The AI ​​sector still has some way to go

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

Cumulative S&P and Nasdaq gains
US stocks mostly rose on Mondaywith S&P 500 and Nasdaq Composite climbing two days in a row. Dear artificial intelligence Nvidia closed at a record high. Asia-Pacific markets advanced widely on Tuesday. The growth of shares of technology companies pushed up the Japanese ones Nikkei 225 by more than 2%, but in Hong Kong Hang Seng Index fell about 1.9% on news that US authorities had added some firms to a list of “Chinese military companies”.

Tencent Listed as “Chinese Military Companies”
Tencent Holdings Hong Kong shares fall 7% on Tuesday after the company was added to a list of “Chinese Military Companies” The US Department of Defense. Creator of accumulators BOILERwhich is part of the supply chain for Ford and Teslawas also added to the list. Tencent said in a statement that its inclusion on the list was “obviously a mistake”.

Nippon Steel is still pursuing the deal
US Steel and Nippon Steel announced on Monday that they were started two lawsuits against the decision of the US President Joe Biden’s administration block acquisition by a Japanese firm of an American steel producer for $14.9 billion. On a press conference on Tuesday, Nippon Steel Chairman and CEO Eiji Hashimoto reiterated his firm’s commitment to the deal.

Nvidia reveals new graphics chips with support for artificial intelligence
At the consumer electronics show CES on Monday, Nvidia announced new graphics chips for PCs which use the same Blackwell architecture that underlies the company’s fastest AI processors for servers and data centers. Although Nvidia started life as a gaming chipmaker, Wall Street isn’t as excited about it as it is about the AI ​​chipmaker’s business.

Foxconn shows that artificial intelligence is still popular
Foxconn, which trades as Hon Hai Precision Industrysaid in a statement Sunday that the company’s fourth-quarter revenue, which rose 15% year over year, was the highest in the company’s history for the period. Foxconn’s numbers show that artificial intelligence is still popular, shipment of supplies Nvidia and other global semiconductor companies.

(PRO) ETFs outperform the S&P
2024 was a landmark year for US stocks. Passive investors who simply bought an exchange-traded fund tracking the S&P would have made over 20% returns. However, several actively managed funds sold in Europe surpassed this gain, with one ETF returns 30%.

Below is a glowing earnings report from an electronics manufacturer Microsoft announcement on Friday that he plans to to invest $80 billion in FY 2025 to build data centers capable of handling artificial intelligence workloads.

These reports suggest that companies are continuing to invest heavily in AI, and the peak is yet to be reached.

Amid such tailwinds, Nvidia shares jumped 3.4% — their third straight day of gains — to close at a record $149.43. The company’s shares rose further in after-hours trading and are currently above the $150 level.

In a broader sense VanEck Semiconductor ETF jumped by more than 3%.

These moves helped propel the major averages forward. Heavy machinery Nasdaq Composite was the clear winner, rising 1.24%, while S&P 500 grew by 0.55%.

However, Art Dow Jones industrial index decreased by 0.06%. The index pared earlier gains built up on news that Trump might ease his import tariffs, which would benefit blue-chip companies such as those in the consumer sector.

Despite these upbeat reports and positive market developments on Monday, the year ahead still looks challenging.

“The market, I think, is pretty bullish on tech right now, expecting earnings growth of 20% this year versus 12.8% for the market … but estimates look restrictive,” said CFRA Research chief investment strategist Sam Stovall.

So the real test for AI is whether companies can use it to increase revenue, rather than just raising the price of picks and shovels in the sector.

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