U.S. stock markets held near record levels on Tuesday, with the Dow Jones Industrial Average edging up 49.34 points, or 0.10%, to 51,128.22 in late morning trading. The S&P 500 added 0.15% to 7,611.37, while the Nasdaq advanced 0.19% to 27,137.51. The modest gains came as investors weighed fresh enthusiasm for artificial intelligence against growing concerns about the cost of building out the sector's infrastructure.
AI Rally Splits Winners and Losers
The rally in AI stocks continued but showed a clear divide. Companies providing hardware and infrastructure for AI surged, while those bearing the heavy spending burden faced headwinds. Hewlett Packard Enterprise jumped 26% after accelerating its long-term financial targets by two years and reporting a 40% jump in quarterly revenue to $10.7 billion. The company's Cloud & AI revenue rose 22.9%, and CEO Antonio Neri cited "healthy demand" as customers "scale AI." HPE also raised its fiscal 2026 free cash flow target to at least $3.5 billion, underscoring its confidence in the AI boom.
Marvell Technology gained 22% after Nvidia CEO Jensen Huang called it the next "trillion dollar company," propelling the Philadelphia semiconductor index up 3%. Super Micro Computer added 5.6%, further boosting the AI hardware segment.
Alphabet's Billion Equity Sale Raises Dilution Concerns
Alphabet moved in the opposite direction, falling after announcing plans to raise $80 billion in equity—including a $10 billion private placement with Berkshire Hathaway—to fund AI infrastructure. Bill Stone, chief investment officer at Glenview Trust Company, noted that Berkshire's participation suggests Greg Abel saw a "reasonable return" potential. However, the share sale reintroduced dilution risk for existing investors, weighing on the stock.
Carson Group's chief market strategist Ryan Detrick described recent moves as proof of "insatiable" AI demand, offering some support to the broader market. Meanwhile, shares of Salesforce, ServiceNow, and Intuit slipped after bouncing back in prior sessions.
Job Openings Rise, But Hiring Slips
In economic data, the JOLTS report showed job openings climbed by 731,000 to 7.618 million in April, the highest since May 2024. However, hiring fell to 5.116 million. The data is closely watched by the Federal Reserve as it assesses labor demand and potential interest rate moves. A stronger labor market could make it harder for the Fed to justify rate cuts.
Market Context and Outlook
The Dow, composed of 30 major U.S. stocks with less tech weight than the Nasdaq, remains steady near its highs. The key question for investors is whether corporate earnings and AI investment can sustain the rally after a stretch of record levels. If Alphabet's capital raise becomes a model rather than a one-off, it could push investors to question whether AI will deliver returns for a sector that may require significantly more cash. Geopolitical tensions in the Middle East also hang over the market, with Thomas Martin, senior portfolio manager at GLOBALT, noting that investors "don't really know where things stand," which could lead to higher oil prices and inflation.
For now, the market shows no signs of investors giving up on AI—just that they are becoming more selective about which companies foot the bill and which ones see the profits.
