Key keywords: AI stocks, Wall Street record highs, S&P 500, Nasdaq Composite, semiconductor earnings, artificial intelligence investment, tech stock rally, U.S. stock market performance U.S. stocks edged higher in Thursday’s regular trading session, pushing the S&P 500 and Nasdaq Composite within striking distance of fresh all-time highs, as blowout earnings and surging global demand for artificial intelligence-related products continued to fuel investor enthusiasm for the sector. The S&P 500 rose 0.3% to close at 5,842.15, just 0.1% below its record close set earlier this week, while the tech-heavy Nasdaq gained 0.6% to finish at 17,889.20, less than 0.2% off its own all-time high. The Dow Jones Industrial Average also ticked up 0.1%, supported by gains in its tech constituents. Leading the rally were semiconductor stocks, the core backbone of AI computing infrastructure. Nvidia Corp, the world’s largest maker of AI chips, jumped 2.1% to hit a new intraday record, bringing its year-to-date gains to nearly 72% as analysts repeatedly raise their price targets on the back of unmet demand for its H100 and H200 GPUs. Rival chipmaker Advanced Micro Devices added 3.2% after the company announced it expects sales of its MI300 AI accelerators to top $10 billion this year, up from a previous forecast of $8 billion. Cloud and enterprise AI players also posted strong gains: Microsoft Corp, which has integrated OpenAI’s models across its entire product suite, rose 0.8%, while AI chip designer Arm Holdings climbed 4.5% following a positive note from Goldman Sachs that highlighted the company’s exposure to fast-growing edge AI demand. Market data shows that AI-related stocks have accounted for more than 60% of the S&P 500’s total gains so far this year, as corporate spending on AI infrastructure and tools shows no signs of slowing. A recent survey of 500 large enterprises by McKinsey found that 78% of companies plan to increase their AI investment by at least 20% in 2024, with most prioritizing generative AI tools and computing hardware. While some analysts have warned that AI stock valuations are starting to look stretched, with the Nasdaq’s forward price-to-earnings ratio now sitting at 28, well above its 10-year average of 21, many investors remain bullish on the sector’s long-term growth prospects. “We’re not seeing the kind of unprofitable hype that marked the dot-com bubble of 2000,” said Gina Martin Adams, chief equity strategist at Bloomberg Intelligence. “Nearly all of the top-performing AI stocks are posting double-digit revenue and earnings growth, and their product pipelines are booked out for quarters, if not years, in advance.” The rally has also been supported by easing concerns over Federal Reserve interest rate policy, with Fed officials signaling this week that they remain on track to cut rates two or three times before the end of the year, as inflation continues to cool toward the central bank’s 2% target. Lower interest rates tend to boost valuations of high-growth tech stocks, making future cash flows more valuable. Trading volume in AI-related options also hit a new record this week, accounting for nearly 30% of all single-stock options traded on U.S. exchanges, according to data from Cboe Global Markets, a sign that retail and institutional investors alike are continuing to bet on further upside for the sector.