AI Rally Puts Big Tech’s Spending Power on Trial

U.S. stock indexes climbed Tuesday as investors bet technology companies can turn the artificial intelligence boom into profits, even as the cost of building it kept raising questions. The Nasdaq Composite gained 1.18%, the S&P 500 rose 0.6% and the Dow Jones Industrial Average edged up 0.03%. Investors, executives and central banks set the market’s terms. The unresolved test is whether vast corporate spending will pay off.

The winners get the spotlight

Five of the “Magnificent Seven” technology stocks gained. Tesla led, up 4.04%; Amazon rose 1.61%, Apple gained 0.93% and Alphabet rose 0.9%. Nvidia, described as the world’s most valuable public company, climbed almost 1% after announcing a $3 billion investment in Meta’s equity offering. Meta fell 1.64%, while Microsoft declined 0.24%. CoreWeave gained 7.94%, Western Digital 6.95% and Advanced Micro Devices 5.45%.

Asian shares followed Wall Street higher. South Korea’s KOSPI closed up 6.63% after chipmaker SK Hynix reported third-quarter results. Its operating profit rose about 630% year-on-year to 83.33 trillion won; accounts reported the figure as $62.4 billion and $62.8 billion. Reuters said SK Hynix would return about $75 billion to shareholders this year. Its South Korean shares rose 10.89% in one report and more than 8% in another. Japan’s Nikkei 225 ended up 1.08%, Taiwan’s TAIEX rose 2.04%, and China’s CSI300 advanced 0.7%.

Dan Coatsworth, head of markets at AJ Bell in London, told Al Jazeera: “A rally in a host of AI-related stocks including neocloud group CoreWeave, data storage specialist Western Digital and IT solutions provider Super Micro Computing implies that investors aren't over the AI craze just yet.” He said these stocks “have become a litmus test for the mood of the market,” rising when “animal spirits are running high around the technological revolution.”

Who pays for the bet?

Investors awaited earnings from Alphabet and Microsoft after Wednesday’s market close, with Amazon due Thursday and Apple on Monday. The test is whether returns can justify the high cost of AI infrastructure. Nick Ferres, chief investment officer of Vantage Point Asset Management, said: “The equity market has been pricing it as a growth opportunity. The credit markets have started to price the financing risk.” Major companies appeared likely to confirm or affirm their spending, he said, and demand still looked reasonably strong, but “there's a question mark over the return on investment.” Financing markets, he added, had become more challenging for companies with weaker balance sheets.

Technology companies have invested hundreds of billions of dollars each in AI infrastructure. Gartner forecast global AI investment of $2.7 trillion in 2026 and $3.6 trillion in 2027. On Monday, Anthropic filed paperwork for a planned IPO and reported a net loss of $80.7 billion in the first half of 2026 on revenue of $16.3 billion. The figures lay out the market’s wager plainly: enormous spending and losses sit beside expectations of future returns.

A series of AI-related funding announcements from Meta, SpaceX and Broadcom during the week revived the AI trade, Reuters reported. Anthropic’s IPO filing supported it, too. Chris Brigati, SWBC’s chief investment officer, said: “Not all big tech stocks should be treated equally regarding future potential growth.” He added that expectations increasingly focused on “execution risk” and how much future success investors had already built into share prices. The speculative bubble before the 2000 dot-com crash hangs over the spending.

Markets and policymakers set the terms

Central bank decisions also shaped trading. The Bank of Canada was expected to raise rates, while the Federal Reserve was expected to hold them. Analysts at JPMorgan anticipated at least two hawkish dissents at the U.S. central bank. The Reserve Bank of New Zealand unexpectedly held its benchmark official cash rate at 2.75% in a narrow vote. The New Zealand dollar fell more than 1% to a session low of $0.5583.

Oil prices rose amid Middle East conflict. Reuters reported Brent futures up 1.4% to $115.47 a barrel and U.S. crude up 1.5% to $101.40 after an attack on a refinery in Saudi Arabia renewed supply concerns. Israel’s shekel weakened after exit polls indicated the country’s wartime election appeared deadlocked. Stock prices, credit costs and central-bank decisions filled the day’s reports; no grassroots response appeared in the accounts.