US stocks rose Tuesday after getting a reminder that the artificial-intelligence boom may also have an upside.
The S&P 500 climbed 0.8% and recovered nearly three-quarters of its sharp drop from the day before. The Dow Jones Industrial Average added 370 points, or 0.8%, and the Nasdaq composite gained 1%.
Advanced Micro Devices helped lead the market and rallied 8.8% after announcing a multiyear deal where it will supply chips to Meta Platforms to help power its AI ambitions. Under the agreement, Meta also got the right to buy up to 160 million shares of AMD stock for 1 cent each, depending in part on how many chips Meta ultimately buys.
Swing back to AI optimism
It's a reminder of the excitement that built in recent years about the billions of dollars pouring into AI, which could remake the world and create a more productive economy.
It also helped produce a sharp turnaround from the prior day, when worries about the potential downsides of AI shook Wall Street, particularly companies and industries that investors fear could be made obsolete. Industries as far flung as software, trucking logistics and financial services have recently seen investors suddenly and aggressively punish them for potentially being under threat.
The pain has also filtered out to the private-equity industry, with fears building that loans it made to software companies dependent on recurring revenue may have less of a chance of getting repaid.
On Tuesday, Anthropic unveiled new tools for businesses to use with its Claude AI assistant. They covered everything from human-resources work to engineering to investment banking.
The event suggested that fears about AI supplanting existing software, rather than merely making it easier to use, may be overblown, analysts said.
Profits better than expected
Outside of AI worries, big US. companies continued to report mostly better profits for the end of 2025 than analysts expected.
All told, the S&P 500 rose 52.32 points to 6,890.07. The Dow Jones Industrial Average added 370.44 to 49,174.50, and the Nasdaq composite climbed 236.41 to 22,863.68.
In the bond market, Treasury yields held relatively steady after a report said that confidence among US consumers improved by more than economists expected. The yield on the 10-year Treasury held at 4.03%, where it was late on Monday.
