The S&P 500 continued its steady rise over the past two weeks, rising 1.4%, signalling renewed confidence in the US economy. Few economists would have predicted this outcome a year ago. Many analysts warned that President Trump’s tariff policy and ongoing trade tensions could slow growth, reignite inflation, or even push the economy into a recession. Instead, as 2025 comes to an end, the S&P 500 is nearing the critical 7,000 mark, up about 17% YoY, while the Nasdaq has risen roughly 20% over the same period.
Economic data reinforced the bullish narrative. In a surprise to markets, US GDP grew at a much faster-than-expected pace in the third quarter, rising 4.3%, well above the 3.2% consensus forecast, driven by robust consumer spending. The report, delayed by a government shutdown, prompted a swift political response, with President Trump crediting tariffs for the strong figures and reiterating claims of low inflation and improved national security.
Beneath the headline growth, however, concerns are emerging about the risk of AI concentration. Several analysts have noted that much of the investment momentum is coming almost exclusively from AI-related spending. Pantheon Macroeconomics highlighted that private fixed investment is rising primarily due to AI, while other categories are stagnating or declining. Deutsche Bank echoed this view, suggesting that without tech-driven capital expenditure, the US economy would be facing recession.
Bank of America estimates that AI capital expenditure from five hyperscalers, Alphabet, Meta, Microsoft, Amazon, and Oracle, will total $399 billion this year and exceed $600 billion in the years ahead. Increasingly, this spending is being funded through debt, with AI-related issuers accounting for roughly 30% of net USD credit supply in 2025, according to Goldman Sachs.
Policy developments also influenced sentiment. A federal judge allowed the Trump administration to proceed with a $100,000 fee on new H-1 B visa applications, seen as a setback for US technology companies that depend on skilled foreign workers. The Department of Homeland Security also announced plans to replace the visa lottery system with a weighted selection favoring higher-paid roles, along with proposals for a wage floor. In healthcare, President Trump announced agreements with nine pharmaceutical companies to reduce drug prices for certain Americans in exchange for temporary tariff relief, bringing the total number of participating drugmakers to 14 out of 17 targeted earlier this year.
Geopolitics and technology competition remained in focus after reports that Chinese scientists have developed a domestic prototype of an EUV-like lithography machine, long considered a near monopoly of ASML. ASML’s EUV machines, each costing around $250 million, are critical to manufacturing cutting-edge chips designed by Nvidia and AMD and produced by TSMC, Intel, and Samsung, and have been restricted to US allies such as Taiwan, South Korea, and Japan. While major technical hurdles remain and commercial viability is years away, the development underscores China’s determination to close the semiconductor gap. Beijing has set an official goal of producing functional chips on the system by 2028, though those close to the project suggest 2030 is a more realistic timeline.
Meanwhile, gold prices pushed near record highs as investors sought protection against policy risk, tariffs, and geopolitical uncertainty. Signs of a widening gap between large and small businesses also emerged, with profits and job creation increasingly concentrated among large firms.
Defense spending returned to the spotlight after President Trump signed a nearly $1 trillion annual defense bill that included $800 million in funding for Ukraine. Trump also announced plans to meet with major defense contractors, pressing them to prioritize investment in development over buybacks and dividends, and to support ambitious proposals to revive US shipbuilding.
Weekly Earnings Roundup: Surprises & Misses
Several major companies released their earnings in the last 2 weeks, including Micron Technology (NASDAQ: MU), Jabil (NYSE: JBL), General Mills (NYSE: GIS), Accenture (NYSE: ACN), Nike (NYSE: NKE), FedEx (NYSE: FDX), and Carnival Cruise Lines(NYSE: CCL). Earnings over the past two weeks reinforced the dominance of AI-driven themes.
Micron Technology delivered one of the strongest reports of the season, beating estimates and issuing bullish guidance as demand for AI memory continues to outstrip supply. Management raised capital expenditure plans and guided to sharply higher margins, citing an environment where demand is structurally above supply. The stock is up 20% over the past two weeks following upgrades from major banks.
Jabil also posted a solid quarter, beating earnings expectations and reporting 19% YoY revenue growth, supported by strength across multiple end markets. Shares gained 6% over the period.
Nike, in contrast, disappointed investors after guiding that near-term sales will decline, reflecting ongoing weakness in China and difficulties faced by its Converse brand. While revenue modestly grew by 1%, concerns about product strategy and market share weighed on sentiment, sending shares down 12% over the past two weeks.
Carnival Cruise Lines stood out on the positive side, reporting better-than-expected earnings and issuing optimistic guidance for 2026. Management highlighted strong demand and record revenue, reinforcing confidence in the durability of the travel recovery. The stock rose 7% over the period.
Top Gainers
Norwegian Cruise Line (NYSE: NCLH) advanced 11% over the past two weeks as investors reassessed the cruise sector, encouraged by resilient demand and healthy onboard spending trends.
AppLovin (NASDAQ: APP) gained 8%, benefiting from a broader market rally in AI-related stocks, and s investors focused on the company's strategic pivot to AI-powered advertising.
NVIDIA (NASDAQ: NVDA) increased 7% following news of a non-exclusive licensing agreement with AI inference specialist Groq, along with reports of potential asset acquisitions. The developments reinforced Nvidia’s central role in the evolving AI ecosystem.
Top Losers
ServiceNow (NYSE: NOW) declined 12% after reports that the company is in talks to acquire cybersecurity firm Armis in a deal that could reach $7 billion. Investors questioned the strategic fit and reacted cautiously amid broader rotation out of high-multiple software stocks.
Moderna (NASDAQ: MDRNA) fell 5% following reports that an FDA official called for a stricter vaccine approval process, adding uncertainty to the company’s longer-term pipeline outlook.
Upcoming Earnings: Key Stocks to Monitor
The coming week is expected to be relatively quiet, with no major companies scheduled to report earnings. Attention will then shift to the following week, when results are due from Constellation Brands (NYSE: STZ), Jefferies Financial Group (NYSE: JEF), and Albertsons Companies (NYSE: ACI).
As markets head into the new year, investor focus is likely to remain on AI-related capital spending, policy signals, and how companies allocate cash amid slowing growth and elevated valuations.