Wall Street Soars: AI Hype Collides With Earnings Breakthrough

Tech stocks surge as artificial intelligence promises meet profit deliverables—proving even algorithms can't resist a good old-fashioned earnings beat.

Bulls charge ahead

Nasdaq rockets 3% as megacaps turn AI pipe dreams into concrete revenue streams. Suddenly those 'transformative' machine learning slideshows start looking credible with actual dollar signs attached.

Reality check

Analysts whisper the quiet part loud: Turns out monetizing LLMs works better when companies, you know, charge money for them. Who knew? (Besides every SaaS founder since 2012).

Wall Street's latest love affair proves even the shiniest tech needs to pass the oldest test: Show me the money. Bonus cynicism: Just wait for the 'AI-adjusted EBITDA' accounting tricks to roll in next quarter.

Traders are bidding up tech stocks ahead of key earnings reports. Notably, both Alphabet and Tesla will release their earnings on Wednesday, the first among the major tech giants this quarter. Strong results could validate the market’s optimism and high valuations.

Still, the market’s focus on the AI sector is increasingly drawing comparisons to the 1999 tech bubble. Torsten Slok, the chief economist at Apollo Global Management, stated that the AI bubble could be even worse than the dot-com bubble.

Torsten Slok: "The difference between the IT bubble in the 1990s and the AI bubble today is that the top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s" pic.twitter.com/OEervHU4WG

Slok explained that the top 10 companies in the S&P 500 are now more overvalued than they were in the 1990s. Specifically, he compared the P/E ratios of major firms such as Nvidia, Microsoft, and Apple, and found they were higher than at the absolute peak of the dot-com bubble.

EU readies response as trade war escalates

Moreover, traders remain concerned over U.S. trade policy, as tensions with the EU escalate. The European Union is preparing for a trade reprisal if it doesn’t get a deal with the U.S. “If they want war, they will get war,” WSJ quoted one German official referencing the trade negotiations.

This is a response to President Donald Trump’s escalating demands toward the EU and other trading partners. Earlier, TRUMP pushed for a 20% minimum tariff on EU goods, up from 15% proposed earlier. On the other hand, the EU aims to obtain a 10% baseline tariff, with special consideration for certain industries.