U.S. stock markets closed higher on Monday to start the Christmas week. Wall Street generally remains positive in the last two truncated trading weeks of any year with muted volumes. This year, market participants’ confidence has received a boost from renewed momentum in the artificial intelligence (AI) trade. All three major stock indexes ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.5% or 227.79 points to close at 48,362.68 Notably, 20 components of the 30-stock index ended in positive territory, while 10 finished in negative territory. The tech-heavy Nasdaq Composite finished at 23,428.83, rising 0.5% or 121.21 points on the strong performance of AI bigwigs.
The S&P 500 gained 0.6% points to finish at 6,878.49. Six out of 11 broad-sectors of the broad-market index ended in positive territory while four ended in negative territory and one remained unchanged. The technology Select Sector SPDR (XLK) rose 2.2%. On the other hand, the Utilities Select Sector SPDR (XLU) fell 1.3%.
The fear gauge, the CBOE Volatility Index (VIX) was down 5.6% to 14.08, marking its lowest closing since Dec. 13, 2024. A total of 14.57 billion shares were traded on Monday, lower than the last 20-session average of 16.9 billion. Advancers outnumbered decliners on the NYSE by a 2.15-to-1 ratio. On the Nasdaq, a 1.61-to-1 ratio favored advancing issues.
AI Trade Continues to Thrive
The AI saga, supported by the massive growth of cloud computing and data centers, is yet to fully unfold. This space remains rock solid supported by an extremely bullish demand scenario. The demand for data center capacity surged to manage and store the vast amount of cloud computing-based data.
Goldman Sachs and Bank of America projected that AI infrastructure capex spending will cross $1 trillion in 2028. JP Moran and Citigroup forecast this figure to total $5 trillion cumulative in 2030. Research firm McKinsey & Co. estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
Four of the “magnificent 7” stocks have decided to invest a massive $380 billion in 2025 as capital expenditure for AI-infrastructure development. This marks a significant 54% year-over-year increase in capital spending on the AI ecosystem. Moreover, these companies have also said that AI capex is likely to increase handsomely in 2026.
Latest Developments on AI Space
The Trump administration has decided to allow the generative AI chipset behemoth NVIDIA Corp. NVDA to sell its high-end H200 AI chips to some “approved customers” in China. Reuters reported that NVIDIA is considering shipment of H200 chips to China from mid-February 2026. The H200 chip is two generations behind NVDA’s current Blackwell Ultra processors.
Reuters reported that the initial shipment will consist of around 40,000 to 80,000 H200 chips. Several investment banks have estimated that the resumption of sales in China could bring back around $10 to $20 billion in revenues per calendar year for the company.
Alphabet Inc. GOOGL has decided to acquire data center and energy infrastructure company, Intersect, for a consideration of $4.75 billion in cash. In addition, Alphabet will assume the debts of Intersect. Alphabet expects the deal to bring more data center and generation capacity online faster.
Sundar Pichai, CEO of Google and Alphabet, said, “Intersect will help us expand capacity, operate more nimbly in building new power generation in lockstep with new data center load, and reimagine energy solutions to drive U.S. innovation and leadership.”
The stock prices of NVIDIA and Alphabet rose 1.6% and 0.9%, respectively. NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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