“Queen you shall be until there comes another, younger and more beautiful, to cast you down and take all that you hold dear.” — Maggy the Frog, Game of Thrones by George R. R. Martin
Chart of the Day
Good morning!
After a year long stumble, Alphabet seems to no longer be going through a personality crisis in the age of AI. No, its recovery actually might be so impressive it gets taught in classrooms across the world.
Its shares are the best performer in the Magnificent Seven this year. It’s up about 50%, which is way more than Nvidia’s 35% gain and the S&P 500’s 13% advance.
There are reasons to believe that outperformance may extend, at least in the near term. It released a newer model for Gemini on Tuesday, which is significantly more skilled at vibe coding, solving mathematical and scientific queries, and generating images, the company said.
Positive reception to the model was behind Alphabet’s shares falling a mere 0.3% yesterday, declining less than the broader index’s 0.8% slide.
It goes without saying but Gemini 3 will most certainly cannibalize ChatGPT’s market share for queries. The former said it has 650 million users per month, and that’s up from 450 million in July. ChatGPT has more at around 800 million each week, up from 700 million in July, but it still goes to show that Google is looking to close the gap with ChatGPT.
A huge reason for why is because of Nano Banana — and no, I’m not joking it’s really called that. It generates images much more quickly than other models like ChatGPT’s and also does a better job. Another reason is that Google already has a roughly 90% market share of online searches, so it’s a matter of who has the better model to get people hooked onto its own suite of products.
And remember that ChatGPT’s last major update was GPT-5 back in August, which largely disappointed users because it wasn’t all that much better from the previous version. Its owner OpenAI doesn’t trade publicly, but it does act as a major leader in shaping the world’s view of AI. If it falters, it’d push other tech companies to play the Game of Thrones, creating new opportunities.
So Alphabet playing catch up here is exactly what you want to see at this point in the AI supercycle.
And it’s especially encouraging to see concrete progress made by hyperscalers during a two-week long rout for tech stocks, where suddenly everyone is questioning if valuations are too high and whether circular investments in AI are hiding a bubble. The latest example came just yesterday when Microsoft and Nvidia said they would invest up to $15 billion in Anthropic. Nvidia’s earnings today will shed some light on that, too. (No pressure, lol.)
In the meantime, if you need more conviction in Alphabet and the broader AI trade, don’t feel compelled to listen to me, though. Look to Warren Buffet’s Berkshire Hathaway giving Alphabet its seal of approval, adding it to its portfolio during the third quarter and selling Apple.
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📧✍️Here’s what a reader commented📧✍️
Q: What’s to blame for surging beef prices?
A: (1) One reason is that the typical farmer/rancher that raises cattle is 58 years old. Few young farmers are taking over the herds or starting up a new herd. (2) My father in-law is in his mid-seventies and is selling his heifers that he would typically keep for (breeding) stock cows due to the record high fat cow prices and the fact that he is starting to slow down in his older years. The fact that you have aging cattle farmers with record high prices is magnifying the low supply issue.
Catch up with FS Insight
NVDA stock has been flat for the past 5 months and the P/E is the lowest since June 2025. So a lot of caution is baked into the stock. Thus, we think probabilities favor a rally post-results.
Technical
Failure to mount a strong rally in December that helps to lift market breadth into year-end would likely prove to be a 1st Half 2026 problem. For now, I like using recent weakness to buy.
Crypto
My bigger concern is the continued complacency and build-up of bullish leverage in BTC perps. Overall, while the risk-reward has improved sharply since last week, I still prefer staying patient here.
News We’re Following
Breaking News
- Larry Summers Resigns From OpenAI Board Amid Epstein Revelations WSJ
- Congress approves Jeffrey Epstein files bill, sending it to Trump to sign CNBC
Markets and economy
- Mortgage rates hit highest level in a month, pushing loan demand down 5% CNBC
- Blip, dip, pullback or the beginning of the end? Global investors weigh in on stock sell-off CNBC
- Oracle is already underwater on its ‘astonishing’ $300bn OpenAI deal FT
- Two more ‘Magnificent Seven’ stocks are now in correction territory as the AI trade unwinds MW
- Bitcoin Slide Spurs Record Withdrawals From BlackRock’s IBIT BBG
Business
- Target to Invest Billions to Upgrade Stores as Sales Slump Continues WSJ
- How Trump and Nvidia’s C.E.O. Became Partners on the International Stage NYT
- Nokia splits AI business into separate unit after $1bn Nvidia investment FT
Politics
- Texas’ New Congressional Map Is Blocked by Court WSJ
- Jessica Tisch Will Remain Police Commissioner Under Mamdani NYT
Overseas
- Trump Lauds Saudi Prince in Lavish Visit, Brushing Off Journalist’s Killing NYT
- Japan’s borrowing costs at highest in decades on fears of public spending surge FT
Of Interest
- What Pixar’s ‘WALL-E’ Got Right About the Future of Work WSJ
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| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 11/19 | 8:30 AM | Aug Trade Balance | -60.4 | -78.311 |
| 11/19 | 2:00 PM | Oct 29 Sep 17 FOMC Minutes | n/a | 1 |
| 11/20 | 8:30 AM | Sep Oct AHE m/m | 0.3 | 0.3 |
| 11/20 | 8:30 AM | Sep Oct Unemployment Rate | 4.3 | 4.3 |
| 11/20 | 8:30 AM | Sep Oct Non-farm Payrolls | 54 | 22 |
| 11/20 | 10:00 AM | Oct Sep Existing Home Sales | 4.08 | 4.06 |
| 11/20 | 10:00 AM | Oct Sep Existing Home Sales m/m | 0.49 | 1.5 |
| 11/21 | 9:45 AM | Nov P Sep F S&P Srvcs PMI | 54.6 | 54.8 |
| 11/21 | 9:45 AM | Nov P Oct S&P Manu PMI | 52 | 52.5 |
| 11/21 | 10:00 AM | Nov F Oct P UMich 1yr Inf Exp | n/a | 4.7 |
| 11/21 | 10:00 AM | Nov F Oct P UMich Sentiment | 50.6 | 50.3 |
| 11/25 | 8:30 AM | Sep PPI m/m | n/a | -0.1 |
| 11/25 | 8:30 AM | Sep Core PPI m/m | n/a | -0.1 |
| 11/25 | 9:00 AM | Sep Aug Case Shiller 20-City m/m | n/a | 0.19 |
| 11/25 | 10:00 AM | Nov Oct Conf Board Sentiment | 93.3 | 94.6 |
