Investors rotate out of Nvidia as Nasdaq hits a high

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.

Losing streak for Dow
On Monday, the Dow Jones Industrial Average lost 0.25% for its eighth straight day of losses, the longest streak since 2018. The S&P 500 gained 0.38% and the Nasdaq Composite advanced 1.24% to close at a new high. Asia-Pacific markets were mixed on Tuesday. China’s CSI 300 ticked up around 0.4% after lawmakers reportedly planned to increase the country’s budget deficit in 2025.

Correction: Nvidia
Nvidia shares fell 1.7% on Monday to close at $132. That’s around 11% off its closing high of $148.88 in November, putting Nvidia in correction territory. That said, Nvidia is still up 166% this year, and a correction doesn’t necessarily signal a sustained downward trend. Moreover, other chipmakers, like Broadcom, are still powering forward.  

Paving the Waymo in Tokyo
Waymo will start testing its autonomous vehicles in Tokyo starting 2025, the company announced Monday. That’s the Alphabet-owned company’s first entry into an international market — and left-hand-drive road. Local taxi operator Nihon Kotsu and taxi app GO will be Waymo’s partners in Tokyo.

Investment incentive or deterrent?
Indonesia banned the sale of Apple’s iPhone 16 in October because of its law requiring companies to invest in or source components from the country. The government is now asking Apple to invest $1 billion in manufacturing cell phone components in Indonesia. However, analysts think that such tactics to draw investment into the country could backfire.

[PRO] Smaller European companies too
Small- and mid-cap companies in the U.S. have been attracting attention — and inflows — in recent weeks, thanks to Trump’s ostensible focus on the domestic economy. Across the Atlantic, European companies of that size are also likely to outperform their larger counterparts in the coming month, according to Deutsche Bank strategists.

The frustrating thing for Nvidia — and its shareholders — is that apart from an investigation by a Chinese regulator, there hasn’t been any other major bumps on the road: In fact, the company’s fundamentals are stable.

As Keith Lerner, co-chief investment officer at Truist, points out, Nvidia’s position in the semiconductor and artificial intelligence industry remains unchanged. “You need Nvidia, and you need their chips for infrastructure,” said Lerner. “But I think what the market’s also saying is that there are other beneficiaries beyond that.”

The fact that the Nasdaq Composite closed at another record despite Nvidia falling is a sign of that rotation into other semiconductor and AI-related stocks.

Most conspicuously, Broadcom shares have hammered the accelerator, surging forward on Friday and Monday on the back of a glowing fourth-quarter earnings report and increased price targets by banks.

“Momentum has been driving this stock. I don’t think momentum is going to kill it quite yet, but momentum does what momentum does, which is it seeks the higher flyer,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

The key difference between playing the stock market and Mario Kart is that the latter is a zero-sum game — you lose if your friend wins — but that’s not always the case with the former. You can own both Nvidia and Broadcom, and benefit regardless of the race’s leader.

— CNBC’s Ari Levy, Samantha Subin, Brian Evans and Jess Pound contributed to this report.