 2026 outlook. Plus, we discuss what could be in store for the AI trade in the new year with Deepwater Asset Management’s Gene Munster. And, one of the standout stories of the markets in 2025 is the participation of the retail investor – even bigger than we may have thought, according to some new data. Kristina Partsinevelos breaks down the numbers and what it means to the market.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wobner live from Post 9 here at the New York Stock Exchange. This Baker Breakout begins with stocks at record highs again. Let's get right to the scorecard here with 60 to go in regulation. Dow is leading the way today. Yet again, following through on yesterday's post-fed move, we should also, we are on track right now for record closes for both the Dow and the S&P.

And once again, it's outside of tech where the story really is. The equal weight S&P and the Russell 2000, both hitting record. highs of their own today. Banks having a very strong day, as are the insurance names. We're tracking all of that into the close today. Oracle, though, it's the stock story of the day for all the wrong reasons. It's sinking following its earnings release. That's one of the worst days in a while for that name, down 10%. And the AI trade is going to get another test in overtime today when Broadcom reports will lead you up with a preview of exactly what you expect from that one. Other standouts today include Marriott and Hilton, Nike, and Target. Just a few of

the bigger gainers today. It takes us to our talk of the tape, this record-setting rally, and how far stocks can go? Let's ask Tom Lee. He is Fund Stratt's head of research, a CNBC contributor. He's with me at Post 9 because he is out with his 2026 outlook for stocks. Thanks for sharing it with us first. We appreciate you for that. So let's get right to it. So we're going to 7,700. That's the headline. So that's a pretty decent year in the year ahead, not quite as robust as we had. year. Why that target? Well, we're three years of 20% gains because the S&P probably closes 7,000 or so this year. And so I think there's a deceleration of what the market can do next year. But that 10% I think belies what will be a very turbulent year, similar to this year where

this year we had tariffs and sort of a Fed that became hawkish again. Next year is a year where we have a Supreme Court potentially overturning tariffs and then a new Fed, which will be tested. So I think we could have what looks like a bear market in 2026, but we exit strong. I mean, even with a new Fed, and, you know, it's divided, obviously, as we learned yet again, yesterday, we know from what the president wants to do in terms of who he wants to appoint that the bias is going to be towards easing. Correct. So why so much turbulence around that particular issue? You're right.

I think next year, the real message at the end of the year will be there's the Fed put back in play. So then you have a White House put and a Fed put, which are tailwinds for stocks. But before all that happens, the Fed has to, the new chairman has to be confirmed. It takes about 90 days from the time that is nomination takes place and the confirmation.

And the markets always test a new Fed chair. So I think that that is the, January or October period is that the Fed is being tested, even though we know it's going to be a Dovish Fed and a Fed put comes out of that. We think we're going to get, I mean, at least if you believe the outlook, which that's, you know, it's your own prerogative. A cut into a strengthening economy, though. I mean, at the end of the day, that supersedes everything.

Isn't that partly what the last couple of days yesterday and today are about? Yeah. I mean, this was a, in my mind, even though people positioned it as a hawkish cut, it's actually quite bullish for stocks because the Fed, again, is now weighing the downside risk to the economy, which is the Fed put coming back into play. Plus, as you know, QT ended, and even though it's not officially QE, it's the absence of tightening, which is QE. I mean, you call it whatever you want. If the effects of whatever they're doing are nearly the same as if you want to call it QE, the bottom line is stocks went up and rates came down. And if that continues to be the picture,

it's going to be hard to lean against the equity market in that scenario. Correct. And the right groups are responding, as you highlighted, small caps hitting record highs, financials rallying. And now what we just want is the ISM to turn. But if housing can turn, then you've got a real broadening taking place next year. See, when you still talk about a wall of worry, I feel like that's debatable now. I mean, I felt like it's debatable for the last few months, but once you get into the new year, do we really have a wall of worry? As I said, we expect the economy to strengthen. The Fed's going to have a more doveish tilt, even with a new person. You're going to have some of the impacts of the big, beautiful bill. You're going to have what should

be a better environment for M&A and even IPOs. We may get some of the largest we've ever seen from the AI space, not to mention the AI trade in and of itself. Is that really a wall of worry? Well, those are definitely all tailwind, Scott. But in our conversations with clients, we find skepticism about valuations. Okay. Fears of an AI bubble. Fair? Fair. The Supreme Court overturning tariffs does create turmoil at a time when the midterms are now in people's minds. Would that be a plus for stocks? Well, it is and it isn't because now it makes policy uncertain again and the economic ripple effects uncertain because if the tariffs stay in place and remember markets don't expect the tariffs to hold, then we can anniversary a lot of the

effects. But if now we're talking about them being reversed, some companies suing to get refunds and then new tariffs coming, it adds to the lack of visibility. So on the issue of AI, how does the breakdown happen in what leads the market to your target of 7,700? and what lags? Well, I think tech is going to be a group that probably has to digest the prodigious gains made this year into early next year. And we know that that, whenever tech starts to stall, people wonder, is that the leadership ending so the market will fall, or is this a rotation?

And that's controversial. Isn't that what's happening right now? Yeah. And you can see sentiment has not improved in the face of that. People have turned bearish because of that. They've turned bearish. I feel like this is confirmation of exactly what a bullish story would want to be. That you could have a step back in the tech trade.

But, man, if you get a pickup in equal weight and you get a pick up in the rustle and you get a pickup in all these other areas, that's what keeps the market from being upset by the lack of performance from tech. That's a rational explanation. It makes perfect sense. But in our client conversations, people are more bearer. now because tech is stalling. And it's in the backdrop of 75% of the weeks this year,

sentiment on AAI has been negative. It is only something you see in the middle of a bear market. So I think people are sort of entrenched in their bearishness, even as we exit strong, and I think that carries into next year. Man, I mean, I don't know who you're talking to. I feel like it's hard to find people who are bearish, which is why we've got a couple people on the desk that we're going to bring into the conversation now,

conversation now and see where they stand. New Edge Wells, Cameron Dawson, Investco's Brian Levitt, both here at Post-9. You guys aren't, you guys aren't bears. You're not bearish, are you? It is really hard to fight a market that's in a clear up trend that has fed support, that has fiscal policy support, where earnings estimates are still going up, GDP estimates are still going up, but this market is price for perfection, and it's expecting perfection. You have a 22 and a half times forward multiple earnings estimates look to be very fulsome, $309 a share. That includes 200 basis points of operating margin expansion.

So it is definitely something you don't want to bet against the great American might of margin expansion. However, that's a pretty high bar. But to Tom's point, you are only in the 60th percentile in institutional investor positioning survey. So there is still room for people to get dragged kicking and screaming into the Well, those are two different, two different ideas. There is the ideas, as Cameron says, of FOMO, of Chase for Performance. Then there's the realization of whether earnings are going to live up to the hype to justify the valuation that Cameron suggests that we are at and we may expand to. Yeah, and I think we will. And, you know, it's funny, when I, when you talk about

hearing people's concerns, I mean, I think that's what I do for a living. I hear people's fears all the time. So it always sounds like they're somewhat pessimistic. But the backdrop continues to be quite good. You're in an environment where leading indicators are picking up a bit. The Fed wants to ease. Inflation expectations are contained. I mean, it's a good backdrop. And our outlook coming into the year at Investco was about this broadening out. It, you know, a lot of the concerns we hear is valuations, concentration. And what's nice about an environment with easing and a pickup in economic activity is you can build better value portfolios, whether that's non-U.S., whether that's down capitalization, equal weight. You can build a better value portfolio and participate.

I mean, 6,900 right now, S&P's never been higher in terms of where it might close. And we're going to track that right to the end. It just shows you the optimism. You're bullish. I'm bullish, right? I'm bullish. And look, when do I get less bullish if I have inflation expectations breaking out, if I have credit spreads, they're not, if I have the Fed having to become more hawkish. And they're not. And they're not. And credit spreads are blowing out. And they're not. And they're not. So, you know, this, to me, it's more about leadership. I'm very convinced that this cycle is continuing. The question that we've been debating is the direction of it. Are we, are we gathering momentum here? And I believe we are. And as you gather momentum, you want a different

type of risk in the portfolio rather than 2023, 24, where global growth was kind of not doing anything. All right. Well, let's stay on that theme and welcome in another guest. Jonathan Khrinsky, BTIG, has a new note on the small caps today, so we wanted to bring him in to talk to you about it. It's nice to have you, especially given this move we've seen in the last few days at least. We're getting confirmation of a bigger breakout? Thanks, Scott. So, I mean, yeah, there's a couple of points here. One, You know, we had the Russell 2000 breakout in September, two new all-time highs, but the S&P 600, which is a small-cap index that has a profitability component,

really continued to struggle even despite that breakout. So it was more of a speculative lower-quality breakout. And what we have the last couple of days is that S&P 600 actually joining the Russell 2 and is within, you know, a very close margin of hitting its own all-time highs. And, you know, when we think about small caps, they've essentially, we're basically at the same levels as we were four years ago in November of 2021. So, you know, if this breakout can hold, then, you know, there could be meaningful upside to the small cap trade. And at the same time, you know, we're noticing some moderation or relative weakness in some of the Mag 7. And VDia has been trading a little bit poorly.

Meta is below its 200 days. So when you look, put it all together and you look at the ratio of small caps to Mag 7. we're now really just starting to break out above a multi-year downtrend that started, you know, back in 2022, 2023. So I do think there could be some runway, and it's definitely a theme we'll be watching as we head into 26. So it's okay that there's relative underperformance from the Mag 7s. You're telling me there's runway, despite that fact, as long as the other parts of the market

that you're citing here continue to participate all as well. well yeah i think there's a difference between relative underperformance and absolute weakness right and um up to this point i think it's really just the relative um underperformance i think the pullbacks in invidia and meta are you know you could argue meta is potentially changing the trends um it's probably one of the weakest of the max seven where you actually have the price under the 200 and the slope of the 200 is potentially inflecting lower um so if you were to start to see more max 7 names have that setup happen that would be a big concern for the market as it stands now i think it's a function and kind of what tom was saying is maybe you get um just some some lagging or

underperformance from the s&p maybe it does grind a bit higher but you know the the alpha is going to be in small caps okay interesting uh we saw your note we needed to talk to you about it jonathan thanks for making time for us we appreciate you jonathan krinsky b tig mr small cap um we have a year. We're up 16%. Okay. And a lot of it's been done in a lot, well, not a lot of it, but a good amount of it we have watched in recent trading sessions. Yeah. You want to make a big call about this again? Small caps in 2026? You know, I just don't want to jinx it, Scott. That's why I'm silently watching it because every time I kind of feel confident about small caps, there's a bit of a rugpole, but it makes sense that small caps should outperform because the Fed's

doveish and the ISM, which has been below 50, is finally going to break up, break out. out in small caps valuations relative to large gaps have never been cheaper. But you made the point already, though, that there's going to be this tension within the Fed complex because of a new chair. Will that also, if it leads to some sort of volatility or turbulence as you use, won't that upset that trade? Yeah, I mean, in the short term, it will. I mean, I just think next year it's going to feel like a full cycle again, you know, a rally. in the beginning, turbulence and maybe a bear market, you know, 20% decline like we had this year, but then we exit really strong and maybe a rally to end all rallies type at the end.

What do you think about that? Small caps have been the quintessential here for a good time, not for a long-time trade, because since they peaked in 2021, we've had these little bursts of relative outperformance, and then they give it all back up. So you've made an unrelenting new relative lows. And the reason for that is because earnings estimate cuts for small caps have been unrelenting. You came into this year expecting 40% earnings growth. You've gotten six.

Next year, there's an expectation for 50% earnings growth. That's why small cap valuations on the surface look so cheap relative to large caps. However, I don't think small cap earnings necessarily deserve the benefit of the doubt that they can deliver that 50%. Rate cuts help because small caps have a lot of debt and a lot of floating rate debt, which should help with some interest expense. But again, just because consensus expects it, doesn't mean you're going to get it. I'm still hung up on this idea that Tom's talking about,

that you could have a bare market moment in 2026 before things resolve themselves. That's not going to feel very good. You agree with that? I mean, let's look at a year-to-date of the S&P also because we have had an incredible ability in this market and you see a couple of moments where we needed a V-shaped recovery from big dips, and we got it every time, including the most

recent one, where we now have completed the cycle and finished the V. As Mike Santoli likes to say, we've actually finished the V, and we were able to close it at record highs. Does that sound like a scenario that could happen in your mind? Well, there would have to be a catalyst for, I mean, you have a 5 to 10% downturn almost every year. To get to a 20% downturn, you would probably need a decent amount of policy uncertainty or something going awry with the AI trade. And so my sense is it won't be the AI trade in 2026. So the idea of policy uncertainty, I mean, this, the backdrop really since Liberation Day has been increasing policy improvement or a movement towards greater clarity.

I don't personally think that a new head of the Fed is going to drive that, largely to To your point, Scott, is because they're going to lean doveish. Now, if the market gets a sense that the Fed funds rate's going to 2% and long rates have to adjust, then yeah, valuations need to adjust in the market. But if it's, well, we may see low threes on the funds rate instead of three and a quarter or three and a half, I don't think that's a 20% downturn in the market. You mentioned AI stocks. I mean, they obviously are underperforming today, but there is still.

Plenty of news being made in that space. Open AI rolling out its latest version of Chat, GPT. Sam Altman was live on this network in an exclusive interview earlier today. Mackenzie Sagalos joining us now with more on both fronts. Mac. Hey, Scott. So this is all about Sam Altman going after Alphabet. GBT 5.2 accomplishes two big things for OpenAI.

It is a play to win over the enterprise customer from Anthropic and Google. And crucially, it is about flipping the narrative the Gemini 3 is the top model out there. The company is pitching this latest model as its best system yet for everyday professional use, rolling it out both to consumers and its enterprise buyers. The value that we see people getting from this technology

and thus their willingness to pay, already today, to say nothing of the models that we have coming in the coming months and years makes us confident that we will be able to significantly ramp revenue. It's obviously unusual to be growing, this fast at this kind of scale. But it is what we see in our current data. Altman also saying that its latest model beats Google's Gemini 3 on key benchmarking tests.

And he added that the Gemini launch a few weeks back actually had less of an impact on OpenAI's metrics than initially feared. And that he expects to wind down this code red phase by January, which Scott really begs the question, will they start to double down on ads first thing in the new year? All right, Mac, thank you very much. McKenzie Seagallis. All right, are we going to see, this is just a great way to tee up for us, even a deeper look at some of these stocks. Are we going to see more dispersion within the group?

Like you can't, you talk about the Mag 7 as if they continue to trade as a monolith. They don't, and they probably won't, right? They do and they don't. They're all largely connected to the same megatheme. So I would say the answer is yes and no. It's like they're all genetic. related, but they don't all have to have the same career, you know? So, I don't know how to answer that, Scott.

Well, I mean, right, there was a time where you just, you talk about the Mag 7. Do you want to own the Mag 7, as if it's this monolith group that all trades together? But now, what has been an arms race is a battle. They're fighting with each other for everything. You know, they're doing business with each other, but they're also battling it out with one another for AI supremacy. Now, when we look back at the last industrial revolution, which was the internet buildout, which had internet infrastructure and mobile and Cisco and switches and telecom infrastructure and the mobile carriers and spectrum, they all peaked within months of

each other and their correlation went to one when the bear market started. So they are going to trade as a group, even if we think they're differentiated. Do we agree with that? that we're learning that AI is extraordinarily competitive. And this is what we're seeing with this switch between Google, Open AI, which one is better? This is starkly different than the very near-monopoly businesses that these companies have been able to use to generate extraordinary supernormal profit growth. So a competitive business that's very capital intensive implies lower return on invested capital, which is very different than what these businesses used to be. How would you see that? I agree completely. And I was going to use the word monopolistic also.

It's a sea change, right? These are businesses that, you know, if you were using social, you knew where you were going. If you were shopping online, you knew where you were going, and they're all competing in the same space, and it's investment heavy. So it is a bit of a difference, and you see it even with Oracle, not necessarily a Mag 7 name, but one of the big hyperscalers, you know, you're starting to look at where debt to EBITA is on some of these companies, and that becomes a challenge. So, yeah, I don't think that they all, they're all going to trade in uniform here. will be winners and losers. It's going to be fun to watch, and it's going to be fun to talk about it many times in 26, which I know we will. Guys, thanks so much. Thank you. Thank you. Thank you. Thank you. Let's send it now to Sima Modi for a look at the biggest names moving into the close today. Hi, Sima. Hey, Scott, on this down day, let's look at stocks that are trading

higher. Healthcare is one pocket of green after the Senate rejected the Obamacare credit renewal, which raises the likelihood that subsidies will expire at the end of the year, doubling premiums. Molina Healthcare, Oscar Health and United Health, all up between 2 to 4%. Shares of Robin Hood are sinking 8% after posting disappointing November operating data, which showed that trading volumes, including crypto, were all down by double digits from the month before. That does coincide with the drop that we've been seeing in Bitcoin. Big picture here, Robin Hood stock still up about 230% this year. Finally, Wayfair rising about 7% today after the Conine Family Foundation,

which Wayfair co-founder Steve Conine serves as Treasury for proposed a sale of up to 5,000 shares of the e-commerce furniture retailer stock up about 8%, Scott. All right, Seema, thanks so much. Sima Modi. We're just getting started here. Up next, Deepwater Asset Management's Gene Munster. He breaks out his 2026 playbook.

He'll tell you how he's going to play tech in the new year. And we are, as we said, on track for record closes today from both the Dow and the S&P 500. We'll track it right to the finish. here at the New York Stock Exchange. We're back after this. All right. big year for the tech trade. The question now, or the 2026 will be just as robust. Deepwater's

Gene Munster joins us now with his very own outlook for that space. It's good to have you. Welcome back. Hi, Scott. Let's talk about something in the here and now before we look ahead. That's Broadcom, which you do own. Deepwater does after the bell today. So we, I think, failed the test yesterday with Oracle. What do we do today? stay the course and not only because we're early in AI but we're also early in custom silicon and so that's the big picture Scott but some of the more specific data points to kind of be tracking going in tonight the first is around customers qualified versus potential customers and a quick backstory here is in the April quarter they talked about three qualified customers for potential

customers and then in July quarter that went from three to four and more recently they added Open AI. So they're at five and two now. I'm going to talk about customer concentration here, but they're at five and two. So I think one of the most important things that investors are going to be listening for is they're going to go to six qualified customers? Will they add Apple, Microsoft, Amazon? Will they have more potential customers on that list? And why that's so important is that this story is all about accelerating growth rate. That's what we've seen. We saw in the early part of the year when growth decelerated from the January to April quarter stock down 33% accelerates from April to where we are today. Stocks up 160%. The expectations are

that by the end of next year, that they will exit at a 50% growth rate. It'll be about 25% in the quarter of the reporting tonight. So Scott, this customer piece is so important because as they add customers and they're all big customers, that can have a meaningful impact on that accelerating growth rate. So that's one thing that will be very impactful. And then second, you know, what's the guidance look like? They've got to show that accelerating growth in the January quarter. Streets looking for in line for that. They need to bump it up by a couple percent to hit that threshold.

But overall, I think they're going to talk about one extra customer within those potential customers. And I think that should be enough to keep the optimism around this story continue to move higher. Okay. Does the optimism around the AI story in general continue to move? those stocks higher into 26, or is next year going to be the year of everything else? How do you see that? I think next year it's about AI. I think that, you know, you mentioned leading into this about our predictions, came out with our predictions. And one of them at the highest level is that the NASDAQ will be up more than 10% driven by AI. The NASDAQ's been hanging in there despite some of the

challenges with AI, you know, for the Meg 7 are down 10% in the last month and a half. But I think that this, what we've seen since October 30th is this continuing concern from investors that we're one week, one month away from this all ending. I think that that's going to start to subside going into 2026. And ultimately, I think we're going to see kind of this rebound and optimism around the broader AI trade. And so I feel very good about that, especially look at that cap X number, Scott. I think that's going to be one of the big drivers here in the back half of this year. You say Tim Cook is going to remain the CEO. of Apple. And Apple will be the best performing Mag 7 stock in the first six months of

2026. Why so? Give a shout out to Dan Ives here on this idea. He'll be around for the Trump presidency. I mean, he is the whisper in D.C. He'll be a part of that. And this multiple expansion going into, I think, the next, what we're going to see with this next Siri. I think that's going to be a big catalyst in terms of where the multiple will be. At the end of the day Apple investors have this concern. I'm one. I've been a long-time shareholder, a long-time believer in the company, but this idea of them delivering on this high expectation that they've set from back in June that this is going to be a total breakthrough on Siri. When they talk about a total breakthrough in Siri, what they're really saying is that their whole Apple

Intelligence Initiative is going to finally hit its mark. That's a very high bar. I think that they hit that. I think that causes the multiple to expand. And then separately, I think we're going to see upside to the iPhone over the next one, two quarters. And the combination of those two, I think, is going to lead shares of Apple higher. I think that's the top performer in the front half of the year. Interesting. You say that Google is going to be the best performer, though, for the whole year, right? Right. Yep. So there is this distinction about I'm splitting hairs here, but for the full year, I mean, just kind of going back to your previous segment. And I think there's general consensus about this more competition with the Mag 7.

around AI and it's a very different landscape. I have a much different view. I actually think that, yes, it's competitive, but they've always been competitive. Look at what they've done in their cloud businesses, how ruthless competitive that's been in retail, what Amazon, some of the competition that they faced early. Competition when there is a new paradigm is nothing new. I think one of the benefits that Google has, they are going to be one of the big beneficiaries. And separately, they have distribution. That's a critical piece. Two and a half billion daily search users. Today, ChetGPT has about 500 million active users. Their ability to really redirect those search, habitual search users into using more of their generative AI, I think is going to be a big

unlock for their revenue. I think they're going to have upside on search revenue for the balance of this year, and that's going to move shares higher. Well, now you're going to make Ives mad because you say that Tesla is going to miss delivery expectations for the full year of 26? Well, I'm just calling it like I see it here. Streets had 15% growth for deliveries. They're down seven for calendar 25. That's probably we're going to end up. So pretty big bounce back. A lot of those expectations about the bounce back were originally factored in from this lower cost model. We really haven't seen that. The new model Y, the lower cost model Y really doesn't really reflect that potential. So I have the growth that's somewhere

between a flattish to up 5%. In the end, it really doesn't matter for Tesla investors. They're much more focused, of course, on timing of FSD, more expansion of Robotaxi, what happens with Optimus. So I think this is an example where the street needs just to get their numbers kind of in order in terms of what deliveries are. I don't think that miss is going to have any sort of negative impact on shares. All right. We'll talk to you soon. Gene, thanks. Thank you, Scott. That's Gene Munster. Still ahead, new data, shedding some light on just how big a year it was for retail investors. Got the details coming up.

Let's get another check in the market because it is another historic day on Wall Street, the S&P 500, the Dow Jones Industrial Average, both heading for all-time record closes, and we'll follow it over the next 20 minutes right to the end. One of the standout stories of the markets in 2025, the participation of the retail investor. bigger than we might have thought, according to some new data. Christina Parts of Nevelos joins us with more on that. What do we know? Well, retail traders are just having a breakout year.

That's what we know. They're pouring money into markets at nearly double the five-year average. That's 53% above last year's level. And this, according to J.P. Morgan. So what's working? What are they doing? Well, J.P. Morgan says the winning play has been buying the dip on major sell-offs. Think the Deep Seek Panic in late January or Liberation Day in April when President Trump announced his tariff package. They weren't scared. They actually got in the market. The second strategy,

trading ETFs over single stock, starting in May, retail investors really pulled back on individual names and steadily rotated into ETFs instead. Third strategy, buying gold. That's why I put gold bug on the screen. They were able to capitalize not only in gold, but silver as well. But that doesn't mean AI isn't important. This week alone, they're still chasing the, you know, the Mag 7, buying Nvidia, the top on the list over there, Tesla, Google, Microsoft while net selling for Meta and Apple. And speaking of individual investors, and please don't feel bad about yourself when I say what's next, Moore can now claim millionaire status in their 401k's. Fidelity reported 654,000 401k millionaires, the highest on record going back

to the early 2000s. T-Rowe Price reports the share of their millionaire accounts has doubled since late 2022. So the little guy is having a big year. and don't worry if you're not included in that mix. Yeah, leading the way in many respects in this year in the markets, and we'll see what happens next. Great stuff. Thank you, Christina, Parsna Avers. Coming up next, we track the biggest movers as we head into the close.

Sima Modi is standing by with that. Hi, Seema. Scott, the market remains unimpressed with Rivian's new AI chip. We're going to explain why right after this break. We're less than 15 from the closing bell. Back to Seema now for a look at the stock. She's watching. What's on your list?

Scott, top of mind is Rivian automotive down about 5% after revealing it would ditch NVIDIA and use its new custom AI chip as part of its effort to make its electric vehicles autonomous. That really failed to impress the street. Sheras falling further after OpenAI revealed its new chat GPT model. And then there's Planet Lab, soaring 35% after posting third quarter revenue that beat Wall Street expectations, raising its outlook thanks to an uptick in revenue growth from the defense and intelligence sector, including the U.S. Navy.

worth noting defense names like Rocket Lab and Firefly Aerospace jumping alongside it. And Gemini Space Station surging as well up 30% after the crypto exchange platform won a license to offer prediction markets to its U.S. clients on its website and app. Shares have been struggling since its September IPO down about 53% since then, Scott. All right, Seema, thank you very much for that. Coming up next, we'll run you through what to watch for when Broadcom reports in OT Plus. We are on record watch for the day. Now in the S&P.

Don't go anywhere. The market zones next. All right, we're now in the closing bell market zone. CNBC senior markets commentator. Mike Santoli here to break down these crucial moments of this trading day. Plus, a pair of big earnings. We're watching in OT, Courtney Reagan, standing by for Lulu Lemon. Christina Parts and Nubalo standing by on Broadcom.

Meantime, Broadcom shareholder. Friend of Vangelo of Sandhill Global Advisors is here as well with what she'll be watching for in that print. But size this, what looks to be another record-setting day on the street. It does. And led by a different group than we got used to for most of this year. So, yeah, we're talking about this very, very aggressive rotation toward cyclicals. It's been the takeaway from the net dovish message from the Fed. What's interesting is now that we are basically within a few points of the old record in the S&P, it's six weeks ago. So you're basically at the same level of the S&P six weeks ago. You have banks up like 7 percent since then. Transports

up even more than that, I believe, or vice versa. Small caps are up a few percent. Mag 7's down three. That pretty much tells you that you have the blood flowing to different parts of the market. I do think today, maybe in a short-term basis, that rotation is looking a little forced and panicky. In other words, people are really grabbing at some of these things. If you look at the cruise ship names going up 6 and 8 percent today, it's understandable. It's a lot of money flowing into smaller stocks, but I think you have to be aware that it's a net positive macro message, but But there's only a limit to how much people are going to pay for those types of stocks. And you really do need the macro story to follow through for it to continue.

Some of the hotel names I noticed were up today. Some retailers, Nike and Target, for example. High beta cyclicals are the ones that are running today. Yeah, we'll get another one. Lulu Lemon after the bell court. Tell us what to expect. Yeah, Scott, I mean, shares of Lulu Lemon are up more than 11% in the last three months. But they've shed more than half of their value since the beginning of this year.

So year to date. And competition from smaller names like Allo, Viori, that's really eaten into the brand's market share. Now, comparable sales are expected to grow, but just 1%. That's down from the 4% growth rate this quarter last year, also on lower profit of $2.21 per share. And while anecdotal evidence suggests decent traffic over the Black Friday weekend for Lulu Lemon stores, the street is concerned that it was discounting that led that consumer demand. So we're careful to watch margins when the results are out to see what they have. to do as far as discounting to sell the goods. Investors want to know if Lulu Lemon has had better

success with those new products than it did in the spring. It sort of failed to generate new consumer interest after it had revamped some of those styles. Plus, there was that full-page ad that founder, Chip Wilson took out in the Wall Street Journal. I believe that was an October title Lulu-Len-Colon in a nosedive, sort of urging a bunch of changes at the company. So will there be any reaction to that? I guess we'll know soon enough. Yes, we will. Court, thank you very much. This is such an idiosyncratic story. You're not going to get a broader message about the consumer out of this one. That's right.

I don't believe. Probably not. I mean, certainly maybe out of their commentary, right? People's willingness to pay up for the new stuff and the premium price stuff, which has been their trademark for a long time. But I think in general, people are taking heart in what other retailers have been saying. We probably were braced for a worse kind of Black Friday through Cyber Monday period. And then you had, you know, American Express saying, don't worry about it. By the way, VISA's up like 6%.

It's a huge stock. It's up big. It's not purely about the consumer spending volumes, but it shows you an upgrade. And a stock that's that big is having an effect on a daily like today. Yeah, saw that one as well. Broadcom, after the bell, Christina Parsonevoloz.

Analysts really expecting Broadcom to beat and raise. Very optimistic, driven by surging demand for custom chips it makes specifically for Google. Broadcom shares have actually jumped, what, 25% just over the last two months. Well, if you can prepare it in video on your screen, down 1%. These particular chips, they're called TPUs, sensor processing units designed specifically for AI workloads, and they're definitely gaining traction beyond Google's Gemini models.

Meta, Apple, Anthropic are all using versions with their technology. Morgan Stanley sees the real inflection in the second half of 2026 when Broadcom is expected to deliver $10 billion worth of racks to what's believed to be anthropic. The street, though, expects about a 56% AI revenue growth for Broadcom and fiscal 2020. that AI revenue number is going to be really important. Analysts see upside from the expanding TPU reach, but some of that Google chip strength may be cannibalizing Broadcom's other custom chip customers. Four out of five of Broadcom's ASIC clients, those are the custom chip clients,

have actual ties to Google's TPUs. Earnings will show whether Broadcom is capturing new business or just simply redistributing revenue, Scott. All right. Christina, thank you. Christina Parts of Novelos to the shareholder, Brenda Vangelo. Stock has made you very happy. What about now going into the print? Yeah, I think there's a question about just how high expectations have become, so that's fair.

So I think we could get a beat and raised scenario without a huge reaction from the stock. But all that being said, I think the company is incredibly well positioned here, especially on a day like today where we have the market being concerned about Cappex spend and just how high that has become for many companies like Oracle. And Broadcom's custom chip is really a more cost-effective solution. Now, it's not for everybody, but it is for a lot of the hyperscalers. So I think it's a very relevant company in this environment, and we expect growth continue to be really impressive.

So how are you feeling about the hypers and the mega-caps given the recent underperformance? Well, I think it was bound to happen, and I think it's a good trend. I've heard nothing but concern from our clients over an AI bubble, And so I think this is evidence that some of the froth is coming out of that trade. Because you're right in the thick of it, by the way. When you talk about your clients, you're on Sandhill Road. Even in the Silicon Valley, there's lots of concern about an AI bubble.

And that's because a lot of people were there last time around late 90s, right? And they remember. But I do think that it's great to see a little bit of the froth coming out, a little bit of a resetting, a broadening out of the market. And I do think that over time, we're likely to see some of the biggest beneficiaries of AI outside of the technology industry of companies in healthcare and other industries that are better able to utilize their data. Is that how you're looking at where the opportunities are now, the derivatives of the hyperscaler story? Like, that's well known. We know all of that. Maybe health care has gotten a boost as a result of that. But what about the way you think about it? Yeah. I mean, I think right now we're seeing that a lot of other industries are benefiting, right, from the build.

build out of data centers, the industrials, utilities, some real estate, so that we're already starting to see a broadening of the benefits from that initial spending layer of the infrastructure. But I think the next part of the story is companies that are going to be utilizing that infrastructure in order to better utilize their own data and to drive efficiencies. So I don't think we're seeing that yet, but I think that is the next leg to come and will likely to contribute to market broadening beyond what we've seen. Maybe, Mike, you know, 25 is the year of the CAPEX. 26 is the year of, we see all of these other businesses, productivity, margins as a result of what

this technology has been able to do, and then we start leaning into those other areas. Yeah, I mean, it's all going to be happening in tandem. I think it's worth kind of remembering that when all these companies set out their CAPEX budgets, I mean, that money is still not really flowed in yet, or it's in the process of. So I think it's going to be both the CAPEX build. To me, the market's treatment of how you're capitalizing the spend. Are you relying on debt? Do you have an anchor client like alphabet that you don't have to worry about is very interesting

and it shows a discernment here. What I've been fascinated by, though, Brenda, I mean, Broadcom on a two-year basis is outperformed NVIDIA by now, two years, just about, just by a little bit. And it's much higher valuation now, too. So the market's implicitly saying that the earnings ramp for Broadcom is ahead of it the way it was for NVIDIA a couple of years ago. Right. Well, I think just given NVIDIA's sheer size and the growth that they've seen,

it's natural to expect that there's going to be some slowing growth there versus, you know, a Broadcom is in a different stage of its life cycle in terms of the adoption of a lot of these custom chips. So I think there could be, you know, a greater growth story here in the near term over the next couple of years at Broadcom than we see an NVIDIA, where we might start to ultimately see a little bit of a slowdown. You're with us on the half tomorrow? We'll look forward to having you.

And we will react on the other side to what Broadcom does deliver. We'll leave it there. By the way, Broadcom is also bigger than two of the mag-7, market cap lines. That shows you. That chart pattern of Broadcom will do that for you. All right, so the bell's going to ring, and it's going to ring in a record. It'll be a record. The Dow Jones is up to the average.

We'll set a new closing high today because it's got a big game today of more than 600 points. And the S&P 500 gets another all-time closing high. We'll fight it for right at 69. see where we settle. We'll wait for Broadcom. We got Lulu. I'll see you on the other side tomorrow and O.T.