Alphabet’s AI Power Play Sends Shockwaves Through the Market

Between Alphabet extending its AI lead, macro data nudging the Fed closer to a rate cut, and several corporate surprises that jolted investors awake, there was plenty to keep an eye on. Let me walk you through what mattered and why.

Alphabet Steals the Spotlight (Again)

Alphabet (GOOGL | +1.53%) was once more the talk of Wall Street and for all the right reasons.

After Monday’s impressive 6.3% surge, the stock tacked on another 1.5% Tuesday as enthusiasm around Google’s Gemini 3 AI model continued to build. Early reviews framed Gemini 3 as a genuine contender for the top spot in generative AI, which is a dramatic shift in narrative: Alphabet is no longer the underdog but a potential architect of the next AI era.

The excitement didn’t end there. A report from The Information claimed that Meta Platforms is planning to funnel billions into Google’s custom TPU chips, a massive validation of Alphabet’s hardware ambitions. For a company approaching a $4 trillion valuation, the timing couldn’t be better.

But where there are winners, there are losers.

Nvidia and AMD Feel the Heat

Nvidia (NVDA | -2.59%) and AMD (AMD | -4.15%) were among Tuesday’s most notable decliners as traders reassessed their AI-chip assumptions. The fear is simple: if Alphabet builds more of its AI stack in-house - and starts selling it to giants like Meta - the traditional GPU suppliers lose market share.

Some analysts called the sell-off overdone. Bank of America’s Vivek Arya even reiterated buy ratings, highlighting Nvidia’s still-robust fundamentals and Broadcom’s (AVGO | +1.87%) potential to profit from Alphabet’s TPU licensing stream. Still, the psychological impact was unmistakable: Alphabet just reminded the market that it can disrupt hardware, too.

Macro Tailwinds: Rate-Cut Hopes Return

Tuesday’s rally didn’t come out of thin air. The market received a fresh dose of macroeconomic encouragement:

• Retail sales for September rose just 0.2%, weaker than expected, a sign of cooling demand.

• US consumer confidence slipped to a seven-month low.

• An ADP report showed 13,500 private-sector job losses in November.

Normally, soft data would spook investors. But with the Fed’s final 2025 rate decision coming up on December 10, weakening numbers suddenly look like an early holiday gift. More Fed officials hinted Tuesday that a December rate cut isn’t off the table.

The market wasted no time in pricing that in:

• The Dow outperformed with a +1.45% gain, while the Nasdaq managed +0.65%. Even the euro strengthened as investors digested the shifting monetary landscape.

• Meanwhile, oil slid 2%, pressured by reports of progress toward a peace framework in Ukraine, a development that, if real, would materially lower global geopolitical risk.

Corporate Roundup: Big Winners, Big Surprises

Kohl’s Delivers a Meme-Worthy Rally

Kohl’s (KSS | +42.53%) shocked the market with a profitable quarter and an upgraded full-year outlook. The result? A remarkable 42% surge that traders described as borderline “meme-like.” A new permanent CEO announcement only added fuel to the fire.

Best Buy Quietly Impresses

Best Buy (BBY | +5.34%) delivered better-than-expected Q3 results and raised full-year guidance. The stock jumped 5.3%, proving that traditional retail isn’t dead, just selective.

Zoom Shows It’s Still Alive

Zoom (ZM | +9.85%) posted stronger-than-expected results and lifted full-year guidance. Shares spiked 11% as the company doubled down on its strategy to become an “AI-first” communications platform. A fresh $1 billion buyback program certainly didn’t hurt.

HP Cuts Jobs, Dell Ramps Up AI

HP (HPQ | +1.28%) unveiled a major restructuring plan that includes cutting 4,000–6,000 jobs - up to 10% of its workforce - while aggressively investing in AI across its entire organization. The company sees this as essential to remain competitive, though the market wasn’t thrilled: shares fell about 5% after hours.

Dell Technologies (DELL | -1.02%) delivered a mixed earnings report - slightly light on revenue but ahead on profit - yet the real headline was forward guidance. The company boosted its AI-server revenue expectation for 2026 from $20 billion to $25 billion, citing explosive demand. Investors rewarded the news with an after-hours gain of over 3%.

Final Thoughts

Tuesday’s session was a textbook example of how quickly market narratives can shift. Alphabet reshaped the AI landscape in 48 hours, macro numbers breathed life into rate-cut hopes, and corporate results reminded us that the economy - while cooling - still has pockets of surprising strength.

As always, I’ll be watching whether the Fed follows through with a December cut and whether investors continue rotating into AI names that aren’t named Nvidia. Spoiler alert: the next chapter in the AI hardware battle is only just beginning.

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Kristoff - ChartMill

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