Stocks Rise to Record as AMD Deal Powers AI Bets: Markets Wrap

(Bloomberg) — A rally in chipmakers sent stocks to all-time highs as Advanced Micro Devices Inc.’s deal with OpenAI added fuel to the artificial-intelligence frenzy that’s powered the bull market. Bonds fell. The dollar rose.

The renewed advance in equities drove the S&P 500 up for a seventh straight day – the longest winning streak since May. AMD soared about 30% after the AI infrastructure agreement. While fellow chipmaker Nvidia Corp. fell, a closely watched gauge of semiconductors jumped 4%.

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Monday’s deal is the latest big-budget data center agreement to be unveiled this year. It follows last month’s announcement that Nvidia was planning to invest as much as $100 billion in OpenAI, underscoring booming demand for tools like ChatGPT and the computing power needed to make them run.

“The animal spirits surrounding the AI phenomenon are getting yet another boost,” noted Matt Maley at Miller Tabak.

With that said, Maley added that it’s no surprise that issues like the US government shutdown are being mostly ignored by traders – unless that situation lasts for a very long time.

“As of now, the stock market is shrugging off the government shutdown, and is more focused on earnings optimism and the prospect of additional Federal Reserve rate cuts,” said Robert Edwards at Edwards Asset Management.

Long-term Treasuries underperformed, joining a similar trend through much of Europe and Asia amid growing fiscal concerns. Gold hit a record, nearing $4,000-an-ounce. Bitcoin also climbed to all-time highs. Oil gained as OPEC+ raised production by a modest amount.

For almost as long as the AI boom has been in full swing, there have been warnings of a speculative bubble that could rival the dot-com craze of the late 1990s that ended in a spectacular crash and a wave of bankruptcies.

There was some fear that an AI bubble had already popped in late January, when China’s DeepSeek upended the market with the release of a competitive AI model. But Silicon Valley remained largely undeterred. In the months that followed, tech companies redoubled their AI spending plans, and investors resumed cheering on these bets.

“When the tech bubble in the stock market inflated during 1999, we don’t recall as much chatter about a bubble as we are hearing today. From a contrarian perspective, it is comforting that there is a bubble in bubble fears,” said veteran Wall Street strategist Ed Yardeni.

The founder of Yardeni Research noted that the Google Search index for “AI bubble” rose to 100 on Oct. 2 from zero in mid-September.

“We are counting on another better-than-expected earnings reporting season for Q3 over the next few weeks to support the stock market’s rally to record highs,” Yardeni said. “In addition, we expect that the AI and cloud companies won’t disappoint either.”

US companies are set to enjoy a better-than-expected earnings season as a robust economy and a solid outlook for AI have left estimates looking too low, according to Goldman Sachs Group Inc. strategists led by David Kostin.

Morgan Stanley’s Michael Wilson is also among the more bullish forecasters on US earnings. The strategist said a potential return in inflation next year is poised to boost pricing power and corporate profits.

Solid earnings growth and extreme valuations are calling for further broadening of the global equity rally, Citigroup strategists led by Beata Manthey said.

“We’re in a self-fulfilling rally — earnings are strong and getting stronger, investors are shrugging off a lack of data, and even a government shutdown can’t shake their confidence,” said Mark Hackett at Nationwide. “And with half of the past decade’s returns typically coming in Q4, the main story right now is momentum.”

Deutsche Bank’s Parag Thatte wrote that aggregate equity positioning remains overweight but not stretched, although there are growing pockets of momentum chasing in large caps.

A multi-month winning streak in US stocks is poised to continue based on an equity indicator from Barclays Plc that correctly predicted September’s rally in the face of concern over seasonal weakness.

The Barclays Equity Timing Indicator, which analyzes 19 inputs like market internals, positioning and economic data to find inflection points in the market, implies an 82% chance that the S&P 500 will advance in the next two months, with an average gain of 4% during that time, based on data going back to 2015.

Corporate Highlights:

Tesla Inc. managed to pique the interests of investors with a series of social media posts that sent the carmaker’s shares higher. Apple Inc. faces an investigation in France over the use of voice recordings made with its assistant Siri. Advanced Micro Devices Inc. surged after the chipmaker signed a deal with OpenAI for AI infrastructure that could generate tens of billions of dollars in new revenue. Micron Technology Inc. climbed as Morgan Stanley upgraded the shares to overweight from equal-weight saying the chipmaker is headed for multiple quarters of double-digit price increases. The US Supreme Court declined a chance to open social media companies to lawsuits over content recommended by their algorithms, turning away an appeal that accused Meta Platforms Inc.’s Facebook of radicalizing a man who killed nine South Carolina churchgoers Boeing Co. is guiding suppliers that 737 Max output could reach a 42-jet monthly tempo as soon as this month, according to people familiar with its plans, highlighting growing optimism at the planemaker as it works to win approval for the move from US regulators. Fifth Third Bancorp agreed to buy Comerica Inc. for about $10.9 billion in stock, the largest US bank deal this year and a sign that the logjam blocking big mergers in the industry may have broken under the Trump administration’s deregulation efforts. Verizon Communications Inc. named Dan Schulman chief executive officer, replacing Hans Vestberg effective immediately. The US Supreme Court turned away an appeal by ticketing giant Live Nation Entertainment Inc. in a consumer antitrust suit, dealing a blow to the company’s effort to manage its antitrust woes by channeling cases into arbitration. Paramount Skydance Corp. officially announced that it’s acquiring the online news site the Free Press and putting founder Bari Weiss in the role of editor-in-chief of CBS News, a move likely to stir controversy inside and outside of the news organization. Tata Capital Ltd. started taking orders on Monday for an initial public offering that may raise as much as 155 billion rupees ($1.7 billion), India’s biggest listing this year, and putting the country’s hot IPO market on course for a record month. Nvidia Corp.’s major server production partner Hon Hai Precision Industry Co. reported 11% growth in quarterly sales, signaling healthy demand for the chips and servers needed to develop artificial intelligence. Some of the main moves in markets:

Stocks

The S&P 500 rose 0.4% as of 12 p.m. New York time The Nasdaq 100 rose 0.9% The Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 was little changed The MSCI World Index rose 0.3% Bloomberg Magnificent 7 Total Return Index rose 0.9% The Russell 2000 Index rose 0.9% Philadelphia Stock Exchange Semiconductor Index rose 4% AMD rose 29% Nvidia fell 0.5% Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.3% to $1.1705 The British pound was little changed at $1.3472 The Japanese yen fell 1.8% to 150.08 per dollar Cryptocurrencies

Bitcoin rose 2% to $125,207.34 Ether rose 4% to $4,679.55 Bonds

The yield on 10-year Treasuries advanced four basis points to 4.16% Germany’s 10-year yield advanced two basis points to 2.72% Britain’s 10-year yield advanced five basis points to 4.74% The yield on 2-year Treasuries advanced two basis points to 3.59% The yield on 30-year Treasuries advanced four basis points to 4.75% Commodities

West Texas Intermediate crude rose 1.4% to $61.71 a barrel Spot gold rose 2% to $3,962.53 an ounce ©2025 Bloomberg L.P.