Stock Market Hits Record Highs as Tech Stocks Lead Rally on AI Earnings Surge
The S&P 500 and Nasdaq Composite closed at record levels on May 28 as technology stocks rallied on strong earnings guidance from cloud providers. The broader market momentum reflects investor confidence in AI adoption and a tentative ceasefire in the Middle East.
Market Milestones
The S&P 500 and Nasdaq Composite closed at records on Thursday as tech resumed its leadership, and traders weighed a reported agreement between U.S. and Iranian negotiators to extend the ceasefire. The broader index gained 0.58% to 7,563.63, while the Nasdaq Composite rose 0.91% to 26,917.47. Both indexes also hit intraday all-time highs.
Tech Earnings Drive Gains
Tech stocks rallied Thursday, after a strong earnings outlook from Snowflake revived enthusiasm around the AI trade. Shares soared 36.5%, posting its best day ever after the cloud-based data platform provider issued rosy fiscal second quarter guidance, as well as a beat on the top and bottom lines in its latest quarter. The company also inked a plan to spend $6 billion on Amazon Web Services over five years. This earnings surprise underscored sustained corporate commitment to artificial intelligence infrastructure spending.
Broader Market Concerns
Despite the record closes, strategists are sounding notes of caution. U.S. stocks may be running out of room after a relentless rally, according to Bank of America strategists, who are warning investors to start preparing for a summer pullback. "Risk-reward is deteriorating, and multiple indicators favor a more defensive stance," Bank of America strategists wrote in a note to clients. "Base case: maintain trend-following longs into June, prepare for summer correction."
Valuation Concerns
The "transformative impact of AI in the coming years and decades cannot be overstated, but the current valuations associated with many of the semiconductor stocks that are providing the compute infrastructure to make it all happen have gotten extremely frothy and way ahead of themselves," said Eric Parnell, chief market strategist at Great Valley Advisor Group. In 2026 alone, shares of Micron have more than tripled, as have Intel shares. Questions loom about whether current valuations can be justified by actual AI adoption rates and profitability.