AI, Disney and AMD: what happened on US markets this week

US markets look set to end the week on the back foot as investors grow more sceptical of the AI boom. It represents a complete turnaround from the start of the week when hopes that the government shutdown would be resolved gave stocks a boost. 

By the time the Trump administration signed a bill to end the shutdown on 12 November, equity indices were already falling back with S&P 500 wiping out November’s gains.

Markets were jittery due to the potential for the backlog of economic data to cause a surprise when they are finally released in coming weeks.

Another week passed without a jobless claims report and October’s consumer prices data was also not forthcoming, starving markets and the Federal Reserve of key data on the economy.

Expectations for a consecutive interest rate cut in December have shrunk from close to a certainty a few weeks ago, to a 50/50 coinflip according to the CME FedWatch tool.

Walt Disney

Entertainment giant Disney failed to impress with its fourth-quarter results despite a decent showing for its park and a streaming business which is now delivering healthy profit and is growing.

While earnings per share (EPS) of $1.11 were ahead of the $1.05 which had been forecast, revenue came in short of expectations at $22.5 billion and group operating profit fell 5% to $3.48 billion as its TV and movie business served up a disappointing performance.

A dispute with Youtube TV is not helping here and Disney warned this could go on for some time.

Against this mixed backdrop, pledges to double its share buyback programme and increase dividends largely fell on deaf ears.

This will increase the pressure to resolve the succession issue given CEO Bob Iger is set to step down in a little more than 12 months’ time, with a new boss expected to be unveiled early next year.

Advanced Micro Devices

Shares in chipmaker Advanced Micro Devices – or AMD for short – were in heavy demand after the company’s CEO Lisa Su flagged a big AI-related opportunity at the company’s analyst day on 11 November.

Su said that group revenue would expand to around 35% a year over the next three to five years thanks to heavy demand for AI chips. Much of this growth is being driven by the AI data centre business which is expected to grow at a rate of around 80% a year over the same timeframe and hit tens of billions of dollars in sales by 2027.

Significantly the company said its gross margins would be in a range of 55% to 58% over the medium term. Materially better than anticipated by analysts.

Apart from Nvidia, AMD is the only other major developer of semiconductors involved in AI applications and in October it announced a partnership with ChatGPT developer OpenAI to sell the latter billions of dollars’ worth of its Instinct AI chips. As part of the deal OpenAI could end up taking a 10% stake in AMD.

Cisco Systems

Cisco Systems rallied more than 7% on 13 November to register a new 25-year high, after the networking equipment maker raised its full-year outlook on the back of strong cloud demand.

CEO Chuck Robbins revealed that the firm secured more than $2 billion in AI-related orders for fiscal 2025 reflecting a wave of infrastructure spending as businesses accelerate migration to the cloud.

Cisco raised its revenue projection for fiscal 2026 to a range of $60.2 billion to $61 billion, around 2% ahead of its prior expectations, with AI infrastructure orders expected to top $3 billion.

The company reported its fourth straight quarter of growth as revenues climbed 8% to $14.88 billion in the three months to October, ahead of consensus estimates, while adjusted EPS came in at $1 compared with the $0.98 expected.

The shares are up by around a third so far 2025, comfortably ahead of the Nasdaq Composite’s 21% gain.