S&P 500 Hits Record High Without AI Help. Why That’s a Good Thing.

(Michael M. Santiago/Getty Images)

The artificial-intelligence surge looks to be weakening and maybe that’s a positive sign. Earnings from Oracle and Broadcom didn’t impress investors, but the wider market rallied anyway, which could be a sign of things to come.

This week could be a turning point. On Thursday a double-digit slump for software and cloud-computing company Oracle couldn’t stop the S&P 500 from reaching a record high. Housing stocks were benefiting from the Federal Reserve’s interest-rate cut, while financial companies welcomed news of potential deregulation.

Increased stock market breadth is vital considering the doubts around AI. Oracle was punished for its increased capital expenditure. That spending should be good for hardware providers such as Broadcom, but markets weren’t impressed with the chip company’s earnings, with the stock having fallen more than 3% in after-hours trading Thursday.

Investors are becoming more selective about AI stocks. Oracle and cloud company CoreWeave have sunk about 40% since early October. Dependence on spending by ChatGPT-developer OpenAI is the main point of concern—its $1 billion investment from Disney looks handy, but is less than 0.1% of its $1 trillion+ spending plans.

What does that mean for the market going forward? If you believe in historical patterns, the S&P 500’s valuation indicates investors should expect zero—yes, zero—returns over the next decade, according to Torsten Sløk, chief economist at Apollo Global Management. But that looks too pessimistic. The market’s composition has changed over the years and companies now have structurally higher margins. Wall Street forecasts 14% profit growth for the S&P 500 in 2026, likely helped by AI as the focus shifts from buying hardware to using the technology to make operations more efficient.

There could still be some shaky days ahead. Memory-chip maker Micron Technology is next up for the AI beneficiaries, with earnings next week facing a high bar as the stock has more than tripled in price this year. But even a miss might not be so bad—AI is no longer the only game in town.

—Adam Clark

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Disney Embraces AI in Licensing Deal with OpenAI

Walt Disney is Hollywood’s first major studio to take a big dive into generative artificial intelligence, investing $1 billion in OpenAI in a three-year licensing deal that will let users create short videos using Disney, Marvel, Star Wars, and Pixar characters on Sora, OpenAI’s short-form video platform.

• Under its broader partnership, Disney will use OpenAI’s tools to build new products and experiences, including select videos destined for its Disney+ streaming platform, and will deploy ChatGPT for its employees. Disney is also receiving warrants to buy more OpenAI stock at its current $500 billion valuation.
• AI wasn’t a big issue in Hollywood before the 2023 actors and writers strikes forced studios to consider lawsuits over the use of copyrighted content or forge AI alliances. OpenAI’s deal comes a day after Disney sent Alphabet’s Google a cease-and-desist letter over its use of copyrighted works to train AI models.
• Disney has also sent cease-and-desist letters to Meta Platforms and Character. AI, and, with NBCUniversal has sued AI photo generator Midjourney, alleging illegal use of copyrighted content.
• Sora users will be able to access Disney characters like Mickey Mouse, Cinderella, and Black Panther, but not actors’ likenesses or voices. A November 2023 agreement with SAG-AFTRA union members included protections against using AI to recreate members’ faces or voices without their consent.

What’s Next: OpenAI CEO Sam Altman acknowledged concerns about how Disney characters’ images may be used in AI-generated content. The agreement also prohibits what characters can do related to drugs and alcohol, sex, and interactions with other companies’ properties.

— Angela Palumbo and Janet H. Cho

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Broadcom Beats Expectations; Sees AI Chip Revenue Doubling

Broadcom beat expectations for its fourth quarter, noting momentum continuing into the current quarter and expectations that AI chip revenue will double from a year ago to around $8.2 billion for the first quarter. CEO Hock Tan said it’s being driven by custom AI accelerators and Ethernet AI switches.

• Tan identified Anthropic as the new customer it landed with a $10 billion order, a deal that Tan said in September would significantly improve the AI revenue outlook for 2026. Tan said Anthropic ordered an additional $11 billion of AI chips for delivery in late 2026.
• Broadcom’s semiconductors compete in several categories, including networking, broadband, server storage, wireless, and industrial. The company is also a leader in the market for high-end AI application-specific integrated circuits, or AI ASICs. It helps large technology companies design custom chips for AI.
• Tan also said there was a fifth customer for AI chips that ordered $1 billion of chips for delivery in late 2026. He said Broadcom’s AI order backlog now totals $73 billion, which the company expects to be delivered over the next 18 months.
• For its fiscal fourth quarter, the company reported revenue of $18.02 billion and adjusted earnings of $1.95 a share. Earnings before interest, taxes, depreciation, and amortization for the full year 2025 rose 35% to a record $43 billion.

What’s Next: For the current quarter, Broadcom guided to $19.1 billion in revenue, compared with analysts’ expectations of $18.4 billion. The company also announced a 10% increase to its quarterly common stock dividend to $0.65 per share for fiscal 2026.

— Tae Kim

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Trump Administration Targets Financial Industry Watchdog for Overhaul

The Trump administration is advancing its broader agenda to loosen oversight of the financial sector in favor of an approach it calls more pro-growth. On Thursday, Treasury Secretary Scott Bessent outlined plans to rework the way a top financial regulatory body monitors the U.S. financial system for risks.

• The Financial Stability Oversight Council, a group of U.S. regulators formed after the 2008-09 financial crisis, will adopt a new approach to assessing financial stability threats. Bessent said the council, which he chairs, will now prioritize economic growth and security and pinpoint ways to ease regulation.
• Bessent’s vision aligns with promises from other Trump administration financial regulators to undo a web of rules introduced in 2010 to strengthen oversight of the financial system. Those efforts have drawn fierce criticism from proponents of stricter regulation, who say less oversight could pave the way for new financial crises.
• Dennis Kelleher, co-founder and chief executive of Better Markets, a nonprofit group that supports tighter regulation, said he views Bessent’s plans as harmful to financial stability. It’s false to say financial regulation negatively affects economic growth, Kelleher said. He’s a former Democratic advisor who helped establish the 2010 Dodd-Frank reforms.
• FSOC members include the Federal Reserve and the Securities and Exchange Commission. It makes recommendations to agencies, but isn’t a regulator itself. Under Bessent, it will have new working groups, including one to explore ways that AI could promote financial resilience and its potential risks.

What’s Next: Raymond James analysts said the administration’s financial deregulatory agenda will likely “accelerate significantly” next year as Bessent coordinates federal banking regulators’ efforts to ease constraints on lenders.

— Rebecca Ungarino

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Prediction Markets Form Lobbying Group to Push Back at States

The blossoming prediction-market industry has coalesced behind a new national lobbying group called The Coalition for Prediction Markets, aimed at helping platforms like Kalshi and Crypto.com push back against state efforts to block or regulate prediction markets. Washington state gambling regulators are the latest to oppose the industry.

• Washington state said this week that offering events-based contracts or participating in these markets isn’t authorized there. State regulators say contracts that let people bet on sports are gambling and that platform operators should abide by the rules in their state.
• Kalshi’s Sara Slane, head of corporate development and an executive board member of the Coalition, said the piecemeal 50-state regulatory framework offers conflicting interpretations. The Coalition wants to keep federal regulation of prediction-markets’ event contracts, which are overseen by the Commodity Futures Trading Commission.
• Other state gambling regulators and attorneys general have joined Washington state in taking action. Some have issued cease-and-desist orders against prediction-market platforms, while others, such as Massachusetts, have sued them. Barron’s reported in March that Washington was investigating prediction markets.
• The newly formed lobbying coalition includes Crypto.com; the mobile brokerage Robinhood, which has an event contract arrangement with Kalshi; Underdog, a fantasy sports app that works with Crypto.com to power its prediction market; and the cryptocurrency exchange Coinbase, which is introducing a prediction-market platform soon.

What’s Next: Gemini Space Station, the crypto platform founded by billionaire twins Cameron and Tyler Winklevoss, has received a license from the CFTC that will soon let U.S. customers participate in prediction markets. Acting Chairman Caroline D. Pham announced Gemini CEO Tyler Winklevoss will be on CFTC’s CEO Innovation Council.

— Nick Devor, Nate Wolf, and Janet H. Cho

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Rivian Goes Full Tesla With AI Play, Street Balks

Rivian is the latest to embrace AI. The electric-vehicle maker outlined plans to integrate artificial intelligence into its products on Thursday—but shares dropped. It’s a sign that talking up AI is no longer an easy way to wow investors.

• Rivian shareholders reacted with caution after the company hosted its first autonomy and AI day. Shares traded as low as $15.73 and closed at $16.43, down 6.1%. The S&P 500 and Dow Jones Industrial Average gained 0.2% and 1.3%, respectively.
• It isn’t clear what spooked Wall Street. The event was positive: Rivian said it plans to use AI computing to develop self-driving cars. The goal is truly hands-free autonomous driving that Rivian will sell to drivers on a subscription basis.
• It’s a very Tesla-like approach. The Elon Musk-led company has a robo-taxi business and sells its highest-level driver assistance plan, Full-Self Driving, for about $100 a month.
• Investors might be worried about how much it will cost to develop self-driving cars. Autonomous driving hasn’t been cheap to develop and companies including Ford Motor and General Motors have essentially backed away from the type of driving that Alphabet’s robo-taxi company Waymo and Tesla have achieved.

What’s Next: Cash is also essential for Rivian—which isn’t profitable yet. Wall Street doesn’t project positive free cash flow until 2029. Analysts tracked by FactSet expect Rivian to use almost $9 billion in cash to build its business between 2025 and 2028.

— Al Root and George Glover

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner