Key Takeaways
- The Nasdaq gained 1.18% on Tuesday as AI-related shares helped lift major US stock indexes.
- South Korea’s KOSPI closed 6.63% higher after SK Hynix reported a sharp rise in quarterly operating profit.
- Microsoft and Alphabet earnings are expected to give investors more information about returns on AI spending.
- Concerns remain over whether technology companies can justify the cost of expanding their AI infrastructure.
Global stock markets moved higher as investors continued to buy technology shares linked to artificial intelligence, with gains on Wall Street carrying into Asian markets on Wednesday. The rally came as major technology companies prepared to report their quarterly results, putting attention on whether their spending on AI infrastructure is translating into stronger business performance.
In the United States, the Nasdaq Composite rose 1.18% on Tuesday, while the S&P 500 gained 0.6%. The Dow Jones Industrial Average edged up 0.03%. Several large technology companies advanced, helping the indexes finish higher even as investors continued to assess the costs and potential returns associated with AI development.
Asian markets followed the gains, with South Korea’s KOSPI recording a particularly strong advance. Results from chipmaker SK Hynix added to investor interest in companies supplying hardware for AI systems. Upcoming earnings from Microsoft, Alphabet and other technology firms are expected to provide further clues about demand and spending across the sector.
AI Stocks Lift Wall Street As Asian Markets Follow
AI-related stocks helped push US indexes higher on Tuesday, although the gains were not shared by every major technology company. The Nasdaq Composite rose 1.18%, the S&P 500 gained 0.6%, and the Dow Jones Industrial Average edged up 0.03%. Among major technology companies, Tesla rose 4.04%, while Amazon gained 1.61%. Apple advanced 0.93%, and Alphabet added 0.9%.
Nvidia rose almost 1% after announcing a $3 billion investment in Meta’s equity offering. Meta shares fell 1.64%, while Microsoft slipped 0.24%. Other companies linked to AI infrastructure also recorded gains. CoreWeave rose 7.94%, Western Digital advanced 6.95%, and Advanced Micro Devices gained 5.45%. Broadcom and Intel also finished higher.
The advances reflect continued investor interest in companies supplying the chips, storage and computing capacity needed to run AI services. However, rising share prices alone do not establish whether the money being invested in AI will generate sufficient returns over time. Asian markets followed Wall Street’s gains on Wednesday. South Korea’s KOSPI closed 6.63% higher, while Japan’s Nikkei 225 ended the session up 1.08%.
Taiwan’s TAIEX gained 2.04%, and Hong Kong’s Hang Seng Index was up 0.33% shortly before the market closed. SK Hynix was a major contributor to South Korea’s advance. The memory chipmaker reported third-quarter operating profit of 83.33 trillion won, equivalent to about $62.4 billion in Al Jazeera’s report. That represented an increase of roughly 630% from a year earlier, while its South Korea-listed shares rose 10.89% following the results.
Major Tech Earnings Put AI Spending Under Scrutiny
The market gains come as investors prepare for results from some of the world’s largest technology companies. Microsoft and Alphabet are scheduled to report on Wednesday, followed by Amazon on Thursday and Apple the following Monday. Their results could help investors judge whether AI-related spending is supporting revenue growth and business performance.
Companies have committed substantial sums to data centres, chips and other infrastructure, but the costs involved have also raised questions about how quickly those investments can generate returns.
The cost of expanding AI infrastructure is also raising questions about how companies are financing their plans. As firms borrow to build data centres and secure computing capacity, investors are paying closer attention to debt levels and the returns these investments may generate. Our recent report on AI-related debt risks examines growing demand for credit protection as concerns over AI companies’ borrowing and spending persist.
The latest rally does not remove those concerns. If earnings and company forecasts show that AI demand is translating into stronger revenue, investors may have more reason to support current valuations. If the results fall short of expectations, the same shares could face renewed pressure.
Investor discussions on Reddit reflect some of the same questions about AI valuations. In a discussion on Reddit, users discussed whether market movements were being driven more by expectations around AI than by company fundamentals, alongside concerns about borrowing costs and the wider economy.
