Closing Bell - Closing Bell Overtime: 1/2/26

Episode Date: January 2, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, that's the end of regulation. Next-Gen EMP, ringing the closing bell, the New York Stock Exchange. New 42, doing the honors of the NASDAQ. A mixed start to the year. The Dow up more than 300 points. The S&P 500 up just fractionally here. But the NASDAQ finishing lower, just a small loss. The Russell 2000, that was an outperform today, too, higher by nearly 1%.

Energy, the top-performing S&P sector today. That was up 2%. Utilities also a gainer, as are industrial stocks. In both of those sectors, the top names are the ones most closely correlated to the AI infrastructure buildout. Consumer discretionary, that was the worst performing S&P sector. Carstocks among the laggards, Carvana, AutoZone, but also Tesla following its deliveries data. Tesla losing its global EV crown to China's BYD as annual sales declined for 2025. There was some green on the screen around the world, though, to start the new year.

Most notably, in Asian markets where Hong Kong, South Korea and Taiwan, all. all kicked off 2026 on a high note, thanks largely to what else, the global AI trade. And that is the scorecard on Wall Street, but winner stay late. Welcome to closing bell overtime. I'm John Ford alongside Morgan Brennan. And as we enter what would be the fourth year of this bull market, can stocks really post another year of double-digit gains? We will hear from someone who says yes and AI will continue to drive it. Plus, the U.S. dollar had a rough year in 2025. The dollar indexed down 10%. But our guest says it remains over.

We've got that coming up. And we'll talk to the CEO of Z-Scaler about the challenges AI presents for cybersecurity. Now for more on today's markets, let's get to Christina Parts of Nebulus at the NASDAQ. Christina. Hi, John. Well, despite the lack of fireworks at the NASDAQ today, chip stocks did rally as investors really piled back into the AI sector. Flash memory led the way.

Sand disk, you can see on your screen closing almost 16% higher, micron, 10% higher. The catalyst was definitely a wave of bullish headlines out of Asia. You had a Chinese AI chip maker surging 76% in its Hong Kong debut, IPO debut. Baidu also filed for its own chip unit IPO. Samsung CEO signaled the company is close to inking a deal with Nvidia for high bandwidth memory. Also talked about strong demand. And that strength really lifted the entire chip complex. Equipment names like ASML, Lam Research, applied material all rallied.

Even Intel on your screen will show that up closing over 7% higher. But it's really just a rotation, Software names sold off, the IGV ETF, down almost 3% as investors really rotated out of software into chips. App-loving, Palantir, Adobe, Workday, just a few of their names that dropped at least 4% today. Beyond chips, though, AI infrastructure names also rallied. Corrieve, Nevis, Irin, all higher as investors really bet on the power and data centers needed to fuel all of that AI spending, including Caterpillar Island on that note after an almost 60% surge last. Last year, the equipment and generator provider closing almost 5% higher today, guys. Morgan?

All right. Christina Parts Nevelas, thank you. Now let's turn to the bond market. Rick Santelli is in Chicago and he has more. Hi, Rick. Hi, Morgan. Indeed, if we look at the way we came into 2026 with Treasury yields, look no farther than the long end of the market. Look at 10-year yields over the last couple of weeks. Once again, we're revisiting the top of that range.

It really jumps out at you when you move to a four-month charge. And you can see, as we get very close to 420, we've been backing down a bit. But maybe this time may be different. We see two-year note yields are virtually on change. We're up a couple of basis points in a 10 on the week. At 419, we're up a half a dozen basis points. And look at the 2's 10 spread. This chart starts around November 12th when we hit 50 basis points.

So in basically seven weeks, we've gone 21 bases. points to 71 on that spread. And that is the Stephenson's been in more than four years. And given the way it's been acting, it certainly seems as though 2026 is going to be all about sticky yields on the long end. John Fort, back to you. All right, Rick San Telly, thank you. And now it may have been a lacklester first trading day of 2026, but our next guest says it'll be another strong year with a number of tail wins. Joining us now is Jed Ellberg, portfolio manager at Argent Capital Management. Jed, we talk a lot about tech,

but you say aerospace and defense is going to have a strong demand environment this year. But how much of that is priced in already? Yeah, some of it is priced in. A lot of those stocks performed very well in 2025. One that didn't perform quite as well in trades that what we think is a reasonable evaluation is Transdime.

Transdime announced a sizable acquisition just last week, almost a billion dollars. And we think all three of their end markets are firing at the same time. Commercial aerospace, new aircraft production and deliveries, aftermarket for both defense and aerospace, and then the defense, you know, U.S. budget circumstance, which remains strong double-digit growth this year. So we like that stock quite a bit. You also like retail at scale and for that Amazon. What about Walmart? What about Costco? Why in particular the Amazon call and how much is the consumer's health, particularly the working class consumer at play? Yeah. Big is winning in U.S. retail. That's kind of the big headline for us.

That means Amazon, Costco, and Walmart, the three biggest U.S. retailers, they're outgrowing pretty much everyone else. Most of the retail sales growth nationwide is being gobbled up by those three. We expect that to continue. Walmart in particular has benefited from consumer trade-down activity over the last couple of years. But also the strongest growing customer segment for them is the high-end consumer. So Walmart very well positioned. That stock has done very well. It's at almost 40 times next 12 months earnings, which is a 10-year high for that stock.

We've seen Costco's valuation come down from almost 50 times to near Walmart's 40 times today. So those stocks are priced almost at parity with each other. They're both growing mid-single digits. We like Amazon the most because it's growing 11, 12% a year, faster than the previous two I mentioned. and I think they're widening their distribution advantage over peers with the heavy investment in logistics, or excuse me, in robotics within their warehouses, and then also their warehouse expansion to rural areas, we think, driving additional growth. Yeah, autonomy on factory floors and in warehouses and the like, perhaps going to be an even bigger story to your point here in 2026. Jed, if I just take a step back here, we had three straight years of double digit percentage gains for the S&P. You think this could be the fourth year where we see something like that again.

How? Why? Yeah, the short answer is double-digit corporate earnings growth. I think the S&P 500 is expected to grow its earnings 14% in aggregate in 2026. That's led by tech, but with other areas of contribution as well, including industrials and financials. So that broad-based earnings growth is a big deal. The market will also benefit from falling interest rates. I think the Fed is a big swing factor in 2026. We'll get the new chair announcement, probably here in the next couple weeks.

taking a seat in May. And the tax bill is going to contribute some as well. And then finally, rising IPO activity, rising merger and acquisition activity should be helpful for markets as well. What could go wrong? What are the biggest risks? Inflation is a little sticky, a little bit higher than the Fed wants, probably restraining the pace of interest rate cuts. And I think some complain that valuation is too high. Valuation in particular doesn't bother me. I think the rising valuation over the last few years just reflects the increased profitability and growth prospects of the big tech companies that represent a bigger and bigger chunk of our, you know, major U.S. benchmarks. Jed, what do you see as the biggest risks in the

market and where do midterms and the, I don't know, historically shifting political environment play in? Normally, the party that's in control of the executive branch in both houses, of Congress doesn't do quite as well at midterms? Yeah, I think the biggest risk that I see in markets is that the AI infrastructure buildout is increasingly financed by capital markets, issuance, both equity and debt, rather than the very strong cash flows of the big hyper-scalers that have done most of the spending thus far. We see companies like CoreWeave and Oracle needing to rely more on capital markets to make those AI investments. I think that's a risk because capital markets are inherently risky and

volatile. As far as the midterm elections, I see that impacting the equity market most in the healthcare industry. Hospitals and other provider groups, the health insurance companies, their earnings and business prospects really depend on the regulatory environment. The Biden administration was fairly tough in most of those areas. The Trump administration has eased up a bit, but we may see, you know, a shift back to Democrat control, or at least balanced environment, you know, starting in 2027, depending on how these midterms go. All right, Jed, thank you for kicking off the hour with us. Thank you.

With a mixed Friday session for the major averages, but all of the major averages actually down for the week, the S&P down 1% this week in a holiday shortened week. Tesla shares falling today after the company's latest delivery numbers. Let's get the latest from Philobo. Hi, Phil. Hi, Morgan. And these were not expected to be great numbers, and that's what we got this morning. In fact, they didn't even meet the expectations that Tesla had put out on Wednesday when it said a surveyed analyst and we're expecting about $422,000.

That was the analyst estimate. Came in at 418-227. The street official estimate, by the way, was $426,000, a decline of 15.9% compared to the third quarter. For the year, Tesla delivered 1.63 million vehicles. That was down 8.5% compared to 2024. And yes, it was a second straight year where Tesla saw global deliveries decline. So why didn't we see a bigger sell-off in shares of Tesla? Look, there's momentum behind this stock.

It has been for some time because of three things that are driving the optimism right now. Robotaxy rollout. CyberCamp production is expected to perhaps hit some level of increase, growth, actually rollout and a bigger number in the middle of next this year. then you've got robot development. Elon Musk has said, look, I'll have a million of those optimist robots out by 2030. Whether or not he hits it, there's plenty of optimism about it. And as you take a look at shares of Tesla, one other note from today. This doesn't get much intention, but it should. Energy deployments. It has been growing steadily over the last four years.

They deployed 14.2 gigawatt hours in the fourth quarter. They will report their Q4 numbers. and we'll hear from Elon Musk after the bell on January 28th. Guys, back to you. Phil, you took my question right out of my mouth, and that was energy storage because there seemed to be a lot of very positive notes on the street about that and the fact that it's reaching an all-time high

in terms of deployments. And it's expected to continue growing. I think, you know, when you look at where they were for the year, somewhere around 42, 44 gigawatt hours, up 49% compared to where they were last or in 2024. It's going to be up in the mid-50s is the expectation for 2026. The only thing that's really limiting them on the gigawatt hour and those megapacks is the production capacity. If they could build a bit more and increase it even more, Morgan, they would.

There's that much demand out there right now. All right. Philibault, thank you. Coming up, President Trump offering a reprieve from some of his tariffs that were set to go into effect yesterday. We'll show you the stocks rallying as a result. And the U.S. dollar. It had a rough year in 2025. Our next guest isn't expecting 2026 to be much better,

but we're going to dig into what that actually means. Overtime's back into. Welcome back to overtime. Check out the furniture makers today, starting the year off right. Wayfair, William Sonoma, and R.H. All nicely higher, more than 5%. A lot of them. President Trump on New Year's Eve decided to delay furniture tariff.

which were scheduled to go into effect yesterday, January 1st. Those tariffs have been delayed by a year because, according to the White House, there had been productive negotiations on importing wood products. All right. Well, the dollar index coming off its worst year since 2017 is U.S. deficit concerns, shifting trade policies, and the Fed's rate path all weighed on the greenback. Our next guest sees more downside ahead, calling the dollar, quote, deeply overvalued. Joining us now is Chester Tony Ford.

He is chief strategist at BCA Research, leading the year. FX and fixed income strategy. Tony, it's great, or Chester, excuse me, it's great to have you on. And that's where I want to start with you, because we did have this weakening of the dollar last year pretty significantly against other major currencies. You still think it's overvalued. Why? We've done a lot of models that show that the dollar is overvalued. If you look at it from a purchasing power parity basis, you're getting around, like, you know, call it, like, you know, like 15 to 20% overvaluation.

Typically, over time, our work has shows that when you have this level of overvaluation, over the next, call it, two to three years, the dollar tends to depreciate. If you also look at what's happening, like, you know, in terms of competitiveness, you see that, like, you know, according to competitiveness measures, the dollar tends to be less competitive compared to a lot of other currencies. and you can see that in some of the data, which I can present a little bit, a little bit later. So, yes, a little bit still overvalued. You have gotten that depreciation that has adjusted that overvaluation.

But I think that going into 2026, 2027, you're going to get a little bit more adjustment. Yeah, it's interesting here. You say in your nose that the dollar is no longer reliably defensive. Why not? And how does that contribute to this conversation overall? Well, like, I mean, correlations change over time. So it's no longer reliable as a defensive currency because the dollar has obviously not provided that defensiveness that you need during the market sell off that we got earlier in 2025. So that has wasted a lot of concerns.

I think maybe that is a little bit overstated in the sense that it is still the global reserve currency. it's still the global safe haven. So in terms of stress, you're still going to get inflows into the U.S. dollar. But the fact that you did not get that protection when you needed it in terms of the downturns that tended to happen earlier during 2025, that has raised concerns about its defense of nature. Yeah, and we've talked so much about volatility in the stock markets here at CNBC, but we've seen a lot of volatility over the past year or so in FX as well, whether it's been some of the moves we've seen around the year.

yen or even euro yen. Even just today, Peter Bookvar pointing out the fact that you're seeing the Chinese yuan at its strongest level against the U.S. dollars since 2023, which arguably is signaling more about the shift in policy in China than the currency itself. How to think about this volatility and how to think about some of these moves specifically? Yeah, that's a very interesting question. And it's a very, it's interesting to dissect that. So talking about volatility, I would say that if you are trying to position yourself against rising volatility in the coming regime shift that you're talking about, you definitely want to hold some dollars, but you want to put into perspective the fact that the regime might be changing. In terms of the Chinese one and the appreciation against the dollar from a lot of emerging market currencies, actually.

The answer is actually simple. It's come down to fundamentals. A lot of these currencies, not the yuan. The yuan is facing, China is facing deflation. So obviously that is a major impact on what's happening in terms of the long-term fair value of the yuan against the US dollar. But you get like, you know, like you get a good carry on a lot of currencies. that are not in the U.S., in the emerging markets.

Mexico, for example, Poland, I was just looking at today, a lot of South American currencies, Asian currencies that we're talking about. So when you're looking at this, like sometimes it talks about, like we tend to shift the narrative to a regime shift, but fundamentals are playing a role here. You're getting a lot of attractive carry in other currencies right now versus the U.S. Yeah, and finally, I just want to ask how you're thinking about Bitcoin, stable coins, what those could mean to the dollar thesis here.

And perhaps just as interestingly, whether you're seeing gold trade more as a currency as some strategists have come on to CNBC and argued. Yep, that's interesting. So in terms of Bitcoin, stable coins, I think they're good for the, they're good for systemic risk, right? Stable coins are diversifying our access to the U.S. dollar. derivis-fying our access to other mediums of exchange so that is a very very good thing i always encourage that right now according to our data we don't see that as being something that's a

game changer according to us m2 money supplies double coins are perhaps maybe 1.2 1.3 percent of your u.s money supply overall cryptocurrencies are much more important in terms of uh in terms of supply but in that realm of things i think it's a it's a healthy uh structure in terms of like diversifying your access to a medium of exchange uh in terms of what that means it like you know like call it for the dollar uh going forward yeah i think it's still a it's still a difficult uh it's still difficult to call okay uh right now i I think we're in this situation whereby we're in a talk of war, the U.S. exceptionalism story is still alive and kicking.

Okay. U.S. growth is still projected to grow ahead of the rest of the world. Okay. In 2006, that will help inflows into the dollar. But at the same time, as I mentioned, you're getting the stores of value in terms of carry that are in different currencies. Okay. Chester, Tony Ford, thanks for joining us.

Thank you. Well, 2026 is off to a good start for some of last year's biggest winners, but one of those names is not feeling the loving yet. And while many of those stocks are part of the AI trade, the big names at the heart of it haven't rallied, especially in the past three months. So what should we make of the MegaCAP's recent moves? Mike Santoli is going to join us.

It's coming up next on overtime. Welcome back to overtime. Shares of app love and the worst performer in the S&P 500 today. That seven straight down session since closing on all-time high on December 2nd. It is down 15% over that time to 618 bucks a share. Average price target among analyst 756. And now let's bring in senior markets commentator Mike Santoli. He is looking at whether Mega Cap Tech can break out of its recently wobbly action. Mike.

Yeah, Morgan. It's been a couple of months now where it's been unable to really get upside thrust. This is the NASDAQ 100. You see it here with its 50-day moving average. It's been kind of crisscrossing that sort of medium-term trend line for a little while right now. You see marginally down today. At the same time, the equal-weighted S&P 500 today was up more than two-thirds of 1%. So that continues a recent pattern.

Here's the look at the NASDAQ 100 relative to that equal-weighted S&P 500 over the last two years. And what you'll see is a major peak, basically October 28th of this year, which is when we also hit the first all-time high in a while, or the last all-time high before December, actually. And this shows a period when the S&P 500 is flat, but the market is broadening out. Broadening out, meaning the equal-weight S&P is vastly outperforming. The average stock's doing pretty well. Cycical stocks are on the upside, for the most part. NASDAQ-100 is suffering. on a relative basis from there.

So it shows you it's difficult for the S&P to make headway. Now, we did see another period like this. It was started in July of last year, and it was multiple months when you had a major relative peak in the NASDAQ 100, Mag 7 type names that declined. Now here, the S&P 500 did manage to gain even without the leadership of the Mag 7 type stocks, the NASDAQ 100. But it was right until here that low point in relative performance when the S&P 500 really accelerated to the upside. Right here, the S&P was going up at an 11% annualized pace from here

on out to late November. It was basically going up at a 27% annualized pace. So everyone thinks the market should broaden. It feels very virtuous. It feels more inclusive. And maybe it's a better macro message for the economy. But it's difficult to kind of get out of a concentrated index and still have overall gains. Yeah, it's super fascinating to me. I also wonder, though, because we do talk so much about the market broadening out or rotation, whether perhaps with the AI trade, the rotation isn't just a domestic one, but it's a global one, especially when you look at some of the headlines and consequent stock moves we've seen coming out of places like China, for example,

or some of the Asian markets with some of the AI moves there. Without a doubt, yeah, Morgan, I mean, so it's kind of got this global component where the we're kind of like the marginal dollar is trying to chase whatever players seems to be best position or have the momentum fundamentally, wherever it might be. And of course, as we've talked about, within the AI trade in the U.S., it's been very bifurcated, or it's been kind of a pendulum swinging back and forth from the open AI complex over to the kind of alphabet broadcom ecosystem as well. So it's been tough to navigate.

I think in aggregate, the gains have been so great in the stocks that have been working that it's all been, you know, a net benefit to index holders. It gets tricky if it continues to whipsaw that way. All right. Mike, thank you. Time now for a CNBC News update with Christina Ports and Nevelace. Christina. Well, John, the owner of the Swiss Ski Resort Bar,

where a deadly fire broke out on New Year's Day, told a local newspaper, the establishment had been inspected by local authorities three times in 10 years. Authorities say at least 40 people died in the blaze, which they think was likely started by sparklers on champagne bottles carried too close to the bar ceiling. Officials say they plan to look into whether the material on the ceiling conformed with regulations.

Another shake-up in Ukraine, as President Vladimir Zelensky proposed the appointment of a new defense minister, who he says has been instrumental in the country's development of a drone defense wall. It comes as Zelensky calls for a greater focus on Ukraine security, and after he announced that country's spy chief would become his next chief of staff. And New York reported its highest-ever-recorded number of hospitalizations from the floor. in a single week. Health officials said today more than 4,500 people in the state were hospitalized with the flu just last week. It comes as the flu is surging nationwide driven by a new variant of the virus. Morgan? Yeah, super flu or whatever they're calling it right now.

Christina Parsonevilles, thank you. Thank you. Coming up, we'll get you caught up on all the AI stocks driving the markets today, including the news behind Bidu's big gains that helped lift Asian markets. And we'll talk to the CEO of Z-Scaler about the challenge. for cybersecurity in 2026. That stock gained about 40% in 2025, even though it's 30% off its high three months ago. Jay Chaudry is next on overtime. Welcome back to overtime. The market's mostly higher today. The Dow adding 300 points, a small gain, fractional gain for the S&P 500, which ended at 68, 58. The NASDAQ off very slightly, basically unchanged. As you can see, right there. But the Russell 2000 was up

more than 1%, perhaps some January effect action coming into effect right now. Last year's best Dow stock, continuing its strong run as well. Caterpillar jumping more than 4%, almost 4.5%. Investors flocking to it for its AI potential as well. A lot of

investments into things like autonomous machinery. Today was a big day for the AI infrastructure names two, including iron. The energy plays such as Fermi, we should note, that stock and others have been hit pretty hard recently, so perhaps not surprised to see a rebound here in a risk on trading day like today. The memory storage stocks continuing to soar. Wow. It's just

been monster gains lately. Same thing today. Sand disk, big gains there. You can see up about 16%. It was spun off of Western Digital back in February at around $36 per share. Just to give you some, I guess, context here, it's now trading at $275 per share. Yeah. Well, AI agents are supposed to be the future of business. And as CEOs put their valuable data into the hands of autonomous bots, we should think about security. Z-Skiller CEO, Jay Chaldry, joins me now in a CNBC exclusive to share what he's hearing from customers. Jay, happy new year. I also want to hear from you the context around M&A. How much acquisition activity do you expect in the space this year? Do you expect to do? You had a couple of notable acquisitions last year, including one around AI security

specifically. How are you really knitting that into your strategy? John, first of all, happy new year and good to be back on your show. MNA. There are so many companies getting funded in the AI security space. It's hard to keep track of the count. And most of them will get either acquired or they get sold. We selectively look for companies that are doing real innovations. We actually did two acquisitions last year. One was a company that built red-teaming technology to identify vulnerabilities in AI models and applications.

And second was an agentic security operations that can identify some of these potential breaches in a big set of data. So we will be inquisitive, but very selectively. Even before we saw this latest way, of generative AI driven by open AI. We had this franchising effect among attackers, where they were making tools available for less experienced but eager thieves to go after data. How have you seen the availability of AI tools both make social engineering attacks and language-driven,

natural language-driven attacks more prevalent? And how has it changed what you need to do, what your customers need to do to counter those attacks. John, AI is turbocharging that franchising attacks you talked about because with AI, you can build tools faster. With AI, you can ask a simple question that says, show me all the firewalls and VPNs of a given company that have vulnerabilities and give it to me in a nice tabler fashion. You get it in under 60 seconds.

So AI is helping. AI can automate tools as well. But AI is powerful for providers like Z-Skiller. We have embedded AI across the whole application or security solutions landscape. For example, we are able to detect when a bad guy is trying to do reconnaissance. Our technology can figure out with the help of AI very quickly. We are expanding upon our zero trust security. Exchange. With that, we can track if agents, if they go rogue, are they going to do bad things?

So technology for protection is evolving at a rapid pace. The key challenge ICAs, will enterprises move fast enough to embrace that technology? Because the whole world is moving at a faster and faster pace. Jay, when I think about Z-scaler and I think about Crowdstrike, I think about platforms that are executing on security. And so much of what we talk about with AI is the importance of scale as long as there's intelligent scale with data, well-managed scale. What kind of strategic position does that put you in in the AI era? As we're talking about acquisitions, as we're talking about trying to protect customers from multiple different kinds of threats, how is a platform company strategically positioned versus the rest of the market?

Yeah. There used to be lots and lots of point product companies. Point products aren't good enough. So you need a platform, but somehow the word platform has become meaningless. Every company calls itself a platform. Or a vendor goes on a buying spree and buys 10 companies and calls it a platform. None of that are integrated. They don't work well together. Our belief is that you should have properly integrated offerings, so it makes the customer's job easier and easier. So having a platform that works well together is important. The second point you talked about is data. AI is only as powerful as the data it's trained on.

Z-scaler is the largest security cloud. We process over half a trillion transactions a day. That means the models can be trained. they can be smart to detect those things. So the combination of the comprehensive platform with the vast amount of data allows us to protect our customers better than most of the other vendors out there.

Makes sense. Jay Chaudry from Z-Scaler. Thank you. John. Thank you. Up next, we will tell you where in the world you should be looking to uncover the next frontier in AI investing. And speaking of AI, Alphabet has been one of the big winners

over the past year. Coming out, Fast Money's Karen Feinerman's going to tell us whether the stock is starting to look expensive or has even more room to run. Be right back. Welcome back to overtime. It was a very happy new year in Hong Kong today. The Hank Sun Index having its best first day of a trading year since 2013. By-Doo is a big part of that rally after its AI chip business filed to go public on that exchange. Besides the offering, not announced, but some analysts estimate that this.

could be valued by as much as $23 billion. And you can see, Hengsen right there, finished the first day of trading in 2026, up 2.7%. Yeah. And that Baidu news could be a hint of what's to come in 2026, as American investors turn their attention to AI opportunities in Asia, and not just Mark Zuckerberg. Sima Modi has the details.

We've been reworking some of those sources overseas, and the tide does seem to be turning. Morgan and John, a flurry of Chinese IPOs expected this year. You mentioned Baidu joining the craze. Five more AI-related names from China set to debut this month on the Hong Kong Exchange. And what's really driving this activity is twofold. One is greater pressure from the Chinese government

to make its domestic companies more self-sufficient. And two, U.S. investors starting to look more for exposure to AI's AI names in Asia. Meta's $2 billion acquisition of Maine is the latest example that even the smartest names in AI are plotting opportunities overseas. And that is boosting valuations even beyond China. Take a look at South Korea's memory players, S.K. Hynix and Samsung, locking in huge gains in 2025 following big customer wins, including Nvidia.

Japan's semiconductor darling Kiyoksia, which gained over 500% in 2025 as it forges relationships with both Apple and Microsoft. So, guys, bottom line, the AI landscape, it's widening, no longer dominated just by the Silicon Valley names, as these specific names in Asia look for more opportunities from U.S. customers. It's interesting that players in Southeast Asia are looking to remain neutral. They're very conscious of this AI battle between the U.S. and China, and they seem to be looking to adopt technologies from each. I don't know if eventually that causes a problem for investors or if it's all opportunity. DeepSeek really seemed to be the defining moment where the U.S. investor woke up to this reality

that there's great innovation happening in China and broader Asia, and they're running these models much more cost-efficiently than a lot of the companies here. I spoke to Brandon Ahern, who's the head of Crane Shares, once at KIA-Web-China E-T-F. He said even behind all of this is just sentiment becoming much more positive around the U.S.-China relationship. If this summit actually happens between President Trump and President Xi in April, the whole expectation is that trade tensions reduce dramatically and how that creates more opportunity, not just on tariffs and you think agriculture and industrials, but for tech as well.

Yeah, and of course that deep-seek paper that was dropped this week on more efficient ways to train models, I'm sure, factoring in, too. Yes, for sure. Seema Modi, thank you. Thanks. All right, well, banks have been booming, significantly outperforming over the past year. Up next, Fast Money's Karen Feinerman joins us. She reveals the banks she thinks have a lot more upside in 2026.

Stay with us. Welcome back. Fowing was the top performer in the Dow today, helping boost the industrial sector as well. Joining us now, Karen Feinerman, Metropolitan Capital Advisor, CEO, and co-founder, and a fast money trader. Karen, great to have you on the program. Thank you for having me, Morgan. Good to be here.

Well, Boeing outperforms both the down on the S&P 500 in 2020-25. It's been the comeback kid. Do you expect it to continue? I do. I mean, we're starting to see some good things actually just today, right? We saw that Apache contract, which is nice, but it's not for something Boeing size, not going to move the needle. It's really that the commercial side of the business, as you well know, probably better than

anyone, is really starting to find their way out of the tremendous hole that they've been in for the last couple of years. We're going to see cash flow positive from this company next year, which is sort of the benchmark. We'd all been waiting for just to really start get going. And so while it doesn't look cheap now, it looks expensive, but where they're going to be is so much better than where they've been. So they're going to be hitting on both the commercial and the defense side. And so we're starting to see more interest here. And remember, the stock bottomed out when they finally did that equity offering, that was the, that was some sort of time to start getting into it. But I still think, if I owned none, I would buy some

today's not the best day, maybe tomorrow. All right, Carolyn, you also like Dell this year, which I think is interesting because it was up about 8% last year, half as much as the S&P. Given its valuation, why do you like it? Because of its valuation. You got to think anything that's AI adjacent like Dell certainly is, that was a pretty mediocre. And mediocre is sort of being, I don't know, flattering to them with how they did last year, the stock anyway. So they got two parts of their business. We know the storage part of their business, the server part of the business, rather. Tons of orders, tons of backlog. The margins weren't great. They were starting to improve. So I'm optimistic, though, that they will start to get it together, that we will

start to see this giant backlog and the margins improvement. And then they had a headwind with memory prices going up. But I think they're going to be able to somewhat either pass that along or work around that somewhat. And then I have been waiting for the PC upgrade cycle to happen. That didn't happen last year. It was fairly disappointing. I do think it's still going to happen. So you've got a coming, even though it was up somewhat, it still trades in the low double-digit earnings. So that's a pretty attractive PE for what I think is a truly AI-adjacent business that really has a lot of extra earnings to come. So that's one that I like disappointing, though, it's been.

You're also bullish on Citigroup. It had a big 2025. You think that's going to continue? I think the chance of it having as big a 26 as 25 is probably near zero. However, I still like it. It was up huge for sure. But going into this year, it was the cheapest by far on a P.E. basis, on a price to book. basis of any of the money center banks.

So many great things are happening for money center banks. We have big capital markets. We have big asset wealth management environment that's great for them. We have pretty good credit quality. We have pretty good GDP growth. So all of that is really good for them. We know that Jane Fraser's had a big job in her sort of streamlining this business, which is an amalgamation of a number of banks.

And then I think they, as maybe more than anyone, will be the beneficiary of AI improvements to their expenses, so that could really help their margin. I want to try to sneak one more in. Alphabet, Google. Top performer in the MAG 7 last year, you think it's still not expensive? I think it's still not expensive. I mean, they're actually hitting on every cylinder. There's so many good things happening, and it's not expensive 28. The balance sheet's great. A lot of excess cash. And I also think there's a shot that maybe they pull Waymo out and we can see what they actually do. And that could be a boost for the stock. if Waymo starts to get anything remotely close to what the street gives Tesla for their business.

So I like that one. All right, Karen. And we like having you on. So thank you for joining us. Nice to be with you guys. You can catch Karen and the rest of the fast money team coming up at the top of the hour. So in just about seven minutes. Up next, Mike Santoli has been doing some digging into the market to find some lagging groups that could be primed for a major comeback this year.

Stay tuned. Welcome back to overtime, Berta, a big winner to kick off the trading year. Barclays upgrading the company, which makes power and cooling systems for AI data centers to overweight from equal weight, hiking the price target $200 per share from 181. The analysts that are citing strong earnings expectations and valuations before today's big gains, stock had been down more than 10% over the past month, but had a big 25, and actually was a less than $14 stock as recently as 2023, John. It's now trading a 175.

Indeed. Well, the New Year is an opportunity to reshuffle your portfolios. So should you look for underdogs? Let's ask Mike Santola. Yeah, John, so just prospecting for some themes in the market that have been left far behind last year, at least as a starting point to try and sort of investigate whether there could be some catch-up. Maybe the market is overlooking something.

First off, this is from Michael Semble. big piece that hit today or yesterday on the overall AI infrastructure story. And it's different stock baskets that reflect different kind of parts of the AI theme, which is obviously infrastructure. And this is relative stock performance of these stock baskets compared to the equal weight S&P 500. So obviously that's when all the action is. The outperformance relative to the average stock has been stupendous. Revenue opportunities from AI, this is mostly software. Today's software got absolutely slammed. It seemed like a mechanization. trade in favor of chips and against software. Microsoft down two and a half percent.

Salesforce, Adobe, down even more. So who knows if that's going to turn, but it shows you that the market's not giving a lot of credit for those types of companies as basically getting a revenue boost from AI capabilities. And then finally, the productivity story. These are companies that have very high sort of labor costs relative to revenues where you could assume that AI might be able to fatten up their margins. Again, market showing not a lot of faith at this point, that that's going to, broadly speaking, be a big lift. Now, other areas of the market, more sort of micro-themes that did suffer last year. This is fintech or e-commerce payments, more or less, been a very, very rough road.

A lot of that is FISA, which had an absolutely cataclysmic year last year. This obviously is Bitcoin, so clearly that was, you know, not near the bottom, I wouldn't say, but definitely underperform the latter part of the year. And then business development companies, this is private credit, private capital. These are pools of loans and things like that, publicly traded ones, and they've obviously suffered as well.

So always impossible to just be kind of blindly contrarian and say, you know, this is going to be the time for a turnaround, but there is a lot to work with if you're looking for laggards. It's hard to time, Mike, but particularly in software, historically speaking, something has to turn. I mean, everybody's not going to do well, but somebody's going to either acquire the right thing or get acquired by the right thing in order to power this AI leg if it materializes. Right. So really all you'd have to do is make the case. Well, one, maybe you can make the case that sort of AI is going to be an accelerant to the upside for some of these players or simply that it's kind of a phantom threat.

And in fact, the core business is going to be more resilient than maybe people are fearful of right now. And I guess that's where you start to try and decide if, in fact, software is being unfair. tared by this trend right now. And Microsoft, of course, is involved, but the open AI connection seems like it hasn't been enough to kind of allay people's concerns about the whole buildout and its place in it. Okay. Mike Santoli. Thank you. Yeah. Next week, we get labor data, ISM manufacturing and services, a few other things as well. Congress back in session in Washington, and then keep an eye on the Supreme Court because a little bit later this month, we could finally get that decision on those IEPA tariffs, and that's going to be meaningful for markets, too.

We get the Consumer Electronics Show with NVIDIA, AMD, Qualcomm. I'll be there. All right. Well, that does it for us here at overtime. Fast money starts now.