The AI trade reached new heights on Wednesday as semiconductor earnings and positive news from China propelled US tech stocks to historic levels. The S&P 500 crossed the psychologically significant 7,000 threshold for the first time in history, while the Nasdaq 100 also hit a record high, driven primarily by surging AI chip stocks.
Nvidia led the rally, climbing more than 1% after Reuters reported that China had approved several large firms to purchase the company’s H200 AI chips. This development marks a significant shift in US-China tech relations and demonstrates continued strong demand for Nvidia’s advanced AI hardware.
The broader semiconductor sector experienced substantial gains following robust earnings guidance from international chip makers. ASML and SK Hynix both surged after issuing strong forecasts for 2026, sending ripples across the entire chips and semiconductors space. SK Hynix jumped 5%, while ASML and Intel both gained 4%. Other major players including Micron Technology (+3%), Taiwan Semiconductor Manufacturing (+1%), and Broadcom (+1%) all participated in the rally.
Market sentiment was further bolstered by anticipation of mega-cap tech earnings from companies at the center of the AI boom. Investors were awaiting results from Tesla, Meta, and Microsoft after the close, with Apple earnings expected Thursday. These companies represent the core of AI infrastructure and application development.
José Torres, senior economist at Interactive Brokers, noted that the risk-on attitude reflects investor confidence that earnings will exceed expectations. “The risk-on attitude on Wall Street, amid a lack of hesitation to lift exposures, is emblematic of participants believing that the prints will deliver beats and raises overall, pointing to an extended runway ahead for AI,” he explained.
The rally occurred as investors looked ahead to the Federal Reserve’s January rate decision, though markets aren’t expecting a rate cut. Instead, analysts believe strong earnings from AI-related companies will drive the next phase of the bull market, underscoring the central role of artificial intelligence in current market dynamics.
Key Quotes
The risk-on attitude on Wall Street, amid a lack of hesitation to lift exposures, is emblematic of participants believing that the prints will deliver beats and raises overall, pointing to an extended runway ahead for AI
José Torres, senior economist at Interactive Brokers, explained why investors are aggressively positioning ahead of tech earnings, highlighting market confidence in AI’s continued growth trajectory.
US stock indexes futures began Wednesday in bullish form. Wall Street loves a milestone, so there will be caps in the air if the S&P can maintain the 7,000 level it passed this morning
David Morrison, senior market analyst at Trade Nation, captured the celebratory mood as the S&P 500 achieved this historic threshold, driven largely by AI-related stocks.
Our Take
This rally represents a critical inflection point where AI transitions from narrative to numbers. The semiconductor sector’s strength, particularly with international players like ASML and SK Hynix providing robust 2026 guidance, suggests the AI infrastructure buildout is far from complete. China’s approval of Nvidia H200 purchases is particularly noteworthy—it indicates pragmatic recognition that AI development requires access to cutting-edge chips, potentially opening new revenue streams for US semiconductor firms despite geopolitical tensions. The market’s focus on upcoming earnings from Meta, Microsoft, and Tesla reveals investor expectations that AI investments are finally translating into measurable financial returns. If these companies deliver strong AI-driven results, it could validate the massive capital expenditures and justify current valuations, potentially fueling another leg higher in the AI trade.
Why This Matters
This market milestone underscores AI’s dominant role in driving equity valuations and investor sentiment in 2026. The S&P 500 breaking 7,000 isn’t just a numerical achievement—it represents sustained confidence in the AI infrastructure buildout and the monetization potential of artificial intelligence technologies.
The China approval for Nvidia’s H200 chips signals potential easing of tech tensions and validates the global demand for advanced AI hardware, which could have significant implications for semiconductor supply chains and international AI development. The strong guidance from ASML and SK Hynix suggests the AI chip boom has substantial runway ahead, contradicting concerns about potential oversupply or demand slowdown.
For businesses and investors, this rally demonstrates that AI remains the primary growth driver in technology markets. The anticipation surrounding earnings from Meta, Microsoft, and Tesla reflects expectations that AI investments are beginning to translate into tangible revenue and profit growth. This shift from speculative AI enthusiasm to earnings-driven validation could mark a new, more sustainable phase of the AI market cycle, with profound implications for capital allocation and business strategy across industries.
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Source: https://www.businessinsider.com/stock-market-today-sp500-nasdaq-record-high-chip-stocks-nvda-2026-1