U.S. stock markets traded near all-time highs on Tuesday, but a sharp decline in Alphabet shares tempered gains from a continued rally in artificial-intelligence hardware stocks. The S&P 500 edged up 0.02% to 7,601.50, while the Nasdaq Composite added 0.07% to 27,105.89. The Dow Jones Industrial Average slipped 0.07% to 51,041.29, according to LSEG data.
Alphabet shares slid after the Google parent unveiled plans to raise $80 billion through equity offerings, including a $10 billion private placement to Berkshire Hathaway. The move is designed to fund the company's massive AI infrastructure expansion. Earlier in April, Alphabet raised its annual capital expenditure outlook to a range of $180 billion to $190 billion, underscoring the enormous investments required to stay competitive in the AI race.
“It confirms the insatiable demand that we’re seeing really across the board for AI,” said Ryan Detrick, chief market strategist at Carson Group. “Every day it seems like a different company comes out with incredible signs that this wave of AI is alive and well.”
Hewlett Packard Enterprise (HPE) surged after announcing that stronger demand for AI servers could allow it to reach its long-term financial goals two years ahead of schedule. If gains hold, HPE could add approximately $17 billion to its market capitalization. Dell and Super Micro Computer remain key benchmarks for traders monitoring AI server stocks.
“The biggest takeaway from the quarter was that HPE is benefiting from the same pricing dynamic that has recently driven upside at Dell – customers are absorbing materially higher server prices with little evidence of demand destruction,” Morgan Stanley analysts wrote. Piper Sandler called 2024 “the year of refresh” for enterprise IT gear, AI upgrades, and product updates.
Marvell Technology (MRVL) shares skyrocketed 22.5% to a record high, lifting its market cap to $234 billion, after Nvidia (NVDA) CEO Jensen Huang suggested at Computex in Taipei that Marvell could become the next “trillion-dollar company.” Nvidia shares also moved higher.
On the economic front, job openings jumped by 731,000 to 7.618 million at the end of April, the highest level since May 2024, according to the Bureau of Labor Statistics' JOLTS report. However, hiring dropped to 5.116 million, presenting a mixed picture of the labor market. Bulls saw the rise in openings as a sign the economy remains resilient, while bears pointed to soft hiring as evidence of caution among employers. Traders will closely watch the May payrolls report due Friday.
Federal Reserve rate risk remains in focus. Cleveland Fed President Beth Hammack said it could be time for the central bank to act “soon” if inflation does not ease. For now, she believes it is reasonable to keep rates unchanged. “Inflation is too high and is moving higher,” Hammack told Reuters.
Oil prices slipped, with Brent crude last down at $94.89 a barrel, while the U.S. 10-year Treasury yield held steady at 4.431%, keeping growth stocks under pressure. The core risk remains that if AI spending translates into dilution and increased debt rather than profits, Alphabet's decline could drag down other megacaps. Additionally, hotter inflation or a spike in energy prices from Middle East tensions could push the Federal Reserve toward a rate hike, threatening a market priced for strong earnings and loose liquidity.
