The AI ​​sector still has legs to run

This report is from today’s CNBC Daily Open, the international markets newsletter. CNBC Daily Open keeps investors informed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Consecutive gains for S&P and Nasdaq
US stocks Most of them rose on Mondaywith Standard & Poor’s 500 and Nasdaq Composite Climbed two days in a row. Artificial intelligence, baby Nvidia It closed at a record high. Asia Pacific markets It advanced widely on Tuesday. The rise in technology stocks sent Japanese stocks higher Nikki 225 By more than 2%, but in Hong Kong Hang Seng Index It fell about 1.9% after news that US authorities added some companies to the list of “Chinese military companies.”

Tencent on the list of “Chinese military companies”
Tencent Holdings Hong Kong-listed stocks fall 7% On Tuesday after adding the company to A List of “Chinese military companies” By the US Department of Defense. Battery maker Cattlewhich is part of the supply chain for Ford and Teslaand was also added to the list. Tencent said in a statement that its inclusion on the list was a “clear error.”

Nippon Steel is still pursuing the deal
United States steel and Nippon Steel He announced Monday that they have Two lawsuits were filed Against the decision of the administration of US President Joe Biden roadblock The Japanese company acquired an American steelmaker for $14.9 billion. In a press conference On Tuesday, Nippon Steel Chairman and CEO Eiji Hashimoto He confirmed that his company was seeking the deal.

Nvidia unveils new AI-ready graphics chips
At CES, or Consumer Electronics Show, on Monday, Nvidia Announced new graphics chips for computers Which uses the same Blackwell architecture behind the company’s fastest AI processors for servers and data centers. Although Nvidia started life as a gaming chip maker, Wall Street isn’t as excited about that as it is about the chipmaker’s AI business.

Foxconn shows that AI is still hot
Foxconn, trading as Hon Hai Precision IndustryHe said in a statement on Sunday that the company’s fourth-quarter revenue, which grew 15% year over year, was the highest ever in the company’s history for that period. Foxconn numbers indicate that AI is still popular, Send stock From Nvidia and other global semiconductor companies.

(PRO) ETFs outperform the S&P
US stocks had a banner year in 2024. Passive investors who simply bought an exchange-traded fund tracking the S&P index would have received returns of more than 20%. However, a few actively managed funds marketed in Europe have outperformed these gains One ETF returns 30%.

Below is the electronics manufacturer’s earnings report Microsoft announced Friday that it plans to do so An investment of 80 billion dollars in fiscal year 2025 to build data centers that can handle AI workloads.

These reports indicate that companies are continuing to invest heavily in artificial intelligence, and the peak has not yet been reached.

On the back of these tailwinds, Nvidia shares jumped 3.4% — a third straight day of gains — to close at a record high of $149.43. The company’s stock rose further in extended trading, and is currently above the $150 level.

On a larger scale, Van Eck Semiconductor Corporation It jumped more than 3%.

These moves helped push the major averages forward. Heavy technology Nasdaq Composite It was the clear winner, rising 1.24%, while… Standard & Poor’s 500 It rose by 0.55%.

However, Dow Jones Industrial Average It fell 0.06% and the index gave up earlier gains made when it was reported that Trump might ease his import tariffs, which would have benefited its major constituent companies such as those in the consumer discretionary sector.

Despite those upbeat reports and positive market movements on Monday, the year ahead still looks tough.

“I think the market is very bullish on technology right now, looking for 20% earnings growth this year versus 12.8% for the market…but valuations look constrained,” said Sam Stovall, chief investment strategist at CFRA.

The real test of AI is whether companies are able to leverage it to boost revenues, rather than simply raise prices for sector picks and shovels.

— CNBC’s Ryan Brown, Jordan Novitt, Piya Singh and Tanaya Machel contributed to this report.