AI-related Stocks Fuel S&P 500, Nasdaq, and Kospi to Record Heights: Evaluating Market Valuations

Technology Stocks Surge on AI Optimism and Aggressive Capital Spending

Technology stocks across the US and Asia have witnessed a strong rally, driven by sustained optimism around artificial intelligence (AI) and aggressive capital spending by global tech giants. The shares of chipmakers have led the gains, with AMD rising 4.02% and surging over 16% in extended trading ahead of its quarterly results on Tuesday.

Intel shares jumped 13%, and Apple stock price also advanced 2.64%, reflecting broader strength in AI-linked names. The rally in semiconductor stocks pushed the Philadelphia Semiconductor Index up 4.2% to a record high, with the index now gaining 55% so far in 2026.

Market Performance

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Broader markets mirrored the momentum, with both the S&P 500 and Nasdaq Composite closing at record highs, supported by gains in AI and semiconductor stocks. In Asia, the rally has been equally strong, with South Korea's benchmark KOSPI index crossing the 7,000 mark for the first time, led by a surge in semiconductor heavyweights.

Samsung Electronics shares breached the $1 trillion market capitalization milestone, while SK Hynix jumped to record levels. Together, the two companies now account for roughly 44% of the index's total value.

The primary catalyst behind the rally in AI stocks is the sharp increase in capital expenditure by hyperscalers. Tech giants — Microsoft, Amazon, Alphabet, and Meta — are expected to collectively spend close to $700 billion in capex this year, nearly double their 2025 outlay.

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This spending is directly translating into revenues for companies across the AI ecosystem — from Nvidia and semiconductor foundries to networking and power infrastructure firms. However, market breadth has narrowed significantly, with gains concentrated in a handful of large-cap names — a trend reminiscent of the dot-com era.

Valuations have expanded, but they have not yet reached panic levels. The S&P 500 is currently trading at around 21–22 times forward earnings — slightly below its recent peak and still under the extreme multiples seen during the dot-com bubble.

The cyclically adjusted price-to-earnings (CAPE) ratio is in the top decile of its 40-year range, indicating elevated but not unprecedented valuations. Within the AI space, investor behavior is becoming more selective, with infrastructure suppliers with visible order books being rewarded, while the mega-cap platforms are starting to face tougher questions.

The near-term outlook for AI stocks remains constructive, supported by robust spending and earnings visibility. However, key risks that could alter market sentiment include any signs of moderation in capex spending, potential impairment charges on AI infrastructure, and a more hawkish-than-expected stance from the US Federal Reserve.