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Micron's revenue and profit soared in the most recent quarter, driven by a memory chip shortage and booming demand.

Key Takeaways

• Some AI stocks shook off bubble concerns and soared on Thursday after memory chip maker Micron blew past earnings estimates and predicted its profits will soar.
• Memory and data storage companies could be the biggest beneficiaries of the AI boom over the next year, according to some analysts.

AI stocks soared Thursday after memory chip maker Micron (MU) reported quarterly results far stronger-than-expected. That offered tech investors a glimmer of hope after weeks of disappointing performance for AI stocks. 

Micron was the S&P 500's best-performing stock Thursday, with shares finishing up more than 10%. Fellow memory and storage companies Sandisk (SNDK) and Western Digital (WDC) saw similar jumps, rising 6% and 5%, respectively. Other AI beneficiaries, such as nuclear power provider Constellation Energy (CEG) and software company Applovin (APP), whose stocks have lately been pressured, were also sharply higher. 

Micron's results were a big tailwind Thursday. The company blew past quarterly earnings estimates, citing booming demand from data centers for its memory chips and a supply shortage. Demand is so strong, according to executives on the company’s earnings call, that Micron is already sold out of high-bandwidth memory chips through 2026. 

Why This Is Important

The AI rally that's fueled the bull market for three years hit turbulence last month and has remained under pressure. Micron's strong earnings could revive Wall Street's confidence in the AI infrastructure buildout and, subsequently, the companies and stocks benefiting from it.

“Yesterday’s guidance was everything [Micron] bulls could have hoped for,” said Ryan Lee, senior vice president of product and strategy at Direxion, in emailed comments. Micron predicted earnings per share of $8.19 in the current quarter, more than 70% above Wall Street’s expectations. The critical challenge for the company will be increasing supply without eating into margins, according to Lee. 

There were also notes of restraint. The semiconductor industry is notoriously cyclical, alternating between periods of severe undersupply and oversupply. "Investors should be valuing memory names on through-cycle profitability potential, not on current peak levels," wrote Deutsche Bank analyst Melissa Weathers in a note on Thursday.

Still, Weathers hailed Micron's results as evidence of "a paradigm shift in the memory sector." The industry, she wrote, "is structurally low on supply, which could sustain for multiple years to come."

The question on some investors’ minds Thursday is whether Micron’s results would be enough to revive the ailing AI rally. In early November, investors grew anxious about when big tech would see returns on its massive investments in artificial intelligence, if at all. Investors also grew wary of the industry's increasing reliance on debt to fund its projects. Those concerns dampened the mood on Wall Street, causing high-flying tech stocks to pull back from their records.

Investors are increasingly demanding evidence that AI investments are delivering tangible benefits or will soon. Oracle (ORCL) tumbled last week after its results failed to temper anxiety about its debt-financed data center investments. Chipmaker Broadcom (AVGO) showed its AI business was booming, but investors focused on the impact that growth might have on its profit margins.

That's likely why Micron's results reinvigorated investors today. "Memory and storage vendors are demand weathervanes for AI, so seeing demand so vastly exceed supply is a positive sign for the industry as a whole," Olivier Blanchard, research director and practice lead of intelligent devices at The Futurum Group, told Investopedia.

Paul Meeks, managing director and head of technology research at Freedom Capital Markets, believes the AI infrastructure boom has “at least another year, likely two” in it. That’s why he sees potential for Micron’s earnings to exceed already high expectations, and says “any dip presents an extraordinary opportunity” to buy the stock and other companies benefiting from AI spending.  

Morgan Stanley analysts said memory companies like Micron, Western Digital, and Seagate Technology (STX) “would be the biggest beneficiary” if tech companies and investors continue to plow money into AI infrastructure. "Memory and storage for AI are finally having their moment," Blanchard said.

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Olive Garden is the latest among a growing number of restaurant chains reporting American consumers are searching for value.

Key Takeaways

• Olive Garden's "never ending pasta bowl" special was a meaningful driver of its quarterly sales as Americans search for deals, executives said Thursday.
• Executives also said Olive Garden has seen a growing number of higher-income customers at its restaurants.

Olive Garden said its sales show Americans are growing more hungry for two things: value, and lots of pasta.

Executives from Darden Restaurants (DRI), the parent company of Olive Garden, said during the company's earnings call Thursday that the restaurant chain saw a big boost in its quarterly sales, thanks in part to the popularity of its $13.99 "never ending pasta bowl" special.

"Preference was strong and refill rates reached a record high demonstrating that guests continue to find abundance, and meaningful value at Olive Garden in this environment," CEO Rick Cardenas said, according to a transcript from AlphaSense.

The CEO also said Olive Garden and Darden's LongHorn Steakhouse have seen a growing number of middle to higher-income customers, echoing other restaurant chains and retailers saying they're seeing consumers at higher income levels search for better deals.

Why This Is Significant

Olive Garden parent Darden is the latest in a growing trend of companies reporting American consumers are showing some signs of strain and searching for value.

Darden posted $3.1 billion in sales for its fiscal second quarter, slightly above the analyst consensus compiled by Visible Alpha. Adjusted earnings per share came in at $2.08, just 1 cent below estimates. Cardenas said that record-high beef prices were among the factors pressuring its margins. Same restaurant sales gained 4.3% across Darden's portfolio, led by 4.7% and 5.9% gains for Olive Garden and LongHorn Steakhouse, respectively, each topping forecasts.

Looking ahead, Cardenas said that the restaurant operator plans to continue focusing on value, including introducing a lower price, smaller portion option at Olive Garden.

Darden raised its full-year revenue outlook for the third straight quarter, though it warned higher prices could hold back profits. Darden said it now expects sales growth of 8.5% to 9.3%, compared to its prior guidance of 7.5% to 8.5%. It held its adjusted EPS forecast steady at $10.50 to $10.70.

Shares of Darden were up less than 1% in recent trading. They've climbed about 2% for 2025, after pulling back from record levels reached over the summer.

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The most recent CPI reading could change the Fed's interest rate calculus.

What This Means For The Economy

• Price increases cooled unexpectedly in November, which could ease inflation fears for Fed officials and justify cutting interest rates to preserve the job market.
• Fed officials have been torn between keeping its key interest rate higher for longer to fight inflation, or lowering it to boost the job market.
  
• The government shutdown distorted the data, leading some economists, and possibly the Fed, to take it with a grain of salt.
  

The sudden drop of inflation in November could clear the decks for the Federal Reserve to cut interest rates to help boost the faltering job market. But the outlook is complicated by the government shutdown's impact on the data.

Core inflation in the Consumer Price Index fell to a four-year low in November, the Bureau of Labor Statistics said Thursday. Normally that kind of news would be music to the ears of officials at the Federal Reserve who adjust the central bank's interest rate with the goal of keeping inflation low. If the trend is confirmed in future months, the central bank might cut interest rates without fear of stoking inflation.

What This Means For The Economy

A lower fed funds rate reduces borrowing costs across the economy, making everything from consumer loans to business credit cheaper. That can encourage more spending and investment, supporting stronger economic growth.

However, experts said the good news could prove to be a mirage, since the government shutdown in October and November may have distorted the picture. Among other abnormalities, the BLS did not report price data for October at all, since it couldn't carry out its usual surveys that month.

Economists have long expected inflation to cool significantly because home prices have decelerated over the past few years after surging during the pandemic. That day may have finally arrived, which could help resolve the debate among Fed officials about whether to keep the fed funds rate higher for longer to fight inflation. Alternatively, they could lower it to boost the economy and encourage hiring to prevent the recent jobs slowdown from turning into a wave of high unemployment.

"A surprisingly sharp decline in U.S. consumer price inflation should grease the wheels for further Fed easing in 2026,"  Sal Guatieri, senior economist at BMO Capital Markets, wrote in a commentary.

Financial markets are pricing in only a 26.6% chance the Fed will cut interest rates at its next meeting in January, after it cut them by a quarter-point at each of its last three meetings. Thursday's surprisingly tame inflation report did little to shift those expectations. Fed officials may wait for more reliable data before making any more moves with interest rates, since setting rates too low risks fueling high inflation.

"The latest CPI numbers are encouraging for the Federal Reserve, but Fed Chair Jerome Powell has already warned against reading too much into the latest data due to distortions from the shutdown," Bernard Yaros, lead economist at Oxford Economics, wrote in a commentary.

Still, the report could help ease some inflation concerns at the Fed, which has a dual mandate to keep inflation low and employment high. Data this week showed the job market's recent slowdown deepened in November, which could encourage the Fed to emphasize the labor side of its mandate and make rate cuts more likely.

"The weaker than expected inflation reading for November supports the case for further Fed cuts in the New Year, particularly given the deterioration in labour market conditions signaled by data released earlier this week," Andrew Grantham, senior economist at CIBC, wrote in a commentary.

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Key Takeaways

• JPMorgan stock analysts set a target of 7500 for the end of 2026, which points toward the possibility of another year of double-digit gains for stocks.
• The Federal Open Market Committee would have to deliver more than a half a percentage cut to rates to move the benchmark stock index meaningfully higher, the bank's analysts said.

What will it take to get the S&P 500 above 8000 next year? More than the two interest-rate cuts JP Morgan expects.

The bank's analysts broadly expect the benchmark index to finish 2026 at 7500, implying a 10% rise from recent levels; in research published Thursday, the bank said it expects two quarter-percentage point interest-rate cuts from the Fed next year. Further cuts, the bank said, could help the index to 18% gains, matching its recent year-to-date rise.

CME FedWatch puts the highest probability on two cuts by December 2026. Prediction markets put slightly higher odds on three cuts, with Polymarket bettors anticipating rates that come down by three-quarters of a percentage point next year.

WHY THIS MATTERS TO YOU

If stocks at large start posting smaller gains, investors may to start looking elsewhere to make up for the kind of returns to which they've become accustomed.

With the S&P 500's valuations driven upward by artificial intelligence-linked stocks, investors and investment shops have started to ring the alarm on potentially anemic annual returns on the horizon. The benchmark index's average annual return has been about 10% since the late 1950s, and JPMorgan's base-case outlook implies investors can bag another year of double-digit gains. Anything beyond that will require a little help from the Fed, according to the bank's research.

Some investors expect a new Federal Reserve chairman to answer to political pressures and lower rates below the 3% to 3.25% range, but that's not what JPMorgan analysts were getting at. In their notes, they specified that the their more-bullish outlook for the S&P 500 is based on the assumption that the Fed cuts further due to "improving inflation dynamics."

Artificial intelligence-linked stocks should stay strong, according to the JPMorgan equity research team led by Ken Goldman. "FOBO," or Fear of Becoming Obsolete, is driving corporate and government spending, and by the back end of 2026, companies that have adopted the technology should have something to show for it, according to the report.

"Despite AI bubble and valuation concerns, we see current elevated multiples correctly anticipating above-trend earnings growth, an AI capex boom, rising shareholder payouts, and easier fiscal and monetary policies," they wrote.

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Elliott Investment Management has a CEO candidate in mind for Lululemon.

Key Takeaways

• The activist investment group Elliott thinks the former Ralph Lauren CFO Jane Nielsen would be a strong candidate for CEO at Lululemon Athletica.
• The retailer hasn't commented on the idea, but investors appear to have embraced the suggestion.

Lululemon needs a new CEO. One investor's preferred candidate might not be a a stretch.

Less than a week has passed since Lululemon announced it was seeking a CEO, and one of its biggest stakeholders is already floating a candidate who—based on the market's reaction—seems to appeal to fellow investors: Jane Nielsen, who contributed to turnarounds at Ralph Lauren (RL) and Coach, now part of Tapestry (TPR).

Activist investor Elliott Investment Management has put forward Nielsen, the notion which was first reported by The Wall Street Journal. Elliott has acquired a more than $1 billion stake in the retailer, according to a person familiar with the matter, giving it sway in a company with a market value of about $25 billion.

Why This News Matters to Investors

Elliott Investment Management has a record of influencing companies, including working with PepsiCo to reduce some prices and shifting the board at Southwest Airlines. Elliott has built up a stake in several companies and owns Barnes & Nobel.

Lululemon Athletica (LULU) didn't respond to a request for comment in time for publication. But investors appear to be considering the involvement of Elliott—and its pick of Nielsen, previously CFO at Ralph Lauren and now a board member at Mondelēz International (MDLZ)—warmly: Company shares were recently up more than 4%. (They remain down more than 40% this year, part of why a new chief is needed in the first place.)

“Lululemon is one of the most powerful brands in retail, defined by exceptional products, deeply engaged communities and significant global potential,” Nielsen told The Journal. “I would welcome the chance to discuss this opportunity with the Lululemon board."

The Canada-based retailer last week said CEO Calvin McDonald will leave his post at the end of January, and that it was seeking a successor with growth and restructuring experience. The move stood out in a time when a number of other well-known consumer-facing companies, such as Target (TGT), Walmart (WMT) and Nike (NIKE) have named successors without a public search.

Lululemon's approach didn't sit well with its founder, Dennis “Chip” Wilson, who saw it as a sign of insufficient planning. Wilson has a more than 8% stake in Lululemon. He also has a history of publicizing when he disagrees with the retailer, including voicing concern about Lululemon moving far beyond its yoga-focused roots. He didn't respond to Investopedia's request for comment in time for publication.

U.S. sales have slowed for the retailer as it broadens its reach. Lululemon, once known for imbuing leggings and sports bras with a sense of luxury, now sells golf and tennis gear, along with men's apparel.

Lululemon hopes to revive its American business by rolling out new items this spring and speeding up its design and production process, CFO Meghan Frank said. She is serving as interim co-CEO along with Chief Commercial Officer André Maestrini.

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New protein-focused menu options are set to launch at Chipotle next week, the company said.

Key Takeaways

• If you think you saw protein popping up everywhere this year, you're not wrong. Food and beverage companies have been adding it to products from snacks to drinks for much of 2025.
• Some menu changes at Chipotle, announced today, suggest that the trend still has legs heading into next year.

Everybody seemed to want, and to want to sell, more protein this year. Now Chipotle is carrying the torch into 2026.

Chipotle Mexican Grill (CMG), the burrito chain where diners are known to use ordering "hacks" in hopes of landing more meat and other favored ingredients—one long-running theory is that the way to get a bit more is by asking for half of one, half of another, like beef and chicken—on Thursday said it now has an official "high-protein menu."

In practice, that includes what the company called its "first-ever" snack, a 4-ounce bowl of chicken or steak priced below $4; regular-sized bowls and burritos with double meat; and other new bowls and salads. The menu launches Tuesday, the company said.

Why This Matters to You

Consumables companies leaned hard into Americans' appetite for protein this year, putting into all kinds of products seen in restaurants and on store shelves. Today's news from Chipotle suggests that that trend may not be slowing down as the year draws to a close.

The announcement references a survey indicating that Americans' "top diet pattern" this year was high protein. And it comes as other food and drink companies have sought to bring Americans more protein, which is generally seen as helpful to those seeking to feel full and build muscle, among other things, in their offerings ranging from snacks to drinks.

Starbucks (SBUX) earlier this year said it would put protein in foam. More recently, companies have announced protein-focused fruit punches, plant-based coffees, and waffles; Khloé Kardashian added it to her popcorn brand. Chipotle's announcement touches on several of the reasons diners might look for more protein, offering up celebrity-inspired meals aimed at athletes, people seeking to lose weight, and general wellness.

"For years, guests have used Chipotle's customizable offerings to build high protein and fiber-filled meals on their own," said Chipotle President Chris Brandt in a statement. "This curated menu brings that fan behavior to the forefront."

Chipotle is seeking to re-energize diners who are choosing its chow less frequently. In October the company said revenue in its latest quarter came in lower than expected and trimmed its forecast for same-store sales. Performance like that has weighed on the company's shares, which for years were powerful gainers but in 2025 have lost more than a third of their value.

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An investigation released earlier this month found Instacart's AI pricing tool charged users different prices for the same items

Key Takeaways

• The Federal Trade Commission is reportedly investigating Instacart after a study found the grocery delivery giant used AI tools to charge shoppers different prices for the same items.
• Consumer Reports, Groundwork Collaborative, and More Perfect Union estimated the variations in pricing could add up to about $1,200 per year in additional costs for the typical household shopping on Instacart.

Instacart's use of AI-driven pricing is drawing attention from federal regulators. 

The Federal Trade Commission, a consumer protection agency, is looking into the grocery delivery giant's use of AI pricing tools after an investigation found it was charging customers substantially different prices for the same items, according to a Reuters report Wednesday.

An investigation by Consumer Reports, Groundwork Collaborative, and More Perfect Union published earlier this month found prices for about three-quarters of surveyed items on Instacart varied by up to 23% from user to user among volunteers shopping at the same time. The report estimated such price variations could add up to about $1,200 per year in additional costs for the typical household shopping on Instacart. A review of an Investopedia editor's transactions on Instacart found that prices for a range of products at Costco (COST) also varied from one order to the next.

"Much of what’s been reported has mischaracterized how pricing works on Instacart," a company spokesperson told Investopedia. "First, our retail partners control their pricing strategies, and we work with them to align their online and in-store pricing wherever possible. Second, these tests are not dynamic pricing nor surveillance pricing—prices on Instacart do not change in real time nor are they based on supply or demand, and we never use personal, demographic, or user-level behavioral data to set item prices. These tests are a form of randomized A/B testing, similar to the way retailers have long run pricing tests between different stores,” the spokesperson said.

The FTC said in an emailed statement Thursday that it has a "longstanding policy of not commenting on any potential or ongoing investigations. But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices."

Why This Matters to You

Instacart isn't the only company that's been experimenting with AI-driven pricing tools, and as a growing number of companies across industries implement them, it could affect how much you pay for a variety of goods and services.

The FTC sent Instacart a civil investigative demand over its Eversight pricing tool, named for a company that Instacart acquired in 2022, Reuters reported. The tool helps retailers test consumer reactions to different prices, and retailers who use the tool could see a 1% to 3% bump in revenue, according to Instacart's website.

Separately, the FTC said Thursday that Instacart is set to pay $60 million in consumer refunds to settle allegations it engaged in deceptive membership enrollment practices and false advertising concerning refunds for unsatisfactory orders and free delivery on first orders.

Instacart acknowledged the settlement in a blog post Thursday, but said it denies "any allegations of wrongdoing by the agency."

Shares of Instacart parent Maplebear (CART) slid 1.5% Thursday. They've lost about 9% of their value since the start of the year.

This article has been updated since it was first published to include additional information.

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Inflation dropped to 2.7% in November, according to the CPI report released Thursday.

Key Takeaways

• Inflation decelerated significantly between September and November, with annual "core" inflation falling to its lowest since 2021.
  
• Housing inflation slowed dramatically, and prices for clothing and hotel rooms fell, pushing down overall inflation.
  
• Economists were skeptical of the data since the Bureau of Labor Statistics' price survey was disrupted by the government shutdown in October and November.
  

Inflation fell to its lowest in years in November, according to one important measure.

Consumer prices rose 2.7% over the 12 months through November, the Bureau of Labor Statistics said Thursday. That was down from a 3% annual increase in September and lower than the 3.1% increase forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. "Core" inflation, which excludes volatile prices for food and energy, rose 2.6% over the year, down from a 3% annual increase in September and hitting its lowest since 2021.

The reduction in core inflation was especially notable because economists consider core inflation measures to be a more accurate indicator of price trends. Food and gas prices can fluctuate for reasons unrelated to broader inflation trends.

What This Means For The Economy

If it's not reversed in the coming months, the sudden decline of inflation in November could mark a turning point in the trajectory of the economy, signaling the uptick of inflation caused by tariffs is fading.

Inflation decelerated because of falling prices for hotel rooms, recreation, and clothing, and a relatively small increase of 0.2% in shelter prices between September and November.

"At face value, the signal is positive and suggests we may be past the peak in inflation," Oren Klachkin, financial markets economist at Nationwide, wrote in a commentary. "However, the latest data demands more nuance than usual, given sampling and data collection issues caused by the government shutdown."

Indeed, Thursday's report had been delayed by just over a week because of the government shutdown in October and November, and the bureau did not publish a report for October's prices.

Potential distortions in the data due to the shutdown caused some economists to take Thursday's report with a grain of salt. The bureau started collecting prices in late November, when holiday sales were underway, for instance.

"The canceling of the October report makes month-on-month comparisons impossible, for example, while the truncated information-gathering process, given the shutdown, could have caused systematic biases in the data," Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, wrote in a commentary.

Grocery prices rose 1.7% over the year in November, the lowest annual inflation since February, although the figure provoked some skepticism from economists.

“It’s hard to read too much into the November inflation data," Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. "The shutdown clearly had a big impact on data collection. Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”

Update, Dec. 18, 2025: This article has been updated with more information from the CPI report and commentary from economists.

News of the day for Dec. 18, 2025

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Tech stocks are looking to rebound after sliding earlier this week amid AI bubble fears

Stock futures are trending higher Thursday ahead of the release of inflation data for November.

The pending release of the Consumer Price Index is expected to show inflation rising by just over 3% in the month, the highest jump in well over a year; Micron shares are soaring after the memory chip maker posted strong results last night; Nike is scheduled to give its latest update on the shoe maker's turnaround plan and the impact of tariffs this afternoon; and there's some notable news in the ranks of corporate executives.

1. Stock Futures Rise Ahead of Inflation Data

Stock futures are pointing to a higher open Thursday ahead of a key reading of inflation data, with tech stocks looking to reverse their recent slide. Futures tied to the Dow Jones Industrial Average and S&P 500 were up 0.3% and 0.5%, respectively, while those connected to the tech-focused Nasdaq 100 were up 0.8%.

On Wednesday, the major indexes declined as the Dow lost 0.5%, and the S&P and Nasdaq sank even further as tech stocks tumbled. Oil futures are down to roughly $56 a barrel, with gold futures still slightly below record highs at about $4,350. Bitcoin is trading around $87,000, where it has been for most of the week. The yield on the 10-year Treasury bond is at about 4.13%.

2. November CPI Due This Morning With Inflation Expected at 3.1%

Investors will get another look into the state of the U.S. economy today, with the CPI report for November scheduled to be released at 8:30 a.m. The key inflation metric is expected to show that inflation rose by 3.1% last month, the biggest increase since May 2024, as tariffs continue to drive prices higher. The inflation reading will impact how the Federal Reserve thinks about interest rates ahead of its next meeting in January, but inflation rising at the same time that unemployment is also increasing and the job market looks stagnant makes for a difficult decision.

3. Micron Stock Surges on Strong Results

Micron (MU) shares are surging after the maker of memory chips posted better revenue and profits in its latest quarterly report after the market closed Wednesday. Micron supplies memory components to other chipmakers like Nvidia (NVDA); it has seen its stock nearly triple this year, closing at a record high last week before the recent tech sell-off started.

Analysts said ahead of the report that an AI-fueled demand surge has led to a shortage in the memory components Micron and other companies make, leading to historically high prices in the sector. Micron shares are up more than 11% premarket.

4. Nike Slated to Give Update on Turnaround Effort, Tariffs

Nike (NKE) is scheduled to release its own results for last quarter after the closing bell today, with sales expected to decline slightly while profits are cut nearly in half by high tariffs and other costs. The stock has recovered from the lows it fell to after President Donald Trump announced plans to enact massive tariffs in April, but is still down for the year as the companay manages a turnaround plan that analysts say would have taken time even without the weight of tariffs.

The company beat revenue estimates in its last report in September, but raised its projected tariff payments to $1.5 billion from $1 billion. Nike CEO Elliott Hill took over the top job at the athletic apparel giant just over a year ago. Nike shares are up just under 1% premarket, and options pricing suggests the stock could swing up to 7% in either direction following today's report.

5. BP Announces Succession Plan; Activist Investor Reportedly Pushing Candidate for Lululemon Job

Some high-profile corporate leadership changes were in focus this morning. One of the world's biggest oil and gas companies has a new CEO, as BP (BP) announced a succession plan on Thursday. Current CEO Murray Auchincloss is stepping down effective Thursday, and Meg O’Neill will become the British energy company's new CEO April 1, 2026. Current EVP of supply, trading, and shipping Carol Howle will serve as BP's interim CEO, the company said. BP's U.S.-listed shares are down nearly 1% Thursday morning.

Meanwhile,The Wall Street Journal reported late Thursday that activist investor Elliott Investment Management has built a $1 billion-plus stake in Lululemon (LULU) and is looking to push for its own CEO candidate. The athleisure brand said last week that its current CEO will leave at the end of January. Lululemon's stock was recently up more than 6% premarket.

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Coinbase Global announced new products and services including stock trading, prediction markets.

Key Takeaways

• Coinbase Global rolled out a slate of new offerings including stock trading, a tokenization platform, prediction markets, and an AI-powered investment advisor.
• Coinbase CFO Alesia Haas said that the company intends to be the "No. 1 financial app" in the next five years.

The largest publicly-traded U.S. crypto exchange just entered the race to build a financial "everything app."

Coinbase Global (COIN) on Wednesday evening announced a raft of new products and services, including stock trading, prediction markets, a tokenization platform, and an artificial intelligence-powered roboadvisor. "We are building to become the face of the future of finance," Coinbase CFO Alesia Haas said in an interview with Investopedia, saying its goal in the next five years is to be the No.1 financial app.

A so-called everything app or "super app" has been the holy grail for many companies in retail, social media, dating—and, of course, financial services. Trading platforms including Robinhood (HOOD) and SoFi (SOFI) appear to be converging in the same space, rolling out similar services and products such as banking services, credit cards, and events contracts.

WHY THIS MATTERS TO YOU

Super apps like China's WeChat or Korea's KakaoTalk haven't really arrived in the U.S. If one does, it might resemble those—which users rarely close because if they're not using them to call or chat with loved ones, they're using them to shop and pay for things.

Haas said Coinbase's "primary goal" is to deepen relationships with existing customers; the broader set of offerings could also open up its potential customer base.

"What this will enable us to do is gain more share of wallet from our customers," Haas said. "So before, I think many of our customers would trade crypto with Coinbase and trade their stocks at another platform, and now we have the opportunity to serve them in more of their trading needs."

As Coinbase advances in its goal of becoming more than a crypto exchange, its business and stock should be less subject to the swings of coin markets—though it would also move the company to a realm already populated by other large financial services companies.

"This strategy should substantially widen the firm's addressable markets (both retail and institutional), diversify its product/service range, while helping to mitigate potential future pricing pressure within retail crypto trading," Deutsche Bank analyst Brian Bedell said in a research note Wednesday.

Bedell initiated coverage of Coinbase with a Buy rating on the stock and a price target of $340, implying upside of almost 40% from Wednesday's closing price of $244. Of the 12 analysts tracked by Visible Alpha, eight have a buy, or bullish, rating on the stock, and four, a hold, which is effectively a neutral position; the average price target is $380.