Federal Reserve Chairman Jerome Powell’s warning to investors about the need for potentially more rate increases couldn’t keep stocks from rising on Friday, suggesting that the year-end rally might have more fuel than the bears realized. At this point, the bulls are now asking how many multiple new highs the market might make before the year ends. But first, let’s address the near term.

Powell on Friday addressed speculation for aggressive interest rate cuts. “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said in prepared remarks for an audience at Spelman College in Atlanta. “We are prepared to tighten policy further if it becomes appropriate to do so.” While acknowledging the recent string of positive indicators regarding prices, the Fed chair warned that it’s too soon to declare victory over inflation.

After an initial muted response in terms of stock movement, investors brushed off that concern, kicking off the December trading by sending the Dow Jones Industrial Average to a new high on Friday. The blue-chip index rose 294.61 points, or 0.82%, to close at 36,245.50. Leading the gains on the Dow were, among others, Apple (AAPL), Nike (NKE), Intel (INTC) and IBM (IBM). The S&P 500 index added 26.83 points, or 0.59%, ending the day at 4,594.63, while the tech-heavy Nasdaq Composite gained 78.81 points, adding 0.55%, to close at 14,305.03.

This week’s trading action capped off November as its best month in more than a year. In November alone, the S&P and Nasdaq surged 9% and 11%, respectively. Both averages enjoyed their best monthly performances since July 2022. The Dow, meanwhile, added 9% in November, logging its best month since October 2022. November’s dominant rally came as a surprise. Granted, the economic indicators for inflation were pointing towards an eventual dovish policy by the Fed, even speculation surrounding rate cuts in the first half of next year.

All of that said, few market participants expected the sort of aggressiveness investors showed in piling back into stocks, especially as the market entered November on a three-month losing streak. In terms of momentum, December is off to a solid start. The Fed will meet on Dec. 13 to decide on further monetary policy. While Powell has hinted that the Fed’s rate hike mode might not be over, citing that overall economic growth remains above the Fed’s recently confirmed 2% target, it’s nonetheless hard to justify further rate hikes at this point.

On the earnings front in particular, here are the stocks I’ll be watching this week.

C3.ai (AI) – Reports after the close, Wednesday, Dec. 6

Wall Street expects C3.ai to post a per-share loss of 18 cents on revenue of $74.33 million. This compares to the year-ago quarter when the loss was 11 cents per share on revenue of $62.41 million.

What to watch: The growing popularity of artificial intelligence and ChatGPT in particular is more than just hype. The three quarterly results and guidance from Nvidia’s (NVDA) suggests there’s an insatiable appetite for AI. Another company surging with AI’s popularity is C3.ai, which provides enterprise AI applications that meet the business-critical needs of global enterprises in manufacturing, financial services, government, defense and intelligence, among other industries. Its shares have risen 172% year to date, compared with 19% rise in the S&P 500 index. The stock has risen near 25% just in the past thirty days.

Much of the popularity C3.ai has enjoyed has been attributed to the company’s partnership with Google (GOOG, GOOGL), where it will make its generative AI product suite available as a public offer on Google Cloud Marketplace. The product suite features enterprise search, allowing businesses to search across their database to locate and retrieve relevant information. Meanwhile, the management has also been working to modify the company’s business model, shifting the business away from short-term revenues to a transaction-based pricing method, while boosting long-term revenues by growing its customer base. Those initiatives appear to be working with growth rates starting to re-accelerate following. On Wednesday, the company will look to prove that it is here to stay and has a sustainable path towards profitability.

GameStop (GME) – Reports after the close, Wednesday, Dec. 6

Wall Street expects GameStop to post a per-share loss of 8 cents on revenue of $1.18 billion. This compares to the year-ago quarter when the loss was 31 cents per share on revenue of $1.19 billion.

What to watch: Meme stock darling GameStop remains one of the most widely-followed stocks on the market, but the video game retailer has not performed this year as investors hoped it would. Currently trading at around $15 per share, the stock is off some 46% from its 52-week high of around $28. Its shares have fallen 16% year-to-date, including 37% over the past six months, trailing the 19% year-to-date rise in the S&P 500 index. Meanwhile, over the trailing twelve months, GME stock has fallen 41%, while the S&P 500 has risen 12%.

The brick-and-mortar retailer is still facing significant challenges in its fundamental prospects; its main weakness in its core business of trading physical video games, which has suffered a steady decline due to the digitalization of the gaming industry. Although GameStop management has attempted to diversify the company’s revenue stream, there has been no signs of meaningful improvement. The company is projected to generate roughly $5.7 billion in revenue for the fiscal year, which reflects a decline of 3.7% year over year. Even then, that estimate has been reduced by 5% over the past six months as U.S. video game sales continue to decline.

On the bright side, its management has done a decent job cutting costs to preserve cash flow, which will need to continue if video game sales continue to decline. However, cost cuts alone, absent revenue growth, is not a workable long-term strategy. On Wednesday GameStop will need to outline its long-term plan and demonstrate it has lasting power.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: Earnings Feed: Earnings to Watch This Week (AI, GME)