The S&P 500 rose 1.8% to a record close of 7,736.52, surpassing the all-time high it set two months ago. The Dow Jones Industrial Average gained 907.47 points, or 1.7%, to finish at a record 54,085.88, while the Nasdaq Composite jumped 2.6% to 26,584.99.

The gains extended Wall Street’s recent momentum as investors welcomed another round of upbeat earnings reports while monitoring inflation, geopolitical tensions and the outlook for artificial intelligence spending.

Strong Earnings Drive Market Higher

Corporate earnings remained the biggest driver of Tuesday’s rally.

Palantir Technologies led the advance, with shares soaring 29.5% after the artificial intelligence software company reported quarterly results that exceeded analysts’ expectations.

Chief Executive Officer Alex Karp said revenue rose 93% during what he described as an “otherworldly” quarter. The company also raised its full-year revenue forecast after posting stronger-than-expected profit.

Caterpillar also posted solid results, sending its shares up 5.6%.

The heavy equipment manufacturer reported record quarterly revenue of more than $20 billion, beating Wall Street estimates for both sales and earnings.

Chief Executive Officer Joe Creed said customer demand remained strong, with the company continuing to build a healthy order backlog. Caterpillar also cited growing demand tied to artificial intelligence infrastructure, including equipment used to power large data centers.

The latest reports followed strong earnings from major technology companies including Amazon and Microsoft, reinforcing expectations for another robust earnings season.

According to FactSet, companies in the S&P 500 are on pace to deliver nearly 50% year-over-year earnings-per-share growth for the spring quarter. If achieved, it would mark the strongest quarterly earnings growth since 2021.

Phil Segner, co-portfolio manager at Leuthold Group, said improving corporate profits have helped justify higher stock prices despite record market levels.

Falling Oil Prices Ease Inflation Concerns

Lower oil prices also supported investor sentiment.

Brent crude, the global benchmark, fell 5.3% to $79.36 per barrel as concerns over Middle East supply disruptions eased.

Oil prices had swung sharply throughout July, trading between $72 and $102 per barrel amid uncertainty surrounding the conflict involving Iran and shipping through the Persian Gulf.

The latest decline reduced immediate concerns that higher energy costs could push inflation higher or slow economic growth.

Lower oil prices also helped pull Treasury yields lower, easing borrowing-cost pressures for consumers and businesses.

The yield on the benchmark 10-year U.S. Treasury note fell to 4.62%, down from 4.70% on Monday and 4.75% at the end of last week.

Although yields remain above levels seen before the Iran conflict intensified, the recent decline offers some relief for borrowers, including homebuyers and companies financing major investment projects.

Economic Data Points to a Resilient Economy

Fresh economic data also supported investor confidence.

Employers reported nearly 7.4 million job openings at the end of June, slightly below May’s total but generally matching economists’ expectations.

The figures suggest the labor market is cooling gradually while continuing to support broader economic growth.

AI Stocks Continue to Lead Gains

Artificial intelligence-related companies remained among the market’s strongest performers.

Nvidia gained 2.6%, Broadcom rose 6.6%, and Micron Technology advanced 7.6%, making some of the largest contributions to the S&P 500’s record-setting session.

Technology shares also helped lift overseas markets.

South Korea’s Kospi index rose 1.6%, extending recent volatility driven largely by semiconductor giants Samsung Electronics and SK Hynix.

Not every company joined the rally. Chipotle Mexican Grill fell 9.7% after investors expressed concern that a temporary removal of jalapeños from some restaurants during a salmonella outbreak could weigh on future earnings.

Chipotle said Minnesota health officials had no continuing concerns involving the company.

Tuesday’s gains reflected growing investor confidence in corporate earnings while lower oil prices helped reduce inflation worries. Markets remain focused on the outlook for artificial intelligence, interest rates and global economic growth.

This report is based on reporting by The Associated Press.

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Palantir Technologies (PLTR.O) saw its stock soar over 18% in premarket trading after the company issued a strong revenue forecast, buoyed by rising demand for its software and data analytics services. This growth comes as businesses scramble to integrate generative AI into their operations.

At the current share price of $99.31, Palantir’s market capitalization is set to rise by around $35 billion.

Strong AI Demand Drives Growth

Palantir has positioned itself as a key player in the AI space, offering software solutions that help businesses and governments alike analyze and interpret complex data. Known for its work with government agencies—such as providing software that visualizes military operations—the company has become a crucial tool for organizations leveraging artificial intelligence.

Russ Mould, Investment Director at AJ Bell, notes, “Palantir is one of many companies capitalizing on the AI boom. Multiple industries are heavily investing in technology to stay competitive, and Palantir is right at the center of this shift.”

AI Platform AIP Gains Traction

Palantir’s AI platform, AIP, has seen increasing adoption, particularly for tasks like testing, debugging code, and evaluating AI scenarios. This comes as businesses explore generative AI tools for a range of applications, from automating processes to enhancing decision-making.

Matt Britzman, Senior Equity Analyst at Hargreaves Lansdown, adds, “Palantir is the Michael Jordan of AI stocks—capturing investor attention and delivering results when it matters most.”

Strategic Decisions and National Security Considerations

In a notable move, Palantir’s Chief Revenue Officer, Ryan Taylor, stated that the company would advise against using AI models from DeepSeek, a competitor. However, he emphasized that Palantir would continue to work with clients who choose to use DeepSeek’s technology, reflecting the company’s commitment to maintaining strong relationships with its commercial clients.

This development also comes amid growing scrutiny of AI’s national security implications. White House Press Secretary Karoline Leavitt recently mentioned that U.S. officials are assessing the risks tied to DeepSeek’s AI models, highlighting the broader concerns surrounding AI’s role in both security and global competition.

Growing Demand for Palantir’s Analytics

The ongoing U.S.-China trade tensions, including new tariffs imposed by President Donald Trump, may further increase demand for Palantir’s analytics services, particularly those related to supply chain and logistics management. These services are becoming crucial for businesses seeking to navigate the complexities of global trade and reduce the risks associated with international supply chains.

Analysts Raise Stock Targets

As a result of Palantir’s impressive outlook, analysts are adjusting their predictions for the stock. According to LSEG data, at least nine analysts raised their price targets, with Morgan Stanley upgrading the stock from ‘underweight’ to ‘equalweight.’ The investment firm also highlighted Palantir as a “powerful AI story” with significant growth potential.

Despite its optimistic outlook, Palantir’s stock remains highly valued, with a forward price-to-earnings ratio of 160.93—much higher than peers like Snowflake, suggesting that investors are betting heavily on the company’s continued success in the AI-driven future.

Conclusion

Palantir is riding a wave of enthusiasm around generative AI, with strong growth prospects driven by its cutting-edge platform and strategic position in both the government and commercial sectors. With analysts raising their price targets and the company increasingly seen as a leader in AI, Palantir appears poised for continued success as businesses worldwide ramp up their AI investments.

Source

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