Santa Rally Hopes Meet AI Reality Check

As 2025 concludes, investors are conflicted between the historically strong Santa Claus rally, which occurs in the last five trading days of December and first two of January, and doubts surrounding the AI trade that fueled recent market growth. While seasonality favors a rally, skeptics argue that the trade is too crowded. Furthermore, the AI sector faces a reality check, evidenced by recent selloffs and high spending projections—Alphabet, Microsoft, Amazon, and Meta plan to spend over $400 billion on data centers—despite fewer than half of current AI projects yielding returns greater than their costs. However, optimism remains as the Nasdaq 100 trades at a lower multiple than during the 2000 dot-com bubble, and historical data suggests the end of December is historically strong for stocks. Ultimately, while short-term seasonal strength may persist, the market's direction heading into 2026 will depend on whether AI investments begin delivering tangible returns.

(Source：BeInCrypto)