The AI Trade Has Powered Wall Street Through Bitcoin’s Wobble. It Sets Up a December Rally.

AI risk appetite is holding firm. A Bitcoin rebound will add further fuel. (Michael M. Santiago/Getty Images)

Key Points

• Bitcoin rebounds above $93,000, signaling renewed risk appetite, while AI-related stocks also see significant gains.
• Oracle, Meta Platforms, and CoreWeave have posted solid gains over the past week.
• Nvidia rises almost 4% as its AI sector investments continue.

If Bitcoin’s late autumn slump was meant to drive a stake into the heart of the animal spirits that have powered risky assets higher for much of the past three years, the stock market appears largely unscathed and more than willing to roll the dice into the final weeks of December.

Bitcoin prices, which are inexorably tied to investor sentiment, have rebounded firmly over the past two days, taking the world’s largest cryptocurrency back above $93,000 and stoking risk appetite in markets around the world.

However, the bounce back actually is lagging an even more bullish tenor in the market’s bigger—and far more powerful sentiment driver—and that trade has returned in full force.

Oracle shares, which were pounded in the selloff in November, have jumped more than 3.6% over the past five days, and look set to open at the highest levels in nearly two weeks.

Meta Platforms, whose AI capex hubris in late October triggered a near 22% drawdown for the Facebook parent, has gained nearly 4% over the past week. CoreWeave, which has faced difficult questions over the cost of ambitious AI expansion, has gained nearly 8%.

Nvidia , the market’s biggest and most-important stock, has risen almost 4% over the past week, pacing Bitcoin’s advance and ensuring investors that risk appetite remains firmly entrenched over the early days of December.

“Nvidia and Bitcoin are the market’s two biggest high-beta, risk-on trades, attracting the same pools of speculative capital,” said Joe Tigay, portfolio manager at Equity Armor Investments. “Both assets represent the future—AI and decentralized finance—and both serve as magnets for leveraged speculation.”

The biggest players in the AI sector itself, meanwhile, show no signs of slowing down investment as they continue to stake their claims in the digital land rush that has propelled stocks higher for much of the year.

Nvidia, unfazed by concerns over the circular nature of big AI investments, unveiled a $2 billion stake in chip design software group Synopsys earlier this week.

Amazon.com , keen to ensure that it remains within touching distance of the biggest names in the AI chipmaking space, rushed its new Trainium 3 accelerators to market just a year after its predecessor.

Meanwhile, reports from London’ Financial Times on Wednesday suggested Anthropic, the AI start-up backed by both Amazon and Google parent Alphabet , was planning to bring what could be one of the biggest initial public offerings ever to the market sometime next year.

No wonder OpenAI’s Sam Altman issued a “code red” alert to employees urging them to step up the pace of chatbot development in the face of stiffening competition from the likes of Google’s Gemini.

With Bitcoin steadying early Wednesday, and the AI trade firmly back on track, market focus likely will shift to next week’s Federal Reserve rate decision to provide the final dose of fuel for the expected December rally.

A few data hurdles will need to be cleared first, but the CME Group’s FedWatch pegs the odds of a quarter-point rate reduction at around 87%, and the likely naming of National Economic Council director Kevin Hassett as the next Fed chairman presumably will keep the central bank on a dovish tack into 2026.

“The bottom line is after a 38% rally in six and a half months, some type of shake the tree pullback was needed,” said Ryan Detrick, chief market strategist at Carson Group.

“We think it may have been necessary to shake the weak hands out this year to set up a potential late year rally.”

Write to Martin Baccardax at martin.baccardax@barrons.com