AI: Due for a Correction?

AI: Due for a Correction?

“We see roughly 60-65% odds that artificial intelligence (AI) is more impactful than the personal computer. The US stock market today is pricing roughly a 90% probability,” Joe Davis, Chief Economist at Vanguard, the world’s second-biggest asset manager, told the Financial Times. This points to a risk of a “correction” in share prices. Furthermore, Davis cautioned, the stocks that are most associated with the surge in investment in AI may not ultimately be its biggest beneficiaries.   

Can Amazon Close the “AI Gap” With Microsoft?

At its annual tech event this week, Amazon’s [AMZN] Amazon Web Services (AWS) aimed to demonstrate that it is accelerating in generative AI, narrowing the gap with Microsoft’s [MSFT] OpenAI partnership. AWS showcased AI integrations across its cloud platform, highlighting automation’s growing role in enterprise functions; AWS’ AI-driven revenue grew over 100% annually. The focus now is on whether businesses will trust generative AI for critical operations and significant investments, according to the Financial Times.

AMD and NVDA: Collateral Damage in the Chip War

Advanced Micro Devices [AMD] and Nvidia [NVDA] are facing scrutiny in China after four Chinese semiconductor industry associations declared US-made processors were “no longer safe”, Seeking Alphareported. This response follows new US export controls aimed at curbing China’s semiconductor advancements. Nvidia recently noted growth in Chinese data center revenue through compliant shipments, while AMD sees potential to expand its “underrepresented” server CPU presence in the region.

Salesforce Q3 Beats on AI Push

Salesforce [CRM] shares surged toward record highs after posting stronger-than-expected Q3 results, driven by optimism over its AI product strategy. Revenue grew 8.3% to $9.44bn, surpassing the $9.35bn forecast, while adjusted operating margin reached 33.1%, beating expectations of 32.2%. Following its Q2 earnings, OPTO detailed how Salesforce’s unique fusion of software-as-a-service and AI make it an intriguing prospect for investors. 

Work Starts on TSMC Chip Plant in Singapore 

NXP Semiconductors [NXPI] and Vanguard International Semiconductor, an affiliate of Taiwan Semiconductor Manufacturing Co [TSM], on Wednesday broke ground on a $7.8bn Singapore chip venture, and are already moving forward with a second phase. NXP, a leading maker of automotive and networking chips, is aiming to diversify its supply chain amid US-China tech tensions, as well as to strengthen its presence in China’s electric vehicle and telecom markets.

BofA: US Cyclicals to Outperform in 2025 

BofA Securities analysts expect US cyclicals to lead in 2025, Seeking Alpha has detailed. EPS for 2025 is forecast at $275, a 13% year-over-year increase for the category. “We like companies with healthy cash return prospects and a tether to the US economy — large-cap value stocks”, said Savita Subramanian, Head of US Equity and Quantitative Strategy at BofA, highlighting that she sees better prospects in the average stock than in the index. 

Finding Value in Biotech in 2025

The biotech theme took a bit of a beating in the aftermath of Trump’s election win, but investors have since been buoyed by Trump’s pick of Marty Makary to head the Food and Drug Administration. The iShares Biotechnology ETF [IBB] is up 14.57% over the past 12 months, but several stocks could outperform the theme. Here, OPTO explores three Nasdaq-listed stocks held by the fund that investors could consider as value plays on the biotech theme for 2025.