AI Trade Reignites Risk Appetite as Big Tech Rallies; Alphabet, Tesla, Broadcom Lead Gains
Wall Street’s tech complex surged as AI optimism and revived rate-cut bets powered a broad risk-on session, lifting the Nasdaq about 2.6% and the S&P 500 roughly 1.6%. Alphabet advanced around 5% on fresh Gemini 3 momentum, while Tesla and Broadcom outperformed amid aggressive buying in high-beta AI proxies.
Big Tech Leads as AI Spend Meets Rate-Cut Hopes The latest leg higher in megacap tech came as investors rotated back into AI narratives and growth duration, with monetary policy expectations stabilizing in favor of a potential dovish tilt later this year. Liquidity flows favored large-cap tech and semiconductor bellwethers, bolstering overall risk appetite and compressing FX volatility.
Meta Platforms gained about 3.5%, though shares remain 22.3% below the 52-week high as investors debate the margin trajectory amid heavy AI infrastructure spend. Amazon added roughly 2.7% but faced a fresh “Neutral” call as doubts linger over the speed of AWS reacceleration and near-term AI return on investment. Both names are still off recent peaks, with Amazon down about 10.9% from its highs.
Alphabet Advances on Gemini Update; Google Steps Deeper Into Chips Alphabet’s latest AI update around Gemini 3 helped extend gains across the complex. Separately, The Information reported Google is pushing further into custom AI chips, intensifying competition with Nvidia in the high-performance computing stack. The move underscores evolving market positioning in AI infrastructure, where hyperscalers are diversifying away from single-vendor dependencies to manage cost, performance, and supply-chain risk.
Semis and AI Adjacencies Outperform Broadcom rallied by double digits—up roughly 11% intraday—as investors leaned into names tied to data-center demand, networking, and accelerator supply. Tesla rose around 7%, buoyed by AI-linked autonomy narratives and broader dip-buying. The session’s breadth favored AI-exposed software, chips, and platform names, with traders citing short-covering dynamics and improved liquidity as catalysts.
Crypto-Linked Tech Diverges: MicroStrategy Slumps In contrast to the AI-driven rally, MicroStrategy fell sharply from prior cycle highs and now sits about 67% below its peak. The company has paused additional Bitcoin purchases amid valuation pressure near 14-month lows, with traders flagging potential index rebalancing risks that could amplify outflows in a thin liquidity environment.
What to Watch Next – Margin discipline versus AI capex: For Meta and peers, the tug-of-war between AI investment and operating leverage remains central to multiple expansion. – AWS trajectory: Amazon’s cloud growth and AI monetization timeline will be key to sentiment stabilization. – Chip supply and pricing: Google’s in-house silicon push adds competitive tension to Nvidia’s dominance and could reshape data-center cost curves. – Policy backdrop: Softer inflation prints or weaker growth would bolster rate-cut odds, supporting long-duration tech valuations via lower discount rates.
Market Highlights – Nasdaq +2.6%, S&P 500 +1.6% as AI momentum meets rate-cut hopes – Alphabet up about 5% on Gemini 3 enthusiasm; Google deepens AI chip efforts – Meta +3.5%, still 22.3% below its 52-week high; margin trajectory in focus – Amazon +2.7%, downgraded to Neutral amid AWS and AI ROI concerns; ~10.9% off highs – Broadcom +11% and Tesla +7% as investors crowd into AI-exposed plays – MicroStrategy down 67% from peak; Bitcoin buying paused; index-flow risk cited
Quick Q&A Q: What primarily drove the latest rally in tech? A: Renewed AI optimism and improving rate-cut expectations boosted risk appetite, with flows favoring semis and megacap platforms leveraged to data-center and model deployment.
Q: Why is Amazon facing a Neutral call despite the rebound? A: Analysts remain cautious on the pace of AWS reacceleration and the near-term ROI from AI investments, which may cap multiple expansion until revenue traction is clearer.
Q: How does Google’s chip push affect Nvidia? A: It heightens competitive pressure at the accelerator layer, potentially diversifying demand and affecting pricing power, though Nvidia’s ecosystem and software moat remain significant.
Q: Why did MicroStrategy underperform amid the tech rally? A: The stock’s performance is tethered to Bitcoin sensitivity and valuation dynamics; the pause in BTC buys and potential index-related selling add to near-term downside risk.
This article was prepared for global investors by BPayNews’ markets desk.
