AI Trade Roars Back — AMD Surges 7%, Broadcom Gains 5%; Tesla Pops After Hours as S&P 500 Rallies 1%

The AI trade came roaring back to life on Wednesday, powering the Nasdaq to its strongest session in over a week and lifting the S&P 500 above the 7,100 level for the first time since mid-April. Semiconductor heavyweights AMD and Broadcom led the charge, surging 6.7% and 5.1% respectively, as a JPMorgan research note flagged investor appetite for artificial intelligence equities at levels “not seen since the first half of 2025.”

The session was a decisive reversal of Tuesday’s defensive tone, which had been weighed down by Apple’s Tim Cook retirement bombshell and a rout in defense contractors. Technology was the clear alpha sector on Wednesday, gaining 2.2% while real estate and industrials lagged. Apple itself staged a notable 2.6% bounce, suggesting the market has largely digested the Cook succession news.

But the real fireworks came after the closing bell. Tesla jumped roughly 3.3% in extended trading following its quarterly earnings release, while Texas Instruments surged 7.6% on a semiconductor demand beat. The mood turned decisively sour for enterprise software, however, as ServiceNow cratered 13.1% on a revenue miss and IBM dropped 6.7% on disappointing cloud growth figures. The after-hours tape underscored a deepening divergence within the tech sector: hardware and chips are thriving on the AI infrastructure build-out, while some software names are struggling to monetize it.

Closing Scoreboard

What Happened

Wednesday’s rally was driven by a single, dominant theme: the artificial intelligence trade is back — and it’s back with conviction. JPMorgan’s quantitative research team published a note flagging that the “level of investor interest in AI-linked equities has reached a pitch not seen since the first half of 2025,” when the initial wave of generative AI enthusiasm swept through Wall Street. Since April 7, the Nasdaq 100 has ripped 9.4% higher while the S&P 500 has gained 6.8%. Roughly two-thirds of AI-linked stocks have outperformed the broader market over that stretch.

The catalyst that reignited the frenzy was Anthropic’s Mythos model launch, which has been described as a “GPT-4 moment” for enterprise AI adoption. Amazon poured another $25 billion into Anthropic this week — bringing its total commitment to $33 billion — while Anthropic committed $100 billion in cloud spend on AWS over the next decade. That kind of real capital expenditure is exactly what investors want to see: not just hype, but infrastructure-level commitment that flows directly to chip makers and hardware providers.

Apple bounced 2.6% after Tuesday’s 2.5% sell-off on Tim Cook’s retirement announcement. The recovery suggests the market views the succession plan — with COO Jeff Williams expected to step up — as orderly rather than disruptive. Meanwhile, defense contractors continued to bleed: GE Aerospace fell another 3.6% and RTX shed 3.3%, extending a sector rout that began after RTX’s “beat-and-raise” quarter was met with aggressive profit-taking on Tuesday.

The day’s most spectacular price action belonged to Avis Budget Group, which plunged 37.8% after a multi-day short squeeze that had sent shares up more than 500% collapsed under its own weight. The reversal was a reminder that technical dislocations, however violent on the way up, tend to mean-revert just as sharply.

Mega-Cap & Key Movers

Sector Breakdown

Technology was the runaway leader, gaining 2.2% on the AI trade resurgence. Energy rode Brent crude’s 2.9% surge above $101 to post the second-best sector return at +1.2%. The defensive trio of utilities, real estate, and industrials lagged as money rotated aggressively into growth. Real estate’s 0.7% decline reflected continued sensitivity to rate expectations; the 10-year yield edged higher to 4.28%, keeping pressure on rate-sensitive sectors.

Global Markets

Asia-Pacific

The standout performer was South Korea’s KOSPI, which surged to a fresh all-time high and is now up an extraordinary 48% year-to-date — making it one of the best-performing major indexes globally. The rally has been fueled by Samsung’s AI chip pivot and a weaker won that has juiced export competitiveness. Japan’s Nikkei 225 gained 0.8% to 38,420, supported by semiconductor strength and a softer yen. Hong Kong’s Hang Seng edged up 0.3%, while the Shanghai Composite was roughly flat as investors awaited clarity on the next round of stimulus measures from Beijing.

Europe

European equities closed modestly higher, with the pan-European Stoxx 600 gaining 0.4%. Germany’s DAX rose 0.6%, led by SAP and Infineon on the global tech tailwind. The FTSE 100 added 0.3% despite a firmer pound weighing on exporters. Deutsche Telekom drew attention after reports that the German telecommunications giant is exploring a full combination with T-Mobile US, a deal that would create one of the world’s largest telecom operators.

Fixed Income & Commodities

The Treasury market was relatively subdued given the equity rally. The 10-year yield ticked up 2 basis points to 4.28% while the 2-year edged to 3.74%, keeping the 2s/10s spread at a healthy +54 basis points. The mild move higher in yields reflected the risk-on mood — some capital rotating out of Treasuries and into equities — rather than any fundamental shift in rate expectations. Fed funds futures continued to price roughly 50 basis points of cuts by year-end, with the first expected in September.

Gold climbed 0.8% to $4,758 per ounce, extending its remarkable 2026 rally. The yellow metal continues to benefit from a trifecta of tailwinds: persistent geopolitical uncertainty in the Middle East, central bank purchases (particularly from China and India), and lingering doubts about U.S. fiscal discipline. Bitcoin surged 4.1% to $78,748, riding the broader risk-on wave and benefiting from increased institutional flows into spot ETFs.

The dollar firmed modestly, with the DXY index edging up to 99.85. EUR/USD slipped 0.3% to $1.1706 as the euro gave back some of its recent gains. The dollar’s bounce was shallow, however, and the greenback remains near multi-year lows — a structural headwind that continues to support commodity prices and emerging market assets.

Corporate News

SpaceX-Cursor Deal & Bezos’s Project Prometheus

Two mega-deals dominated corporate headlines. SpaceX reportedly signed an agreement to acquire AI coding startup Cursor for approximately $60 billion, underscoring the space company’s ambition to build AI-native engineering tools ahead of its closely watched IPO. Separately, Jeff Bezos’s Project Prometheus — a “physical AI” manufacturing venture — raised $10 billion at a $38 billion valuation, with JPMorgan and Blackstone anchoring the round. The deal signals growing investor appetite for AI applications beyond software and into real-world manufacturing and robotics.

United Airlines Slashes Forecast

United Airlines beat Q1 estimates but slashed its full-year guidance, citing surging jet fuel costs driven by the Iran-Hormuz oil price spike. Shares tumbled 5.6%. The warning reverberated across the airline sector and raised fresh questions about how sustained oil above $90 will erode consumer-facing margins. Separately, President Trump came out against the rumored United Airlines–American Airlines merger, calling it “bad for competition.”

Kevin Warsh Fed Confirmation Hearing

Kevin Warsh, President Trump’s nominee to lead the Federal Reserve, appeared before the Senate Banking Committee. The hearing was contentious — Democrats described Warsh as a “sock puppet” who would undermine Fed independence — but confirmation is widely expected given the Republican majority. Warsh, a former Fed governor who famously opposed quantitative easing as “reverse Robin Hood,” is expected to steer monetary policy toward a more hawkish posture once confirmed.

Other Headlines

• 3M beat Q1 estimates and reaffirmed its full-year forecast, but shares fell 1.8% on muted forward guidance commentary.
• Capital One missed Q1 EPS estimates and boosted loan-loss provisions, reflecting consumer stress from higher gasoline prices. Shares slid 1.5%.
• Meta reportedly plans to track employee mouse movements to train AI models, drawing scrutiny from privacy advocates and labor groups.
• Anthropic’s Mythos model was reportedly accessed by unauthorized users in a security breach, though the company said no customer data was compromised.

Economic Data

The economic calendar took a back seat to earnings on Wednesday. MBA Mortgage Applications rose 1.2% for the week, a modest improvement but still well below levels consistent with a healthy housing market given 30-year rates hovering near 7.1%. Markets largely shrugged off the data, with all eyes on the after-hours earnings deluge and Thursday’s initial jobless claims and existing home sales reports.

After-Hours Movers

The after-hours session delivered a stark split between semiconductor strength and software weakness, setting up a potentially volatile open on Thursday.

Texas Instruments was the standout, with its results confirming that the semiconductor upcycle has legs beyond just AI-specific chips. TXN’s strength in analog and embedded processing suggests broad-based industrial and automotive demand is recovering — a positive read-through for the entire chip complex. Tesla’s after-hours pop was more relief than euphoria; the stock had been flat during the regular session as traders hedged ahead of the print.

The ServiceNow implosion is more concerning. A 13% after-hours decline for a stock that had been a market darling raises questions about whether enterprise IT budgets are tightening as CFOs prioritize AI infrastructure spending over existing software subscriptions. IBM’s 6.7% drop tells a similar story: legacy tech names that can’t demonstrate clear AI monetization are being punished.

The AlphaEdge Take

Today’s session confirmed what we’ve been watching since the Anthropic Mythos launch: the AI trade is not a one-week wonder. The breadth of participation — AMD, Broadcom, Nvidia, Amazon, Microsoft — and the caliber of institutional capital flowing in (JPMorgan’s note was not a retail-driven call) suggest this rally has fundamental underpinning, not just momentum chasing. The Nasdaq is up 9.4% from its April 7 low, and the tape looks like it wants to go higher.

The after-hours action, however, injects an important note of caution. The market is drawing a bright line between AI winners and AI spectators. Texas Instruments and Tesla represent the hardware-and-infrastructure beneficiaries; ServiceNow and IBM represent the software incumbents that haven’t yet proven they can translate the AI wave into revenue growth. Thursday’s open will be a critical test: if the S&P 500 can absorb ServiceNow’s 13% drop and IBM’s 7% slide without giving back today’s gains, the bull case strengthens meaningfully.

Geopolitically, the oil market remains the elephant in the room. Brent above $101 and the Brent-WTI spread widening to $9 are not signals you can ignore. Trump’s ceasefire extension was a net positive, but Iran’s Hormuz seizures demonstrate that the Iranian regime retains significant leverage over global energy flows. If Brent holds above $100 for another two weeks, expect more airline and consumer-facing downgrades — United Airlines’s guidance cut today was likely just the opening salvo.

For Thursday, the earnings calendar features Intel, Blackstone, American Airlines, and American Express. Intel will be the most consequential: after AMD’s monster day, any sign that Intel is gaining ground in AI accelerators could add fuel to the semiconductor fire. Keep a close eye on initial jobless claims and existing home sales for macro signals. Our base case is that the rally extends, but we’d use any pullback into the 7,050–7,080 zone on the S&P 500 as an opportunity to add risk.