Market Overview for December 18
1. Stocks showed a rebound this morning following a lower-than-expected consumer inflation report, causing bond yields to decline. The Dow, S&P 500, and Nasdaq all experienced significant drops yesterday, with the tech-heavy Nasdaq seeing a 1.8% decrease — its steepest decline in about a month. Tonight, Nike, a significant player in the Dow, will release its earnings, prompting us to evaluate what the company needs to do to improve its situation.
Micron’s Impact on AI Stocks
2. Can Micron rescue the artificial intelligence sector, or is it simply adding pressure due to demand fluctuations? The company’s shares surged by 14% after exceeding Wall Street expectations and raising its future forecasts. The question remains: is Micron fully sold out and capable of increasing prices at will? Other companies like Sandisk, Seagate, and Western Digital are facing challenges due to insufficient investment in key technology firms like Applied Materials and Lam Research.
Stocks to Watch: The Magical Year of Investing
3. Micron’s resurgence sparks a final chance for investors. Key players to watch include data center creators like Iren and CoreWeave, as well as burgeoning sectors like quantum computing (D-Wave and Rigetti) and nuclear energy. However, stocks in these segments have recently declined as anticipated, indicating that while there may be temporary relief, it is unlikely to be sustained. The previous focus on battery stocks seems to be over.
OpenAI’s Valuation and Oracle’s Future
4. According to The Information, OpenAI could potentially raise tens of billions at a valuation of around $750 billion, even as it establishes partnerships at a $500 billion level. This raises eyebrows—will OpenAI reward these partners with significant payouts upon going public? If OpenAI succeeds, it may also benefit Oracle, enabling it to enhance its data center initiatives.
Tesla and AI Developments
5. Tesla’s strengthened position hinges more on developments in self-driving technology and robotics rather than vehicle sales, enabling Waymo to secure additional funding. The decision to divest from Alphabet, Google’s parent company, seems to be questioned again as reports suggest that its Gemini project may soon surpass OpenAI.
Company Updates and Analyst Ratings
6. ServiceNow executed a 5-for-1 stock split, but has struggled since a KeyBanc downgrade earlier this week due to AI’s threat to software-as-a-service companies. Additionally, homebuilder Lennar has been downgraded from buy to sell by Bank of America as housing prices revert to 2019 levels despite inflation elsewhere.
Investment Recommendations and Changes
7. Jefferies upgraded GE Vernova from hold to buy, increasing its price target to $815. Meanwhile, Citi has upgraded Sherwin-Williams to buy, suggesting a more favorable outlook for 2026, while cutting its price target slightly to $390. Conversely, Morgan Stanley downgraded PayPal from hold to sell, adjusting its price target down to $51 amidst expectations of slower growth. This is crucial for the fintech sector, which needs stronger performance from PayPal.
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