AI Stock Dip Is Seasonal Profit-Taking, Not a Bear Signal, Says Nomura

December Pullback Matches Historical 2.7% Median Dip

The recent weakness in leading AI-related stocks like Nvidia, Microsoft, and Broadcom is not a harbinger of a 2026 downturn but rather a standard year-end profit-taking cycle. According to Nomura cross-asset strategist Charlie McElligott, this "leadership reversal" is a well-documented phenomenon. Historical data reveals that the momentum factor has averaged a 1.1% drawdown in December since 1995. This trend has accelerated since 2016, with the median retreat for top-performing stocks hitting 2.7% as traders reallocate capital to laggards ahead of the new year.

Further evidence suggests the dip is temporary. Options market activity during the sell-off showed investors selling puts on a basket of AI proxies, including Broadcom, Eaton, Alphabet, Nvidia, and Vistra. This strategy signals that traders do not anticipate further significant declines, reinforcing the view that the pullback is a technical rotation rather than a fundamental shift in sentiment. McElligott notes this is simply "old fashioned profit-taking after a strong run," which has "snowballed into something sloppier" due to high leverage in the trade.

Market Shifts Focus to 2026 Revenue and Chip Shipments

Investors are already looking past the seasonal churn toward concrete revenue catalysts in 2026. On December 22, reports surfaced that Nvidia plans to begin shipping its H200 AI chips to Chinese clients by mid-February, following a policy shift that permits the sales with a 25% fee. Initial shipments could total 5,000 to 10,000 chip modules. This coincides with a major growth forecast for Microsoft, with Wedbush analysts projecting that AI monetization through Azure and Copilot could add approximately $25 billion to the company's top line by fiscal year 2026.

This forward-looking sentiment is driving a rebound in the sector, with the Philadelphia Semiconductor Index rising late last week. The narrative is maturing from early capital-expenditure euphoria to a more rigorous assessment of balance sheets and return on investment. The focus is now on tangible results, such as enterprise adoption of Microsoft’s AI tools and the execution of high-stakes chip shipments to China from both Nvidia and its competitor AMD, which is expected to supply 40,000 to 50,000 of its MI308 accelerators to Alibaba.

Alphabet's $4.75B Energy Deal Signals New AI Bottleneck

The AI arms race is expanding beyond silicon to the power grid itself, creating a new competitive moat. Alphabet announced on December 22 its acquisition of clean energy developer Intersect for $4.75 billion in cash and assumed debt. The move is a direct response to the immense electricity demand from AI data centers, which is beginning to strain existing U.S. power infrastructure. Intersect has projects expected to represent about 10.8 gigawatts of capacity by 2028, effectively allowing Alphabet to verticalize a critical part of its AI supply chain.

This strategic purchase underscores a new reality for the tech sector: the ability to procure massive amounts of power is becoming as crucial as designing the most advanced chips. The AI buildout has driven global tech companies to issue a record $428.3 billion in bonds in 2025, nearly doubling the median debt-to-EBITDA ratio for large firms to 0.4. As capital discipline becomes a key theme for 2026, investors are scrutinizing not only who can innovate but who can sustainably fund and power the next phase of AI growth.