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Luke Kawa

The AI trade roars back after its worst week since April tariff announcements

The AI trade is roaring back after getting speed checked last week.

Baskets of US AI beneficiaries compiled by Morgan Stanley and Bank of America, which just suffered their worst week since the Rose Garden tariffs announcement, are up more than 3.5% in early trading to lead a broad-based market recovery amid optimism that the government shutdown will soon be over.

The likes of Palantir Technologies (which tumbled despite reporting strong results), Western Digital, and Seagate Technology Holdings are all up more than 4.5% as of 10:45 a.m. ET.

Semiconductor stocks are also rallying strongly after Nvidia CEO Jensen Huang asked his counterpart at TSMC to boost chip output.

“While the bears will continue to yell ‘AI Bubble’ from their hibernation caves we continue to point to this tech cap-ex supercycle that is driving this 4th Industrial Revolution into the next few years,” Wedbush Securities analyst Dan Ives wrote. “This is our focus and along with our AI use case work in the field is driving trillions of spending over the next few years and thus will keep this tech bull market alive for at least another 2 years in our view.”

Bank of America argues (convincingly) that last week’s retreat in the cohort had little to do with any industry-specific fundamental news.

“The pervasive skepticism re AI capex is understandable but likely a contrarian positive, helping minimize overcrowding,” Bank of America analyst Vivek Arya wrote in a note reaffirming his conviction on his preferred data center and semicap stocks. “Yes, large-cap AI semis have been volatile (down 7-8% on average last week) but we argue that was driven by (correctable) macro factors (US govt. shutdown, weak jobs data, tariff turmoil, misstated OpenAI comments) rather than any negative datapoint about the AI spending cycle.”

Further bolstering that argument, 22V Research flagged how earnings expectations are improving much more rapidly for AI-linked firms than the S&P 500 at large.

“AI usage and AI related fundamentals are unusually strong,” wrote Dennis DeBusschere, chief market strategist at 22V Research. “In 3Q, AI earnings growth rate has been ~3x that of other S&P names.”

22V Research earnings trends

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Max Knoblauch

Rivian is on pace for its best-ever trading day, as analysts dig into Q4 results

EV maker Rivian is on track to log its best trading day on record Friday, as investors pour in following its fourth-quarter earnings report and 2026 guidance and analysts issue bullish appraisals of the shares.

Rivian shares are up more than 30% on Friday afternoon, easily surpassing its previous best trading day, which came in January 2025.

“We continue to remain confident in the long-term vision that RIVN is amid a massive transformation,” said Wedbush’s Dan Ives in a fresh note on Friday. The firm maintained its $25 price target and “outperform” outlook and wrote that the launch of Rivian’s upcoming lower-cost SUV, the R2, is “crucial.”

Rivian received uprgrades from Deutsche Bank (to “buy” from “hold”) and UBS (to “neutral” from “sell”) following its results.

On its Thursday earnings call, Rivian said it expects its delivery volume of its existing vehicle lineup to land “roughly in line with... 2025 total volumes.” Given the automaker’s full-year delivery guidance, that statement implies 2026 R2 deliveries to land between 20,000 and 25,000 units.

Self-driving features also appear to be boosting investor optimism. On Thursday’s earnings call, CEO RJ Scaringe said the company would enable “point to point” driving in its vehicles later this year. In a podcast interview released Thursday, Scaringe predicted that by 2030 it will be “inconceivable to buy a car and not expect it to drive itself.” Rivian is targeting “a little sooner than that,” Scaringe added.

Rivian shares are also likely benefitting from something of a snap back: before the release of its Q4 results, Rivian shares had been hammered recently, down 38% since their recent high in December.

Rivian climbs after posting better-than-expected Q4 results; sees R2 SUV hitting the market in Q2

Rivian climbs after posting better-than-expected Q4 results; sees R2 SUV hitting the market in Q2

“We continue to remain confident in the long-term vision that RIVN is amid a massive transformation,” said Wedbush’s Dan Ives in a fresh note on Friday. The firm maintained its $25 price target and “outperform” outlook and wrote that the launch of Rivian’s upcoming lower-cost SUV, the R2, is “crucial.”

Rivian received uprgrades from Deutsche Bank (to “buy” from “hold”) and UBS (to “neutral” from “sell”) following its results.

On its Thursday earnings call, Rivian said it expects its delivery volume of its existing vehicle lineup to land “roughly in line with... 2025 total volumes.” Given the automaker’s full-year delivery guidance, that statement implies 2026 R2 deliveries to land between 20,000 and 25,000 units.

Self-driving features also appear to be boosting investor optimism. On Thursday’s earnings call, CEO RJ Scaringe said the company would enable “point to point” driving in its vehicles later this year. In a podcast interview released Thursday, Scaringe predicted that by 2030 it will be “inconceivable to buy a car and not expect it to drive itself.” Rivian is targeting “a little sooner than that,” Scaringe added.

Rivian shares are also likely benefitting from something of a snap back: before the release of its Q4 results, Rivian shares had been hammered recently, down 38% since their recent high in December.

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Max Knoblauch

Advance Auto Parts climbs as store closures power earnings beat amid revamp

Shares of Advance Auto Parts are up more than 8% in early trading on Friday, following the release of the company’s fourth-quarter results.

Advance Auto posted adjusted earnings of $0.86 per share in Q4, more than twice the $0.41 per share expected by analysts polled by FactSet. Same-store sales grew 1.1%, below the 2.2% consensus.

The retailer closed 522 stores in its fiscal year 2025 as part of an overhaul it first announced in 2024. It plans to open between 40 and 45 stores this year.

Looking ahead, Advance Auto said it expects comparable-store sales to grow between 1% and 2% in 2026. Wall Street expected 2.13%.

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In-line core CPI inflation a relief after recent history of January price spikes

The January CPI report is out.

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Luke Kawa

Applied Materials soars as Wall Street scrambles to boost price targets after “narrative-changing quarter”

Wall Street has fresh conviction that Applied Materials is a winner as the AI boom forces an expansion of chipmaking capacity.

The semicap company reported a top- and bottom-line beat, along with Q2 guidance that exceeded estimates, after the close on Thursday, sending shares sharply higher. Applied Materials is trading up double digits as of 8 a.m. ET.

“This is finally the narrative-changing quarter that we have been waiting for,” wrote Needham & Co. analyst Charles Shi, who boosted his price target to $440 from $390. “With AMAT shaking off the bad China narrative and returning to a strong AI-driven beat-and-raise cycle, we expect AMAT valuation gap vs. peers will narrow as AMAT should re-rate higher.”

The numbers speak for themselves, but the words on the conference call didn’t hurt either.

“Management’s decidedly more constructive tone on the call (relative to a more muted/conservative tone on the last call) we think was underpinned by a sharp acceleration in customer orders and activity levels in the quarter,” wrote JPMorgan analyst Harlan Sur, who lifted his price target to $400 from $260.

He spotlighted the strong outlook for its advanced packaging business given “AMAT’s #1 position in HBM where spending is inflecting higher as the absorption of previously shipped equipment concludes and additional capacity/capability is required amid burgeoning demand growth and customers’ rapid technology transitions (HBM3e > HBM4 > HBM4e and beyond).”

Other sell-side shops that took a more more optimistic view and upped their price targets include:

  • Keybanc, up to $450 from $380;

  • Barclays, up to $450 from $360;

  • Wells Fargo, up to $435 from $350;

  • Citi, up to $420 from $400;

  • Morgan Stanley, up to $420 from $364;

  • And Mizuho, up to $410 from $370.

Applied Materials jumps after posting better-than-expected Q1 results, strong Q2 outlook

Applied Materials jumps after posting better-than-expected Q1 results, strong Q2 outlook

“This is finally the narrative-changing quarter that we have been waiting for,” wrote Needham & Co. analyst Charles Shi, who boosted his price target to $440 from $390. “With AMAT shaking off the bad China narrative and returning to a strong AI-driven beat-and-raise cycle, we expect AMAT valuation gap vs. peers will narrow as AMAT should re-rate higher.”

The numbers speak for themselves, but the words on the conference call didn’t hurt either.

“Management’s decidedly more constructive tone on the call (relative to a more muted/conservative tone on the last call) we think was underpinned by a sharp acceleration in customer orders and activity levels in the quarter,” wrote JPMorgan analyst Harlan Sur, who lifted his price target to $400 from $260.

He spotlighted the strong outlook for its advanced packaging business given “AMAT’s #1 position in HBM where spending is inflecting higher as the absorption of previously shipped equipment concludes and additional capacity/capability is required amid burgeoning demand growth and customers’ rapid technology transitions (HBM3e > HBM4 > HBM4e and beyond).”

Other sell-side shops that took a more more optimistic view and upped their price targets include:

  • Keybanc, up to $450 from $380;

  • Barclays, up to $450 from $360;

  • Wells Fargo, up to $435 from $350;

  • Citi, up to $420 from $400;

  • Morgan Stanley, up to $420 from $364;

  • And Mizuho, up to $410 from $370.

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