US stock markets experienced a significant rally on Monday, driven primarily by mega-cap technology companies as artificial intelligence enthusiasm returned to Wall Street. Nvidia led the charge with shares surging as much as 5%, nearly reaching a record high, while other AI giants including Alphabet and Meta Platforms posted substantial gains.
The rally coincided with the opening of the 2025 Consumer Electronics Show (CES), where Nvidia CEO Jensen Huang was scheduled to deliver the keynote address at 6:30 p.m. PST. The broader Nasdaq 100 Index jumped more than 1%, while the S&P 500 rose over 0.5%. The Dow Jones Industrial Average bucked the trend, closing slightly lower.
Wall Street analysts anticipate major announcements from Huang regarding Nvidia’s data center business and its expansion into robotics. Bank of America analyst Vivek Arya noted in a recent research note that investors should “look for updates on Robotics strategy from silicon to software and emergence of ‘physical AI’ theme.” Arya expects Nvidia to make “a strong push” into the robotics sector, signaling the company’s ambitions beyond traditional AI computing.
The semiconductor sector saw particularly strong gains, partly fueled by positive earnings from Foxconn, a major contract manufacturer of chips and electronic devices. The company reported impressive 15% year-over-year revenue growth, boosting confidence across the chip industry. Micron surged 8%, ASML gained 6%, and Taiwan Semiconductor jumped 11%, reflecting broad-based optimism about AI-driven chip demand.
Market volatility emerged following a Washington Post report suggesting the incoming Trump administration might scale back its tariff plans. However, President-elect Trump quickly disputed the report on Truth Social, stating the story “incorrectly states that my tariff policy will be pared back. That is wrong.” The tariff uncertainty has raised concerns about potential inflation impacts and the Federal Reserve’s interest rate policy.
Trading activity will be compressed this week, as markets will close Thursday in remembrance of former President Jimmy Carter, who passed away on December 29. The shortened week adds additional significance to Monday’s strong performance and the anticipated announcements from CES.
Key Quotes
We look for updates on Robotics strategy from silicon to software and emergence of ‘physical AI’ theme
Bank of America analyst Vivek Arya provided this insight in a research note ahead of Jensen Huang’s CES keynote, highlighting Wall Street’s expectations that Nvidia will announce significant robotics initiatives, representing a major strategic expansion beyond traditional AI computing.
The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong
President-elect Donald Trump posted this statement on Truth Social, directly contradicting reports that his administration would soften its tariff stance. This pushback created market volatility and uncertainty about future trade policy that could impact AI hardware supply chains.
Our Take
The convergence of CES timing with this market rally reveals how AI has become the central narrative driving technology valuations. Nvidia’s 5% surge on anticipation alone demonstrates the company’s unique position as both a beneficiary and enabler of the AI revolution. The “physical AI” concept represents a crucial inflection point—moving artificial intelligence from cloud servers into robots, autonomous vehicles, and industrial automation. This transition could dwarf even the current AI boom’s economic impact. However, investors should note the market’s sensitivity to macro factors like tariffs, which could disrupt AI hardware supply chains heavily dependent on Asian manufacturing. The semiconductor sector’s broad gains suggest the AI infrastructure buildout has years of runway remaining, but geopolitical risks and potential policy shifts under the new administration add uncertainty to an otherwise bullish AI investment thesis.
Why This Matters
This market rally underscores AI’s continued dominance as the primary driver of technology sector valuations and broader market sentiment. Nvidia’s near-record performance and the anticipation surrounding Jensen Huang’s keynote demonstrate how deeply AI infrastructure has become embedded in investor psychology and corporate strategy.
The emergence of “physical AI” and robotics as Nvidia’s next frontier signals a critical evolution in artificial intelligence applications beyond data centers and cloud computing. This expansion could unlock entirely new markets and revenue streams, potentially worth hundreds of billions of dollars as AI moves from digital environments into physical automation and robotics.
The semiconductor sector’s strong performance reflects growing confidence that AI-driven chip demand will remain robust throughout 2025 and beyond. With major manufacturers like Foxconn reporting double-digit growth, the entire AI supply chain appears positioned for continued expansion. This has profound implications for businesses investing in AI infrastructure, workers in tech manufacturing, and the global competition for AI supremacy between the US and China.
Recommended Reading
For those interested in learning more about artificial intelligence, machine learning, and effective AI communication, here are some excellent resources: