Market action suggests investors are falling out of love with the artificial-intelligence trade, but here's the rub -- earnings from Taiwan Semiconductor Manufacturing (TSMC) and industry surveys indicate spending on the technology is only set to grow. So someone is getting it wrong on AI.

Judging by the performance of tech stocks so far in 2026, this is the year when AI will run out of steam. Shares of chip leader Nvidia have drifted since last summer while Microsoft is at its lowest level in seven months. Things are even worse for pure-play software companies -- players such as Salesforce, which has championed AI agents, are on the brink of multiyear lows.

On the other hand, TSMC -- the dominant manufacturer of AI chips -- is planning record capital expenditure, which it promises is justified by months of checks with major customers. And industry surveys of company executives say AI is the top IT budget priority with spending only set to increase.

How to reconcile these two narratives? One argument is that investors recognize AI spending will continue to increase, they just don't believe it is money well spent. Bank of America strategists estimate borrowing in the tech sector could hit as much as $950 billion over three years. The growing number of circular financing deals and off-balance-sheet arrangements used to fund investment naturally attracts skepticism.

Investors have been fleeing anything AI-related in a rotation toward value stocks and small companies. But shareholders in some sectors such as utilities and data-center infrastructure shouldn't particularly care whether the AI spending is sensible, only that it is set to last -- and all the indications so far are that the boom has a long way to go.

A rebalancing of stock portfolios and a broadening of the market rally is healthy. But investors should be open to the possibility that some AI stocks are now on offer at bargain prices.

-- Adam Clark

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***

Trump's 25% Tariffs on Chips Only Matter to Nvidia and AMD

President Donald Trump made official his earlier talk that Nvidia would pay the U.S. 25% of its H200 chip sales to China. An executive order signed Wednesday applied tariffs to chips imported to the U.S. that aren't used here for AI but are exported to another country.

   -- That's a practice called transshipping. Such chips, including Nvidia's 
      H200 and Advanced Micro Devices' MI325X chip, would be subject to a 25% 
      tariff under the order, which applies the levies to a very narrow 
      category that the administration views as important to its AI and 
      technology policies. 
 
   -- But the White House left a broader tariff on the table, saying the 
      Commerce Department recommended broader chip tariffs at a significant 
      rate, but with potential to offset them with investments in U.S. chip 
      production or the U.S. chip supply chain. This would likely limit the 
      scope of tariffs. 
 
   -- The order came under a national-security provision of trade law referred 
      to as Section 232. Investors are awaiting a Supreme Court decision on the 
      legality of Trump's tariffs imposed under emergency powers. A ruling 
      likely wouldn't affect tariffs imposed under Section 232. 
 
   -- A second executive order on Wednesday addressed critical minerals. The 
      administration didn't impose tariffs on critical minerals but instead 
      said it was negotiating with trading partners to reduce U.S. reliance on 
      other countries for rare-earths and the like. The door remains open to 
      tariffs. 

What's Next: Treasury officials have met with France, Australia, South Korea, and the U.K. around critical minerals as the U.S. looks to secure its supply chain. Henrietta Treyz, head of economic policy research at Veda Partners, sees Wednesday's moves as preparation if the Supreme Court rules against some of Trump's tariffs.

-- Reshma Kapadia and Tae Kim

***

Oil Prices Slide as Trump Rows Back on Iran

Oil prices have swung sharply in recent weeks. Benchmarks were falling Thursday after President Trump said that "killing in Iran is stopping," in an apparent de-escalation of tensions between Washington and Tehran.

   -- Following Trump's remarks, continuous futures contracts for Brent crude 
      retreated by about 3.5% to roughly $64.22 a barrel. West Texas 
      Intermediate was down by 3.3% to $59.95. 
 
   -- Crude prices had been on a tear over the course of the five trading days 
      ending Wednesday, as the Trump administration considered military action 
      against Iran. 
 
   -- Earlier this week, the president also said he would impose a 25% tariff 
      on any country doing business with Iran in the wake of deadly 
      anti-government protests. 
 
   -- On Tuesday, Citigroup raised its projection for international oil prices 
      over the next three months to $70 a barrel, up from $65, because of the 
      violence in Iran and a change in the war between Russia and Ukraine. 

What's Next: Traders look set to refocus their attention on market fundamentals as crude inventories in the U.S. climbed more than analysts expected last week. Still, oil traders should prepare for more geopolitical volatility with Russia's war in Ukraine and U.S. military action in Venezuela potential powder kegs for the industry.

-- Alex Kozul-Wright

***

Consumers Continue to Borrow and Spend Despite Affordability Concerns

Despite talk about an affordability crunch affecting many households, comments from executives during bank earnings this week point signal that consumers continue to borrow and spend at a decent pace in the final months of 2025 despite the uncertainties caused by a weakening job market and tariffs.

   -- Bank of America CFO Alastair Borthwick told reporters the consumer 
      remains resilient and in "great shape." Bank of America, JPMorgan, and 
      Citigroup all said credit card spending rose in the fourth quarter while 
      delinquencies on accounts were slightly down. 
 
   -- Joining a chorus of bankers pushing back against President Trump's 
      proposed 10% cap on credit card interest rates, Wells Fargo CFO Mike 
      Santomassimo said it could hurt economic growth and hinder Americans' 
      ability to access credit, warning of "a negative impact on credit 
      availability." 
 
   -- The Federal Reserve's periodic survey of economic conditions in its 12 
      districts confirmed the economic observations shared by bankers. Most of 
      the country reported modest growth after several months of stagnation, 
      but growth has been uneven and pressured by high prices. 
 
   -- The report, known as the Beige Book, highlighted a K-shaped economy. 
      Higher-income consumers continued to spend freely on travel, experiences, 
      and luxury goods. Lower- and moderate-income households grew increasingly 
      price sensitive and more hesitant to spend on nonessentials. 

What's Next: While banks so far have reported less than exciting results from investment banking, wealth management has been riding the bull market higher at Wells Fargo, Citigroup, and Bank of America, which owns Merrill. That augurs well for other large wealth management companies.

-- Rebecca Ungarino, Andrew Welsch, and Nicole Goodkind

***

Home Sales Outlook Looks More Promising After Slow 2025

The housing market kept sputtering in 2025, with sales tying the year prior at a roughly three-decade low. But a late-season bump and improving buying conditions suggest sales are headed higher in 2026, with potential buyers lured by lower mortgage rates, slowing home price increases, and other factors.

   -- Home sales last year totaled 4.06 million, the National Association of 
      Realtors said, flat with 2024's total, which was the lowest level since 
      1995. But conditions improved in the fourth quarter, with sales at the 
      fastest pace since early 2023, said NAR chief economist Lawrence Yun. 
 
   -- Fixed 30-year mortgage rates measured by the Mortgage Bankers Association 
      fell to 6.18% as of Jan. 9, while home loan applications rose 13%. 
      President Trump, pressing for more affordable housing, directed the 
      government to buy mortgage-backed securities to bring down mortgage 
      rates. 
 
   -- Trump plans to announce more housing policies in coming days, but they 
      come with risks for real estate sector investors: the administration 
      could urge home builders to churn out more new homes than they would 
      otherwise, Evercore analyst Stephen Kim recently warned. 
 
   -- The administration could also stymie share repurchases by home builders, 
      Kim noted. Trump has already publicly criticized share buybacks by 
      defense contractors and said he would prevent them from further buybacks 
      if they didn't speed up their manufacturing activities. 

What's Next: There are signs of a spring thaw. Mortgage applications have risen 28.5% in the past week, mortgage loan applications increased 15.9%, and refinance activity surged 40.1%, MarketWatch reported. Yun said more homes are expected to come to market starting in February.

-- Shaina Mishkin and Janet H. Cho

***

BitGo Aims for First Crypto-Related IPO of 2026

While Bitcoin's price has been volatile, that's not stopping a new slate of crypto companies from testing the market for initial public offerings. Next week, a digital wallet and custody firm called BitGo plans to go public among several crypto IPOs waiting this year.

   -- BitGo, which generates revenue from digital asset trading, staking 
      (rewards earned from validating crypto transactions on a blockchain), and 
      service fees, aims to raise nearly $190 million by selling more than 11.8 
      million shares at a price range of $15 to $17 for a $2 billion valuation 
      at the midpoint. 
 
   -- In December, BitGo received conditional approval from the Office of the 
      Comptroller of the Currency $(OCC)$ to convert its BitGo Trust Company unit 
      to a nationally chartered bank. It said Tuesday it was expanding its 
      institutional derivatives trading program to further diversify its 
      revenue. 
 
   -- BitGo is profitable, reporting net income of $156.6 million in 2024. 
      BitGo posted a net profit of $35.3 million in the first nine months of 
      2025. The intense volatility in the prices of Bitcoin, Ethereum, Solana, 
      XRP, and other cryptocurrencies could weigh on results, however. 
 
   -- Bitcoin rose above $97,000 late Wednesday, and was above $95,000 for the 
      first time since November. A bill in the Senate could be pushing it 
      higher. The Senate Banking Committee has a hearing on the Digital Asset 
      Market Clarity Act today, aimed at creating a regulatory framework for 
      crypto. 

What's Next: Coinbase CEO Brian Armstrong said Wednesday the company can't support the legislation in its current form, citing "too many issues," including a de facto ban on tokenized equities and prohibitions on decentralized finance that would give the government unlimited access to people's financial records.

-- Paul R. La Monica and Callum Keown

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Rupert Steiner

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 15, 2026 06:50 ET (11:50 GMT)

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