Wall Street high on AI euphoria

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Markets positive
Wall Street hit another record on Friday as markets wrapped the week on a positive note with help from Nvidia’s bumper earnings. The S&P 500 gained 0.03% hitting fresh highs, while the Dow also closed at an all-time high. The Nasdaq Composite lost 0.28% but touched a fresh 52-week high in the session.

Pushing AI phones
Smartphone players like Samsung want to jump on the artificial intelligence frenzy to boost sales of their devices. Smartphone makers plan to talk up the tech at the Mobile World Congress, which kicks off on Monday in Barcelona.

Lenovo laptop prototype
Chinese tech giant Lenovo showed off a prototype of a laptop that has a see-through screen, using a technology similar to augmented reality in some senses. Since the laptop is a concept product, Lenovo has no plans to sell the device.

Berkshire Hathaway earnings jump
Berkshire Hathaway operating earnings surged 28% in the fourth quarter, while its cash pile soared to record levels. For the full year, operating earnings rose to $37.35 billion, up 17% from $30.85 billion in the previous year.

[Pro] China AI stocks surge
Even if China’s broader market recovery remains muted, Chinese artificial intelligence stocks are rising. Analysts are bullish on tech giant Baidu — which Morgan Stanley called the «best AI play in China Internet.» The company is set to release earnings this week.

Al euphoria took over Wall Street last week, thanks to Nvidia. 

The chipmaker’s market cap briefly topped $2 trillion on Friday, after posting blockbuster earnings that fueled a powerful stock rally. 

All three indexes rose more than 1% on the week, with both the Dow and S&P posting record closes. 

Market watchers seem optimistic the current rally has legs since it’s driven by strong earnings.

«We saw the market pullback this week on the uncertainty of NVIDIA earnings and a major relief rally when the AI demand was reconfirmed,» wrote Louis Navellier, founder of Navellier & Associates.

«It’s been a strong week and a strong month. Following a good earnings season, it’s difficult to see, besides some profit-taking, what will push us off this positive trend.»

Still, it remains to be seen whether the AI momentum can last as inflation risks linger.

Investors, so far, have shrugged off the Fed’s cautious tone on interest rates and focused on the AI fervor. But that could change as a big inflation data point is due this week that could spook Wall Street.  

The personal-consumption expenditures index, the Fed’s preferred inflation gauge, will be released Thursday. This comes on the heels of recent hot consumer and wholesale prices that delivered a one-two punch to markets. 

 If the PCE data surprises on the upside that could dampen the markets’ bullish mood.