Mid-Morning Look

Thursday, December 11, 2025

U.S. stocks open mixed, with the Nasdaq and S&P 500 weaker following declines in the tech/AI space following Oracle (ORCL) results, guidance and capex spending dragging the complex lower. However, shares of Healthcare, Financials, Materials and Consumer Staples are strong, rallying further after yesterday’s FOMC rate cut/more dovish outlook for 2026. The AI valuation and revenue concerns that sunk tech sector in early November is back (for today at least) as Oracle (ORCL) shares tumbled more than -15% after cloud sales missed estimates and prompted the earlier weakness in risk assets, especially in names tied to Ai like semi chips, data centers and power plays like nuclear energy stocks. Early weakness in names like CRWV, NBIS, ETHN, VRT and chip names NVDA, AVGO (ahead of earnings) and power names OKLO, SMR, NNE and others. Oracle also warned capital expenditures for fiscal 2026 are now expected to be $15 billion higher than the company’s estimates in September. ORCL also forecast Q3 revenue growth of between 16%-18%, below the 19.4% est. of $16.87B. Tech investors are worried about an AI bubble, stoked by sky-high valuations, limited real-world productivity gains and complex circular investments, even as companies raise billions in debt to build infrastructure. Earnings tonight in the chip sector with AVGO, which is also heavily tied to the AI trade is next tech catalyst.

Dollar index extending yesterday declines -0.5% at 98.28 while Treasury yields fall further with the 10-yr yield down -5.6bps to 4.108% and the 2-yr -6.2bps to 3.50%. Gold initially extended gains, the yellow metal stopping just shy of $4,245 before slipping to around $4,215. Silver rose to a fresh record high of $62.88. Bitcoin under pressure as Nasdaq led US equity futures lower, BTC briefly slipping under $90k. Markets still holding up well, with the Smallcap Russell 2000 outperforming again (at record highs) after the Fed cut interest rates by 25 bps in line with expectations in a split 9-3 vote as Schmid and Goolsbee dissented in favor of no rate change, while Miran dissented in favor of a 50 bps cut. Highlights from yesterday include: There was no shift in forward guidance in the statement to imply that the bar to additional easing was now higher. The Fed slightly tweaked language around unemployment, removing a reference to the unemployment rate remaining low. A big win was the Fed said it would buy $40bn in Treasury bills in the next 30 days, beginning on Dec 12. Powell later noted that Treasury purchases may remain elevated for a few months with reserve balances having fallen to ample levels. Lastly, Powell said that he doesn’t think anyone’s base case is for a hike to be the next move and tended to downplay divergence in FOMC views.

• The U.S. international trade in goods and services balance narrowed to -$52.8B in September from -$59.3B in the prior month (revised from -$59.6B), better than the -$62.5B expected, according to data from the U.S. Census Bureau released on Thursday. Exports drifted up to $289.3B in September from $280.8B in August, while imports rose to $342.1B from $340.4B over the same period. The September decrease in the goods and services shortfall reflects a $7.1B retreat in the goods deficit to $79.0B, as well as a $26.2B pullback in the services surplus of $0.6B.
• Wholesale inventories increased 0.5% M/M to $911.5B in September, stronger than the 0.1% increase expected and August’s flat reading.

• In MedTech: Citigroup upgraded BLCO, PEN to Buy, downgraded HAE, ISRG to Neutral and opened positive catalyst watches on DXCM, BAX; negative catalyst watch on TNDM in Medtech 2026 outlook. The firm said it has been an interesting year for Medtech, with a Healthcare shift in October lifting the entire sector resulting in Healthcare’s best month versus the S&P 500, +900 bps. While 2026 lacks a “big” Medtech product driver, there are several milestones that should drive valuations. Top Picks include MDT and IRTC.
• In Quantum Compute: Mizuho initiated coverage on IONQ with an Outperform rating and $90 price target as sees the company as a leader in quantum computing with trapped ions’ low error rates and higher coherence times potentially driving a faster commercial ramp versus superconducting if qubit scaling can be executed. Mizuho also initiated RGTI with an Outperform rating and $50 price target as sees the company scaling with $450M in cash, equivalents, and investments on hand. Lastly, they initiated QBTS with an Outperform rating and $46 price target as see the company driving a dual track to annealing and gate model with potential for acquisitions. D-Wave is a dominant quantum annealing player in the near-term emerging optimization market, the analyst tells investors in a research note.
• In Internet: META Reiterate Overweight and top pick in Internet in 2026 at Piper while the firm selects RDDT, ROKU, and RBLX as top SMID picks. ROKU was also upgraded to Buy from Hold at Jefferies and raised tgt to $135 from $100 as they recommend staying selective across the internet sector in 2026. Incremental investments could limit margin expansion and concerns around artificial intelligence disintermediation could limit multiple appreciation. Jefferies said they prefer names offering attractive growth and upside visibility, as we expect performance will be driven by fundamentals rather than multiple expansion. Top picks are APP in Large-Cap and ROKU in SMID-Cap while downgraded ACVA to Hold.

• CIEN +5%; after Q4 adj EPS of $0.91 topped ests of $0.76 and revs rose 20.5% y/y to $1.35B above $1.288B estimate; said three customers accounted for 43.6% of total revenue in the quarter, and better guide as sees Q1 revs $1.35B-$1.43B (vs. est. $1.25B) and FY26 revs $5.7B-$6.1B (vs. est. $5.53B).
• CRBP +9%; as reports results from phase 1A study of oral CB1 inverse agonist CRB-913 for the treatment for obesity demonstrating favorable safety profile and emerging evidence of weight loss.
• DHIL +44%; entered into a definitive agreement to be acquired by First Eagle Investments, an independent, privately owned, fundamentally driven investment management firm for $175 per share in an all-cash transaction valuing the Company at approximately $473 million.
• GEMI +7%; shares jumped after saying it received a Designated Contract Market (DCM) license from the Commodity Futures Trading Commission (CFTC). This regulatory approval allows Gemini to offer prediction markets to U.S. customers, marking the culmination of a five-year licensing process.
• PL +24%; after the satellite-imaging firm raised its sales and margin outlook, boosted by new and expanded contracts. Recent wins included an expansion to a contract with NATO and a deal with National Geospatial-Intelligence Agency.
• ROKU +5%; upgraded to Buy from Hold at Jefferies and raise tgt to $135 as sees 20%-plus platform revenue growth in an upside case for Roku; Wedbush adds Roku to Best Idea List, raises price target to $130.
• RYTM +14%; as announced preliminary study data showing its drug could reduce hunger cravings and lower the BMI of people with Prader-Willi Syndrome.
• U +5%; was upgraded at both BTIG to Buy ($60 PT) and Piper to Overweight ($59 PT) saying their Vector Ad business has grown 15% quarter-over quarter in the past two quarters.

• ORCL -13%; following a mixed Q2 print, with stronger Cloud and RPO momentum offset by heavier CAPEX and negative free cash flow. Total revenue grew 14% y/y while Cloud revenue accelerated 34%, driven by 66% cc growth in OCI. Oracle added impressively $69B in incremental RPO (vs. $317B last quarter including $300B OpenAI deal). However, there are doubts about 1) the margins on this revenue and 2) whether certain firms can fulfill these obligations.
• OXM -22%; on weaker Q3 as EPS loss (-$0.92) vs. est. loss (-$0.78) Q3 revs $307M topped ests $305.6M; guides Q4 revs $365M-$385M below consensus $392.1M and FY net sales $1.47B-$1.49B (down from $1.48B-$1.52B prior); said for Q3, faced a highly competitive and promotional retail environment; cuts FY25 adj EPS to $2.20-$2.40 from $2.80-$3.20.
• RZLT -88%; after saying its lead asset, ersodetug, failed to reach the main goals in a Phase 3 trial for patients with congenital hyperinsulinism. Based on topline results, the firm said its sunRIZE study for 63 patients with congenital HI didn’t meet the primary endpoint 9or secondary) related to the change in average weekly hypoglycemia events.
• SKIL -29%; after reported Q3 EPS loss (-$4.74) vs (-$2.86) loss last year and lower revs falling -6% y/y to $129M; cuts FY26 revenue view to $510M-$530M from $530M-$545M and backs FY26 adjusted EBITDA view $112M-$118M; announced review of strategic alternatives for Global Knowledge segment.