Tesla stock has faced challenges since its peak in December, but some Wall Street analysts still see potential opportunities by 2025.

 

The electric automaker's stock is experiencing a correction, declining about 18% from its all-time high closing price of $479.86 on December 17. This sell-off, initially triggered by a broader market downturn, intensified last week after Tesla reported missing annual delivery targets for the first time.

 

The stock further declined by 4% on Tuesday, trading around $395.30 per share.

 

Despite the early 2025 stock weakness, some analysts maintain that the stock has further upside potential this year.

 

Artificial intelligence could be a bullish factor for the stock, according to Dan Ives of Wedbush Securities, who forecasts that companies will spend $2 trillion on AI investments over the next three years.

 

"We've continuously discussed the AI Revolution over the past few years as we believe it represents the most significant tech transformation in over four decades," noted Ives. "Now it's time for the broader software sector to join the AI movement as use cases are rapidly increasing."

 

Here's what analysts are saying about Tesla stock's recent challenges and why the automaker's shares might still experience significant gains in 2025.

 

Consider the Decline a Buying Opportunity: Wedbush Securities

 

According to Wedbush, Tesla's recent stock decline presents a buying opportunity for investors. The firm cites Tesla's "respectable" sales performance from the previous year, highlighting that the company delivered roughly 495,600 vehicles, just slightly below the projected 504,800 units.

 

Tesla is expected to release new models this year, potentially boosting its stock. Analysts reference the low-cost Tesla model Musk has been hinting at for years.

 

"We believe Tesla remains the market's most undervalued AI investment," analysts claimed, expressing "high confidence" that Tesla could increase its delivery growth by 20%-30%.

 

"Tesla's focus for 2025 is on accelerated delivery growth and full self-driving penetration, with the autonomous vision as Musk & Co.'s ultimate goal. We are strong buyers during any sell-off today due to weaker 4Q delivery numbers."

 

The firm reaffirmed its "outperform" rating on the stock and its $515 price target, suggesting a 31% upside from current levels.

 

Stock Appears Inexpensive: Stifel

 

Tesla's stock seems appealing at its current price, considering the company is more than just an automotive entity, according to Stifel analyst Stephen Gengaro.

 

"If you're purchasing the stock solely because they sell EVs, it seems overvalued. However, when considering full self-driving initiatives and how it could enhance the Cybercab business over time, it becomes a substantial value driver for the stock in the medium- to long-term," Gengaro commented in a conversation with Yahoo! Finance on Monday.

 

Musk's increasing interaction with president-elect Trump in recent months is also viewed as positive. It positions him to potentially impact full self-driving technology regulation, as Gengaro pointed out.

 

Furthermore, Tesla might benefit if Trump fulfills his plans to impose steep tariffs on U.S. imports from other nations. These tariffs could lessen competition from Tesla's U.S. rivals, another advantage, according to Gengaro.

 

"Musk is clearly involved in the conversation about accelerating regulation for FSD, opening up various growth prospects for the company over time."

 

In a Monday note, the firm raised its price target for Tesla shares to $492, indicating a 25% upside from current levels.

 

Full Self-Driving Could Approach a Valuation of Half a Trillion Dollars: BofA

 

Bank of America analysts downgraded their Tesla stock rating to neutral in a Tuesday note but increased their price target to $490 per share, suggesting approximately a 25% upside from current levels.

 

They estimated that Tesla's full self-driving technology could have a worth of about $480 billion. Meanwhile, the robotaxi segment might be valued at approximately $420 billion within the US and over $800 billion in global markets, the bank projected.

 

"We tested FSD during our visit to Tesla's gigafactory in Austin, TX in December, and we were impressed by its capabilities," analysts noted, forecasting that by the end of the decade, 23 million vehicles could be equipped with full self-driving software. "FSD is poised to deliver significantly higher margins compared to Tesla's primary auto business and could generate billions in EBIT annually."

 

Additionally, Tesla has several positive prospects in 2025, including possibly launching the robotaxi business and potentially increasing production of Optimus, its humanoid robot, according to the bank.

 

The analysts acknowledged that long-term growth drivers support their price target, although they conceded that there is considerable execution risk.

 

Strength in Energy Storage: Morgan Stanley

 

Morgan Stanley suggested that Tesla's minor delivery shortfall might be insignificant, considering newer facets of its business that will fuel future growth. Analysts highlighted the anticipated lower-priced vehicle model, along with its energy storage business.

 

Energy storage deployments exceeded expectations by roughly 15% in the fourth quarter, while energy storage growth rose about 113% over the 2024 fiscal year, the analysts pointed out.

 

"In our opinion, the shortfall reflects a relatively dated product and greater availability of more affordable competition internationally, prior to the anticipated introduction of the more affordable model (Juniper) in early/mid-2025, offsetting pre-buying and promotional efforts," the analysts wrote.

The new year is just beginning, yet macroeconomic uncertainty is already looming over investors, as Federal Reserve officials express concerns about inflation and its effect on the path of interest rate cuts.

 

During uncertain times like these, investors can boost their portfolio returns by including stocks with strong financial foundations and long-term growth prospects. The investment strategies of top Wall Street analysts can guide investors in selecting the right stocks, as these professionals rely on a deep understanding of the macroeconomic conditions and specific company factors for their analysis.

 

Here are three stocks preferred by the top analysts in the field, according to TipRanks, a platform that evaluates analysts based on their performance.

 

We'll begin with Uber Technologies (UBER), a company known for its ride-sharing and food delivery services. Uber exceeded expectations with its revenue and earnings for the third quarter of 2024, although its gross bookings were below expectations.

 

Recently, Mizuho analyst James Lee reaffirmed a buy rating on Uber Technologies shares with a price target of $90. Lee views 2025 as a year of investment for Uber. Although these investments could affect the company's earnings before interest, taxes, depreciation, and amortization in the short term, they are anticipated to drive long-term growth.

 

Based on his analysis, Lee expects Uber's growth investments to lead to a compound annual growth rate of 16% in core gross bookings from FY23 to FY26, aligning with the company's target of mid- to high-teens growth projected during their analyst day. Lee is confident that Uber's EBITDA growth is on track with the forecasted high-30s to 40% compound annual growth rate set during the analyst day. "Despite focusing on growth investments, economies of scale and enhanced efficiency should mitigate margin risks," said Lee.

 

Additionally, Lee believes that concerns about the growth of Uber's Mobility business are exaggerated. He anticipates high-teens gross bookings growth (in forex-neutral terms) in FY25, with the rate of deceleration slowing compared to the latter half of 2024.

 

Moreover, Lee projects that gross bookings for Uber's Delivery segment will remain in the mid-teens in FY25. This increase is expected to be driven by the rising adoption of new verticals while maintaining its market share in food delivery. The analyst also noted that Mizuho's research indicates order frequency has reached a new all-time high. The research further shows robust adoption of grocery delivery in the U.S., Canada, and Mexico, along with strong user penetration.

 

Lee is ranked No. 324 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 60% of the time, providing an average return of 12.9%. View Uber Technologies Stock Charts on TipRanks.

 

Next, we examine Datadog (DDOG), a company that offers cloud monitoring and security solutions. In November, Datadog reported results for the third quarter of 2024 that exceeded expectations.

 

On January 6, Monness analyst Brian White reiterated a buy rating on Datadog stock with a price target of $155. White believes the company has a balanced approach toward the trend of generative artificial intelligence, "avoiding the exaggerated claims made by many in the software industry." He noted that Datadog performed well compared to its peers in a difficult software landscape in 2024, but acknowledged it lagged behind other stocks in Monness' coverage.

 

Nevertheless, White anticipates that both Datadog and the broader industry will begin to experience incremental growth over the next 12 to 18 months due to the long-term boom in generative AI. Highlighting Datadog's strong performance compared to peers and its transparency regarding its progress in generative AI, White pointed out that AI-native customers comprised more than 6% of the company's annual recurring revenue (ARR) in Q3 2024, an increase from over 4% in Q2 2024 and 2.5% in Q3 2023.

 

White also highlighted some of Datadog's AI offerings, such as LLM Observability and its generative AI assistant, Bits AI. Overall, the analyst is optimistic about Datadog and believes the stock warrants a premium valuation compared to traditional software vendors due to its cloud-native platform, rapid growth, and significant secular trends in the observability field, as well as its new growth opportunities driven by generative AI.

 

White is ranked No. 33 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 69% of the time, yielding an average return of 20%. View Datadog Ownership Structure on TipRanks.

 

Our third stock pick this week is Nvidia (NVDA), a semiconductor powerhouse. The company is regarded as one of the primary beneficiaries of the generative AI surge and is witnessing strong demand for its advanced GPUs (graphics processing units), critical for building and running AI models.

 

Following a fireside chat with Nvidia's CFO, Colette Kress, JPMorgan analyst Harlan Sur reaffirmed his buy rating on Nvidia stock with a price target of $170. Sur emphasized the CFO's confidence in maintaining the production ramp-up of the company's Blackwell platform despite supply chain challenges, thanks to effective execution.

 

Additionally, the company anticipates continued strong spending in the data center space throughout 2025, bolstered by the Blackwell ramp-up and widespread demand. Sur noted that management envisions significant revenue growth opportunities as the company captures a larger portion of the $1 trillion-worth data center infrastructure installed base.

 

Sur added that Nvidia expects to capitalize on the shift to accelerated computing and the growing demand for AI solutions. Management believes the company holds a competitive edge over ASIC (application-specific integrated circuit) solutions due to several advantages, including ease of adoption and comprehensive system solutions.

 

Agreeing with this perspective, Sur stated, "We believe that enterprise, vertical markets, and government customers will continue to favor Nvidia-based solutions."

 

Among other key insights, Sur highlighted the launch of next-generation gaming products and opportunities to expand beyond high-end gaming into markets such as AI PCs.

 

Sur is ranked No. 35 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 67% of the time, providing an average return of 26.9%. View Nvidia Hedge Funds Activity on TipRanks.

Bond yields are climbing to levels unseen in over a year, fueled by worries that President-elect Donald Trump's extensive tariff strategy might trigger a resurgence in inflation.

 

This, in combination with solid economic indicators that don't seem likely to require further aggressive interest rate reductions, has yields on a steep upward trajectory that could impact everyday Americans.

 

While some on Wall Street have issued warnings about how rising bond yields could affect stock markets, the potential challenges extend far beyond that.

 

Outlined below are four areas consumers should monitor for signs of difficulty following the 10-year US Treasury yield's increase of over 100 basis points since mid-September, as it nears the significant 5% mark.

 

Consumer retirement portfolios are confronting a dual challenge as interest rates escalate, resembling what occurred during the bear equity market of 2022.

 

Higher interest rates coincide with declining bond prices for those with fixed-income investments, often resulting in negative returns.

 

In 2022, when the 10-year US Treasury yield more than doubled to around 4%, the Bloomberg aggregate bond index dropped 13%. Increased bond yields also exert pressure on stock valuations, with the S&P 500 falling nearly 20%.

 

Since the 10-year US Treasury yield began increasing in September, that Bloomberg index has decreased nearly 6%, once more adversely affecting consumer retirement assets. This is especially significant for those nearing retirement or already retired, as they typically maintain a larger portion in fixed-income instruments.

 

Meanwhile, the S&P 500 has fallen about 4% since mid-December, when investor unease about surging bond yields started to emerge.

 

Perhaps the most noticeable effect of rising bond yields is the increase in mortgage rates.

 

They were anticipated to decline after the Federal Reserve began reducing interest rates in September, but they have instead increased sharply.

 

This has raised the borrowing costs for potential homebuyers and reduced overall affordability.

 

Based on Freddie Mac data, the average 30-year fixed mortgage rate has climbed nearly 1 percentage point to approximately 7% since September.

 

"Mortgage rates have risen quite significantly," Greg McBride, the chief financial analyst at Bankrate, told Business Insider. He mentioned that a large proportion of the pain arising from higher bond yields is concentrated in fixed mortgage rates.

 

For consumers aiming to purchase a home at the US median sales price of around $420,000, the nearly 1-percentage-point increase in a 30-year fixed mortgage translates to a rise of more than $200 in monthly mortgage payments, equating to about $2,500 per year.

 

Rising interest rates also have an immediate impact on homeowners with adjustable-rate mortgages, as their monthly payments reset to align with the higher interest rates.

 

Even renters might not be exempt, as landlords facing increased financing costs might transfer those costs to their tenants during the next lease agreement.

 

McBride pointed out that auto loan interest rates are more closely associated with movements in the five-year US Treasury yield, which has roughly mirrored the 10-year note's increase of 100 basis points since September.

 

According to data from the St. Louis Federal Reserve, since interest rates began to rise in 2022, consumer auto loan rates for a five-year loan have almost doubled to 8.4% as of August.

 

Consumers can lower their monthly auto loan payment by opting for a longer repayment period, such as the increasingly popular six-year loan. However, this does not reduce the total amount of interest paid on the car over the loan's duration; it actually increases it.

 

Higher bond yields can also push up interest rates on consumer debt, such as personal loans and credit card balances.

 

For credit cards, since the debt is unsecured, it is variable and closely linked to changes in the prime rate, which is based on the federal funds rate.

 

"Even though the Fed lowered interest rates several times in 2024, average credit card interest rates reached record highs," Sara Rathner, a credit card expert at NerdWallet, told BI. "In simple terms, this makes it more costly to have credit card debt."

 

The average credit card interest rate has jumped from about 15% at the start of 2022 to almost 22%, according to information from the St. Louis Federal Reserve.

 

This 7-percentage-point increase will significantly raise interest expenses for consumers if they carry a credit card balance from month to month and do not pay it off fully.

 

A recent survey by NerdWallet found that US households with revolving credit card balances were carrying an average of nearly $10,000 in debt.

 

"If you only make the minimum payment, it could take you over two decades to pay that off," Rathner said, "and with interest, you'll pay triple the original amount that you charged."

 

The stock market has experienced a challenging week, and it might also be facing a difficult year in 2025.

 

The market is on track for its worst week since March 2023 after the Federal Reserve projected a cautious outlook regarding interest rate reductions in 2025. However, examining the market's internal dynamics, it is apparent that damage was inflicted well before the Fed's meeting on Wednesday—and this is a historic indicator of challenging times ahead.

 

The number of declining stocks in the S&P 500 surpassed advancing stocks for 14 consecutive days as of Thursday.

 

The advancing/declining data helps to assess underlying participation in market movements, and the recent weakness indicates that even though the S&P 500 is only down 4% from its record high, damage exists beneath the surface of the benchmark index.

 

This is demonstrated by the equal-weighted S&P 500 index being down 7% from its record high.

 

According to Ed Clissold, chief US strategist at NDR, the S&P 500's 14-day losing streak in its advance-decline line is the worst since October 15, 1978.

 

Clissold noted that 10-day losing streaks or longer in advancing stocks relative to declining stocks can signal ominous prospects for future stock market returns.

 

Although this situation has only been triggered six times since 1972, it demonstrates lackluster forward returns for the S&P 500. The index has shown an average six-month forward return of 0.1% following these 10-day breadth losing streaks, compared to the typical 4.5% average gain observed during all periods.

 

"Studies with only six cases hardly constitute a strategy. But market tops have to originate somewhere, and many commence with breadth divergences, or widely followed averages posting gains with minimal stock participation," Clissold said.

 

Perhaps more indicative for the stock market is whether it can stage a recovery as it approaches one of the most bullish seasonal periods of the year: the Santa Claus trading window.

 

If it cannot, that would be telling, as per Clissold.

 

"A failure to see a Santa Claus Rally would be worrisome not only from a seasonal standpoint, but it would permit breadth divergences to intensify," the strategist mentioned.

 

Additionally concerning to Clissold is investor sentiment, which has exhibited signs of extreme optimism since September. According to the research firm's internal crowd sentiment measure, it is in the seventh-longest stretch in the zone of excessive optimism, based on data since 1995.

 

"Several surveys have reached potentially unsustainable levels," Clissold advised, cautioning that any sentiment reversal could serve as a warning signal for future market returns.

 

Ultimately, sustained stock market weakness, particularly in the internals, would lead Clissold to suggest that 2025 might not be as easy as 2024 for investors.

 

"If the stock market cannot address recent breadth divergences in the coming weeks, it would indicate our concerns about a more challenging 2025 could become a reality," the strategist concluded.

Investors may be underestimating the threat to the bull rally posed by wild moves in the foreign exchange market.

 

KKR wrote in its 2025 outlook this week that currency swings will become the market's "Achilles' heel" next year.

 

"Our bottom line is that this is not the time to take a lot of excess exposure risk on FX, as it may prove to be the dominant story of 2025," it said.

 

The firm said investors should brace for trade wars and widening fiscal imbalances to turbocharge foreign exchange volatility beyond recent norms.

 

Tariffs will likely upend interest rate coordination worldwide, while economic friction causes further disruptions. Monetary policy helps dictate currency levels, and big changes can spur instability.

 

Meanwhile, high levels of government debt can slash demand for a country's currency, triggering devaluations.

 

KKR urges investors to consider how the market behaved between 1994 and 2000. After interest rate hikes first rattled markets in 1994, the stock market went on to rally, similar to what has happened since 2022, KKR said.

 

"However, things became unsettled in 1998, as a combination of currency unwinds and excess leverage led to a short and sharp market correction that investors were underestimating," the outlook noted.

 

Investors can already see this taking place in some markets.

 

Debt and stock markets in Brazil have been shaken this week amid a deep plunge in the country's real. The currency has become the worst performer against the dollar, hitting a record low on Wednesday.

 

Brazilians have been dumping the real since late November after proposed austerity measures failed to satisfy investors concerned over the country's widening fiscal deficit.

 

Still, KKR is largely optimistic about 2025. The firm expects the S&P to reach 6,850 by year-end, before racing toward 7,500 in 2026.

 

"To be sure, we expect plenty of volatility, consolidations, and drawdowns along the way to our 2025-26 price targets," KKR wrote, suggesting that investors couple mega-cap tech exposure with cyclicals, as well as small and mid-cap stocks.

The challenged Chinese autonomous trucking company TuSimple has now rebranded itself as CreateAI, shifting its focus towards video games and animation, the announcement was made on Thursday.

 

This announcement follows GM's closure of its Cruise robotaxi division this month, marking a phase where the once-thriving self-driving startup industry is starting to eliminate laggards. TuSimple, operating in both U.S. and China markets, faced its own problems, including vehicle safety concerns, a $189 million settlement from a securities fraud lawsuit, and its removal from Nasdaq in February.

 

Over two years after CEO Cheng Lu rejoined the company in this role after being ousted, he now forecasts the business might reach a break-even point by 2026.

 

This optimism is tied to a video game based on popular martial arts novels by Jin Yong, planned for an initial release in that year, according to Cheng. He foresees generating "several hundred million" in revenue by 2027 when the complete version is launched.

 

Prior to its delisting, TuSimple reported a loss of $500,000 during the first three quarters of 2023 and invested $164.4 million in research and development during that time frame.

 

Company co-founder Mo Chen has a "long-standing connection" with the Jin Yong family and initiated work back in 2021 to produce an animated feature based on the novels, as Cheng explained.

 

The company touts its artificial intelligence expertise in developing autonomous driving software as providing a foundation for the development of generative AI, which is the advanced technology powering OpenAI’s ChatGPT, able to create human-like responses to user inputs.

 

In conjunction with the CreateAI rebranding, the company has launched its first significant AI model named Ruyi, an open-source visual work model available on the Hugging Face platform.

 

"Our shareholders clearly recognize the value in this transformation and are eager to progress in this new direction," Cheng expressed. "Both our management team and Board of Directors have received tremendous support from our shareholders." The company is slated to hold its annual shareholder meeting on Friday. Cheng stated the company intends to expand its workforce to around 500 next year, up from the current 300.

 

Co-founder Xiaodi Hou, claiming to be the largest individual shareholder at 29.7%, has openly questioned the shift towards gaming and animation. Hou announced his intention to withhold or oppose support at the shareholders meeting and advocated for the liquidation of the company. He has since launched his own autonomous trucking firm in Houston called Bot Auto, which secured $20 million in funding in September.

 

While still operating under the TuSimple brand, the company announced in August a collaboration with Shanghai Three Body Animation to produce the first animated feature film and video game based on the science fiction novel series "The Three-Body Problem."

 

The company mentioned at the time that it was inaugurating a new business sector dedicated to the creation of generative AI applications for video games and animation.

 

CreateAI anticipates reducing top-tier, known as triple A, game production costs by 70% within the next five to six years, according to Cheng. He did not disclose whether the company is in discussions with gaming giant Tencent.

 

When questioned about the implications of U.S. restrictions, Cheng asserted there were no difficulties, stating the company utilizes a combination of Chinese and non-Chinese cloud computing providers.

 

The U.S., under the Biden administration, has intensified restrictions on Chinese businesses’ access to advanced semiconductors necessary for powering generative AI.

 

Gold prices edged up on Thursday, erasing earlier gains after U.S. data reinforced market expectations that the Federal Reserve will take a cautious approach to policy easing in the year ahead.

 

Spot gold was up 0.2% at $2,592.39 per ounce and U.S. gold futures fell 1.7% to $2,607.50.

 

Data earlier showed the U.S. economy growing faster than expected in the third quarter, while jobless claims also fell more than anticipated.

 

"With these GDP prints and the jobless claims, it's showing that the data is fairly firm," said Bart Melek, head of commodity strategies at TD Securities, adding that a solid economy and inflationary risks, including tariffs and spending cuts, reaffirm the Fed has little reason to be aggressive, which historically has not been good for non-yielding gold.

 

Gold slipped more than 2% to a one-month low earlier in the session after Fed officials dialed back projections for future easing given stubborn inflation.

 

The drop attracted investors to buy, sending prices as much as 1.5% higher earlier in the session.

 

"The short-term dip in gold presented a good buy-in opportunity for long-term stackers. You have the looming debt problem, the potential government shutdown, and we're already seeing the posture of the new administration in terms of trying to cut the expenses and minimize the deficits," said Alex Ebkarian, chief operating officer at Allegiance Gold.

 

U.S. President-elect Donald Trump's pre-inauguration push to sway Congress threatens to complicate efforts to avoid a government shutdown, potentially disrupting services such as air travel and law enforcement ahead of the holidays.

 

Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.

 

Investors await Friday's release of core PCE data, the Fed's preferred inflation measure, for further clues on the economic outlook.

 

Spot silver fell 1.4% to $28.95 per ounce, platinum added 0.1% at $920.55 and palladium rose 0.5% to $907.68.

The stock market's post-election surge is heating up as we approach year-end, but it's important for investors to exercise caution in pursuit of profits.

 

Some analysts view the remarkable rise since the November 5 election as a warning sign, implying that the market's record-breaking performance may lead to a downturn as early as next year.

 

Among the pessimists, BCA Research recently suggested that stocks could enter a bearish phase in the first half of next year, with potential declines reaching 35%.

 

Persisting economic threats pose significant risks to stocks, the firm noted in a recent report. Consumer spending appears to be decreasing, with shoppers increasingly seeking cheaper options at retailers like Target and Walmart. Additionally, sectors like the job market are weakening, they mentioned.

 

"While we anticipate a recession in 2025 is likely, risk assets might fall short even without one, and the current valuations are not promising for future gains," the firm stated.

 

"Nevertheless, we predict a bear market in equities will manifest in the first half, and we will seek a strategic entry to short equities if our stops are breached. We intend to reduce our underweight position shortly after the 20% bear-market threshold and may aim to overweight equities at declines of around -30% to -35%, should they reach such lows."

 

Other Wall Street analysts have adopted a bearish outlook due to historically elevated valuations. According to Ned Davis Research, since 1928, in years when the S&P 500 has achieved at least 50 record highs, the median return for the following year was -6%.

 

The S&P 500 recently marked its 57th record high of 2024.

 

"The primary challenge with momentum studies is that stock prices don't rise indefinitely," analysts at the firm wrote, warning that concentrated market areas could predispose stocks to a weaker 2025. "While AI might spur another wave of productivity and profits that quell inflation and moderate Federal Reserve policies, history suggests this is the exception, not the norm."

 

Investors are advised to consider reallocating resources at the year's close, as noted by Andrew Slimmon, a senior portfolio strategist at Morgan Stanley.

 

"The stock market is being driven by speculative, low-quality growth stocks," Slimmon told CNBC this week, remarking that the current investment scenario is reminiscent of 2021. "That period didn't end well for those invested stocks. I believe December is a fitting time to reassess and declare an end. While it might persist, one should be cautious about future repercussions," he said.

 

"Numerous stocks have surged by over 50%, 60%, 70% this year. Therefore, it seems wise to exit these positions and seek out more underperforming areas."

 

Most analysts on Wall Street are broadly optimistic for 2025, though they expect a more subdued performance compared to the significant gains seen in 2023 and 2024. Barclays, Bank of America, and Goldman Sachs project a 10% return for the S&P 500 next year. The benchmark index has risen approximately 28% so far this year.

European markets experienced a downturn on Tuesday, ending an eight-session winning streak. The pan-European Stoxx 600 index closed down by 0.52%, with most sectors retreating. Among the key contributors:

• Industrials led the losses, declining 1.08%.
• Mining stocks fell 0.78% after Chinese trade data disappointed market expectations.

 

Notable Regional Performances

• Germany's DAX managed to close slightly above the flatline.
• France's CAC 40 dropped 1.14%, leading the regional losses.
• Despite Tuesday’s decline, the Stoxx 600 has risen 1.63% in December so far, maintaining its upward momentum for the month.

 

Key Developments and Stock Highlights

 

Delivery Hero

• Shares of Delivery Hero plummeted by 10% following the Dubai Stock Exchange debut of its Middle Eastern subsidiary, Talabat.
• Talabat raised $2 billion in its IPO, but shares fell from 1.7 UAE Dirham to 1.49 UAE Dirham by the session's close.

 

Commerzbank

• Germany’s Commerzbank saw its stock rise nearly 3%, ranking among the top gainers in the Stoxx 600.
• The rally came after the resignation of Jutta Dönges from the bank's supervisory board.

 

Ashtead Group

• The U.K. equipment rental firm saw its shares tumble by over 11%, the largest drop on the Stoxx 600.
• The decline followed its announcement to move its primary listing to New York and a warning of weaker-than-expected annual profits.

 

TeamViewer

• Shares of TeamViewer fell by 6% after the company announced its largest acquisition to date: a $720 million deal for employee experience software maker 1E.

 

Economic Data and Corporate News

 

U.S. Inflation Outlook

 

Investors await Wednesday's U.S. consumer price index (CPI) report, which could shape the Federal Reserve's interest rate decisions for its December 17-18 meeting.

• Forecasts: Headline inflation is expected to rise 0.3% for November and 2.7% year-on-year.

 

China Trade Data

 

Chinese trade figures underwhelmed:

• Imports contracted by 3.9% in November, marking the sharpest drop since September 2023.
• Exports grew by 6.7%, below the anticipated 8.5%.

 

U.K. Hiring Trends

 

A report by Indeed highlighted a 24% year-on-year contraction in U.K. job postings as of November 22.

• Contributing factors: New government policies, including increased National Insurance contributions, a higher minimum wage, and enhanced workers' rights legislation.

 

SSE Investment Plans

 

SSE announced plans for its subsidiary, SSEN Transmission, to invest at least £22 billion in grid infrastructure between 2026 and 2031.

• This aligns with the U.K.’s target to decarbonize the electricity grid by 2030.

 

Other Headlines

• Shell settled a lawsuit with Greenpeace U.K., which included a £300,000 payment to the Royal National Lifeboat Institution and a legally binding agreement barring future protests near Shell’s North Sea platforms.
• Allianz raised its financial targets, promising increased shareholder returns and revenue growth across its divisions.
• Stellantis and CATL announced a joint €4.1 billion investment in a European battery factory in Spain, with production slated for late 2026.

 

Global Markets at a Glance

 

European Opening Predictions

• FTSE 100: Expected to open 38 points lower at 8,315.
• DAX: Predicted to drop 76 points to 20,274.
• CAC 40: Projected to decline 31 points to 7,454.

 

U.S. Market Snapshot

• The S&P 500 and Nasdaq Composite saw slight gains, rising 0.1% and 0.3%, respectively, while the Dow Jones dropped by 0.2%.

The Walt Disney Company has launched a new unit, the Office of Technology Enablement, to oversee its integration of artificial intelligence (AI) and mixed reality (XR) across its diverse business areas, including film, television, and theme parks. This new division will be led by Jamie Voris, former Chief Technology Officer (CTO) of Disney's film studio and the driving force behind the development of Disney’s app for Apple’s Vision Pro mixed reality headset. Voris will report to Disney Entertainment Co-Chairman Alan Bergman.

 

Disney aims to harness fast-evolving technologies like AI and XR to enhance consumer experiences, drive creativity, and innovate within its business operations. Bergman emphasized that the creation of this unit underscores Disney’s commitment to exploring both the potential benefits and risks associated with these technologies. Unlike traditional centralized approaches, the Office of Technology Enablement will serve as a coordinating body, ensuring that various AI and XR initiatives align with Disney’s broader strategic goals without directly controlling individual projects.

 

The Office of Technology Enablement launches with a core leadership team and plans to expand to around 100 employees, according to a source close to the matter. The move follows Disney’s earlier decision to form a dedicated task force to investigate how AI might be applied throughout its entertainment empire. Disney is also actively pursuing expertise in augmented reality (AR), virtual reality (VR), and mixed reality (MR), each of which offers unique opportunities for innovation. AR overlays digital elements onto the physical world, VR immerses users in entirely simulated environments, and MR combines aspects of both, creating immersive, interactive experiences that blend physical and digital realms.

 

Several Disney divisions are already exploring applications for these technologies. Notably, Kyle Laughlin, a longtime Disney executive with experience in AR, VR, and AI, returned to the company in March as Senior Vice President of Research and Development for Walt Disney Imagineering, the creative team behind Disney’s theme park attractions. Laughlin’s return, after a brief departure to lead Amazon’s Alexa Gadgets division, highlights Disney’s focus on infusing cutting-edge technology into its renowned theme park experiences.

 

Disney’s interest in leveraging AI and XR also aligns with broader trends in the technology market, as companies like Meta and Snap have introduced a new generation of sleeker, lightweight AR glasses that offer a stylish alternative to bulkier VR headsets. Seven sources familiar with Disney’s strategy confirmed that the company is quietly building a team to explore how best to utilize these emerging technologies to create unique, immersive experiences in its theme parks and consumer products.

 

The augmented and virtual reality market has shown significant growth, with market research firm IDC reporting that approximately 1.7 million AR and VR headsets have been sold this year. Meta currently dominates the market with a 60.5% share but faces increasing competition from companies like Sony, Apple, and ByteDance. Additionally, Google has signaled intentions to reenter the AR/VR space, indicating that competition within the market is likely to intensify.

 

Disney’s focus on advanced technologies extends beyond hardware, encompassing AI applications as well. With AI-driven tools increasingly being integrated into creative workflows, Disney is actively examining how machine learning and other AI innovations can support its storytelling, animation, and interactive experiences. The new Office of Technology Enablement is tasked with coordinating these efforts, helping Disney not only to create innovative content but also to streamline operations across its multifaceted entertainment ecosystem.

 

As Disney leverages technology to enhance its offerings, the company is positioning itself at the forefront of a technological revolution that promises to reshape the entertainment landscape. With AI and mixed reality as central components of its future strategy, Disney is preparing to lead the way in delivering next-generation experiences to audiences around the world, both within its iconic theme parks and through digital platforms that bring Disney magic directly into consumers' homes.

In a significant shift that reflects the evolving dynamics of the semiconductor industry, Intel is set to be replaced by Nvidia on the Dow Jones Industrial Average (DJIA), bringing an end to Intel’s 25-year presence on the blue-chip index. This change, announced by S&P Dow Jones Indices on Friday, signals the impact of Nvidia’s rise in the booming artificial intelligence (AI) market and the challenges faced by Intel as it struggles to adapt to new industry demands. Alongside Nvidia, paint manufacturer Sherwin-Williams will join the DJIA, taking the place of Dow Inc., further reshaping the 30-member index.

 

Intel's removal from the DJIA marks a setback for the once-dominant chipmaker, which has seen its stock value fall dramatically this year, down 54% year-to-date. The decline has made Intel the worst-performing company on the DJIA, with the lowest share price on the price-weighted index. Following the announcement, Intel’s shares dropped 1.6% in extended trading, while Nvidia’s stock gained 2.2%, reflecting investors’ optimism about Nvidia's future as it joins the Dow.

 

Intel's downfall can be attributed to a series of strategic missteps that have allowed competitors, particularly Taiwan Semiconductor Manufacturing Company (TSMC), to surpass it in the global semiconductor market. Once a leader in chip manufacturing, Intel has lost its technological edge over TSMC, which has taken a commanding position in producing advanced chips. Intel also missed the opportunity to invest in generative AI early on, passing up a potential stake in ChatGPT-owner OpenAI, a decision that has since proven costly as AI demand surged.

 

For Nvidia, however, the story is quite different. The company has emerged as a leader in the AI chip market, with its graphics processing units (GPUs) now widely recognized as essential for AI data centers and machine learning applications. Once known primarily for its role in producing high-performance GPUs for gaming, Nvidia has successfully expanded its influence to become a key player in powering the global AI industry. This expansion has fueled a seven-fold increase in Nvidia’s stock over the past two years, propelling its valuation to a staggering $3.32 trillion. As of 2024, Nvidia stands as the world’s second-most valuable company, underscoring its importance in the technology sector.

 

In addition to Nvidia’s AI-driven success, the company's recent 10-for-1 stock split in June made its shares more accessible to retail investors. This move not only broadened Nvidia’s shareholder base but also helped pave the way for its inclusion in the DJIA, which traditionally favors companies with a higher price-per-share. Nvidia's entry into the DJIA is thus both a recognition of its technological achievements and a testament to its widespread appeal among investors, particularly those looking to capitalize on the AI revolution.

 

Intel’s removal from the DJIA could have broader implications for the company’s stock. Being excluded from the DJIA means Intel will no longer be part of the exchange-traded funds (ETFs) that track the index, which could potentially put additional downward pressure on its share price. Losing its place on the DJIA also presents a reputational setback for Intel, as it works to regain investor confidence amidst a challenging restructuring process.

 

“Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. She also noted that Intel’s exclusion from index-tracking ETFs could affect its stock performance, as fewer investors will now have exposure to Intel through these funds.

 

Once a Silicon Valley icon, Intel played a pioneering role in the chip industry, starting with memory chips before shifting to processors that powered the personal computer revolution. In the 1990s, Intel's "Intel Inside" campaign turned its chips into premium products and made the brand a household name. However, Intel’s struggles over the past decade have been evident in its financial performance. The company’s revenue in 2023 stood at $54 billion, nearly a third lower than in 2021 when Pat Gelsinger took over as CEO. Despite some recent positive projections for its PC and server businesses, Intel is expected to report its first annual net loss this year since 1986. Intel’s market value, now below $100 billion for the first time in three decades, pales in comparison to Nvidia’s massive valuation.

 

As Nvidia steps into Intel's former role on the DJIA, its influence in the semiconductor industry is expected to grow further. Nvidia’s dominance in the AI chip market has placed it at the forefront of the sector, with its chips often viewed as irreplaceable for high-performance computing and AI applications. Nvidia’s technology advantage, along with the high cost of replacing its AI chips, makes it difficult for rivals to compete in this space. Many experts consider Nvidia’s stock a barometer for the broader AI market, reflecting investor sentiment about the sector's long-term growth prospects.

 

U.S. stocks climbed on Friday, led by a surge in Amazon shares after the company reported robust earnings. Meanwhile, 10-year Treasury yields reached a four-month high as investors hesitated to buy bonds ahead of Tuesday's U.S. presidential election.

 

Initially, Treasury yields dropped following October's U.S. employment report, which showed minimal job growth due to industrial actions and hurricanes. However, the unemployment rate remained steady at 4.1%, indicating a stable labor market.

 

After the U.S. market closed, S&P Dow Jones Indices announced that Nvidia would replace Intel in the Dow Jones Industrial Average. Nvidia's shares rose 1.9% in after-hours trading, while Intel dropped 1.4%.

 

With four days until Election Day, polls show a tight race between Republican Donald Trump and Democratic Vice President Kamala Harris. Some analysts predict that U.S. fiscal conditions may worsen regardless of the election outcome.

 

The benchmark 10-year yield increased by 7.7 basis points to 4.361%, the highest since July, after a significant 48 basis point rise in October.

 

On Wall Street, Amazon shares surged 6.2% after forecasting strong holiday quarter results. This gain helped counterbalance a 1.2% drop in Apple shares following the company's conservative growth outlook. “We’ve seen mixed results from Big Tech, but it wasn't as bad as expected,” said Rick Meckler of Cherry Lane Investments.

 

The Dow rose 288.73 points (0.69%) to 42,052.19, the S&P 500 gained 23.35 points (0.41%) to 5,728.80, and the Nasdaq rose 144.77 points (0.80%) to 18,239.92. However, the S&P 500 finished the week down 1.4%.

 

Globally, the MSCI index rose 0.34%, while Europe’s STOXX 600 had its best day in five weeks, boosted by bank stocks.

 

The dollar strengthened against the euro and other major currencies after the U.S. jobs report. The euro fell 0.40% to $1.084, while the dollar index gained 0.36%. Against the yen, the dollar rose 0.60% to 152.94 ahead of Japan’s long weekend.

 

Bitcoin saw a modest rise of 0.57%, trading at $69,531.

 

In commodities, oil prices rose amid reports that Iran was preparing a retaliatory strike on Israel from Iraq. Brent crude futures gained 29 cents to $73.10 per barrel, and WTI crude rose 23 cents to $69.49. Gold edged down, pressured by the stronger dollar.