Good morning, investors. Markets will close early on Christmas eve and remain closed through Christmas day.
I want to wish each of you a happy holiday and New Year — thank you for trusting our team and starting your morning with us. It’s been a fun year, but 2026 will be even better.
Now let’s get to the news.
High-tech utilities
The AI arms race is turning Big Tech into glorified utilities and that’s a red flag for investors.
The Magnificent 7 — Meta, Apple, Tesla, Nvidia, Microsoft, Amazon and Nvidia — are being forced to abandon the asset-light business models that fueled their dominance.
In the scramble for AI supremacy, they are becoming asset-heavy industrial firms in a shift that history suggests will erode future returns, according to Kai Wu, founder and chief investment officer of Sparkline Capital.
“The irony to this whole thing is that the big tech companies who are actually creating this technology are in many ways actually worsening their position competitively,” Wu told me on Full Signal.
The data justify the concern. Since 2012, the Mag 7’s collective capital expenditures have soared from 4% of revenue to 15%.
Meta, for instance, plans to spend roughly 35% of sales on data centers, a level that matches the average utility and exceeds AT&T’s peak dot-com bubble spending.
Through history, share prices for asset-heavy businesses have underperformed their asset-light peers across all sectors.
What looks like a spending blitz on the surface is masking a fundamental change in market structure.
The economic moats that made these companies distinct — across search, social, retail — are collapsing into a single, viciously competitive arena for general AI.
In Wu’s view, the current boom shares parallels with previous infrastructure buildouts like the 19th century railroads or the internet-era fiber-optic cables, which saw most of the early builders go bankrupt.
The lasting value accrued to the next wave of companies — like Netflix post-dot-com — that leveraged the cheap, overbuilt capacity after the initial boom lost momentum.
This framework suggests the companies most essential to the AI revolution today are the ones actively dismantling the qualities and discipline that made them so critical in the first place.
If the historical pattern holds, the winners of the AI era won’t be the indebted builders of the early years but the companies that arrive later to build transformative businesses on top of the cheap, commoditized capacity left in the boom’s wake.
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Market snapshot
Elsewhere
🛢The US will keep crude oil seized near Venezuela. That’s according to President Trump, who said the US will also keep the tankers as it ramps up pressure in the region. (CNBC)
💰 Oracle’s Larry Ellison is personally stepping in to backstop Paramount’s acquisition of Warner Bros. with his own $40 billion in equity financing. Shares of both companies popped on the news. (Yahoo Finance)
📊 Nvidia dominated yet another year in markets. It powered through DeepSeek fears, tariffs, and chatter of an AI bubble to smash records once again. (Yahoo Finance)
Rapid-fire
Novo Nordisk stock rallied after the government approved the first-ever GLP-1 pill (CNBC)
Economists estimate that US GDP grew at 3% in the third quarter (Barron’s)
The White House is offering undocumented immigrants $3,000 and paid travel if they agree to leave the US voluntarily (Bloomberg)
Janus Henderson stock jumped 3% after it agreed to a $7.4 billion take-private deal (Barron’s)
India’s rupee has been Asia’s worst-performing currency of 2025 and that could continue in the new year (CNBC)
The AI boom has coincided with a surge in youth unemployment (Opening Bell Daily)
Crypto bull Senator Cynthia Lummis said she will retire at the end of 2026 (CNBC)
“Buy the dip” keeps working for investors even as sentiment surveys wane (Pomp Letter)
Interview
I sat down with Kai Wu, founder and chief investment officer of Sparkline Capital, to discuss how the AI boom could end, the Magnificent 7’s transition from asset-light to asset-heavy businesses, and how to invest in technological revolutions.
Tune in on YouTube, Spotify, or Apple Podcasts.
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On this day
🗓 December 23, 1913: President Woodrow Wilson signed the Federal Reserve Act to create the Fed following years of debate in the aftermath of the Panic of 1907. It established the network of regional banks and the Fed Board in Washington.
Last thing
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About me
📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.
I write our flagship newsletter and host our show, Full Signal, to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.
Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].