AI Stocks Gain Momentum as Nasdaq Approaches Record Highs Before Major Tech Earnings

Main Highlights

• The Nasdaq Composite neared an all-time high on Wednesday, fueled by a surge in semiconductor stocks after ASML Holdings, a major chip equipment supplier, posted impressive earnings.

• The last time the Nasdaq closed at a record was in late October, just before major tech companies released earnings that sparked renewed debate on Wall Street about the possibility of an AI-driven market bubble.

• Investors are eagerly awaiting updates from Microsoft and Meta, both set to announce their results after the market closes on Wednesday, hoping to see proof that their substantial AI investments are delivering results.

On Wednesday, the Nasdaq Composite came close to setting a new record as several earnings reports indicated that the rapid expansion of AI infrastructure is continuing, with more significant announcements expected soon.

The index opened with a 0.7% gain, reaching 23,986—its highest level since early November. The previous record close was 23,958.47 on October 29, just before tech sector earnings reignited concerns about an AI bubble and weighed on technology shares.

The renewed optimism this year stems from investors shifting their focus away from bubble fears and toward the strong performance of companies providing the technology behind AI advancements.

Why This Matters

Last year, the AI-driven rally pushed major stock indexes to new heights, but worries about excessive spending on AI infrastructure led to a pullback in tech stocks toward year-end. The Nasdaq has nearly recovered those losses, but upcoming earnings reports could reignite concerns about an AI bubble.

A shortage in memory and data storage components has boosted profits and share prices for chipmakers like Micron (MU), as well as storage device producers such as Sandisk (SNDK) and Western Digital (WDC). This scarcity, combined with strong demand for advanced chips, has also benefited equipment suppliers like Lam Research (LRCX) and Applied Materials (AMAT).

Earlier this month, Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chipmaker, reported record quarterly revenue and profits, announcing significant increases in infrastructure spending to keep up with soaring demand. The rally intensified on Wednesday after ASML Holdings (ASML) revealed record-breaking orders, as clients like TSMC accelerated their investments.

The benefits of the AI boom extend beyond chipmakers. Corning (GLW) shares surged 16% on Tuesday after the specialty glass manufacturer secured a $6 billion agreement to provide Meta (META) with fiber optic solutions for its data centers.

Looking Ahead: Challenges and Expectations

Some of Wednesday’s earnings releases highlight a key risk for the AI rally this season: sky-high expectations.

GE Vernova (GEV) shares fluctuated throughout the day, even after the energy technology firm raised its sales forecasts for 2026 and 2028 following a surge in orders last quarter. Meanwhile, Amphenol (APH)—a major supplier of data center technology—was the S&P 500’s worst performer, despite surpassing earnings and guidance estimates. Both companies had seen significant stock gains leading up to Wednesday, with Amphenol up 140% over the past year and GE Vernova rising more than 90%.

The next major test for the AI sector comes tonight, as Microsoft and Meta are set to report their quarterly results. Both firms previously announced plans to significantly ramp up AI infrastructure spending this year. Investors will be watching closely for updates on capital expenditures and, most importantly, for signs that Big Tech’s heavy investments in data centers are delivering tangible returns.