Disney wants to be both the life of the AI party and the bouncer at the door.

Today, the company unveiled a three-year collaboration with OpenAI that will let Sora and ChatGPT Image users incorporate more than 200 Disney, Marvel, and Star Wars characters into their AI-generated photos and videos starting next year. Disney will also integrate OpenAI’s tech across its organization, using OpenAI’s APIs to build new Disney+ features, upgrade tools, and roll out ChatGPT to employees.

Disney sweetened the deal with a $1 billion investment in OpenAI, and executives signaled that more capital could follow. The House of Mouse gained 2.42% on the news.

Not every guest gets a wristband

Disney’s AI strategy isn’t all handshakes and hugs; on the other side of the room, it’s yanking Google out of the party.

The company fired off a cease-and-desist letter late Wednesday accusing Google of using Disney’s copyrighted content to train its AI models and circulating that material without approval.

"Google has refused to implement any technological measures to mitigate or prevent copyright infringement, even though such measures are readily available and being used by Google's competitors. Instead, Google continues to directly exploit Disney's copyrights for commercial gain," the letter noted.

This isn’t Disney’s first AI clash: In June, it joined NBCUniversal in filing the first major Hollywood lawsuit against a generative-AI developer, accusing Midjourney of using and distributing AI-generated versions of the studios’ characters. In September, it issued a similar warning to Character.AI.

The next chapter

As AI becomes a central force across industries, entertainment companies face a choice: resist it, or embrace it.

Disney’s team-up with OpenAI suggests studios may be rethinking their entire approach to AI. Instead of fighting every unauthorized use of their characters, they can license their worlds to the companies building the tech and turn a looming threat into a revenue stream. The risk, however, is that embracing AI could ultimately accelerate the very shift that threatens traditional content creation.

For OpenAI, partnering with Disney gives Sora instant credibility and mainstream reach. Sam Altman must be particularly pleased with Disney’s decision to side with OpenAI at the same time that it lashed out at Google—a company which has significantly closed the AI gap lately, forcing the OpenAI CEO to declare a “code red” to combat the tech titan.

Altman struck while the iron was hot today and unveiled OpenAI’s newest LLM model: ChatGPT 5.2. Designed to “unlock even more economic value for people,” OpenAI likely hopes this latest edition steals the spotlight from Google’s Gemini 3.

If all goes well, OpenAI becomes a helpful Hollywood sidekick. If not…well, every Disney movie has a villain.—SY

🟢 What’s up

• Eli Lilly jumped 1.58% after an experimental obesity shot cut body weight by 23% and slashed knee pain by 62%.
• Earth-imaging company Planet Labs soared 35.01% on a strong Q3, higher guidance, and a shift toward government and defense contracts.
• Ciena gained 9.34% after the network solutions company increased revenue 20% year over year, helping it beat earnings forecasts.
• Vail Resorts climbed 9.1% as investors welcomed management’s plan for a strategic commercial reset.
• Gemini Space Station advanced 31.95% after winning CFTC approval to launch a new derivatives exchange, giving the Winklevoss twins a foothold in the booming prediction markets industry.

What’s down

• Rivian fell 6.11% after the EV company revealed it’s developing in-house AI chips to replace Nvidia’s, an ambitious move investors saw as yet another costly hurdle.
• Coca-Cola fell 1.58% on the news that CEO James Quincey will step down in March and be replaced by COO Henrique Braun.
• Apparel company Oxford Industries dropped 21.24% on weak earnings and a reduced outlook, citing tariff-related product gaps in key seasonal categories.
• GE Vernova slipped 2.6% from all time highs after a Seaport analyst downgraded the stock.
• Rezolute plummeted 87.2% after the biotech’s late-stage sunRIZE trial failed to deliver.
• Robinhood Markets declined 9.05% following reports of softer November metrics, including declines in funded accounts and trading activity.

Part of the Federal Reserve’s mandate is to maintain maximum employment in the US. But a government shutdown has muddied the data waters lately, leaving central bankers to guesstimate how well the labor market is doing. Jerome Powell has a hunch it’s not so hot.

“So why did we move today?” Powell said in his post-FOMC meeting press conference yesterday afternoon. “First of all, gradual cooling in the labor market has continued. Unemployment is now up three-tenths from June through September. Payroll jobs averaging 40,000 per month since April. We think there's an overstatement in these numbers by about 60,000. So that would be negative 20,000 per month.”

Wait—did he just say the US is actually losing 20,000 jobs each month? That statement raised some eyebrows around the market, which was buoyed by the recent jobs report of 119,000 new jobs created in September. And sure, unemployment rose to 4.4% that month—a four-year high—but the situation can’t be as bad as Powell thinks. Right?

Unfortunately, today’s weekly initial jobless claims report seems to back Powell up: initial claims rose by 44,000 to 236,000 last week, the biggest jump since 2020. The holidays may have skewed those numbers a bit, but we’ll get more clarity when the Labor Department delivers the October and November jobs reports. Until then, we’ll have to hope that the Fed head is just being pessimistic.—MR

Today, Time announced that the "architects of AI” are its Person of the Year. But AI investors aren’t feeling like they have much to celebrate as fears of a bubble reach (another) fever pitch.

It’s all thanks to Oracle, which sank 10.82% today after spooking investors about its AI spending spree. The stock is now down roughly 40% from its high in September.

The company reported revenue of $16.06 billion for its fiscal second quarter yesterday, up 14% from the year prior but below forecasts of $16.21 billion. Meanwhile, its adjusted earnings per share came in at $2.26, above expectations—though the beat was primarily thanks to the sale of its chip company Ampere to SoftBank.

But what really concerned investors was its AI budget, and the debt the company is using to make all its spending possible.

Oracle is looking to transition from a legacy software company to a predominantly AI cloud company, and is on a spending spree as it builds data centers. Oracle reported capital expenditures of $12 billion in Q2, up from $4 billion in the same quarter last year, and far above the $8 billion expected by analysts.

There’s no sign of a slowdown: Oracle also raised its capex guidance, and projects it will spend $50 billion during the full year, up from its previous $35 billion estimate. And the amount it’s borrowing to fund all this is concerning investors: In September, the company raised $18 billion in a bond sale, one of the largest ever in the tech industry.

Zoom out: Investors celebrated Oracle’s Q1 report earlier this fall after the company reported a massive 359% increase in its backlog thanks to deals with a who’s who of AI companies, including OpenAI, xAI, Meta, and Nvidia.

Now, those same deals are being heavily scrutinized. Investors are worried that the company is relying too heavily on OpenAI, which still accounts for the majority of its revenue backlog, given the $300 billion deal the two companies recently inked.

And OpenAI isn’t exactly having the best month after Google’s Gemini ate its lunch. But since OpenAI is privately held, investors have instead been punishing the public tech firms linked to the AI startup—like Oracle.

Is the bubble starting to burst?

Oracle is on track for its worst day since January today, and brought the tech sector down with it: Nvidia sank 1.55%, Broadcom fell 1.6%, and Hewlett Packard Enterprise lost 2.81%.

Since Oracle is viewed as a kind of bellwether for the AI boom at large, today’s miss seemed to confirm the fears that have been circulating for months—that all of this AI spending isn’t actually going to pay off.

Big Tech isn’t blinking yet: Microsoft, Amazon, Meta, and Alphabet expect to spend a combined $350 billion this year alone. Oracle’s not spending that kind of money, but as its tab keeps growing, investors keep worrying that the bill will come due for the entire AI trade sooner rather than later.—LB

• Here’s how a SpaceX IPO would affect Tesla’s stock.
• The US trade deficit narrowed to its lowest in more than five years.
• BlackRock’s very own team of nerds quant PhDs are on track for their best year yet.
• Home prices sank 1.4% in the last three months, marking the first time in over two years that prices went negative.
• President Trump and Prime Minister Narendra Modi met to discuss a potential US and India trade truce.
• Take an inside peek into how America’s wealthiest family, the Waltons, manage their fortune.

Like we said yesterday, it’s pretty quiet out there with the holidays right around the corner. There are no major economic reports and no earning reports of note, but that doesn’t mean you should just tune out the market. Keep an eye out for speeches and commentary from several central bankers tomorrow, which should give us some insight into the state of a divided Federal Reserve. We’ll hear from Philadelphia Fed President Anna Paulson, Cleveland Fed President Beth Hammack, and Chicago Fed President Austan Goolsbee.