Global Stocks Hit All-Time Highs; Broadcom Slides as Investors Seek AI Payoff

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:02Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, global stocks are trading at a record as we close out the trading week. In the U.S., the S &P 500 enters today's session at an all-time high, posting its first record close since late October. Bloomberg Markets reporter Valerie Teitel has more on what's leading the gains. The equity market rally has been not really about the tech trade, but more about value stocks over growth stocks. Now, this has been a theme of the last month. If we look over the last 30 trading days, the Russell 2000 is up some 6%.

1:47Meanwhile, the S &P 500 and the Nasdaq are just up around half of 1%. Yes, we did notch those record highs, the new fresh record high, the first one for the S &P 500 since October. But it's really been led by the value stocks. And you have to start wondering whether this is a trend that's going to start continuing into next year. Do we continue to see some of the froth come out of these AI valuations? Bloomberg Markets reporter Valerie Teitel notes the Russell 2000 index of the smallest U.S. stocks jumped 1.2 percent yesterday to close at its own record high. Well, Nathan, we're seeing weakness once again in an AI-related stock.

2:24A day after Oracle plunged almost 11 percent, shares of Broadcom are down almost 5 percent in early trading. The chipmaker's sales outlook for the AI market failed to meet investors' lofty expectations. CEO Hak Tan said the company, which competes with NVIDIA, has a backlog of$73 billion in AI product orders, disappointing some investors. He later clarified that figure as a minimum. Bloomberg Intelligence senior analyst Kunjan Sabani says the market reaction is surprising. There seems to be an overall fatigue coming into the AI space. But fundamentally, when we just look at Broadcom, this was one of the most strongest AI semis report this quarter.

3:05I mean, they beat the AI revenue numbers for next quarter, their fiscal 1Q, by almost 1.4 billion, which is a 20 percent upside to what the street was. And Bloomberg Intelligence's Kujan Sabani says Broadcom held off on giving an annual AI revenue forecast. Now, Karen, let's turn to the latest on the war in Ukraine. President Trump says the U.S. would be willing to contribute assistance to Ukraine as part of a security agreement to end the conflict. This comes as President Volodymyr Zelensky is proposing a referendum that would let Ukrainians vote on whether to hand the Donbass region to Russia.

3:40We get more from Bloomberg senior Europe correspondent Oliver Crook. This is a really interesting approach by Zelensky. I think that it's sort of rooted in the fundamental idea that Zelensky has adopted ever since that terrible meeting in the White House back in February, which is basically there are no bad ideas out of Washington, D.C. So something that even appears intensely confrontational and something that could be a collision between the Ukrainians and the Americans. Basically, Zelensky tries to use the momentum of that idea and put it in a channel that is actually favorable and useful to him.

4:08You saw that happen actually twice this week, once on the question of holding elections within Ukraine. Now talking about the issue of Donbass, this is clever for two reasons for Zelensky. The first, basically, it would prove that if the Ukrainian people vote against it and they say, listen, we are willing to endure this war, that Zelensky is not the impediment to peace. It is the Ukrainian people who have decided it. But also it puts on full display that this is a democratic nation and that they are going to the people to make the most difficult decisions. Bloomberg's Oliver Crook says the U.S.

4:35has dramatically scaled back direct military aid for Ukraine under President Trump. Well, Nathan, tensions between the U.S. and Venezuela have hit a new level this week. But the seizure of a massive oil supertanker may be just the beginning of a new phase of pressure against Venezuelan President Nicolas Maduro. President Trump says the military campaign against alleged drug trafficking boats from Venezuela has already been working. If you look at the drug traffic, drug traffic by sea is down 92 percent. And nobody can figure out who the 8 percent is because I have no idea. Anybody getting involved in that right now is not doing well.

5:13And we'll start that on land too. It's going to be starting on land pretty soon. President Trump spoke from the Oval Office. Sources tell Bloomberg News the capture of the sanctioned oil vessel is meant to deny Maduro an economic lifeline and force him to give up power. The Treasury Department has already followed up the seizure with sanctions on six crude oil tankers and four Maduro's so-called narco nephews. Well, President Trump's warning to Venezuela came, Karen, as he handed a big win to the tech industry. The president signed an executive order to go after state-level regulation of artificial intelligence.

5:45intelligence. President Trump says the industry shouldn't have to navigate a patchwork of AI rules. You have to have a central source of approval. When they need approvals of things, they have to come to one source. They can't go to California, New York, and various other places. President Trump's order directs the attorney general to set up an AI litigation tax force to sue states if they have laws that are inconsistent with White House policy. It also orders the Commerce Department to publish an evaluation of onerous state laws within 90 days. Let's turn to the economy now, Nathan. The Federal Reserve Board of Governors has unanimously reappointed 11 of the central bank's regional presidents to new five-year terms.

6:26The reappointment's resolved for now. A key question surrounding the future makeup of the central bank's policymaking committee. In Europe, Karen, the U.K. economy disappointed again, contracting in October for the fourth straight month without growth. Gross domestic product fell one-tenth of one percent. The UK's GDP has only grown in one of the last seven months. Well, staying in Europe, Nathan, shares of UBS trading at a 17-year high. A group of influential lawmakers proposed watering down the capital demands that Switzerland wants to impose on the bank, and shares of UBS, they're up more than four percent.

7:00And shares of Lululemon back here in the U.S., Karen, are up more than nine and a half percent. The pricey yoga wear brand raised its full year outlook. Lululemon also says CEO Calvin McDonald is stepping down as the company looks to reignite growth amid pressure from competition and Lululemon's founder. Shares of Costco, Nathan, they rose more than one percent in late trading. The country's biggest warehouse club operator posted profit that beat analyst estimates. Analysts say it's a sign that price sensitive shoppers are continuing to search for value. And one more company to keep an eye on, Karen, And that would be Uber.

7:36The ride share giant says it expects to offer RoboTaxi in more than 10 markets by the end of the year. Uber is looking to become a dominant force in an industry that it estimates will eventually be worth at least one trillion dollars. We spoke with Uber CEO Derek Hazrushahi. The technology is absolutely getting there. These are the robot driver. It doesn't get tired, doesn't get distracted. and we very much look forward to working with various authorities to introduce ride share into the markets. We're now live in four markets now as we speak in the U.S. and in the Middle East. Uber CEO Derek Hosershahi says possible new locations for robo-taxi services include Hong Kong and Japan.

8:20For the full conversation, head to the Bloomberg Podcast channel on YouTube.

8:28And it's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Senators rejected a Democratic bill to extend the Affordable Care Act subsidies for three years and a Republican alternative that would have created new health savings accounts. Millions of Americans will likely see a steep rise in costs at the beginning of the year. Senate Democratic Leader Chuck Schumer. Senate Republicans just shoved the American people off the side of a cliff with no parachute and with an anchor tied to their feet.

9:04President Trump struck a bipartisan tone and teased a plan to work on health care with subsidies set to expire on January 1st. I look forward to working with each and every one of you in the coming year to make our nation stronger, safer, wealthier, healthier. and I really believe we can work on health care together and come up with something that's going to be much better, much less expensive for the people, less expensive for our nation. President Trump made his comments while hosting lawmakers at the White House for the annual congressional ball ahead of Christmas. Indiana Republican senators voted down a new congressional map created to give the GOP an advantage in the upcoming 2026 election.

9:4521 GOP senators joined 10 Democrats in voting against the map Thursday. Senate President Pro Tem Roderick Bray says while he wants a Republican majority in Congress, this is not the way to do it. There's a difference of opinion on how we get there, as I have explained before, because there are some concerns that going this route is not the best way to get more conservative representation in Washington, D.C. from the state of Indiana. President Trump has been urging Republicans to redraw their maps to help the GOP maintain control of the House. The Utah man charged with killing conservative activist Charlie Kirk has made his first in-person court appearance.

10:24Tyler Robinson's attorneys are pushing to further limit media access, saying it could interfere with his right to a fair trial. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Aaron. Good one on Thursday Night Football on the NFC South. Tampa Bay needing the win to stay in first place on the Bucs. Led the Falcons by two touchdowns in the fourth quarter. Back came Atlanta on a Zane Gonzalez 43-yard field goal at the end.

10:57The Falcons won 29-28. The Falcons tight end Kyle Pitts had 166 yards and three touchdowns. T.J. Watt, the Steelers' pass rusher, hospitalized during this week. He has long discomfort, but they say he still may play the Monday night game against Miami. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. I'm Carol Masser. And I'm Tim Stenevek, inviting you to join us for the Bloomberg Business Week Daily Podcast. Now, every day we are bringing you reporting from the magazine that helps global leaders stay ahead. We've got insight on the people, the companies and trends that are shaping today's complex economy.

11:37That's right, Tim. We're all over global business, finance, tech news, all as it is happening in real time. And we've got complete coverage of the U.S. market close. Gotta say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it. We also have a lot of fun doing it. Bloomberg Business Week also brings you the analysis behind the headlines through conversations with our expert guests. And we are doing this all live each weekday. And then we bring you the best analysis in our daily podcast. Search for Bloomberg Business Week on YouTube, Apple, Spotify, or anywhere else you listen.

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12:29Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Stocks look set to end the week near record territory, but the AI trade may still be looking a bit shaky after the latest results from Broadcom. The chipmaker came out with pretty strong earnings, but CEO Hakatan says it's tough to know what the future holds. It's hard for me to pinpoint what 26 is going to look like precisely. So I'd rather not give you guys any guidance. And that's why we don't give you guidance, but we do give it for Q1.

13:06That was Broadcom CEO Haktan on the earnings call following the third quarter results. And we're joined now by Bloomberg Markets reporter Valerie Teitel. And Valerie, it seems like the AI order backlog in particular seemed to be a big disappointment in particular for investors this morning. Yeah, good morning, Nathan. In Broadcom's case, it was an order backlog that did disappoint investors as well as what you mentioned, that they failed to give a revenue forecast for 2026. When it comes to their revenue, sorry, their order backlog, they said they only had$73 billion in backlog over the next six quarters.

13:42The CEO on the conference call went to clarify later that that is a minimum that they see, but still, It's highlighting concerns, especially around Broadcom, about tightening profit margins, which has been a key concern for this AI chip maker. Broadcom competes with the likes of NVIDIA for selling the most advanced AI chips in that space. So, again, some jitters in the tech trade today, and we did see it yesterday as well. Yeah, I mean, but this stock has rallied 170 percent this year. Is this a situation where this might have been kind of priced to perfection when it comes to Broadcom? You know, that can't be the case, but I think you can argue that for a lot of these AI tech stocks who are trying to guide the market on what 2026 could look like.

14:24There has been a lot priced into many of these names, and generally there's been a lot priced in to the tech sector. You could see that as one of the reasons why we've seen this last leg of the rally really not be led by these mega cap tech names. You know, previously when we were notching all these record highs in the S &P 500, tech was the main reason behind it. And it seems like in the month of November, we've been able to notch a fresh record high now without big tech behind it. Yesterday, take a look at the Russell 2000. It was up 1.2 percent by the end of Wall Street close. The Nasdaq was down around four tenths of 1 percent.

14:59And we still notched a record high in the broad S &P 500. This rotation has really been a key part of December's price action. Nathan, take a look over the last 30 trading days. The Russell 2000 is up close to 6 percent. NASDAQ and the S &P are up around five-tenths of one percent. So the sector rotation is still continuing even in the futures trade this morning. What does it seem like is driving this rotation? Is it skepticism around artificial intelligence or is it some other factor at play here? Well, I just I want to add in it is December. December is a weird month when it comes to positioning and those wanting to cut losses or sorry, cut their winners as soon as they start to see losses in them.

15:42So perhaps this is just a reallocation going on in December, and it's maybe caused a lot of those portfolio managers to be in some pain on their calls on these sectors. And so when people take profit, sometimes you see this kind of price action headed into year end. But the thing that makes me nervous, Nathan, is that next week is a unusual third week of December because we have so much data and three big central banks also making decisions. We have the delayed nonfarm payroll release and the delayed CPI, which essentially are going to be treated by the market as double reports. So we have a heck of a lot of data before we close up 2025.

16:21And perhaps you have portfolio managers out there wanting to take profit on some of their winning trades. And that would have been some of these big mega cap tech stocks of recent weeks. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

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