AlJazeera reports that US stocks have reached another record high as investors continue to pour money into companies linked to artificial intelligence. 

The S&P 500 rose 0.58% on Tuesday, pushing the benchmark index above its previous record, set in mid-August.

The Nasdaq Composite also reached a new high. The tech-heavy index gained 0.45% during the session.

The gains come despite several major risks facing the US economy. Oil prices remain high, US government debt is under pressure, and interest rates are elevated. 

Meanwhile, geopolitical tensions have added to concerns about energy supplies. Yet investors remain focused on one major theme: artificial intelligence.

AI 

AI has become one of the strongest forces behind the current US stock market rally.

Large technology companies are spending billions of dollars on data centers, chips, cloud computing, and AI systems.

Investors are betting that these huge investments will eventually produce strong profits.

Keith Lerner, chief investment officer and chief market strategist at Truist Advisory Services, described the current rally as a technology and AI surge.

“Every bull market has a dominant theme,” Lerner told Al Jazeera. He said technology and AI remain the dominant themes in the current market.

This is visible across different parts of the technology sector. Technology and communication services were the only two S&P 500 sectors to gain in September. 

The other nine sectors declined.

Big Tech

Amazon was the strongest performer among the Magnificent Seven; its shares climbed 1.95%. Microsoft gained 0.78%, while Tesla rose 0.51%.

Apple and Alphabet each gained 0.22%. Nvidia, one of the biggest beneficiaries of the AI boom, added 0.14%.

Meta was the only member of the group to finish lower. Its shares fell 0.41%.

Meta has still performed strongly in recent weeks. Its stock has gained more than 20% since the company launched its new AI assistant, Muse, last month.

Other technology companies also recorded gains. Marvell Technology climbed 5.81%, and Cisco rose 4.54%.

AI Infrastructure

The AI boom requires enormous amounts of computing power. That means companies need more data centers, advanced chips, networking equipment, and electricity. 

Major cloud and technology companies have responded with multibillion-dollar investments.

Investors are now trying to determine whether those investments will produce enough revenue and profit to justify their enormous cost.

Lochlan Halloway, a senior equity strategist at Morningstar Australia, said investors remain bullish on AI.

He said investors are betting that the money flowing into data centers will generate strong returns.

So far, that belief has outweighed several other concerns. Those concerns include higher interest rates, expensive oil, and a 10-year US government bond yield above 5%.

Economic Risks

The market’s rise is significant because it comes during a period of significant economic and geopolitical pressure.

Oil prices have remained elevated since the start of the war involving Iran. Higher energy prices can raise costs for businesses and consumers.

The US government bond market is also facing pressure. A sell-off has made yields higher as investors worry about the country’s growing debt. 

Higher bond yields can make stocks less attractive. They can also increase borrowing costs for companies.

Despite these challenges, investors have continued buying US shares. The S&P 500 is now up 14% in 2026. The Nasdaq has gained 18.78%.

If those gains hold, the S&P 500 is on track for another year of double-digit returns.

Narrow Market

A large part of the market’s strength is concentrated in a relatively small number of companies. That makes the wide market more dependent on the continued success of the AI story.

Halloway warned that the range of possible outcomes is wide. If AI investments produce strong profits, the current rally could continue. 

But if companies fail to generate enough returns from their massive AI spending, investor confidence could weaken.

That could put pressure on the technology companies that have driven much of the market’s recent growth.

The concentration also means that a sharp fall in a few major technology stocks could have a wider effect on the S&P 500 and other major indexes.

Higher Interest Rates

For now, rising interest rates may be the biggest threat to the market rally. Higher rates can make it more expensive for businesses to borrow money. 

They can also reduce the appeal of future earnings, particularly for fast-growing companies whose profits may come years down the road.

Lerner said he expects the market could continue rising through the end of 2026. Strong corporate earnings could provide additional support. 

Still, he does not expect markets to move upward in a straight line. Historical trends may also offer some support. 

Lerner noted that the fourth quarter of US midterm-election years has produced an average gain of 7% since 1950. The market has been positive during that period 84% of the time.

Past performance, however, does not guarantee future results.

Asian Markets

The optimism on Wall Street did not spread across Asia as major Asian markets fell during the session.

South Korea’s Kospi suffered the biggest decline among the major indexes mentioned in the report. It dropped 1.98%, and Japan’s Nikkei 225 fell 0.92%.

Hong Kong’s Hang Seng Index was down 0.57% shortly before the market closed. The different performances highlight the uneven nature of global markets. 

US investors remain heavily focused on the AI boom, while other markets are dealing with their own economic and geopolitical concerns.

Oil Prices 

Brent crude futures for December delivery reached $101.16 a barrel as of 07:30 GMT on Wednesday. That came to a 0.58% increase.

Traders were watching the fallout from fighting in Yemen between forces aligned with the country’s internationally recognised government and Iran-aligned Houthi forces.

Higher oil prices could create another challenge for the global economy. If energy costs remain high, inflation could become harder to control.

That could keep pressure on interest rates and make the market’s path forward more difficult.