Wednesday's market started strong, then gave back some of its early gains.
The Nasdaq 100 swung between gains and losses, and the Philadelphia Semiconductor Index dropped 1%. The market's recent advance has become tightly linked to technology investment, as Nvidia's climb, AMD's slip, and Sandisk's surge all reflect wagers on continued data-center outlays.
The biggest chip letdown of the day was Advanced Micro Devices.
The enthusiasm is reaching the talent market. Yann LeCun, who previously served as Meta's top AI scientist, is joining a venture firm that backs AI startups.
The earnings picture looks strong. The current reporting period has been a reminder of how central AI-related spending has become to corporate results, with chipmakers especially dependent on fresh signals about data-center investment.
Sandisk is the index's best performer this year, up 501% through Tuesday's close. It and Western Digital, the other memory-chip maker, both report after Wednesday's close.
The two memory-chip makers have contributed substantially to the index's 2026 gains. Sandisk is expected to post much stronger earnings and guide higher after Amazon and Microsoft pledged last week to continue investing heavily in AI infrastructure.
Eli Lilly added to the good news too, rising 2.2% after lifting its 2026 sales guidance. Appetite for weight-loss drugs hasn't faded.
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The one thing to watch is profit margins. Chris Senyek of Wolfe Research said the profit gains came from "the compounding effect of strong company fundamentals, aided by AI," but he wondered if margins have peaked. He still expected "continued expansion over the remainder of the year as the US economy remains strong."
Oil prices are calm. The Iranian foreign ministry said it and Oman had settled on coordinates for tanker transit in the Strait of Hormuz, with West Texas Intermediate crude near $76 a barrel.
President Trump said in Los Angeles on Tuesday evening that negotiations with Iran were, in his words, "moving along very nicely."
SpaceX shares fell 8% despite reporting above-forecast AI-related spending. That spending helped Nvidia, and Elon Musk also promoted his planned computing investments.
Investors have something bigger on their minds: $101 billion of stock becomes tradable Thursday.
Options pricing suggests SpaceX could swing more than 14% either way after earnings, a pattern typical of meme-stock behavior.
Greg Halter, research director at Carnegie Investment Counsel, said SpaceX "has reverberations across the whole economy," from data centers to space operations to rocket launches.
The Fed is in focus too. Neel Kashkari, who dissented when the Fed held rates steady last week, told CNBC that "the time has come to raise rates gradually."
He said he isn't looking for a large rate increase or a slower economy - just inflation back to 2%.
The bull case keeps getting support. Keith Lerner, chief investment officer at Truist Advisory Services, said "the weight of the evidence continues to support giving the bull market the benefit of the doubt," adding: "Earnings remain our north star, the economy continues to show resilience, market participation has broadened, and valuation excesses have largely been worked off."
The economy backs him up. US services activity held steady in July, with faster growth in new orders and a business activity gauge at a five-month high.
Professional money is lining up the same way. Citadel, Ken Griffin's flagship fund, gained 6% in July after buying a portfolio of AI stocks from the hedge fund Situational Awareness that Griffin's team viewed as underappreciated.
For your portfolio, the picture has two sides. Company earnings are beating expectations, the economy is still growing, and AI spending shows no signs of stopping.
But the Fed is preparing to raise rates, and some of the hottest stocks are priced for perfection after runs like Sandisk's 501% climb. That tension, more than any single headline, is likely to decide which way your portfolio swings in the months ahead.
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