• Banks beat earnings expectations throughout 2024: However, analysts are generally forecasting a weaker end to the financial year with these Q4 updates. Hidden Gems rec U.S. Bancorp isn't holding back on pursuing growth, and may be attractive to investors who want to diversify away from high-growth stocks in areas like technology, or who appreciate dividend income.
• "Something to watch going into 2025 is the state of the consumer": Fool analyst Jason Moser observed "The Financial Times recently reported credit card lenders have written off $46 billion in seriously delinquent balances over the first 9 months of 2024, up a whopping 50% from a year ago and the highest level in 14 years; we'll likely see more of the same when banks report earnings in January."

Ahead of the Federal Reserve's January 28-29 meeting, Tuesday brings wholesale figures with the December Producer Price Index (PPI). The Consumer Price Index, following on Wednesday, is expected to show a year-over-year rise to 2.9%, from 2.7% in November.

• "Another speed bump on the road to 2% inflation": Wells Fargo thinks inflation could rise to 2.9%, setting a five-month high. With 256,000 jobs created in December, far more than the expected 165,000, CME's FedWatch tool shows only a 25% probability of a rate cut by the Fed's March meeting.
• "Good economic news is bad market news": The better-than-expected December jobs report is making investors fear higher interest rates for longer, as Scott Chronert at Citi noted bond yields are rising, which tends to be bad news for stocks.

• Patent cliff: The deal comes as Johnson & Johnson faces a potential $17 billion loss of revenue from the 2029 expiry of its blockbuster Darzalex cancer drug.
• Biotech acquisitions back on track: 2024 was a quiet year for deals in the sector, but this one would be the biggest since Pfizer (PFE -0.52%) took over Seagen for $43 billion in 2023.

Sanmeet Deo, CFA

Under the Radar

Beyond the Magnificent Seven, a compelling AI opportunity might be hiding in plain sight: Dell Technologies (DELL -3.81%). While PCs remain part of its business, Dell has quietly transformed into a key player in AI infrastructure. It is building the essential hardware--servers, storage, and networking--that every AI company needs. Think of it as selling the "picks and shovels" during a gold rush.

Dell's AI server customer base has exploded from roughly 30 to over 2,000, with projections exceeding 4,000. This explosive growth signals strong demand. CEO Michael Dell anticipated this trend, strategically acquiring EMC and VMware to create an integrated hardware/software ecosystem optimized for AI. Strong partnerships with Nvidia (NVDA -3.00%) and other chipmakers further solidify their position.

Instead of betting on one specific AI application, Dell provides the foundation for the entire industry. While risks remain – including competition and the uncertainty of long-term AI demand – Dell offers a less volatile opportunity for investors seeking exposure to the AI boom.