LT Weekly: Dec 12, 2025
It doesn’t exactly feel like mid-December, with the New Year right around the corner! Activity in the space has been sky-high and the major market indices have become increasingly choppy with a rotation out of Tech (Nasdaq fell -1.6% this week) and into cyclicals (the Dow rallied +1%). Fresh concerns about the AI trade surfaced and was a big focus this week (see Theme #1) but at the same time, AI developments were also widespread. In the background, as expected the Fed cut rates by 25bp though there was some debate about the rate cut path in 2026
Our edition this week delves into the below themes/developments:
- AI Bets Come Under the Spotlight as Investors Get More Nervous
- Digging Deeper Into Enterprise AI Spend & Trends
- Less Impact From Tariffs & AI Investments Drive Global Ad Forecasts Back Up
- Roku Presents Their 2025 Trend Rewind Along With 2026 Predictions
- US Pay-TV Shows Its First Growth In Years As The Industry Continues To Shift & Adapt
- The AV Space Was Full Of New Milestone & Key Updates This Week
- 2025 Global IT Spending Growth Hits 1996 Levels Thanks To AI
- Grab Bag: TKO’s Mrgn Guidance / Millions Of Teens Lose Access To Social Media / Euro CEOs Are Looking To Invest In The US Even More Than Before
Have a restful weekend.
Best,
Leslie
AI Bets Come Under the Spotlight as Investors Get More Nervous
It’s been a rough past few weeks for the AI sector and the tone from investors has shifted. After a couple of years of giving companies the benefit of the doubt, investors have started to push back on big AI promises and ask for clearer timelines and a better sense of when all this investment will start to pay off. That pressure has been building amid shakier chatter in the sector, as reports of Microsoft missing its AI sales growth targets (which the Co refuted), and CoreWeave lowering full-year guidance due to data center construction delays are starting to temper the rose-colored views many have held on the space.
That backdrop was top of mind heading into Oracle’s earnings this week, and results added further fuel to the fire. The Co missed revenue for the past qtr, but the real hit to sentiment came from CapEx, which came in well ahead of quarterly expectations and full year guidance was unexpectedly raised by $15bn. On the heels of that, Broadcom’s beat-and-raise quarter was not enough to outweigh concerns stemming from a lack of forward visibility on the Co’s AI roadmap. The end result was double-digit post-earnings drop for both companies, and a broader sell-off across AI-exposed names including NVIDIA, CoreWeave, and AMD.
Layered on top of that, the regulatory landscape is shifting as well. The Trump administration signed an executive order this week to block states from setting their own AI rules in favor of a single national framework. Large AI players have been pushing for this, arguing it could ease compliance burdens and support innovation, but states are pushing back.
Despite all these moving parts in the sector, what has not slowed down has been the level of innovation in the sector. New partnerships and product launches continue to roll out, including OpenAI announcing a major licensing agreement with Disney alongside a $1bn investment, as well as new model releases from OpenAI and Runway. Optimism on AI’s long-term potential remains high, but investor tolerance for heavy spending without a clearer path to ROI is starting to wear thin, and how the two will intersect remains to be seen.