The U.S. stock market reached new heights on Tuesday, buoyed by the ongoing surge in artificial intelligence (AI) investments. The S&P 500 edged up by 0.1%, while the Dow Jones Industrial Average gained 228 points, translating to a 0.4% increase. The Nasdaq composite also recorded a modest rise, up less than 0.1%, with all three indices setting all-time highs.
Key players in the AI landscape, such as Hewlett Packard Enterprise, drove the market’s momentum. The company’s stock surged by 19.5% after it announced quarterly profits that significantly exceeded analyst expectations, attributing this success to strong demand from customers enhancing their AI capabilities.
Marvell Technology had an outstanding day as well, with its stock jumping 32.5%—the largest increase since it started trading in 2000. This surge followed a remark from Nvidia CEO Jensen Huang at a conference in Taiwan, who suggested that Marvell could be on track to become “the next trillion-dollar company.” Marvell joins Micron Technology, another firm benefiting from the AI boom.
In another development, Generac’s stock increased by 5.7% after the company disclosed a deal to supply backup power generators to a major “hyperscale data center operator.” These hyperscalers are investing heavily to establish expansive AI data centers, which proponents believe will drive significant economic transformations.
Alphabet, the parent company of Google and a prominent player among hyperscalers, announced plans to raise $80 billion in cash by selling shares to fund its ambitious investment plans, projecting a total expenditure of nearly $190 billion in equipment and other investments this year. This figure is remarkable, surpassing the entire market capitalization of The Walt Disney Co. However, the substantial investments have triggered skepticism about whether AI can deliver the necessary profits and productivity, leading some to speculate about a potential bubble in AI investments. As a result, Alphabet’s stock fell by 3.9%, contributing to pressure on the S&P 500.
Overall, the S&P 500 closed up 9.82 points at 7,609.78, while the Dow Jones finished at 51,307.79 after a gain of 228.91 points. The Nasdaq composite’s slight uptick brought it to 27,093.90. Analysts suggest that the stock market could soon experience a slowdown, as the S&P 500 has enjoyed a robust nine-week winning streak, its longest since early 2023.
The recent market rally has been driven by solid earnings reports from U.S. companies, along with optimism surrounding a potential agreement between the U.S. and Iran to reopen the Strait of Hormuz, allowing oil to flow more freely and potentially lowering prices. In the oil market, prices rose again, with Brent crude oil climbing 1.1% to settle at $96.00 per barrel, still significantly higher than its pre-war price of around $70.
In the bond market, Treasury yields remained relatively stable. The yield on the 10-year Treasury dipped to 4.45% from 4.47% late on Monday, experiencing a brief spike following a report indicating that U.S. employers had listed significantly more job openings at the end of April than anticipated. This report is considered a positive indicator for the health of the U.S. labor market.
High yields globally have raised concerns about potential economic slowdowns and could impact stock prices and other investments. They have already pushed average long-term U.S. mortgage rates to their highest level in nine months, potentially restricting corporate borrowing for AI data center projects crucial to U.S. economic growth.
Internationally, stock indices across much of Europe and Asia reported gains, with Hong Kong’s Hang Seng index recording a remarkable 2.5% increase.
