Big Tech Just Sparked a Market Recovery — Here’s What Comes Next

Key Concepts

AI Trade: The current market trend driven by investments and interest in Artificial Intelligence technologies and companies.
Hyperscalers: Large technology companies that provide cloud computing services and infrastructure, heavily investing in AI. Examples include Microsoft, Oracle, Amazon, and Meta.
GPUs (Graphics Processing Units): Essential hardware for AI computations, leading to increased demand for semiconductor manufacturers like Nvidia, Broadcom, and AMD.
HBM Memory (High Bandwidth Memory): A critical component for AI chips, currently in shortage, benefiting companies like Micron.
Bitcoin Miners: Companies involved in the mining of Bitcoin, whose stock performance often correlates with the price of Bitcoin.
Small Caps: Smaller publicly traded companies, which have shown significant rebound potential.
Quantum Computing: An emerging field of computing that uses quantum-mechanical phenomena, with companies like Rigetti and D-Wave operating in this space.
Holiday Trading: The tendency for market activity and volume to decrease during holiday periods, potentially leading to increased volatility.
Trend Following Signal: A technical indicator suggesting that a market trend is likely to continue.
Consensus Price Target: The average price target set by financial analysts for a particular stock.
Short Squeeze: A rapid increase in a stock's price that occurs when there is a lack of supply and an excess of demand, often driven by short sellers being forced to buy back shares.
Dividend Buyers: Investors who focus on stocks that pay regular dividends.
Value Buy: An investment strategy focused on purchasing stocks that are believed to be trading below their intrinsic value.
Compounders: Companies that consistently reinvest their earnings to generate sustained growth over time.

Market Overview and AI Trade Dominance

The market is experiencing a positive day with a "green" heatmap, a stark contrast to the previous week. This resurgence is largely attributed to the ongoing AI trade, which has reignited interest in technology stocks.

Alphabet (Google) and the AI Resurgence

Alphabet has been a significant mover, continuing its upward trend since its earnings report.
The company has become relevant again in the AI space due to its Gemini model, challenging the dominance of OpenAI.
This development has revitalized the entire AI trade, as major tech companies (hyperscalers) investing heavily in AI require GPUs.

Semiconductor and AI Infrastructure Stocks

Nvidia is a key beneficiary of the GPU demand.
Other semiconductor manufacturers like Broadcom and AMD have also seen strong gains.
Micron is highlighted as a significant player in AI due to the high demand and current shortage of HBM memory, a crucial component for AI chips.
- Micron's stock experienced an 8% surge today.
- Despite trading above its consensus price target, it maintains a buy rating.
- Analysts have set high-end price targets around $325, with some reaching $333, indicating strong confidence in its future performance, particularly in the latter half of the year with the release of AMD's MI450s.
- Micron's earnings report is anticipated in mid-December, and analysts are already pricing in a strong performance.

Other AI-Related Companies

Microsoft, Oracle, and Amazon are also performing well, reflecting the broad strength in the tech sector driven by AI investments.
Meta experienced a pullback after its earnings report, despite not having bad earnings. The nervousness stemmed from its significant doubling down on AI investments, leading to questions about the return on investment. However, the stock is showing signs of a potential bullish reversal with its MACD indicator and RSI in oversold territory, suggesting it might be a good time to re-enter. Analyst price targets for Meta range from $915 to over $1100.

Bitcoin and Related Stocks

The cryptocurrency market is also showing positive movement, with Bitcoin experiencing a gain of approximately 1-2%. Smaller altcoins are also performing well.

Bitcoin Mining Stocks

Bitcoin mining stocks are moving in alignment with Bitcoin's price.
Riot Platforms (RIOT), which had been hit hard in November, saw a sharp increase, at one point up over 10%.
Bitfarms and TeraWulf are also trading higher.
These stocks corrected harder than Bitcoin, potentially facing a more challenging price recovery due to seller overhang.

Applied Digital

Applied Digital is up 12.8% today, driven by the announcement of the successful and on-time readiness of the second phase of its Polaris Forge AI factory campus in North Dakota.
One of the three facilities at the campus is now operating at its full 100-megawatt critical load.
This news affirms the company's robust outlook and is compounded by the general resurgence of the AI trade and the rebound in Bitcoin.
Applied Digital has shown tremendous growth, having been discussed on the channel when it was around $5-$6 per share and reaching highs of $36.

Small Caps Rebound

Small-cap stocks, which suffered significantly last week, are showing a strong rebound today.

The Russell 2000 index rebounded by almost 2%, indicating support at critical moving averages.
This move is seen as a positive sign, aligning with the sector rotation trade and the expanding into small-cap trade discussed over the past few quarters.
Indicators are set up to confirm this trend-following signal, which began in April. New highs for the Russell are anticipated by the end of the year or early 2026.

Quantum Computing Stocks

Quantum stocks, such as Rigetti and D-Wave, are also seeing a jump today.

This resurgence appears to be a sympathetic move with the broad market, indicating that the selling pressure in these stocks may be subsiding.
The question remains whether this bounce is significant enough to signal the end of the "doom and gloom" phase.

Market Sentiment and Holiday Trading

There's a sentiment that "big money's on holiday," and the market might see further shifts next week when institutional traders return.

This week's trading is expected to be characterized by lower volume and potentially higher volatility due to the holiday period.
However, the strong upward movements from critical support levels across various sectors are promising.
Confirmation of the current rally's strength is anticipated next week.
There's a possibility of traders making quick moves before the long weekend, selling positions to avoid holding over the break.

Thanksgiving and Market Trends

Historically, the period around Thanksgiving has been a winning period for the market.

This is often attributed to increased retail trader activity and a general upside bias during holidays.
The current uptrend in the market, particularly the S&P 500, supports this positive outlook.
The S&P 500 is showing support around the 6550 level and is poised for a potential new all-time high next week, which would confirm the uptrend. If not, gains might be capped, leading to a correction or sideways movement.

Specific Stock Discussions

CoreWeave vs. Applied Digital

Both companies operate in the GPU compute space as a service.
Given the sold-out status of GPUs from Nvidia, there is significant demand for their businesses.
Both are reaffirmed as part of the AI trade, with ample room for growth.

OS (Ouster)

Ouster is involved in physical AI, primarily using LiDAR to power autonomous technology.
The stock is up 124% for the year but is trading significantly below analyst consensus targets (about 50% lower).
The company is pivoting towards robotics and serve technology, aiming to guide robots and other applications.
Despite recent volatility, the stock was up sharply today, potentially due to speculation.

SoundHound

SoundHound is experiencing a market correction, but its fundamentals remain unchanged.
Concerns exist about its ability to reach profitability quickly enough, though these are considered unfounded.
Tepid institutional support (around 20% ownership) makes it susceptible to short selling and profit-taking.
Short interest is high, nearing 30%.
A short squeeze is possible in the coming quarters, contingent on the company's ability to capitalize on deals and accelerate revenue growth.
Recent earnings outperformed expectations, and guidance was raised, with plans to accelerate enterprise adoption. This aligns with the AI story of investing in AI to help businesses generate revenue.

AMX (Amplify Energy)

AMX moved higher with the broader market, showing support at critical levels.
It experienced a significant correction of about 50% in recent weeks.
The company is experiencing an expanding backlog, orders, production, and a ramping outlook for revenue and profitability.
Analysts remain bullish, with price targets in the $14-$16 range, indicating 40-60% upside. New highs are expected within the next couple of months, potentially by mid-next year.

UiPath (PATH)

UiPath focuses on business automation using machine learning and AI with "autobots."
The stock has been consolidating and recently moved above moving averages, finding support.
Future performance depends on subsequent earnings reports and the ability to set new highs, which could signal a full reversal. Otherwise, it may continue to trend sideways.

Arcat (ARCT)

Arcat has seen a significant increase, up almost 13% today.
The stock hit a level of support around its mid-to-late May levels, which is holding.
The MACD is showing signs of turning positive, and the relative strength indicator is bouncing off oversold levels, suggesting traders are looking to enter.
Fundamentally, revenue is up strongly, despite missing earnings in the last quarter (a loss of $0.16 per share vs. an expected $0.07 loss).
The market may have gotten ahead of itself, and the pullback presents a potential opportunity.

DS (Drones)

DS is up 30% today, driven by an investment in a combat robotics company to expand growth capabilities.
It has secured new orders and follow-on orders from clients, with improving guidance and a swelling outlook.
Analysts are bullish, with price targets in the $12 range, indicating 30% upside.
The chart action shows support in the mid-single digits, and the 30% spike is on track to reach the $12 region.
The move is accompanied by rapidly increasing volume, suggesting staying power.
Institutional ownership is 38%, with a buying pace of 10:1, indicating a strong tailwind.

Nebius Group

Nebius is up 10% today, following a similar pattern of 10% up, 10% down, 10% up over the past week, indicative of small-cap volatility with a rapidly swelling outlook.
It is a GPU as a service stock, invigorated by the AI trade, especially since Nvidia is sold out.
Major companies like Microsoft and Amazon have contracted for internal computing power from Nebius.
The company's outlook has been affirmed by recent news, and continued contract growth, revenue, and profitability are expected to drive the stock to new highs.
The stock was bought last week on Monday when it was down significantly, and the current action suggests a rebound is in effect.

Xenotech

Xenotech is a smaller company (under $3) that has experienced a significant decline.
It operates in two sectors: enterprise software cloud-based software for medical records and drones.
The company is also involved in surveying.
The dual focus might be a point of confusion, and caution is advised.
There is limited analyst coverage, with one buy rating and a consensus price target of $9, suggesting 200% upside, but the weight of single-analyst coverage is questionable.

ESTS (Eutelsat)

ESTS experienced a significant correction earlier this year due to valuation concerns and growth outlook.
The last earnings report missed expectations, but it is an early-stage growth company with revenue of only about $12 million.
It is still launching satellites, and many contracts are contingent on service availability.
Revenue is expected to grow at a hyper-pace, potentially doubling sequentially in the next quarter.
Full market coverage is expected within 12-18 months, with contracts from major mobile carriers and governments.
Concerns will drive volatility, but the long-term trend should remain upward. The chart action shows support at moving averages, indicating buyers at a critical level.

NVO (Novo Nordisk)

NVO is down about 5.5% today due to disappointing news regarding its oral GLP1 drug for Alzheimer's disease, which showed no benefit.
Growth is slowing, impacting stock action.
The stock is trading at what appears to be four to five-year lows, suggesting it might be oversold.
Analysts maintain a 30% upside target, and coverage is rising, with some buyers stepping in.
Institutional buying activity was high in the first half of Q4.
While it presents a potential buying opportunity, it's advisable to wait for signs of a bottom and good chart signals.
The company's pipeline beyond diabetes and obesity care is crucial for future growth.

Microsoft

Microsoft experienced a pullback last week and is up slightly today.
There appears to be stiff resistance around $500.
Analysts are generally bullish, with price target increases leading to the $550-$650 range, indicating 20-30% upside.
The market is currently more interested in other AI stocks, but a renewed focus on Microsoft's AI business could drive buying.
There are some delays in data center and AI infrastructure build-out in the UK, which is frustrating for Microsoft, as they are aggressively expanding in the US.

SMCI (Super Micro Computer)

SMCI is up today, with Q2 earnings of $10.34.
The forecast for the next quarter is exceptionally strong, aligning with the AI trade, with a projected 100% quarter-to-quarter sequential revenue gain to about $10.5 billion.
There are concerns about potential margin pressure in the next quarter.
Accounting issues have been a past concern, but the company has made changes to address these fears.

AI Bubble Discussion

The consensus is that the AI market is a frothy, growing market with "bubbles" and "pops" here and there, rather than a single bubble that will burst.
The AI trade is currently the "best game in town" for investors seeking growth, and it's unclear where else investors would go if they want growth.

BBAI (BigBear.ai Holdings)

BBAI is up 16% today, likely riding the AI wave.
There was news of a memorandum of understanding to advance a project to strengthen Malaysia's aerospace industry.
However, this is not yet a significant market mover for revenue or earnings outlook.
Short interest is high, and gains may be capped around $8, as seen in previous rallies.
The company was impacted by the government shutdown, which slowed momentum with government contracts, with hopes for recovery in 2026-2027.

Weebl (WEB)

Weebl had a significant spike earlier but is now trading around the $8.50 range.
Analysts are cutting their price targets, and post-IPO action has been "ugly," with heavy resistance around $28.
Significant gains would require strong financial performance and support from analysts, institutions, and capital returns.

TGLS (Technoglass)

TGLS is a new company focused on architectural glass, including high-tech, thermoacoustic, and tempered glass.
Analysts are very optimistic, with high expectations.
Short interest is decreasing but remains around 10%.
Margin is a key driver for the company.
It offers a dividend of 1.25% and has a very low payout ratio (15%).
The dividend has been increasing for the last four years at a 22% CAGR, suggesting it's a good stock for compounding.

Conclusion and Outlook

The market is showing resilience, particularly driven by the AI trade and a rebound in small caps. While concerns about a potential "AI bubble" exist, the current sentiment suggests that the AI market is a frothy, growing sector with significant investment potential. The upcoming week will be crucial for confirming the current uptrend, especially with the return of institutional traders. Investors are advised to monitor key support levels and indicators for further confirmation of market direction. The holiday period may bring increased volatility, but the underlying trends in AI and technology remain strong.