- The Nasdaq has pushed to fresh records as AI demand, chip stocks and falling oil prices offset concerns about inflation, interest rates and geopolitical risks.
The Nasdaq Composite closed at a record 27,244.28 on Tuesday, rising 0.45% and extending its recent advance as semiconductor and other AI-related stocks led the market higher. The Nasdaq-100 also reached a record close, gaining 0.67% to 30,687.94.
The rally is continuing to face a complicated backdrop. US stock futures were little changed Wednesday morning, while investors watched developments in the Middle East, falling crude prices and preparations for a meeting between US President Donald Trump and Chinese President Xi Jinping.
AI and semiconductor stocks remain the main engine
Artificial intelligence (AI) continues to be one of the biggest forces behind the Nasdaq's gains. Micron Technology (NASDAQ: MU) climbed 5% Tuesday, helping push the technology-heavy index to another record. SanDisk (NASDAQ: SNDK) gained 6.82%, while Advanced Micro Devices (NASDAQ: AMD) added 1.34%. AMD has now maintained a market capitalization above $1 trillion after becoming the fourth US chipmaker to reach that level.
The broader AI trade has remained resilient despite concerns that valuations have become stretched. Investors are still responding to strong demand for computing infrastructure and AI applications, while corporate earnings have provided additional support for technology shares.
Meta Platforms' AI assistant, Muse, has also become part of the market narrative. Its early reception has supported chip stocks, although investors are also examining whether AI agents could disrupt businesses such as retailers, payment networks and online platforms.
Falling oil prices are giving stocks another boost
Oil has become another important factor behind the latest move. Brent crude has fallen below $100 a barrel while West Texas Intermediate has moved below $90 as supply conditions in the Middle East improve. Saudi Arabia has restarted operations on its East-West Pipeline, providing an alternative route for crude exports and reducing some of the immediate pressure created by disruptions around the Strait of Hormuz.
Lower oil prices can ease some of the inflation pressure that has complicated the Federal Reserve's policy outlook. Treasury yields also moved lower alongside crude prices during Tuesday's session. This is important for technology stocks because higher interest rates generally increase the discount rate applied to future corporate earnings, making expensive growth stocks more sensitive to movements in Treasury yields.
The Fed remains a source of uncertainty
The Nasdaq's record comes despite a less certain interest-rate outlook. The Federal Reserve raised interest rates last week and signaled that inflation remains a concern. Markets are therefore balancing strong technology earnings and AI investment against the possibility that interest rates could remain elevated for longer. The 10-year Treasury yield remained close to 5% Tuesday, even after falling slightly with crude prices.
Trump-Xi meeting adds another market catalyst
Investors are also looking toward the expected meeting between Trump and Xi later this week. Xi is scheduled to visit Washington, with trade relations and AI regulation among the issues investors are watching. A continuation of the existing trade truce could reduce some uncertainty surrounding US-China relations, although no new agreement has been reached yet.
For technology companies, the discussions are particularly important because the US-China relationship affects tariffs, semiconductor restrictions, AI technology and supply chains.
Why the Nasdaq is still climbing
The current rally is being supported by several forces at the same time: continued enthusiasm for AI spending, strong semiconductor performance, resilient corporate earnings, declining oil prices and hopes for improved geopolitical conditions.
At the same time, elevated Treasury yields, persistent inflation risks and uncertainty surrounding US-China relations remain important counterweights.
For now, the Nasdaq's record reflects continued investor demand for technology and AI exposure despite those risks. Whether that momentum broadens beyond the leading technology and semiconductor names will be an important factor for the next stage of the market rally.