HAPPY SUNDAY TO THE STREET
January is back, which means so is CES. Cue the flying cars, robot arms, and overly ambitious demos.
The seminal tech showcase kicks off next week on Tuesday, January 6. Naturally, Nvidia $NVDA ( ▲ 1.26% ), AMD $AMD ( ▲ 4.35% ), Intel $INTC ( ▲ 6.72% ), and Qualcomm $QCOM ( ▲ 1.13% ) are lining up to flex their latest chips, and innovative AI announcements (read: more data center deals) will likely be everywhere.
But according to YF, the buzz this year is shifting toward something more physical: robotics. The aforementioned semiconductor companies are all expected to tie new chip launches directly to robotics use cases.
Meta $META ( ▼ 1.47% ) and Google $GOOGL ( ▲ 0.69% ) may add fuel through smart glasses and spatial interfaces that help humans interact with machines.
Even if many demos never ship, the direction tech giants want to take in 2026 is clear. AI is preparing to leave the cloud and step into the physical world.
— Brooks & Cas
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SCHWAB IS BACK ON OFFENSE
Defense To Offense
Two years ago, Charles Schwab $SCHW ( ▲ 1.66% ) was firmly on defense.
Rapid rate hikes pushed clients out of low-yielding sweep accounts, forcing the firm to rely on expensive short-term borrowing and denting earnings power.
But now, according to Barron’s, that chapter is largely closed. As rates stabilized and then eased, Schwab paid down much of that debt, removing a major drag on profits. Analysts now frame the story as recovery plus growth, not survival.
UBS $UBS ( ▲ 1.71% ) recently upgraded its stance, calling Schwab’s pivot from defense to offense real and durable. The stock has already responded, but valuation suggests the rerating may not be finished.
Asset Gathering Strength
Schwab’s core engine never stalled. Clients keep coming. Total client assets reached about $11.8 trillion, up 15% year over year, fueled by a strong market and steady inflows.
New brokerage account openings have exceeded one million for four straight quarters. Core net new assets topped $440 billion this year through November. That scale advantage remains difficult to match.
Compared with disruptive rivals like Robinhood Markets $HOOD ( ▲ 1.87% ), Schwab effectively adds the equivalent of an entire Robinhood platform in assets each year. That steady asset gathering supports earnings across market cycles.
Even after a strong rally, shares trade at a below-market multiple near 18x forward earnings, well under historical levels for the franchise.
Advice, Crypto & Private Markets
Growth levers are expanding. Schwab is leaning harder into advice, where only a small portion of clients currently pay for managed solutions. That leaves a long runway as investors age and seek guidance.
The firm is also preparing to launch direct cryptocurrency custody in 2026, allowing clients to hold digital assets alongside stocks, funds, and cash. Meanwhile, Schwab’s acquisition of Forge Global adds private market access, another tool to deepen client relationships and win wallet share.
UBS’s new price target implies 17% upside from Friday’s close, but that pales in comparison to other predictions on the Street. Morgan Stanley $MS ( ▲ 2.46% ) analysts see the stock adding nearly 50% in value — assuming, of course, execution stays on track.
BAIDU MAY UNLOCK HIDDEN AI VALUE
Familiar Name, New Angle
Baidu $BIDU ( ▲ 15.03% ) is often viewed through the narrow lens of Chinese internet search. Jefferies $JEF ( ▲ 2.4% ) thinks that framing is outdated.
A planned spin-off of Kunlunxin, Baidu’s artificial intelligence chip subsidiary, could reshape how investors value the company. Baidu intends to list Kunlunxin on the Hong Kong Stock Exchange while retaining it as a subsidiary.
Jefferies believes that move alone could surface value that currently sits buried inside Baidu’s broader structure. The firm recently raised its price target and reiterated a Buy rating, arguing that investors may finally get a clearer picture of Baidu’s AI ambitions.
Why Kunlunxin Matters
Kunlunxin designs AI computing chips and related infrastructure, a strategically important area as demand for domestic AI hardware grows in China. Spinning it off could give the unit its own investor base, one focused specifically on AI and semiconductors.
Jefferies argues the listing would improve transparency, accountability, and access to capital. Kunlunxin would be able to tap equity and debt markets independently, while Baidu still benefits as the controlling shareholder.
The timing also matters. Baidu recently introduced new Kunlun chips and super node solutions, reinforcing that this is not a dormant asset but an actively developing platform. A standalone listing could sharpen management focus and highlight progress that might otherwise be overlooked.
Valuation, Momentum & Risks
Jefferies’ bull case is simple. If Kunlunxin earns a valuation closer to pure-play AI chip peers, Baidu’s overall valuation could rerate. The firm isn’t alone in its optimism. Most analysts covering Baidu rate the stock a Buy, reflecting confidence in both execution and optionality.
That said, regulatory scrutiny in China has not disappeared, and unsteady market conditions for AI firms could delay or dampen enthusiasm for the listing.
Still, spin-offs have a way of forcing investors to reexamine old assumptions. If Kunlunxin steps into the spotlight, Baidu may start trading less like a legacy internet name and more like a layered AI platform with value yet to be unlocked.
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WAYFAIR GETS A TARIFF TIMEOUT
Tariffs Blink, Analysts Don’t
Wayfair $W ( ▲ 6.13% ) just caught a break.
The Trump administration delayed planned tariff increases on several furniture categories by one year, pushing higher rates into next January.
That matters for an industry built on global sourcing. Upholstered furniture tariffs will stay at 25% instead of rising, while kitchen cabinets and vanities also avoid a steeper jump. For Wayfair, that pause removes a near-term overhang.
Mizuho $MFG ( ▲ 1.23% ) believes the delay gives the stock room to run. The firm reiterated its Outperform rating, arguing that policy relief arrives at a moment when Wayfair’s business model is already gaining traction.
Positioned To Benefit
Tariffs rarely hit all players equally. Mizuho argues that Wayfair’s marketplace model absorbs pricing pressure better than smaller rivals. Flexible sourcing, broad supplier relationships, and scale allow Wayfair to adjust without taking direct margin pain.
Those advantages become more valuable when trade rules stay in flux. The firm says lighter tariffs tend to favor larger platforms, accelerating share gains as weaker competitors struggle to adapt.
That dynamic helps explain why Wayfair has already rallied 131% over the 12 months. Structural changes inside the business, not just macro relief, are doing much of the work.
According to the firm, tariff delays simply remove friction from an already-moving machine.
Upside With Eyes Open
Mizuho sees implied upside of 22% from recent levels if tariff relief holds and execution continues.
But even if the tariff pause is temporary, the bank believes, it could potentially lower uncertainty long enough for Wayfair to unlock the next leg higher. Sometimes the biggest catalyst is not a new strategy, but a problem that simply waits another year.
LAST ISSUE’S POLL RESULTS
Are you bullish or bearish on Cal-Maine $CALM ( ▼ 1.38% ) over the next 12 months?
▇▇▇▇▇▇ 🐂 Bullish
▇▇▇▇▇▇ 🐻 Bearish
And, in response, you said:
🐂 Bullish — “We buy their eggs and eggs are a good food that will continue to sell at the highest prices going forward.”
🐻 Bearish — “The margin for eggs and such is small since there's no moat to speak of.”
Which stock will outperform in 2026?
▇▇▇▇▇▇ Alphabet (GOOGL)
▇▇▇▇▇▇ Amazon (AMZN)
▇▇▇▇▇▇ DoorDash (DASH)
▇▇▇▇▇▇ Spotify (SPOT)
And, in response, you said:
Alphabet — “I think Alphabet still has the breadth and width to crush the so-called 'competition'; although the others on the list may well make gains within their particular arenas.”
Amazon — “AMZN is in just the right business with millions of retail buyers constantly spending their money, even if they don’t have it, yet AMZN looks for it to broaden all it offers and drive shares higher.”
Are you bullish or bearish on pharmacy benefit managers over the next 12 months?
▇▇▇▇▇▇ 🐻 Bearish
▇▇▇▇▇▇ 🐂 Bullish
And, in response, you said:
🐂 Bullish — “If there is money to be made in the pharmaceutical industry, they will sure as heck be trying to write a prescription for it.”
🐻 Bearish — “Finally, someone is taking them to task for gouging the consumer.”