ZACKS·2026-01-02 14:11Market Overview - Wall Street's rally in U.S. stocks is expected to continue into 2026, with the Dow, S&P 500, and Nasdaq Composite projected to rise by 13%, 16.4%, and 20.4% respectively [1] - Financial analysts and economists are optimistic about the potential for a continued rally in 2026 [1] AI Infrastructure Growth - The demand for data center capacity is surging due to the growth of cloud computing, indicating a robust market for AI infrastructure [2] - Goldman Sachs and Bank of America predict AI infrastructure capital expenditure (capex) will exceed $1 trillion by 2028, while JP Morgan and Citigroup forecast a cumulative total of $5 trillion by 2030 [3] - McKinsey & Co. estimates that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030 [3] Capital Expenditure Trends - Four of the "magnificent 7" stocks are set to invest $380 billion in AI infrastructure in 2025, marking a 54% year-over-year increase, with expectations to rise to $440 billion in 2026 [4] U.S. Economic Fundamentals - The U.S. GDP growth rate increased by 4.3% in Q3 2025, following a 3.8% growth in Q2, with consumer spending rising by 3.5% year-over-year [5] - Analysts predict a 7.6% increase in total earnings for the S&P 500 in Q4 2025, with a 12.3% increase expected in 2026 [6] Federal Reserve Rate Cuts - The Federal Reserve lowered the benchmark lending rate by 75 basis points in 2025, following a 1% reduction in 2024, with expectations for two additional 25 basis point cuts in 2026 [7] Company-Specific Insights Marvell Technology Inc. (MRVL) - MRVL is positioned for growth in AI-driven data centers, with a focus on custom XPU silicon and partnerships with hyperscalers [9][11] - The company is acquiring Celestial AI, which specializes in photonic fabric technology, expected to close in Q1 FY 2027 [14] - MRVL's revenue and earnings growth rates are projected at 22.3% and 26.1% respectively for the next year, with a long-term EPS growth rate of 46.9% [18] PG&E Corp. (PCG) - PG&E operates California's only nuclear power plant and is integrating AI to enhance efficiency and safety at Diablo Canyon [21][23] - The company has an expected revenue and earnings growth rate of 6.4% and 9.1% respectively for the current year [24] Snap Inc. (SNAP) - SNAP is integrating AI across its platform, creating monetization opportunities beyond traditional advertising [25] - The partnership with Perplexity will generate $400 million over one year, targeting Snap's 943 million monthly active users [27] - SNAP's expected revenue and earnings growth rates are 13.4% and 52.3% respectively for the current year [30]