Nasdaq 100 Surges 9.3% as AI Rally Adds $3.5 Trillion

Key Takeaways

• The Nasdaq 100 gained 9.3% across four trading sessions, adding an estimated $3.5 trillion in market capitalisation.
• Strong Amazon and Palantir earnings renewed confidence that artificial intelligence investment is generating measurable revenue growth.
• Technology stocks cooled on Wednesday as AMD, SpaceX and other high-growth companies faced renewed scrutiny over AI spending and valuations.

Nasdaq 100 Rally Adds $3.5 Trillion in Four Sessions

The Nasdaq 100 staged one of its strongest short-term advances of 2026 as investors returned to artificial intelligence stocks, semiconductor companies and cloud-computing businesses.

The technology-heavy index climbed from 27,192.31 on 29 July to 29,733.16 on 4 August, representing an increase of approximately 9.3% over four trading sessions. The move added an estimated $3.5 trillion to the combined market capitalisation of Nasdaq 100 companies.

The rally gathered momentum on Tuesday, when the Nasdaq Composite advanced 2.6%. The S&P 500 rose 1.8% to its first record closing high in more than two months, while the Dow Jones Industrial Average gained 1.7% and finished above 54,000 for the first time.

The scale and speed of the advance reflected a sharp change in investor sentiment. Technology stocks had previously faced pressure from high valuations, profit-taking and concerns that the enormous sums committed to AI infrastructure would take years to generate returns.

Recent earnings have begun to challenge that cautious narrative. Stronger cloud growth, expanding AI-related revenue and rising corporate demand for computing capacity encouraged investors to return to some of the market’s largest technology companies.

Amazon and Palantir Earnings Strengthen the AI Growth Case

Amazon’s second-quarter results provided one of the clearest signals that AI demand is supporting cloud revenue and profitability.

Amazon reported net sales of $200.6 billion, up 20% from the previous year, while operating income increased 43% to $27.5 billion. Amazon Web Services revenue rose 37% to $42.2 billion, marking the division’s fastest growth in 18 quarters. AWS operating income reached $16.6 billion, up from $10.2 billion a year earlier.

The figures suggest that demand for AI training, inference, specialised chips and cloud infrastructure is becoming a meaningful source of growth. Amazon said both its AI and semiconductor businesses had exceeded annual revenue run rates of $25 billion.

Amazon shares reached a record high on Monday and briefly lifted the company’s market value above $3 trillion. The stock pulled back more than 2% on Tuesday after a regulatory filing showed that founder Jeff Bezos planned to sell 15 million shares, but the decline did little to reverse the broader enthusiasm surrounding AWS.

Palantir delivered an even more dramatic post-earnings reaction. Its shares surged 29.5% on Tuesday after the AI software company reported second-quarter revenue of $1.94 billion, an increase of 93% year on year.

US commercial revenue jumped 149% to $764 million, while US government revenue increased 90% to $809 million. Palantir also raised its full-year revenue forecast to between $8.15 billion and $8.16 billion, strengthening expectations that corporate and government AI adoption will remain strong.

Semiconductor Stocks Lead the Broader Technology Surge

The Nasdaq 100 rally was not limited to mega-cap cloud and software companies. Semiconductor and memory stocks recorded some of the market’s largest gains as traders anticipated continued spending on AI data centres.

The iShares Semiconductor ETF rose 6.8% on Tuesday, while the Roundhill Memory ETF gained 7.3%. Arm Holdings, Marvell Technology and SanDisk climbed between 11% and 17%, reflecting strong demand across processors, networking equipment and data-storage products.

Nvidia advanced 2.5%, adding further support to the Nasdaq and S&P 500. The company remains central to the AI investment cycle because its graphics processors are widely used to train and operate advanced AI models.

The chip rally also showed that investors are looking beyond individual AI applications. Rising cloud investment can benefit multiple parts of the supply chain, including memory manufacturers, data-centre equipment providers, networking companies, chip designers and semiconductor production businesses.

Microsoft, Alphabet, Amazon and Meta are expected to spend more than $750 billion collectively during 2026 on AI infrastructure, with expenditure potentially exceeding $1 trillion in 2027. The market is therefore increasingly focused on whether this investment produces faster cloud growth, higher margins and sustainable demand for computing capacity.

Tech Stocks Cool After the Four-Day Surge

The Nasdaq rally paused on Wednesday as investors took profits and reassessed the financial demands of the AI investment cycle.

The Nasdaq Composite declined 0.83% to 26,363.44, ending a four-session winning streak. The S&P 500 slipped 0.17% to 7,723.52, while the Dow gained 0.49% to a record 54,349.06.

AMD dropped 7% even though the company delivered record quarterly revenue and issued an outlook supported by AI demand. The negative response highlighted the exceptionally high expectations already reflected in semiconductor valuations.

SpaceX fell 13.6% after its first quarterly report as a public company revealed sharply higher spending on artificial intelligence and data-centre infrastructure. The company reported strong revenue growth, but investors questioned how long it could maintain its current investment rate while remaining heavily dependent on capital spending.

Alphabet and Microsoft also declined, contributing to the Nasdaq pullback. The mixed session suggested that investors are beginning to distinguish between companies demonstrating immediate AI-driven earnings growth and those requiring extended periods of investment before returns become visible.

Conclusion

The Nasdaq 100’s $3.5 trillion advance demonstrates how quickly market sentiment can shift when earnings support the artificial intelligence growth narrative. Amazon’s accelerating AWS business, Palantir’s 93% revenue growth and a powerful semiconductor rebound helped transform AI investment from a spending concern into a potential source of expanding revenue and profit.

However, Wednesday’s pullback showed that expectations remain demanding. Companies reporting strong results can still face sharp declines if their guidance, margins or capital expenditure fail to exceed forecasts.

Attention will now turn to upcoming technology earnings, US employment data and the Federal Reserve’s September policy decision. These events could determine whether the Nasdaq 100 rally develops into a sustained move or gives way to further profit-taking after its rapid four-day surge.