Chip throwdown Qualcomm takes on Nvidia, AMD

S&P 500 rallied 1% to close above 6,800 points for the first time in history. The Nasdaq gained 1.8%, also hitting its highest level on record. That’s thanks to three things. Talks developing talks between China and the US easing trade tensions, secondly there's expectations of a US rate cut later this week, and thirdly we have stronger company earnings. We’re partway through the third-quarter results season, with five of the Magnificent Seven stocks set to report later this week. FOMO buying in anticipation of hot earnings droves the moves overnight, with $NVIDIA (NVDA.US)$ up 2.8% moving back toward its all-time high — and $Apple (AAPL.US)$ up 2.3% to a new record of $268.81.

– Qualcomm shares surged 11% after announcing plans to launch AI chips next year, competing directly with Nvidia and AMD. $Qualcomm (QCOM.US)$ not only hit a 52-week high but analysts say it could return to record levels as it becomes a stronger contender in the AI data-centre market. But Wells Fargo cautioned some hot air may need to come out of the stock.

– This raises the question: which other AI players are investors overlooking? One example is $SMIC (00981.HK)$ , listed in Hong Kong, which derives about 18% of its business from Qualcomm. SMIC is benefiting from rising US demand for AI chips, with its shares up over 160% this year.

– Beyond these giants, smaller-cap players are emerging in the AI chip space. But if you don't know where to start or which stocks to track, look at the $VanEck Semiconductor ETF (SMH.US)$ tracks semiconductor companies and is up 50% this year.

– Megaport. The Australian data-centre and networking company, $Megaport Ltd (MP1.AU)$ has extended its rally, with shares up 116% year-to-date, making it the third-best performer on the ASX. Revenue, earnings, and profits are all growing — and expectations are that these trends will continue.

– Amazon. It plans to cut about 30,000 jobs, which could boost $Amazon (AMZN.US)$'s profitability but worsen unemployment, as Amazon is the second-largest US employer. Its results are due later this week, with record profits and a 50% gross-margin expansion expected. Growth in AWS (Amazon Web Services) continues to drive both revenue and earnings. Technically, shares appear poised for another move higher.

– Palantir. Its shares hit a new all-time high, as the AI-defence company $Palantir (PLTR.US)$ expands into AI-powered drones and real-time mission analytics. Palantir and Red Cat Holdings $Red Cat Holdings (RCAT.US)$ successfully flight-tested the Black Widow drone, equipped with Palantir’s Visual Navigation (VNav) software, under the US Army’s Short Range Reconnaissance program. The partnership signals further revenue expansion opportunities for Palantir.