Key Takeaways:
- AI chip stocks surged Tuesday, lifting the Nasdaq 0.95% as investors weighed renewed artificial intelligence demand optimism against ongoing US-Iran diplomatic uncertainty.
Key Takeaways:

AI chip stocks surged Tuesday, lifting the Nasdaq 0.95% as investors weighed renewed artificial intelligence demand optimism against ongoing US-Iran diplomatic uncertainty.
US stocks rose Tuesday, with the Nasdaq Composite climbing 0.95% as AI semiconductor stocks rallied while US-Iran geopolitical tensions persisted. The Dow Jones Industrial Average added 92 points, or 0.18%, while the S&P 500 gained 0.54%.
"Investors still appear willing to buy dips on the assumption that the conflict ultimately de-escalates," Daniela Hathorn, senior market analyst at Capital.com, said.
Semiconductor stocks led gains, with Marvell Technology rising 9% and Micron Technology climbing 12%. Eli Lilly shares advanced after the company announced agreements to acquire three vaccine developers in deals valued at up to nearly $4 billion combined. Pony AI surged 4% after revealing plans to expand its robotaxi fleet. On the geopolitical front, Iran's Tasnim news agency reported that Tehran is seeking the release of $24 billion in frozen Iranian funds as part of ongoing negotiations with the United States. US Secretary of State Marco Rubio said the talks could "take a few days," while President Donald Trump stated on Truth Social that negotiations were "going nicely." Oil markets reacted but remained contained, with Brent crude trading under $100 a barrel and West Texas Intermediate around $92.
The rally comes as first-quarter S&P 500 earnings growth reached 29% year-over-year, according to LSEG data, well above the 16.1% estimate from a month ago. The Dow hit a record high last week, becoming the final major US index to surpass its pre-conflict peak. Markets now face a key test with consumer confidence data due later Tuesday, which will offer insight into how rising gasoline prices and geopolitical uncertainty are affecting household sentiment. The Federal Reserve, now led by newly sworn-in Chair Kevin Warsh, faces growing pressure to balance inflation concerns against growth risks, with CME FedWatch data showing an 8.5% probability of a rate hike in July, up from less than 1% a month ago.
The advance was concentrated in technology and semiconductor names, which drove the bulk of gains while energy stocks tracked oil prices higher. The broader market's resilience, despite the US conducting what it described as "self-defense" strikes in southern Iran early Tuesday, showed the degree to which AI-related growth expectations have become the dominant narrative for equity investors.
The US-Iran dynamic remains the key risk factor. US Central Command spokesperson Tim Hawkins said the strikes targeted missile launch sites and Iranian boats allegedly attempting to place mines in the Strait of Hormuz, a critical global energy transit route. Global investors are assessing whether diplomatic efforts can restore shipping stability through the strait without triggering a broader supply disruption.
This article is for informational purposes only and does not constitute investment advice.