Wall Street hangs around its records as the AI boom keeps growing

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NEW YORK (AP) — The U.S. stock market is hanging around its records Tuesday as winners of the artificial-intelligence boom keep driving higher.

The S&P 500 rose 0.1 per cent a day after setting its latest all-time high. The Dow Jones Industrial Average was up 252 points, or 0.5 per cent, with an hour remaining in trading, and the Nasdaq composite was 0.1 per cent lower.

Hewlett Packard Enterprise helped lead the market, and its stock soared 17.1 per cent after it reported a profit for the latest quarter that blew past analysts’ expectations. It credited demand from customers building their artificial-intelligence capabilities.

Marvell Technology leaped 29.3 per cent toward its best day in three years after Nvidia’s CEO, Jensen Huang, suggested at a conference in Taiwan that Marvell could be “the next trillion-dollar company.” The last company to enter the expanding club of behemoths was Micron Technology, which is likewise riding the AI wave. Nvidia, which slipped 0.8 per cent, has seen its total value explode over US$5 trillion.

Generac climbed 6 per cent after saying it signed a deal to provide backup power generators to an unnamed “leading hyperscale data center operator.”

Such “hyperscalers” are spending tremendous amounts of money to build huge AI data centers, which are powering what proponents believe is the next great revolution for the global economy.

Alphabet is one of those hyperscalers, and the parent company of Google said it’s raising US$80 billion in cash to help pay for its investments by selling shares of its stock. It’s planning to spend as much as US$190 billion on equipment and other investments this year.

That’s more than all the stock of The Walt Disney Co. is worth, and Alphabet is forecasting its spending on investments next year will “significantly increase.”

Such huge sums raise the question about whether AI can produce the profits and productivity necessary to make all the investment worth it. Critics have already been talking about the possibility of a bubble in AI investment, and Alphabet’s stock fell 3.3 per cent. It was one of the heaviest weights on the S&P 500.

Analysts have been saying the broad U.S. stock market may be set for a slowdown following an unrelenting streak of nine straight winning weeks for the S&P 500, its longest since 2023. The rally has been largely due to strong profit reports from U.S. companies, as well as hopes that the United States and Iran will reach a deal to reopen the Strait of Hormuz. That would allow oil to flow freely again from the Persian Gulf and hopefully lower its price.

In the oil market, prices rose again to claw back more of last week’s slump. Brent crude oil, the international standard, climbed 1.1 per cent to settle at US$96.00 per barrel, and it’s still well above its roughly US$70 level from before the war.

In the bond market, Treasury yields were relatively steady.

The yield on the 10-year Treasury slipped to 4.45 per cent from 4.47 per cent late Monday. It briefly jumped after a report said that U.S. employers were advertising many more jobs at the end of April than economists expected, a potential signal of continued health for the U.S. labor market. But it quickly pulled back to where it was just before the report’s release.

High yields worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments. They have already forced the average long-term U.S. mortgage rate to its most expensive level in nine months, and they could curtail companies’ borrowing to build the AI data centers that have supported the U.S. economy’s growth  recently.

In stock markets abroad indexes rose across much of Europe and Asia.

Hong Kong’s Hang Seng jumped 2.5 per cent for one of the world’s biggest moves.

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Stan Choe, The Associated Press. AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.