Wall St futures steady after weekly gains as Fed meeting looms

Investing.com – Saudi Arabia stocks were higher after the close on Sunday, as gains in the Hotels & Tourism, Telecoms & IT and Financial Services sectors led shares higher.

At the close in Saudi Arabia, the Tadawul All Share gained 0.05%.

The best performers of the session on the Tadawul All Share were Abdullah Saad Mohammed Abo Moati Stationeries Co (TADAWUL:4191), which rose 10.00% or 4.30 points to trade at 47.30 at the close. Meanwhile, Jahez International Company for Information Systems Technology SCJSC (TADAWUL:6017) added 8.32% or 1.29 points to end at 16.80 and Al-Jouf Agriculture Development Co (TADAWUL:6070) was up 4.76% or 2.00 points to 44.00 in late trade.

The worst performers of the session were Saudi Industrial Development Co. (TADAWUL:2130), which fell 5.72% or 0.73 points to trade at 12.03 at the close. Sustained Infrastructure Holding Company SJSC (TADAWUL:2190) declined 3.69% or 1.20 points to end at 31.30 and National Company for Learning and Education SJSC (TADAWUL:4291) was down 3.02% or 4.50 points to 144.40.

Falling stocks outnumbered advancing ones on the Saudi Arabia Stock Exchange by 201 to 125 and 21 ended unchanged.

Shares in Saudi Industrial Development Co. (TADAWUL:2130) fell to 5-year lows; losing 5.72% or 0.73 to 12.03.

Crude oil for January delivery was up 0.69% or 0.41 to $60.08 a barrel. Elsewhere in commodities trading, Brent oil for delivery in February rose 0.77% or 0.49 to hit $63.75 a barrel, while the February Gold Futures contract unchanged 0.00% or 0.00 to trade at $4,243.00 a troy ounce.

EUR/SAR was unchanged 0.01% to 4.37, while USD/SAR unchanged 0.00% to 3.75.

The US Dollar Index Futures was up 0.02% at 98.97.

Investing.com -- U.S. prediction market is at juncture at which courts and regulators will determine whether this fast-growing industry is governed as a federal derivatives market or as state-regulated gambling.

The outcome will tell if such platforms like Kalshi and Polymarket can operate nationally under a single Commodity Futures Trading Commission regime or will comply with lots of state gaming laws. This split in idea has triggered enforcement actions and lawsuits across the country.

Raymond James analysts describe the next 6 to 12 months as critical because multiple state rulings are coming together.

Decisions in Nevada, New Jersey, Maryland, and Massachusetts are testing the core question of whether event contracts such as “Will Team A win” are federally preempted swaps under the Commodity Exchange Act or indistinguishable from sports bets that require local licensing.

Nevada’s recent rejection of broad federal preemption has become a bellwether, making other states intensify cease-and-desist orders and litigation against operators.

Kalshi and Polymarket say once an event contract is listed as a swap on a CFTC-regulated designated contract market, federal jurisdiction supersedes conflicting state gambling laws.

Whereas States say Congress never intended to federalize sports wagering and say many contracts fall squarely within existing gambling statutes.

Experts say this legal clash is escalating quickly, with major players now tied up in disputes spanning Nevada, Ohio, New York, New Jersey, Maryland, California, and Massachusetts.

The legal turning point came after a 2024 ruling that struck down the CFTC’s attempt to block Kalshi’s congressional control contracts. The decision emboldened operators to invoke federal preemption and helped trigger the current wave of state-federal challenges.

Since then, the market has drawn heavyweight entrants including Robinhood, CME Group, ICE, Cboe, and Coinbase, each aiming to build regulated infrastructure around event-based trading.

Raymond James notes that appellate courts in the Third, Fourth, and Ninth Circuits are expected to issue the first comprehensive readings on swap classification and preemption over the coming year. A split between circuits would likely push the fight to the Supreme Court, which analysts say could hear cases in the 2027 to 2028 term.

Right now prediction operators look at an extended period of uncertainty.

Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

InvestingPro subscribers always get first dibs on market-moving AI analyst comments. Upgrade today!

Get premium news and insight, AI stock picks, and deep research tools by upgrading to InvestingPro - get 55% off today

Morgan Stanley lifts Nvidia, Broadcom targets as AI demand tightens supply

Earlier this week, Morgan Stanley hiked its price targets on Nvidia and Broadcom after meetings in Asia and the U.S. pointed to broad-based AI strength and tightening supply across key parts of the semiconductor chain.

The bank said both companies look positioned for a meaningful ramp next year as customers struggle to secure enough hardware to support accelerating workloads.

Analysts led by Joseph Moore said they “continue to see Nvidia maintaining dominant market share,” arguing that competitive concerns remain “overstated” and that customers’ primary worry heading into next year is securing supply, especially for the upcoming Vera Rubin platform.

Nvidia’s data-center revenue outlook remains constrained by limited availability through 2026, and Morgan Stanley now sees the company tracking closer to the revenue path management outlined earlier this year. The price target rises to $250 from $235.

“We still are below the "$500 bn in 5 quarters" voiced by the CEO at the GTC event, but clearly the situation is strong,” Moore wrote.

The firm’s checks also support stronger-than-expected demand for Google’s TPU supply chain, which Broadcom designs and sells. Suppliers across analog, memory and ODMs pointed to upward revisions in TPU builds, with the largest increases projected for 2027.

“We remain Overweight (OW) AVGO and we are encouraged to see this - and raising numbers - but we would introduce a few caveats,” Moore said. He added that Google is advancing a homegrown TPU variant with Mediatek—potentially a long-term risk but not one that materially shifts the base case.

Reflecting higher ASIC expectations for 2026 and 2027, Morgan Stanley raised its Broadcom target to $443 from $409.

Moore said the surge in AI demand is straining back-end capacity such as CoWoS and high-bandwidth memory, while front-end wafers across 3-, 4- and 5-nanometer nodes are also tight—a setup that reinforces a bullish backdrop as the industry requires more capacity additions.

Memory markets are firming rapidly as well, with cloud buyers showing what the analysts describe as a “gold rush purchasing mentality.”

AI winter risk grows as valuations stretch and adoption cools, strategist warns

An “AI winter” is becoming a more plausible outcome for the industry over the next several years, BCA Research warned in a note this week, as the sector’s breakneck investment cycle enters a more fragile stage and valuation assumptions run far ahead of what is likely to be delivered.

“Over a three-to-five-year time horizon, the balance of probabilities points to the emergence of an ‘AI Winter,’ likely beginning over the next one-to-three years,” BCA chief strategist Jonathan LaBerge wrote.

Such a phase would entail a cooling in AI-related capex and data-center buildouts, alongside “a meaningful correction in tech/growth stock prices.”

BCA lays out three structural paths for AI, assigning only a 5% probability to a genuine artificial general intelligence breakthrough that would validate the market’s most bullish expectations.

Instead, it sees an 80% chance that AI ultimately generates “moderate macro-level productivity gains,” lifting output by roughly 0.4–0.5% a year—positive for the economy, but too modest to support the profit and cash-flow trajectory embedded in leading tech names.

A more adverse scenario, involving a major data-center investment misfire and a productivity bust, carries a 15% probability.

LaBerge estimates that U.S. equities have already priced in far greater AI-driven upside. He calculates that $9–$12 trillion in market gains since late 2022 cannot be explained by earnings trends or interest rates alone.

"It is not enough for artificial intelligence to be productivity enhancing: It needs to boost productivity growth / corporate profits very significantly for current pricing of the overall equity market to be justified," he wrote.

The strategist also flags early signs of stress in adoption trends, noting that business uptake of AI tools has cooled while capital spending continues to accelerate. At the same time, the industry’s debt dependence is deepening as hyperscalers and infrastructure providers issue large amounts of bonds to fund data-center construction.

The capital-intensive nature of today’s AI wave—demanding constant investment in chips, energy, networking and cooling—adds another layer of risk.

BCA advises investors to prepare for a slower reset in expectations, recommending an underweight stance on tech-linked names until excesses unwind. It sees adopters better positioned than enablers and monetizers, with financials, pharmaceuticals, biotechnology, life sciences and defense likely to benefit most from practical AI deployment.

BofA names ASML a top semis pick for 2026, raises target

Bank of America has named ASML one of its top semiconductor picks for 2026, saying the company is entering a multi-year upswing supported by rising lithography intensity, stronger earnings momentum and a substantial improvement in free cash flow.

The bank reaffirmed its Buy rating and raised its price objective to €1,158 from €986, with analysts led by Didier Scemama pointing to 2027 as a clear turning point as ASML captures a greater share of customer spending and benefits from a more favorable product mix.

ASML features on BofA’s “25 stocks for 2026” roster and is included in its Europe 1 list of top ideas.

The Wall Street firm’s expected re-rating is anchored in three forces: higher lithography intensity in memory as DRAM makers add EUV layers, gross-margin expansion of roughly 150 basis points that supports about 30% earnings growth, and free cash flow doubling to €14 billion.

Lithography intensity remains resilient and is projected to rise toward an estimated 26% by 2028 as ASML gains a growing share of spending.

BofA also sees several long-standing investor worries receding. The analysts argue that customer concentration risk is easing as Samsung regains competitiveness, Micron accelerates EUV adoption, Intel stabilizes and AI chipmakers move deeper into advanced nodes.

They expect China’s revenue contribution to settle in the low-to-mid-20% range, helping shift sentiment from a “WFE minus” to a “WFE plus” narrative. This transition is set to be reinforced by a projected 5-percentage-point expansion in gross margins by 2030 and an estimated 18% earnings CAGR over the next five years.

TD Cowen puts AMD on ’Best Ideas 2026’ list

TD Cowen has placed AMD on its “Best Ideas 2026” list, saying the company is approaching a major inflection as its Helios rack-scale platform prepares to debut.

The broker argues the launch will “ignite AMD’s AI business” and set up a stronger multi-year trajectory for the chipmaker. Analyst Joshua Buchalter reiterated a Buy rating and a $290 target, calling the recent pullback an “attractive entry point.”

Buchalter says “AI compute spending will prove durable and AMD has cemented itself as a winner,” despite growing competitive scrutiny and debate around whether the industry is entering an “AI bubble.”

He believes that AMD “has garnered more bearish sentiment than deserved and than peers,” a dynamic the firm expects to reverse as Helios and the MI450 accelerator ramp from mid-2026.

The rollout is central to their bullish stance. TD Cowen says the platform “will mark a key inflection in AMD’s story,” with fourth-quarter 2026 EPS expected to reach “a >$10 run-rate, or up ~2x… Y/Y and Q/Q.”

TD Cowen models $89 billion in Instinct sales by 2030, implying a 67% compound annual growth rate, while noting that even this estimate “falls below AMD’s guided >80% CAGR.”

On concerns around AMD’s exposure to OpenAI, Buchalter says the stock is being “unfairly punished,” noting the company’s expected revenue tied to OpenAI in 2027 is “roughly the same” as peers.

He also highlights the chipmaker’s overlooked server and PC segments, arguing they “remain an important part of AMD’s core business” and stand to benefit as AI adoption increases the need for real-time inference.

Summit lifts Marvell to Buy, sees data-center growth inflection ahead

Marvell received an upgrade on Tuesday at Summit Insights. The brokerage said a clear turning point is approaching for the company’s data-center business, setting the stage for a sharp acceleration in growth over the next two fiscal years.

Summit raised its rating to Buy, arguing that the coming topline expansion should more than offset near-term softness and ongoing concerns around product-mix pressure.

Marvell expects its data-center segment to grow about 25% year over year in fiscal 2027, followed by roughly 40% in fiscal 2028. Summit analyst Kinngai Chan said the company is positioned to benefit from higher port counts, rising bandwidth needs and a strengthening electro-optical portfolio.

He also noted that he “continues to see risk of lumpy shipments for its AI ASIC programs.” Even so, Chan added that “our industry checks, however, lead us to believe that AI capex will only accelerate in the next 2-years and both AI accelerators and interconnectivity will be the largest beneficiary of this capex spend.

For the January quarter, Marvell forecasts 6% sequential revenue growth to $2.20 billion. Data-center revenue is expected to increase about 9%, driven by recovering custom ASIC demand and ongoing strength in electro-optics.

Gross margin is projected to hold in the 58.5% to 59.5% range amid a less favorable mix.