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AI SUCCUMBS TO GRAVITY IN DECEMBER

Without a doubt, anything to do with artificial intelligence has been the banner trade of 2025, lifting all boats, from chipmakers, to grid operators and cloud computing providers, right down to the price of copper.

But it's finding the last month of the year more of a slog. Results from AI bellwethers Oracle ORCL.N and Broadcom AVGO.O this week have given investors a reminder that things like profit forecasts, margins and debt levels matter.

Investors have long said there will come a time when companies will have to prove their billions of dollars of investment and the huge debt some are taking on to get into AI, are turning into profit.

December may not be that moment, but it is certainly providing something of a reality check.

Some of the biggest AI-themed ETFs, like the Global X Artificial Intelligence & Technology ETF AIQ.O, which has holdings in AI classics like Alphabet GOOGL.O and TSMC 2330.TW, are up comfortably year to date.

AIQ is up 27%, while BlackRock rival iShares AI Innovation and Tech Active ETF BAI.N is up 25%, compared with a gain of "only" 14.5% in the Roundhill Magnificent 7 ETF MAGS.K and 8.1% in the equal-weighted S&P .EWGSPC - which strips out the impact of Big Tech.

In the last month, the tables have turned somewhat. AIQ is down 0.8%, while BAI is down 1.4% and the Mag 7, down 1.2%. Leading is the equal-weighted S&P, with a gain of 3%, which suggests a little more market breadth and, perhaps the pull of gravity, for a change.

(Amanda Cooper)

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