C3.ai(US:AI) ZACKS·2025-12-12 20:50Market Performance - Year-to-date, the Dow is up 14.5%, the S&P is up 17.3%, and the Nasdaq is up 22.2% [1] - Historically, Q4 is the best quarter for stocks, with December in post-election years having a 77.8% likelihood of finishing higher [1] Economic Indicators - Recent inflation reports show core inflation at 3.0% year-over-year, down from 3.3% [12] - The Producer Price Index (PPI) eased to 2.6% year-over-year, down from 2.8% [12] - The Personal Consumption Expenditures (PCE) index came in at 2.8%, down from 2.9% [13] - The Federal Reserve cut interest rates by 25 basis points, marking the third cut of the year, with expectations for another cut next year [13] Earnings Outlook - Q4 earnings growth is forecasted at 6.8%, with Q1 2026 at 8.2% and Q2 2026 at 9.8% [15] - Despite concerns over tariffs and recession, aggregate earnings estimates remain strong, indicating growth potential [16] Small-Cap Performance - The small-cap Russell 2000 reached new all-time highs following the Fed's rate cut [17] - Small-caps are expected to benefit significantly from lower interest rates and tax provisions allowing for immediate expensing of capital expenditures [18][19] Technology Sector - The current tech boom is driven by Artificial Intelligence (AI), which is expected to be transformative across various industries [6][9] - AMD's CEO predicts a 35% annual growth for the company over the next 3-5 years due to insatiable demand for AI [9] - NVIDIA's CEO describes AI as the most powerful technology force of our time, indicating a new computing era [10] Investment Strategies - Stocks with a Zacks Rank 1 Strong Buy have historically outperformed the market, achieving an average annual return of over 24% [21] - Strategies focusing on new highs and small-cap growth have shown significant returns, with small-cap growth averaging 44.3% over the past 25 years [26][28]