US stocks climbed to an all-time high on Tuesday, but the rally’s fate now rests on a question of delivery: will the multibillion-dollar data centre buildout behind the AI boom actually earn a return?
The S&P 500 closed 0.58 percent higher, topping the previous peak set in mid-August. The Nasdaq Composite, more heavily weighted toward technology, also set a record, finishing up 0.45 percent. The S&P 500 has risen 14 percent so far in 2026, and the Nasdaq is up 18.78 percent, putting the market on track for a fourth consecutive year of double-digit returns.
The gains are concentrated in the companies building and supplying AI capacity. Every member of the “Magnificent Seven” except Meta closed higher. Amazon led with a 1.95 percent gain, followed by Microsoft, up 0.78 percent, and Tesla, up 0.51 percent. Apple and Alphabet each rose 0.22 percent, while Nvidia gained 0.14 percent. Meta, which has climbed more than 20 percent since launching its AI assistant, Muse, last month, fell 0.41 percent. Beyond the largest names, Marvell Technology rose 5.81 percent and Cisco gained 4.54 percent.
Keith Lerner, chief investment officer and chief market strategist at Truist Advisory Services in Atlanta, Georgia, framed the rally as a buildout story. “Every bull market has a dominant theme, and technology and AI remain this market’s dominant theme,” he told Al Jazeera. He noted that technology and communication services were the only two S&P 500 sectors to rise last month, while the other nine declined.
Meanwhile, the market has shrugged off a series of operational and economic headwinds, including an energy crunch tied to the US-Israel war on Iran and a sell-off in US government bonds driven partly by ballooning government debt. Investors, analysts say, are wagering that the money hyperscalers are pouring into data centres will earn a good return.
“Investors remain bullish on the prospects for AI,” said Lochlan Halloway, a senior equity strategist at Morningstar Australia. “They are betting that the money pouring into data centres will earn a good return, and so far, that belief has outweighed rising interest rates, more expensive oil and a 10-year bond yield above 5 percent.”
Execution risk remains central to the outlook, Halloway cautioned. “We are positive on AI too,” he said. “But the range of outcomes is wide, and the market is concentrated in a handful of companies, so the outlook for US shares, and by extension global shares, relies on the AI story continuing to deliver.”
Lerner said the rally could continue through the end of 2026, citing historical trends and expectations for strong corporate earnings, though he did not expect a straight line higher. The fourth quarter of US midterm-election years has produced an average gain of 7 percent and has been positive 84 percent of the time since 1950, he pointed out. Rising interest rates pose the biggest risk to the upward trend, but “on balance, the weight of the evidence suggests this bull market still has more upside potential.”
By contrast, the picture elsewhere was less buoyant. Asian markets fell on Wednesday, with the Kospi in Seoul leading the sell-off at 1.98 percent lower, Tokyo’s Nikkei 225 down 0.92 percent, and Hong Kong’s Hang Seng Index off 0.57 percent shortly before the close. Oil prices rose as traders weighed fighting in Yemen between forces aligned with Yemen’s internationally recognised government and the Iran-aligned Houthis. Brent crude futures for December delivery stood at $101.16 a barrel as of 07:30 GMT, up 0.58 percent.
Whether the data centres now under construction can convert record investment into actual returns is the open question hanging over the record highs.