#semiconductors

#semiconductors

A frenzy around AI has been one of the main reasons Wall Street has been hitting record after record, though that's also raising worries that prices have potentially shot too high. Much of the furor around AI in the last couple weeks has come from OpenAI, which has quickly grown into a $500 billion company, announcing deals with businesses around the world to develop more AI infrastructure.

In some respects, it reflects a modern economic take on Roosevelt's Big Stick ideology, only Trump seems to have ignored the speaking softly bit and jumped straight to swinging his stick like every problem is a piñata with candy inside. Trump need not even swing his stick - all he has to do is make a threat, and those in its path scramble to appease him.

This summer, Steve Witkoff, President Trump's Middle East envoy, paid a visit to the coast of Sardinia, a stretch of the Mediterranean Sea crowded with super yachts. On one of those extravagant vessels, Mr. Witkoff sat down with a member of the ultrarich ruling family of the United Arab Emirates. He was meeting Sheikh Tahnoon bin Zayed Al Nahyan, a trim figure in dark glasses who controls $1.5 trillion of the Emiratis' sovereign wealth.

Regardless of this year's stock market volatility, the explosive demand for semiconductors and microchips that has grabbed news headlines and led the market higher over the past few years remains. As the drive toward integrating artificial intelligence (AI) into our everyday lives progresses, a handful of mega-cap companies are capable of meeting that demand. While Nvidia Corp. ( NASDAQ: NVDA) may get the lion's share of attention, companies like Broadcom Inc. ( NASDAQ: AVGO) will also be playing a central role in supply.

Perhaps as a foretaste of seasonal volatility stocks fell Friday as US tech - specifically chipmakers - wobbled, with the Nasdaq down more than 1% for the session. Nvidia was down more than 3% to extend its weakness in the wake of earnings. This seemed to weigh on Asian equities on Monday, but Hong Kong rallied 2% on a huge surge in Alibaba shares, which jumped 15% on its AI revenue growth.

Commerce Secretary Howard Lutnick confirmed that the US government is in discussions to take an equity stake in Intel Corp., transforming grants from the Chips and Science Act into stock. This does not grant the federal government governance or voting rights, but could position it as Intel's largest shareholder. He criticized the previous administration's approach for providing subsidies without accountability, emphasizing the change to securing taxpayer interests through equity stakes instead.