Fed Rate Cut Expectations & AI Sector Impact Analysis (Nov 2025)

This analysis is based on a Reddit discussion [internal] and Fed policy updates [1] published on Nov 24, 2025. Core highlights include Fed Daly’s support for a December rate cut, 80%+ probability of the cut, market reactions (indices up, AI stocks gaining), and mixed sentiment about AI growth vs bubble risks.

San Francisco Fed President Mary Daly supported a December rate cut citing labor market weakness [1]. The CME FedWatch Tool shows an 80.2% probability of the cut as of Nov 26 [2]. Rate cut odds doubled from ~40% to ~80% in a week due to dovish Fed comments [3].

US indices rose on Nov24: S&P500 (+1.03%), NASDAQ (+1.73%), Dow (+0.17%) [0]. Energy sector led gains (+1.44%) on Nov26 while Tech rose modestly (+0.188%) [0]. Nvidia (NVDA) was up 1.78% to $180.98, Microsoft (MSFT) up 2% to $486.55 [0].

JPMorgan noted AI drove half of 2025 GDP growth from capex [4]. Rate cuts lower borrowing costs, potentially accelerating AI investments [4]. Nvidia’s buy-the-dip narrative [6] and Starcloud’s space data center project [5] indicate ongoing AI interest.

• Cross-domain Link: Rate cuts → lower borrowing costs → AI capex growth
• Mixed Sentiment: AI stocks gained but Tech didn’t lead sector gains, reflecting bubble concerns
• Rapid Policy Shift: Rate cut odds doubled in a week, showing market sensitivity to Fed comments

• AI bubble concerns (modest Tech gains vs Energy leadership)
• Labor market weakness cited by Daly [1]

• Buying opportunities during potential panic sell-offs
• AI capex growth driven by lower rates [4]

Critical points include: Fed’s dovish shift, 80%+ rate cut probability, AI’s role in GDP growth, mixed market sentiment about AI. No prescriptive recommendations are provided.