AI spending stayed strong enough to keep the market moving forward
U.S. stocks traded unevenly on Thursday, but the broader takeaway was still constructive. The Dow Jones Industrial Average climbed more than 500 points, the S&P 500 pushed higher, and the Nasdaq Composite managed to recover after slipping earlier in the session.
The reason the market held together was simple: investors came into the day with fresh proof that the biggest technology companies are still spending aggressively on AI infrastructure. That helped offset a much noisier backdrop that included rising oil, hotter inflation readings, and lingering geopolitical tension.
Big Tech just gave the market a much bigger AI number to work with
The most important market driver was the latest read-through from mega-cap tech.
Results from Alphabet, Amazon, Meta, and Microsoft reinforced the view that AI capital spending is still accelerating. The combined outlook now points to roughly $725 billion in spending this year, up from earlier expectations closer to $670 billion.
That matters because the market is still looking for confirmation that the AI boom is not just talk. What investors got this week was evidence that the companies with the deepest pockets are still willing to spend huge amounts on data centers, chips, cloud capacity, and related infrastructure.
That keeps the core AI trade alive.
The market rewarded the theme, even if not every stock won
One of the more interesting parts of Thursday’s action was that the market liked the AI spending story more than it liked all of the individual stocks attached to it.
Alphabet rose after an earnings beat, but Amazon, Meta, and Microsoft came under pressure. That split matters because it shows investors are no longer rewarding all AI-linked names equally. They still believe in the theme, but they are getting more selective on valuation, margins, and how efficiently that spending may turn into returns.
That is a healthier market dynamic than blind buying, even if it creates more chop in the short term.
Nvidia slipped even as the AI case got stronger
One of the day’s biggest contradictions was Nvidia.
The company has been the clearest market proxy for the AI infrastructure boom, yet the stock fell sharply even after hyperscalers increased their spending outlook. That likely reflects two things happening at once:
- some investors are taking profits after a huge run
- others are starting to think more seriously about competition from in-house chips at Amazon and Google
That does not break the broader Nvidia story, but it does suggest the market is becoming more demanding. It now wants to know not only whether AI spending is rising, but also who captures the most value from it.
The U.S. economy is starting to look more like an AI economy
Another notable signal came from the GDP data.
The U.S. economy grew 2% in the first quarter. That was a little below expectations, but still a solid result given the broader macro noise. More importantly, business investment contributed more to growth than consumer spending, which is not the normal pattern in the U.S. economy.
That shift matters.
Consumer spending still matters enormously, but this quarter showed how much AI infrastructure investment and related capital expenditure are now supporting growth. Equipment spending, especially in technology and information processing, stayed firm. That reinforces the idea that AI is no longer just a stock-market narrative. It is starting to show up in the real economy.
Inflation stayed uncomfortable, even if the market looked past it
The macro data was not all friendly.
The latest PCE report showed headline inflation rose 0.7% in March and 3.5% year over year. Core readings were a little softer, but still firm enough to keep the inflation backdrop uncomfortable.
That matters because the market is trying to hold two ideas at once:
- AI-driven investment is helping growth
- inflation is still high enough to keep policy tight
That tension is one reason the session felt choppy even though the broader index picture ended up decent.
Labor data helped steady the growth story
On the more encouraging side, initial jobless claims came in at 189,000, better than expectations and lower than the prior week.
That matters because it suggests the labor market is still holding up. In a market worried about inflation, rates, and oil, a softer growth story would have made the setup much harder. Instead, investors got another sign that the economy is still absorbing higher costs and tighter conditions better than many expected.
That gave the market a reason to stay engaged rather than turning fully defensive.
Oil is still a problem the market has not solved
Even with the constructive AI backdrop, oil remains one of the market’s biggest sources of risk.
Prices surged early in the day after a report that President Trump is considering fresh military options against Iran. That pushed Brent crude back to its highest level since 2022. Even though equities ultimately held together, this kind of energy move still matters because it can quickly feed into inflation expectations and pressure margins across transport, consumer, and industrial sectors.
The market is coping with higher oil for now. It is not comfortable with it.
The Fed stayed steady, but the pressure has not gone away
The Federal Reserve held rates unchanged, as expected, and other central banks also stayed on hold.
That was not surprising. What matters more is that the combination of:
- still-firm inflation
- stronger oil
- and resilient labor data
does not give policymakers much room to sound easy. That is part of why investors are still so dependent on earnings and AI-driven growth to keep the market moving higher.
If the macro backdrop is not going to get friendlier, then corporate execution has to do more of the work.
Apple is now the next major test
With four major tech reports already out, the next spotlight turns to Apple.
That matters because Apple’s report helps round out the market’s read on whether the Magnificent Seven can keep carrying the tape. Investors will be looking not only at headline numbers, but also at any commentary around demand, margins, capital allocation, and how the company is thinking about AI in comparison with peers that are spending much more aggressively.
WSA Take
Thursday’s session showed that the market still wants to believe in the AI buildout, and for now it has enough evidence to keep doing so. The strongest support came from the sheer size of the spending outlook coming from the biggest tech players, and from the fact that business investment is now making a bigger contribution to growth than usual.
But this was not a clean risk-on day. Oil is still high, inflation is still sticky, and even core leaders like Nvidia are starting to face more selective scrutiny. The AI story is still carrying the market, but it is having to do more lifting than before.
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