Breakfast | Tencent sanctioned by the U.S. Department of Defense, Tencent ADR once plunged 10%

Market Overview

Chip stocks surged, with technology stocks supporting the S&P and Nasdaq's rebound for two consecutive days, but the Dow Jones turned negative after rising over 380 points during the day; the chip stock index closed up 2.8%; NVIDIA rose over 3%, and Taiwan Semiconductor rose over 5%, both reaching record highs in the U.S. stock market. European and American luxury stocks and automotive stocks rose, while Chinese concept stocks fell over 1%, with Tencent's U.S. stock briefly dropping nearly 10%.

Investors are focused on Trump's tariff plan, and the 30-year U.S. Treasury yield hit a 14-month high; the U.S. dollar index briefly fell over 1%, marking the largest intraday drop in over a year, continuing to retreat from a two-year high; the offshore yuan rebounded over 500 points during the day, breaking through 7.32. Bitcoin surged over $4,000 during the day, surpassing the $102,000 mark.

Crude oil and gold saw intraday highs before retreating, with crude oil rising over 1% before turning negative, saying goodbye to two-month highs, while gold futures turned negative, briefly dropping over 1%.

During the Asian session, A-shares fell on reduced volume, with retail and AI glasses leading the decline. The 30-year Treasury futures saw an expanded gain in the afternoon, while the onshore yuan briefly fell below the 7.3 mark.

Chip Stocks Surge, U.S. Semiconductor Index Closes Up Nearly 3%

NVIDIA and Taiwan Semiconductor hit closing historical highs. NVIDIA broke through $150 for the first time since last November, with semiconductor stocks in Asia, Europe, and the U.S. rising broadly. AI demand stimulated Foxconn's record high revenue in the fourth quarter of last year, becoming the main driver for chip stocks' outperformance. At the same time, Microsoft and OpenAI have released positive signals regarding AI demand, and the market is also looking forward to Jensen Huang's keynote speech on Monday, which has boosted sentiment (NVIDIA CEO Jensen Huang will deliver a keynote speech at 9:30 AM Beijing time.).

With strong AI demand, Foxconn's sales in December surged 42%, and significant revenue growth is expected in the first quarter. Foxconn expects that this year, its cloud business revenue, including AI servers, will be on par with its iPhone manufacturing business.

Wall Street remains optimistic about Taiwan Semiconductor in 2025: strong demand for AI and high-performance computers, along with a rebound in consumer electronics demand. Morgan Stanley believes that Taiwan Semiconductor usually provides conservative expectations at the beginning of the year and then exceeds those expectations. UBS pointed out that with strong demand for high-performance computing and cloud AI, Taiwan Semiconductor's total revenue in 2025 is expected to achieve a significant growth of 25%. Goldman Sachs expects that Taiwan Semiconductor's revenue in the first quarter of 2025 will only decline by 2.2% quarter-on-quarter, far better than the average decline of 5% over the past decade.

"Tech Spring Festival Gala" CES Opens, Chip Giants Unveil New Products

AMD showcased multiple new Ryzen products, with the strongest AI laptop chip making its debut, and the best gaming CPU significantly outperforming Intel's Core. The high-end Ryzen AI Max features up to 40 RDNA 3.5 architecture CUs, 16 Zen 5 architecture CPU cores, and 32 threads, with graphics performance over 1.4 times that of Intel's Core i9 288V processor, and rendering performance 84% faster than the 12-core Apple MacBook M4 ProAMD simultaneously launched what it claims to be the best CPU for gamers and creators, the Ryzen 9 9950X3D, which also features 16 Zen 5 cores and is 20% faster in gaming than Intel's Core Ultra 9 285K.

Qualcomm introduced a new AI chip for mid-range models priced at just $600. The company stated that this chip is manufactured using a 4nm process and can provide battery life lasting "multiple days" along with powerful performance, including support for running the latest AI software, with Microsoft Copilot+PC running on this chip priced as low as $600.

Intel released next-generation Core Ultra series chips with enhanced battery life, but due to architectural reasons, they do not support Copilot+. The new chip lineup ranges from the Core 3 for light tasks to the more powerful Core Ultra 200H, aimed at improving performance in two key areas: battery life and the ability to run AI functions. Additionally, the first Intel 18A process chip, the Intel Panther Lake processor, is set to be released in the second half of 2025. However, it is important to note that, except for the Core Ultra 200V, the majority of new processors released by Intel at this CES are based on the Arrow Lake architecture and do not utilize the latest GPU architecture or faster NPU, thus lacking support for Copilot+ functionality.

Tencent sanctioned by the U.S. Department of Defense, plunges nearly 10%

On Monday (6th), the U.S. Department of Defense announced that it has placed Tencent Holdings, along with battery manufacturer CATL, on its "sanctions" list (which includes 134 Chinese companies). Due to concerns over U.S. sanctions, Tencent's stock price fell nearly 10% in the U.S. over-the-counter market on Monday.

According to the latest released documents, the list has added Tencent, the parent company of WeChat, CATL, chip manufacturer CXMT, Quectel Wireless, and drone manufacturer Autel Robotics.

A spokesperson for Tencent stated that placing Tencent on the list is clearly a mistake. A spokesperson for Quectel Wireless also stated that the company "will request the Pentagon to reconsider its designation, as this is clearly an error."

FuboTV stock skyrockets over 250%

FuboTV is partnering with Disney to merge live TV streaming services. On Monday, insiders revealed that Disney will announce a partnership with sports streaming platform FuboTV to merge Hulu+ Live TV with Fubo, forming a new video company MVPD. This collaboration will further enhance Fubo's competitiveness in the fierce sports streaming market, and additionally, FuboTV will drop its lawsuit against Venu Sports

OpenAI CEO: OpenAI Weekly Active Users Exceed 300 Million, Future Revenue Target of $100 Billion

OpenAI CEO Altman stated in a New Year's post: OpenAI's weekly active users have exceeded 300 million, and we have found the path to AGI. In the past, Altman's statements about achieving AGI were more confident, but this firm declaration of having identified the path to AGI is a first.

OpenAI CEO: ChatGPT Pro is still losing money, with a future revenue target of $100 billion. Altman revealed that due to user engagement far exceeding expectations, the $200 monthly fee for ChatGPT Pro is still unprofitable. The losses are primarily due to high operational costs such as labor, office rent, and AI training infrastructure, with daily operating expenses for ChatGPT amounting to approximately $700,000. OpenAI plans to attract new investments, considers raising subscription fees, and optimistically expects revenue to reach $11.6 billion this year, with a potential to hit $100 billion by 2029.

Media Reports Trump Plans to Impose Tariffs Only on Key Imported Goods, Trump Denies: Fake News

U.S. media reported on Monday that Trump's aides are exploring tariffs on "all countries," but only covering key imported goods. The narrowing of the tariff plan or avoidance of a broader trade conflict boosted European and American stock markets, the euro and pound rose, the dollar fell as much as 1.1%, and the FTSE China A50 index futures rose by 1.8%, while the offshore yuan rose by over 400 points, with U.S. automotive stocks all rising.

Trump subsequently denied the report, and coupled with Federal Reserve voting member Cook's support for cautious rate cuts, the gains in U.S. stocks narrowed after midday, and the dollar surged after a significant drop.

U.S. December Services PMI Hits New High Since March 2022, Employment Ends Contraction

The final value of the U.S. December Markit Services PMI was 56.8, below the expected 58.5 and up from 56.1 in November. The employment sub-index final value rose to 51.4, ending the contraction trend; the new business sub-index final value reached a new high since March 2022; signs of continued easing inflationary pressures were further evident in December, although input prices still rose significantly. The final value of the U.S. December Markit Composite PMI was 55.4, with an initial value of 56.6