U.S. equities climbed higher Tuesday, with the Nasdaq Composite leading the charge as technology stocks rebounded on renewed artificial intelligence enthusiasm and a retreat in oil prices. The Dow Jones Industrial Average gained 0.51%, the S&P 500 added 0.67%, and the Nasdaq advanced 0.83% in morning trading, recapturing momentum after April's historic surge.
Chip Stocks Ignite
Intel surged 14.4% to $109.59 following reports that Apple held preliminary talks with both Intel and Samsung about main processor manufacturing, according to Reuters. The news rekindled hopes for Intel's foundry ambitions and lifted the entire semiconductor complex. Micron Technology jumped 10.6% to $637.80, crossing the $600 milestone, while SanDisk climbed 9.3% after reporting blockbuster quarterly results. Alphabet added 1.2%, and AMD gained 2.7% ahead of its after-hours earnings report.
SanDisk's Data Center Boom
SanDisk reported fiscal third-quarter revenue of $5.95 billion, a staggering 251% increase year-over-year, driven by a 645% surge in data center sales. The company forecast fourth-quarter revenue between $7.75 billion and $8.25 billion, citing robust enterprise demand for storage products powering AI data centers. CEO David Goeckeler called the quarter a "fundamental inflection point," highlighting the company's pivot toward higher-value markets. The strong outlook echoed similar reports from Western Digital and Seagate, underscoring a broad-based appetite for AI infrastructure.
Oil Eases, Tech Benefits
Falling crude prices provided additional relief to rate-sensitive technology names, whose lofty valuations depend on future earnings. Lower oil reduces inflationary pressures, giving the Federal Reserve more flexibility to hold or cut interest rates. This dynamic has been a key tailwind for growth stocks, which had been under pressure from rising energy costs earlier in the year.
April's Record Run
Tuesday's gains built on an already remarkable April. According to the Financial Times, U.S. stocks posted their strongest month since 2020, with the S&P 500 rising 10.4% and the Nasdaq Composite gaining 15.3%. The Philadelphia Semiconductor Index (SOX) soared 38.4%, led by Intel, SanDisk, Marvell, ON Semiconductor, and AMD. The Technology Select Sector SPDR Fund advanced 20% during the month.
Earnings Momentum
First-quarter earnings growth for the S&P 500 is expected to exceed 18%, according to LSEG data cited by Reuters. Jeff Buchbinder, chief equity strategist at LPL Financial, noted that "AI-driven spending will likely continue to do the heavy lifting" for earnings growth. However, the rally remains narrow, with high-multiple names like PayPal and Palantir showing that even earnings beats can disappoint if growth mix or guidance falls short.
Geopolitical Risks Loom
BlackRock Investment Institute warned that the Strait of Hormuz closure poses a significant risk. "Even U.S. equities won't be insulated" if the shipping artery remains blocked, the firm stated, cautioning that a prolonged oil surge would hurt the U.S. economy. For now, traders seem to bet that AI investment, chip demand, and improving profits can withstand higher oil and geopolitical shocks.
Outlook
With AMD set to report after the bell, investors will gauge whether AI hardware demand is broadening beyond top chip and memory players. The market's ability to sustain its rally will depend on earnings delivering on lofty expectations and geopolitical tensions not escalating further.
