CNBC Daily Open: A risky alpha bet in markets to revive AI trade

Alphabet on Monday resuscitated the artificial intelligence trade, which had been flagging the previous week. Its stock jumped 6.3%, lifting associated AI names such as Broadcom, Micron Technology and AMD. Major indexes rallied, with the Nasdaq Composite posting its best day in six months.

Investors were particularly enthusiastic about Broadcom because it helps to design and manufacture Google-parent Alphabet’s custom AI chips. In other words, the more market share Alphabet’s AI offerings gain, the greater the benefit to Broadcom — rather like Nvidia and the broader AI sector at the moment. Broadcom shares surged 11.1% on this notion, making it the S&P 500’s top gainer.

But while investors may cheer Alphabet’s leadership on Monday, not everyone wants it to have the last word.

“Some investors are petrified that Alphabet will win the AI war due to huge improvements in its Gemini AI model and ongoing benefits from its custom TPU chip,” Melius Research analyst Ben Reitzes wrote to clients in a Monday note. “GOOGL winning would actually hurt several stocks we cover — so prepare for volatility.”

Approaching the market’s moves from another angle, Melissa Brown, managing director of investment decision research at SimCorp, said it’s a concern when just one stock lifts the market. “That just doesn’t seem to me to be a sustainable force behind driving the market higher over the next however many days,” she added.

Alphabet on Monday may have brought about alpha — in the sense of market outperformance and potentially beginning a new phase of AI enthusiasm — but letting it be the omega as well could pose problems for investors.

U.S. tech stocks roar back. The Nasdaq Composite popped 2.69%, its best day since May 12, on investors enthusiasm over Alphabet and its new AI model Gemini 3.Other major indexes rose in tandem. The pan-European Stoxx 600 ticked up 0.14%.

Amazon will spend up to $50 billion on AI infrastructure. The compute capacity will amount to nearly 1.3 gigawatts and cater to the company’s U.S. government customers, Amazon said Monday.

OpenAI has first prototypes for its device. CEO Sam Altman on Friday described it as “jaw dropping.” In May, OpenAI acquired former Apple design chief Jony Ive’s startup and said it would create AI hardware.

Trump had a call with his Chinese counterpart Xi. A White House official confirmed to CNBC that the U.S. president spoke on the phone with Xi Jinping on Monday morning. Trump wrote on Truth Social that both parties discussed aspects of their earlier trade truce.

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