The Dow Jones Industrial Average (DJIA) faced a messy session on Tuesday, exploring early upside and challenging the 47,600 level before getting knocked back down once again. New-old players in the AI space are cropping up to challenge the long-running Nvidia (NVDA) hegemony in the hardware space, prompting a back-and-forth in major tech names heading into the midweek.
The Dow Jones and the Standard & Poor’s 500 (SP500) indexes are grappling to hold onto intraday gains, with the Dow climbing around 220 points or 0.48%, and the SP500 rising a scant 25 points, or 0.37%. The tech-heavy Nasdaq 100 climbed 180 points, or 0.76%, to cross 23,450 as the AI and crypto segments recover their footing.
Crypto rebound looks to grow some legs
Bitcoin (BTC) rebounded around 6.5%, clawing back recent losses as crypto traders pile back into what many speculators hope is the bottom of the crypto plunge that dragged BTC/USD prices down over 36% from all-time highs set in October.
AI hardware race continues to heat up, maybe?
The AI hardware race continues to heat up, and long-time AI champion Nvidia declined from Tuesday’s meager highs after Amazon (AMZN) announced a rushed launch of its own AI-focused chipsets, tailor-made to compete with Nvidia’s AI-servicing GPUs. Amazon rose 1.2% on the headlines before it too fell back toward the previous day’s close, slipping back below $236 per share in the process.
According to Amazon, their new ‘Trainium3’ chipsets will be able to handle demanding calculation loads necessary to train and run AI models. However, a key sticking point that is preventing Amazon stock from running hot: According to the company, its AI-focused chipsets lack extensive function libraries that are bespoke to Nvidia hardware, meaning any cost savings in operating will likely be expended in setup and additional training time, making a transition from pre-existing Nvidia hardware a lateral move.
Political jitters continue to roil just beneath the surface
Never ones to sit idly by and let an equity recovery run unimpeded, the Trump administration is hard at work pumping out eyebrow-raising statements that are raising political jitters among market participants. US President Donald Trump reiterated his frequent promises that the federal government would be handing out supplementary payments to Americans from tariff income. By all accounts, tariff inflows have drastically underperformed expectations from the Trump administration itself, and are overwhelmingly being paid for by US companies and citizens to begin with.
US Treasury Secretary Scott Bessent is working double-duty to walk back Trump’s own “tariff repayment” proposals, highlighting the dysfunction underscoring the Trump administration. According to Bessent, “tariff repayments” are likely to take the form of steep tax rebates, which the Treasury Secretary could be coming as soon as Q1 2026.
Dow Jones daily chart
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.