Dow and S&P 500 Hit Records on AI Earnings: When Will the Bubble Burst?

Upbeat earnings from Caterpillar and Palantir Technologies (PLTR) drove the Dow Jones Industrial Average and S&P 500 to record closes on Tuesday, easing concerns over artificial intelligence (AI) spending.

The Dow gained 907 points, or 1.71%, to close at 54,091.42. The S&P 500 rose 1.79% to 7,736.52. The Nasdaq Composite jumped 2.59% to a record 26,584.99.

AI Earnings Beat the Street

Caterpillar raised its annual revenue growth forecast as AI data center construction drove demand for its power-generation equipment. Its stock jumped 5.6%, the single biggest boost to the Dow.

Palantir's blowout earnings drove an even bigger move. Shares climbed 29.5% after the company raised its own annual revenue forecast, marking its best single-day gain since February 2024.

Optimism extended well beyond those two stocks. Of the 304 S&P 500 companies that had reported second-quarter results, 85.2% beat estimates, versus a long-term average of 67.5%, according to Reuters.

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