Artificial intelligence (AI) companies are driving market gains, with strong corporate earnings boosting investor confidence. More than half of the S&P 500 companies have reported their second-quarter earnings, and the results show a significant improvement in year-over-year growth to 9.8%. This is up from 5.8% estimated growth on July 1.
The strength of AI-driven earnings is particularly reassuring for investors, who had been cautious about the impact of tariffs and economic concerns. However, the earnings season has seen an unexpected turnaround, with many companies beating analyst expectations.
Analysts say that the results for AI names such as Microsoft, Meta Platforms, and Nvidia are heartening, and could propel the Dow to a fresh peak. The dominance of these companies in terms of market capitalization is also seen as a positive factor for the overall market.
While some analysts warn that short-term volatility is expected, particularly in August and September, they see AI-driven earnings as a buying opportunity, especially in mega-cap technology names.
Source: https://www.reuters.com/business/wall-st-week-ahead-ai-gains-strong-earnings-support-wall-street-tariff-woes-2025-08-01