Stocks snapped their two-day losing streak on Thursday, as tech shares rebounded and market participants cheered the latest round of bank earnings. A surprise drop in weekly jobless claims helped keep the wind at the market's back.
At the close, the blue-chip Dow Jones Industrial Average was up 0.6% at 49,442, the broader S&P 500 was 0.3% higher at 6,944, and the tech-heavy Nasdaq Composite had gained 0.3% to 23,530.
Taiwan Semiconductor Manufacturing Company (TSM) led a bounce in tech stocks, soaring 4.4% after earnings from the world's largest chip manufacturer silenced artificial intelligence (AI) skeptics.
For its fourth quarter, TSM reported higher-than-expected year-over-year earnings and revenue growth of 35% and 20.5%, respectively.
The company, which counts AI chipmakers Nvidia (NVDA, +2.1%) and Advanced Micro Devices (AMD, +1.9%) and tech giant Apple (AAPL, -0.7%) among its customers, expects revenue to be up 38% year over year in the first quarter and 30% in fiscal 2026.
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Additionally, it anticipates full-year capital expenditures of $56 billion at the high end of estimates.
"We believe the strong Q1 guidance has likely surprised many investors to the upside," says Needham analyst Charles Shi. "While there are isolated high-flying estimates out there, we think both [full-year revenue growth and CapEx] should have beat buyside expectations. Solid CapEx guidance should also lead to even stronger wafer fab equipment (WFE) outlook for 2026 and beyond."
Shi has a Buy rating on the semiconductor stock and lifted his price target to $410 from $360, representing implied upside of nearly 20% to current levels.
Goldman Sachs and Morgan Stanley pop after earnings
Bank stocks also rebounded on Thursday, thanks to well-received earnings reports from Goldman Sachs (GS) and Morgan Stanley (MS).
GS jumped 4.6%, making it the best Dow Jones stock today. "Goldman decided to refocus on its core strengths of investment banking and trading operations while scaling back its consumer banking footprint, and hence undertook a major business restructuring initiative," says Brian Mulberry, senior client portfolio manager at Zacks Investment Management.
The move has paid off, Mulberry adds, with rising equity trading revenue and investment banking income "helping to support strong results this quarter."
MS, meanwhile, gained 5.8%. The entire banking industry is coming off a great year of execution, says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors.
He believes "Morgan Stanley can continue this narrative with execution or increasing their forward projection goals of efficiency, ROTCE [return on tangible common equity], and wealth management pre-tax margin, as the bank showed this quarter, and their investments in growth continue to bear fruit."
Bernstein believes COST is undervalued
Costco Wholesale (COST, +0.6%) shares are up nearly 11% so far in 2026, and Bernstein analyst Zhihan Ma thinks there's more room to run. "COST is the ultimate compounder," writes Ma in a January 15 note to clients, adding that the retail stock is "undervalued" at current levels.
The analyst believes the warehouse operator can sustain earnings-per-share growth of at least 12% to 13% over the long term. "This implies a justified multiple potentially above the 45-50x price-to-earnings (P/E) range. The stock has recovered somewhat from the trough to 46x, and we see further upside from here."
Ma has an Outperform (Buy) rating on the consumer staples stock and a price target of $1,146 – implied upside of 20% to current levels.
