Chip Stocks Surge on AI Optimism; Dow Hits Record High

Jan 7, 2026, 2:54 AM

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US stock markets ended higher on Tuesday, with the Dow Jones Industrial Average gaining about 1% to reach a new record high. This surge was largely fueled by renewed optimism surrounding artificial intelligence (AI) technologies, particularly in the semiconductor sector.

Chip stocks experienced significant gains after Nvidia CEO Jensen Huang announced details about upcoming AI processors at the Consumer Electronics Show in Las Vegas. These processors are expected to include a new layer of storage technology, which excited investors and led to substantial increases in stock prices for several companies. SanDisk surged over 27%, Western Digital jumped 17%, Seagate Technology gained 14%, and Micron Technology rose 10%, with all four stocks hitting record highs.

The PHLX chip index also reached an all-time high, reflecting an overall gain of approximately 8% in the first three trading sessions of 2026. Analysts are optimistic about the upcoming earnings season for major tech companies, with expectations that capital expenditure estimates will be revised higher.

In addition to the chip sector's performance, shares of Moderna rose nearly 11% after Bank of America Global Research raised its price target for the company, contributing to a 1.96% increase in the S&P 500 healthcare index. The S&P 500 itself gained 42.92 points, or 0.61%, closing at 6,944.97 points, while the Nasdaq Composite climbed 147.40 points, or 0.63%, to 23,543.22 points.

Despite the positive market sentiment, concerns lingered regarding the potential impact of Huang's comments on the demand for data center cooling systems, which could be affected by the efficiency of Nvidia's new chips. Shares of Johnson Controls and Trane Technologies fell by 6.2% and 2.5%, respectively, as a result.

Investors also appeared to brush aside geopolitical concerns following the capture of Venezuelan President Nicolas Maduro by US forces over the weekend. Many are betting that this development could open up access to Venezuela's oil reserves for US firms. However, oil stocks dipped after strong gains in the previous session, with Exxon Mobil and Chevron losing approximately 3.4% and 4.5%, respectively.

Looking ahead, investors are eager for reliable economic data as the effects of a record 43-day federal government shutdown begin to dissipate. Key upcoming releases include the Job Openings and Labor Turnover Survey (JOLTS) and the jobs report for December, which could influence central bank interest rate decisions. Richmond Federal Reserve President Tom Barkin has emphasized a cautious approach to further interest rate cuts, contrasting with calls for more aggressive measures from other officials.

Overall, the combination of strong performances in the tech sector, particularly among chip stocks, and a positive outlook for economic data contributed to the record-setting day on Wall Street.

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