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Palantir Stock Drops While Google Expands AI Chips

The artificial intelligence market saw notable shifts on January 3, 2026, as investors began moving capital from AI software companies to chipmakers. Palantir Technologies, for instance, experienced a 5.6 percent stock drop, closing at $167.86. This movement occurred despite Palantir's impressive 143 percent surge in 2025, with its current high valuation prompting some investor caution. Meanwhile, the broader chip sector, as measured by the Philadelphia SE Semiconductor index, rallied 4 percent, marking a strong start to 2026 after three consecutive years of gains. Even with the chip sector's rally, some individual chip stocks showed modest gains; Broadcom Inc. shares rose 0.44 percent to $347.62. Broadcom, which sells networking chips and enterprise software, had previously warned that lower-profit AI products could impact its earnings. For investors seeking a balanced approach to the volatile AI sector, the Global X Artificial Intelligence & Technology ETF (AIQ) offers diversification. This ETF, which closed at $51.43 on January 2, 2026, tracks the Indxx Artificial Intelligence & Big Data index and limits any single company's exposure to a maximum of 3 percent, including holdings like Alphabet, Broadcom, and Nvidia. Looking ahead, Alphabet (Google) is positioned as a strong AI investment for 2026. Its Google Gemini AI assistant is rapidly expanding, attracting users from OpenAI's ChatGPT. Alphabet is also exploring a significant new revenue stream by selling its custom AI chips, Tensor Processing Units (TPUs), to other firms such as Anthropic and Meta Platforms, potentially capturing a large share of the AI chip market. Nvidia continues to expand its influence beyond its core GPU business, participating in 67 venture capital deals in 2025, up from 54 in 2024, backing prominent AI companies like OpenAI and Anthropic. Microsoft is also a major player, with Wall Street analysts predicting significant growth in 2026 driven by its substantial AI investments. The company spent approximately $69 billion on AI and cloud infrastructure over the past year and boasts a $392 billion backlog in contracted cloud business. Analysts expect Microsoft's Azure cloud service to maintain high growth. Beyond these giants, the AI boom is fueling a credit trading frenzy, with an average of $50 billion in investment-grade and high-yield bonds traded daily last year, partly due to companies taking on debt for AI initiatives.

Key Takeaways

Palantir Technologies stock dropped 5.6% to $167.86 on January 3, 2026, as investors shifted from AI software to chipmakers.
The Philadelphia SE Semiconductor index rallied 4% on January 3, 2026, starting the year strong after three consecutive years of gains.
Broadcom Inc. shares increased 0.44% to $347.62 on January 3, 2026, despite the broader chip sector rally.
The Global X Artificial Intelligence & Technology ETF (AIQ) closed at $51.43 on January 2, 2026, offering diversified AI exposure with a maximum 3% per company.
Alphabet (Google) is expanding its Gemini AI assistant and plans to sell its Tensor Processing Units (TPUs) to companies like Anthropic and Meta Platforms.
Nvidia increased its AI startup investments, participating in 67 venture capital deals in 2025, backing firms including OpenAI and Anthropic.
Microsoft spent $69 billion on AI and cloud infrastructure over the past year and has a $392 billion backlog in contracted cloud business.
Wall Street analysts predict strong growth for Microsoft in 2026, with an average price target of $631 per share.
The AI boom is driving a credit trading frenzy, with an average of $50 billion in bonds traded daily last year due to AI-related debt.
The Baron Partners Retail Fund (BPTRX) has achieved an average return of 26.8% since inception, investing in growth companies benefiting from AI.

Palantir stock drops 5.6 percent as AI investments shift

Palantir Technologies stock fell 5.6 percent to $167.86 on January 3, 2026, the first trading day of the year. This happened as investors moved money from AI software companies like Palantir to chipmakers. The broader market was mixed, with the Dow and S&P 500 up, but the Nasdaq flat. Traders are now watching for Palantir's next earnings report, expected around February 2, and upcoming US economic data for new market direction.

Broadcom stock rises slightly as chip sector rallies

Broadcom Inc. shares increased by 0.44 percent to $347.62 on January 3, 2026, the first trading day of the year. This modest rise occurred even as the overall chip sector, measured by the Philadelphia SE Semiconductor index, jumped 4 percent. Investors are becoming more cautious about the high prices of some AI-related stocks. Broadcom sells networking chips and enterprise software, connecting its future to both AI hardware demand and software spending. The company had previously warned that lower-profit AI products could affect its earnings.

Global X AI ETF offers balanced investment approach

Investing in artificial intelligence can be tricky because it is hard to pick winning companies like Nvidia or Palantir. The Global X Artificial Intelligence & Technology ETF, ticker AIQ, offers a balanced way to invest in the AI sector. This ETF closed at $51.43 on January 2, 2026. It tracks the Indxx Artificial Intelligence & Big Data index, which carefully selects and weights its holdings. The fund limits any single company's exposure to a maximum of 3 percent, providing a diversified approach to AI investments.

Global X AI ETF provides balanced investment strategy

Investing in artificial intelligence can be challenging due to the difficulty of choosing successful companies and concerns about high stock prices. The Global X Artificial Intelligence & Technology ETF, known as AIQ, offers a simple and effective solution for investors. This ETF provides broad exposure to the AI sector by holding familiar names like Alphabet, Broadcom, and Nvidia. It stands out because its weighting method ensures no single company makes up more than 3 percent of the fund. This balanced approach helps investors avoid the risks of relying too heavily on a few volatile stocks.

Alphabet poised for AI growth in 2026

Palantir Technologies stock saw a huge 143 percent increase in 2025, but its current high value makes some investors hesitant. Alphabet is presented as a strong alternative for AI investment in 2026 and beyond. Alphabet's Google Gemini AI assistant is rapidly expanding, gaining users from OpenAI's ChatGPT. Experts predict the AI software market will grow significantly, offering a massive opportunity for Alphabet. The company is also exploring selling its custom AI chips, Tensor Processing Units, to other firms like Anthropic and Meta Platforms. This move could potentially give Alphabet a large share of the AI chip market, creating a huge new revenue stream.

Alphabet offers strong AI investment opportunity for 2026

Palantir Technologies experienced a remarkable stock surge, but its high valuation makes some investors look for other options. Alphabet presents a compelling artificial intelligence investment opportunity for 2026 and beyond. The company's Google Gemini AI assistant is showing strong growth, attracting users and expanding its presence in the AI software market. Furthermore, Alphabet is considering selling its custom Tensor Processing Units, or TPUs, to other companies. This strategic move could allow Alphabet to capture a significant portion of the AI chip market, potentially generating hundreds of billions in new revenue.

Three AI stocks to watch today January 3 2026

MarketBeat's stock screener identified three top artificial intelligence stocks to watch on January 3, 2026. These companies are Tempus AI, Hut 8, and BigBear.ai. These businesses are actively involved in creating, selling, or using AI technologies. Investors are keeping an eye on these specific AI stocks.

Nvidia expands AI influence through startup investments

Nvidia has greatly increased its investments in artificial intelligence startups since ChatGPT's introduction. In 2025, the company participated in 67 venture capital deals, a significant jump from 54 deals in 2024. These investments do not even include those made by its corporate venture fund, NVentures, which also saw increased activity. Nvidia has backed many prominent AI companies, including OpenAI, Anthropic, and Mistral AI. These strategic investments highlight Nvidia's growing influence across the entire AI industry, extending beyond its core business of making high-performance GPUs.

Baron Partners Retail Fund a strong AI investment

The Baron Partners Retail Fund, ticker BPTRX, is gaining attention as a potential long-term investment for the artificial intelligence era. This fund has achieved an impressive average return of 26.8 percent since it began. It also charges management fees that are lower than most other funds. The fund invests in a select group of growth companies, many of which are set to benefit from the rise of AI technology.

Chip stocks begin 2026 with strong rally

Chipmaking stocks started 2026 with a strong rally, led by companies like ASML, Intel, and Micron Technology. The sector had a very successful 2025, driven by the expansion of artificial intelligence and significant spending on data centers. The Philadelphia SE Semiconductor index has now seen three consecutive years of gains, with its best performance in 2023. Despite concerns about a potential AI bubble, the chip industry continues to show strong growth.

Wall Street predicts Microsoft AI surge in 2026

Wall Street analysts are very positive about Microsoft's potential growth in 2026, driven by its strong investments in artificial intelligence. Microsoft spent about $69 billion on AI and cloud infrastructure over the past year. The company has a large backlog of contracted cloud business, totaling $392 billion, which shows high demand for its services. Analysts expect Microsoft's Azure cloud service to continue growing at a high rate, which should help normalize spending and boost profits. Most analysts recommend buying Microsoft stock, with an average price target of $631 per share.

AI debt boom sparks credit trading frenzy

The rapid growth in artificial intelligence is fueling a credit trading frenzy. Last year, an average of $50 billion in investment-grade and high-yield bonds were traded each day. New bond sales, partly driven by companies taking on debt for AI initiatives, are a major reason for this increased trading. Major financial firms like Morgan Stanley and JPMorgan Chase & Co. predict record sales of high-grade US corporate debt, largely due to the AI boom.