Key Takeaways
- The Nasdaq Composite approached a fresh record high Wednesday as semiconductor stocks rallied following strong results from chip manufacturing equipment supplier ASML Holdings.
- The Nasdaq last closed at a record in late October, right before Big Tech earnings reports fueled debate on Wall Street about an AI bubble.
- Investors will be hoping to see evidence that massive AI investments are paying off when Microsoft and Meta report results after the bell Wednesday.
The Nasdaq Composite came within a hair’s breadth of a new high on Wednesday when several earnings reports suggested the AI infrastructure boom isn’t slowing down anytime soon—and with several more big ones right around the corner.
The Nasdaq jumped 0.7% at the open to trade at 23,986, its highest price since early November. (The index was about flat in recent trading.) Its last record closing high—23,958.47—came on Oct. 29, right before earnings reports from tech giants amplified the debate on Wall Street about an AI bubble, dragging on tech stocks.
Why are we back here? Because this year, investors have put those concerns aside to focus on the booming businesses of the companies supplying the technology that enables AI.
Why This Is Important
The AI rally lifted the major indexes to a series of record highs last year before concerns about overspending on AI infrastructure dragged on tech stocks in the final months of the year. The Nasdaq has almost recovered from those losses, but earnings reports on Wednesday evening could revive AI bubble worries.
A shortage of memory and data storage technology has boosted the earnings and shares of chip makers like Micron (MU) and storage device makers like Sandisk (SNDK) and Western Digital (WDC). That shortage—plus seemingly insatiable demand for advanced semiconductors—has also lifted the stocks of chip manufacturing equipment suppliers like Lam Research (LRCX) and Applied Materials (AMAT).
Chip stocks were buoyed earlier this month when Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chip manufacturer, reported record quarterly revenue and earnings and said it was dramatically increasing its infrastructure investments to meet booming demand. The rally gained momentum Wednesday after ASML Holdings (ASML), a supplier of chipmaking equipment, reported record quarterly orders as customers like TSMC ramped up their investments.
It isn’t just chipmakers that are reaping the benefits of the AI boom. Shares of Corning (GLW) soared 16% on Tuesday after the specialty glass maker struck a $6 billion deal to supply Meta (META) with fiber optic technology for its data centers.
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A few of Wednesday’s earnings reports hint at one of the biggest risks facing the AI rally this earnings season: high expectations.
Shares of GE Vernova (GEV) swung between gains and losses on Wednesday despite the energy tech company raising its 2026 and 2028 sales outlooks following a surge in orders last quarter. Amphenol (APH) was the worst-performing stock in the S&P 500 even though the supplier of data center technology easily topped estimates with its results and guidance. Both stocks were flying high into Wednesday’s session, with Amphenol stock up 140% in the past year and GE Vernova rising more than 90%.
The AI rally’s next big test will come tonight. Microsoft and Meta report quarterly results after the bell, and both companies said in their October earnings reports that they planned to significantly increase their AI infrastructure investments this year. Investors will be eyeing capital expenditures for confirmation of that. Most vital to the AI trade, however, may be whether Big Tech can convince investors their data center spending is paying off.