S&P 500, Nasdaq Hit Records as AI, Chip Stocks Rally

The S&P 500 rose 0.62% to a record close of 7,519.47 and the Nasdaq gained 1.18% to 26,655.89 on Tuesday as AI and semiconductor stocks pushed major technology indexes higher. The Dow Jones Industrial Average slipped about 107 points to 50,473.10 amid tensions with Iran.

Trading resumed after the Memorial Day holiday, with both the S&P and Nasdaq touching fresh intraday highs. The Dow lagged as a narrower set of industrial components offered less exposure to AI and chip-related gains.

Investors bought shares of companies tied to artificial intelligence infrastructure and advanced computing, betting higher capital spending by cloud and data center operators will support sector earnings. Data from LSEG shows expectations for first-quarter earnings growth rose to roughly 29% year-over-year, compared with about 16.1% a month earlier.

Memory and storage stocks led the advance. Micron Technology surged after UBS raised its price target to $1,625 from $535, pushing Micron’s market value above $1 trillion for the first time. Seagate Technology climbed about 4% and Western Digital rose roughly 8%. The Roundhill Memory ETF jumped about 14% to a record high.

Other chip names also advanced. Qualcomm moved higher after reports it reached an agreement to supply chips to TikTok owner ByteDance, and Marvell Technology gained as demand expectations for AI hardware strengthened. The Philadelphia Semiconductor Index reached an all-time high.

Geopolitical developments influenced sentiment. U.S. officials described American forces carrying out what they called self-defense strikes in southern Iran targeting missile launch sites and boats alleged to be placing mines. President Donald Trump described talks with Iran as ‘proceeding nicely’ and warned the United States could act further if negotiations fail. U.S. Secretary of State Marco Rubio estimated a potential agreement could ‘take a few days.’ Iran’s Tasnim news agency reported Tehran is seeking the release of $24 billion in frozen overseas funds.

Oil prices reacted to the flare-up. Brent crude rose about 4% to near $99.58 a barrel and West Texas Intermediate traded around $93.89 a barrel.

Ron Albahary, chief investment officer at LNW, called the market a ‘tug of war’ and said investors were ‘pathologically optimistic’ that the conflict will end soon while noting the broader economy remains ‘still relatively fragile.’

Traders will weigh rising optimism about AI-driven capital spending and upgraded earnings forecasts against ongoing uncertainty from the Iran conflict and other macroeconomic risks.