2026 Tech Outlook: AI Broadens, Software Faces Pressure, Tesla Challenges

Bloomberg Tech · December 24, 2025 · Listen to Original Episode →

Original Title:

TL;DR

Nvidia's halt of Intel's 18A manufacturing process tests raises doubts about Intel's ability to compete with TSMC, potentially impacting its turnaround strategy and stock prospects.
The "boring" tech sectors like memory chips and hard drives significantly outperformed in 2025 due to AI demand, suggesting a broader market rally into 2026 beyond core AI hardware.
Software companies like Adobe and Salesforce face pressure from AI competition and monetization challenges, indicating a rougher competitive landscape for AI applications in 2026.
Increased scrutiny on AI spending and return on investment will be a major talking point in 2026, favoring companies like Microsoft, Amazon, and Google that can monetize data center and chip rental services.
A rotation from technology to non-technology sectors is expected in 2026, even as the macroeconomic backdrop remains positive for tech, suggesting a deceleration in AI enthusiasm's impact.
Tesla faces significant challenges in 2026 with declining sales and profits, requiring faster regulatory approval for robotaxis and growth in its energy division to sustain its market capitalization.
ServiceNow's $7.75 billion acquisition of Armis is a strategic move to accelerate roadmap and scale cybersecurity capabilities, aiming to become a premium platform provider by integrating asset data with its CMDB.

Deep Dive

Tesla faces significant regulatory and market challenges in 2026, despite its recent share price surge and CEO's record compensation. The company is under a new U.S. government probe for Model 3 emergency door handles, a mechanical issue that requires more than a simple software fix and could damage its reputation as a technology leader. Concurrently, Tesla is expected to experience a second consecutive year of declining sales and shrinking profits, putting pressure on its high market valuation. While the limited launch of robotaxis in Austin and San Francisco is a step forward, Tesla remains far behind Waymo, which already operates in multiple cities, has a significant lead in rides, and is expanding internationally. To maintain its share price and market position, Tesla must accelerate regulatory approval for its robotaxis, expand into more cities rapidly, and achieve substantial revenue growth, particularly by leveraging its booming energy division, which provides powerwalls, megapacks, and energy blocks to utilities.

The broader tech landscape also presents evolving dynamics. Intel's stock fell on reports that Nvidia has halted testing of its advanced chip production processes, casting doubt on Intel's ambitious turnaround program and its ability to compete with manufacturers like TSMC. This setback underscores the challenges in rebuilding domestic chip manufacturing capacity, a critical area for national security. Meanwhile, "boring" tech sectors like memory chips and hard disk drives have outperformed this year, driven by AI infrastructure demand, with companies like Micron seeing significant gains. Looking ahead to 2026, the AI rally is expected to broaden beyond technology into sectors like banking and healthcare, as AI's productivity benefits become more widely apparent. However, software companies integrating AI, such as Adobe and Shutterstock, face intense competition and pressure on margins as they struggle to monetize AI-enhanced models.

In the realm of corporate finance and media, a federal judge has allowed the Trump administration to proceed with a $100,000 fee on new H-1B visa applications, impacting U.S. tech companies that rely on foreign skilled workers. While large tech firms may absorb this cost, public sector entities like hospitals and universities, which also depend on H-1B visas for skilled professionals in healthcare and education, may suffer from reduced quality of care and services due to the fee. Separately, the media industry is undergoing a significant reshaping, with potential consolidation among major players like Paramount, Warner Bros. Discovery, and even TikTok. This consolidation is driven by the immense value of media content as a data source for training artificial intelligence models, raising complex governance and fiduciary responsibilities for boards and shareholders concerning data access and control. Finally, the ETF market is seeing a continued shift towards actively managed funds, particularly leveraged single-stock ETFs and thematic products focused on areas like AI and quantum computing, reflecting investor demand for specialized and innovative investment vehicles.

Action Items

Audit Tesla's Model 3 door handle issue: Identify root cause and implement a permanent fix to prevent recurrence and mitigate reputational damage.
Analyze Intel's chip manufacturing process: Assess Nvidia's decision to halt testing and identify critical gaps to inform future strategic partnerships.
Measure AI adoption impact on software companies: For 3-5 companies (e.g., Adobe, ServiceNow), calculate correlation between AI integration and revenue/margin changes.
Track AI spending ROI: For 3-5 companies (e.g., Oracle, Microsoft), monitor capital expenditure against immediate revenue generation from data centers and chip rentals.

Key Quotes

"Intel down about one and a half percent nvidia down nearly 1 given how big nvidia is that is really acting as a weight on the overall benchmarks here."

This quote highlights the immediate market reaction to news concerning Intel and Nvidia. The author, Ryan Vlastelica, points out that Nvidia's significant market capitalization means its stock performance directly impacts broader tech benchmarks, illustrating the interconnectedness of major players in the semiconductor industry.

"The headline that I'm reading on the terminal Intel falling on a report that Nvidia has halted a production tests of some of its advanced chipmaking capacity here Ryan what do we know so far."

This quote introduces a specific news event that is causing Intel's stock to decline. The speaker is asking for details about a report indicating Nvidia has paused testing Intel's advanced chipmaking processes, signaling a potential setback for Intel's manufacturing ambitions.

"The fact that they are pausing here is just enough of a you know it sort of underlines how intel has really sort of fallen behind competitors in this pretty significant area."

Ryan Vlastelica explains the implication of Nvidia's decision, stating that it underscores Intel's competitive struggles in chip manufacturing. The author suggests that Nvidia's pause in testing Intel's processes highlights a perceived gap between Intel and its rivals in this critical technological sector.

"And so in 2026 we think that not only that the boring the most boring and undervalued pockets of the market will be in investors' radar but we will also expect to see actually this technology and ai rally broaden toward the non technology pockets of the market because ai productivity ai cost efficiency will also benefit to any other sector out there including banks healthcare industries and I think that this is going to be the big story of 2026."

Epek Oscar Dzhakaya discusses the anticipated market trends for 2026, predicting that less exciting but undervalued market segments will gain investor attention. The analyst also forecasts that the rally driven by AI will expand beyond technology sectors to benefit industries like banking and healthcare due to AI's impact on productivity and cost efficiency.

"Well these companies have come under the pressure of ai you would expect that making ai tools available to investors would boost their revenue but it actually had the exact opposite impact on these companies they have they have not been able to monetize and sell these ai boosted models to investors as much as they wanted and actually the fact that other models although ai models came to the market to challenge these companies have also been a bit of a problem for these companies."

Epek Oscar Dzhakaya analyzes the challenges faced by certain software companies in the context of AI adoption. The analyst explains that despite offering AI tools, these companies have struggled to monetize them effectively, and competition from other AI models has further complicated their market position.

"The highest conviction right now is rotation again from technology to non technology pockets of the market I think it is important to note that the macroeconomic backdrop remains positive for technology stocks as well so we think that the rally could continue but it might decelerate next year and again the ai enthusiasm will probably move toward the non technology pockets of the market toward the sectors that actually do also use technology that could be boosted by ai tools."

Epek Oscar Dzhakaya reiterates his primary investment outlook, emphasizing a rotation from technology stocks to non-technology sectors. The analyst acknowledges that the macroeconomic environment remains favorable for tech stocks, suggesting a potential continuation of their rally, albeit at a slower pace, with AI enthusiasm shifting towards sectors that can leverage technology for growth.

Resources

External Resources

Books

"The Sleepover" by [Author Not Specified] - Mentioned in relation to a child's anticipation of an event.

Research & Studies

Study on Xolair's efficacy (Genentech and Novartis) - Discussed as a prescription medication proven to significantly reduce allergic reactions to accidental food exposure.

Tools & Software

Odoo - Referenced as an all-in-one business software platform integrating CRM, accounting, inventory, e-commerce, and HR.
Cisco Duo - Mentioned as a security solution providing phishing resistance and session theft protection.

Articles & Papers

"Intel falling on a report that Nvidia has halted a production tests of some of its advanced chipmaking capacity" (Reuters) - Discussed as the reason for Intel's stock decline.
"Intel's turnaround program" - Mentioned in the context of investments from Nvidia and the US government.
"The chips act" - Referenced in relation to government funding for domestic chip manufacturing.
"Ryan's story on the terminal about boring bets in tech" - Discussed as highlighting the success of memory chips and hard disk drives in the tech space.
"Epec's view on 2026 market trends" - Discussed in relation to the expectation of AI rally broadening to non-technology sectors.
"Adobe, ServiceNow, Salesforce performance" - Mentioned as software names that have come under pressure due to AI competition.
"Oracle's equity and debt performance" - Referenced as an example of pressure to see ROI on capital expenditure.
"Microsoft, Amazon, and Google's role in AI data centers" - Discussed as companies that could help investors reduce the risk of AI overspending.
"Trump administration's visa sanctions on Thierry Breton and other activists" - Mentioned as a response to European efforts to regulate online content moderation.
"X's fine for not allowing content moderation to feed out hate speech" - Referenced as a reason for the US visa sanctions on European officials.
"Warner Brothers Discovery and Paramount media dealmaking" - Discussed in the context of a potential hostile bid and its implications.
"Larry Ellison's personal guarantee of $40 billion for the Paramount SkyDance hostile bid" - Mentioned as a financing aspect of the media deal.
"Netflix's offer for Warner Brothers Discovery" - Discussed as an alternative deal in the media landscape.
"Tesla's Model 3 emergency door handles probe" - Mentioned as a new federal investigation into Tesla.
"Waymo's robotaxi operations" - Referenced as a competitor to Tesla in the autonomous driving space.
"Tesla's energy division products (Powerwalls, Megapacks, Energy Blocks)" - Discussed as a booming sector for Tesla.
"ServiceNow's agreement to buy cybersecurity startup Armis" - Mentioned as ServiceNow's biggest acquisition to date.
"ServiceNow's acquisition of Moveworks" - Referenced as a previous M&A activity by ServiceNow.
"Bitcoin's price performance" - Discussed in relation to its trading status and quarterly performance.
"OpenAI's potential integration of ads into ChatGPT" - Mentioned as a reported development for the AI chatbot.
"Alphabet's Waymo software update for power outages" - Discussed as a response to self-driving taxis freezing during a power failure.

People

Katie Greifeld - Host of Bloomberg Tech.
Caroline Hyde - Host of Bloomberg Tech.
Ed Ludlow - Host of Bloomberg Tech.
Ryan Vlastelica - Bloomberg equities reporter.
Epec Oscar Dzhakaya - eToro senior market analyst.
Eric Larson - Bloomberg News reporter covering legal affairs and politics.
Thierry Breton - Former European Union commissioner.
Mike Pompeo - Secretary of State.
Laura Davison - Bloomberg News reporter in Washington.
Stephen Wolf Pereira - CEO and founder of Alpha, an AI governance intelligence firm.
Larry Ellison - Associated with Oracle and a potential bid for Paramount.
Amit Zaveri - President and COO of ServiceNow.
Steve Wesley - Founder of The Wesley Group and former Tesla board member.

Organizations & Institutions

Intel - Discussed in relation to chip production and its stock performance.
Nvidia - Mentioned in relation to halting tests of Intel's chip production process.
TSMC - Referenced as a competitor to Intel in chip manufacturing.
US Government - Mentioned in relation to investments in Intel and visa policies.
Micron - Highlighted as a significant gainer in the tech space due to memory chips.
Sandisk - Mentioned as a company whose stock has performed well.
Western Digital - Mentioned as a company whose stock has performed well.
Seagate Technology - Mentioned as a company whose stock has performed well.
eToro - Affiliation of Epec Oscar Dzhakaya.
Swissquote - Affiliation of Epec Oscar Dzhakaya.
Chamber of Commerce - Filed a lawsuit challenging the H-1B visa fee.
19 Democratic Attorneys General - Filed a lawsuit challenging the H-1B visa fee.
California - Leading the lawsuit filed by Democratic attorneys general regarding H-1B visas.
European Union (EU) - Mentioned in the context of tech regulation and a "cold war" with the US.
Facebook - Mentioned as a social media platform subject to EU regulation.
Instagram - Mentioned as a social media platform subject to EU regulation.
X (formerly Twitter) - Mentioned as a social media platform subject to EU regulation and a fine.
Warner Brothers Discovery - Involved in media dealmaking discussions.
Paramount - Involved in media dealmaking discussions and a hostile bid.
SkyDance - Involved in a hostile bid for Paramount.
Oracle - Associated with Larry Ellison and potential involvement in media consolidation.
TikTok - Mentioned in the context of data consolidation for AI training.
Netflix - Made an offer for Warner Brothers Discovery.
NHTSA (National Highway Traffic Safety Administration) - Investigating Tesla's Model 3 door handles.
Tesla - Discussed regarding its stock performance, robotaxis, energy division, and regulatory scrutiny.
Waymo - Competitor to Tesla in the robotaxi space.
HSBC - Mentioned as a company using quantum computing for bond pricing.
IBM - Mentioned as a company investing in quantum computing.
Cisco - Mentioned as a company investing in quantum computing.
Amazon - Mentioned as a company providing quantum services through its cloud.
Microsoft - Mentioned as a company providing quantum services through its cloud.
Google - Mentioned as a company providing quantum services through its cloud.
Defiance ETFs - Issuer of ETFs, including leveraged single stock and quantum ETFs.
ServiceNow - Discussed regarding its acquisition of Armis and previous acquisition of Moveworks.
Armis - Cybersecurity startup acquired by ServiceNow.
Moveworks - Company acquired by ServiceNow.
OpenAI - Developing AI chatbot technology.
Alphabet - Parent company of Waymo.
Bloomberg Intelligence - Provides data and analysis on ETFs.
Genentech - Pharmaceutical company, advertiser of Xolair.
Novartis - Pharmaceutical company, advertiser of Xolair.
Abercrombie & Fitch - Retail company mentioned for holiday outfits.
Stelo - Glucose biosensor company.
Bloomberg - Media company.
Cohesity - Company mentioned for resilience solutions.
Spectrum - Telecommunications company offering mobile and internet services.
Kroger - Grocery store now available on DoorDash.
Doordash - Delivery platform.
Repatha - Medication for lowering LDL cholesterol.
CVS - Pharmacy and community health provider.

Courses & Educational Resources

"Bloomberg Tech" podcast - The primary source of the transcript.

Websites & Online Resources

cohesity.com/resilience - Website for learning more about Cohesity's resilience solutions.
xolair.com - Website for full prescribing information on Xolair.
stelo.com - Website for Stelo glucose biosensor.
omnystudio.com/listener - Website for privacy information.
spectrum.com/freeforever - Website for Spectrum's free home internet offer.
odoo.com - Website to try Odoo for free.
duo.com - Website for Cisco Duo security solutions.

Podcasts & Audio

Bloomberg Tech - The podcast from which this transcript is derived.

Other Resources

H-1B visa applications - Discussed in the context of a new fee imposed by the Trump administration.
AI (Artificial Intelligence) - A pervasive theme discussed across multiple segments, including its impact on chipmaking, software, data centers, and investment strategies.
Quantum computing - Discussed as a long-term investment with emerging commercialization proof points.
6G technology - Mentioned as a priority for the US to research and build out for leadership.
Leveraged ETFs - Discussed as a growing area of interest for investors.
Single stock ETFs - Mentioned as actively managed products with significant investor interest.
Option space products - Discussed as an area of innovation in ETFs.
Memory chips - Highlighted as a successful "boring bet" in the tech space.
Hard disk drives - Highlighted as a successful "boring bet" in the tech space.
Capital expenditure (CapEx) - Discussed as a major talking point for investors in 2026, with a focus on return on investment.
Data centers - Mentioned as a key component of AI infrastructure and a revenue opportunity.
Robotaxis - Discussed in relation to Tesla's launch and competition with Waymo.
Energy division - Discussed as a booming sector for Tesla.
Cybersecurity - Discussed in relation to ServiceNow's acquisition of Armis and the broader market.
Bitcoin - Discussed in relation to its price performance.
AI debt deluge - Mentioned as a theme in credit markets.
Full self-driving (FSD) - Discussed in relation to Tesla's progress and competition.
Personal health revolution - Mentioned in relation to Stelo.
Seasonal wardrobe - Mentioned in relation to Abercrombie & Fitch.
Holiday essentials - Mentioned in relation to Kroger and DoorDash.
LDL cholesterol - Mentioned in relation to Repatha.
Fishing (metaphorical) - Used as a metaphor for hacking activities.