Introduction
On May 22, 2025, U.S. equity markets were lifted by a strong rebound in technology shares, with artificial intelligence (AI)-related earnings delivering an upside surprise that powered the Nasdaq Composite to its best daily performance in nearly a month. The recovery followed a week of cautious trading driven by interest rate repricing, and highlighted the sector’s continued leadership in the 2025 equity rally.
The Nasdaq Composite surged 2.1% to close at 15,855, led by outsized gains in semiconductor and cloud computing stocks. The S&P 500 rose 1.1% to 5,264, while the Dow Jones Industrial Average added 0.9% to end the session at 38,348.
AI Earnings: Better Than Expected
Several marquee tech firms with heavy exposure to AI and machine learning reported strong quarterly earnings that exceeded Wall Street expectations:
- Nvidia (NVDA): +6.3% to $1,042.50 after beating revenue estimates by $1.1 billion and guiding higher
- Palantir Technologies (PLTR): +8.9% on strong AI software demand across government and commercial contracts
- Snowflake (SNOW): +5.7% after highlighting record growth in AI-native data warehousing services
Nvidia’s report was the primary catalyst, with CEO Jensen Huang declaring, “We are entering the next industrial revolution, driven by accelerated computing.”
Broader Tech Sector Gains
The rally spread beyond AI leaders to the broader tech sector:
- Apple (AAPL): +2.3%
- Microsoft (MSFT): +2.0%
- Alphabet (GOOGL): +1.9%
The S&P 500 Information Technology sector rose 3.1%, its largest single-day increase since February.
Sector Rotation and Risk Appetite
Investors rotated back into growth stocks after last week’s retreat, encouraged by strong fundamentals and reassurances from companies that margin pressures are easing.
- ARK Innovation ETF (ARKK): +4.4%
- iShares U.S. Technology ETF (IYW): +3.5%
Traders also interpreted the earnings strength as a counterbalance to recent Fed hawkishness.
Bond and Currency Markets Stable
Despite the equity rally, bond yields held steady:
- 10-year Treasury yield: unchanged at 4.56%
- 2-year yield: down 1 bp to 4.62%
The U.S. dollar was little changed:
- DXY: flat at 103.6
- USD/JPY: 147.0
- EUR/USD: 1.088
Stability in rates and FX helped reinforce confidence that equity gains were earnings-driven rather than purely macro-influenced.
Commodities
- Gold: -0.4% to $2,385/oz as risk appetite improved
- WTI crude: +0.6% to $96.88/barrel
- Brent crude: +0.5% to $100.18/barrel
Oil advanced slightly on inventory drawdowns and demand optimism from tech-led economic growth.
Cryptocurrency Rally
Crypto assets followed risk markets higher:
- Bitcoin (BTC): +2.8% to $106,250
- Ethereum (ETH): +3.2% to $3,395
Market analysts cited a “beta chase” into high-volatility assets, as risk-on sentiment resurfaced.
Global Equities Follow Tech Lead
International markets mirrored the tech rebound:
- Nikkei 225: +1.4%
- Hang Seng: +2.1%
- Euro Stoxx 50: +1.0%
- FTSE 100: +0.9%
Chip manufacturers in Taiwan and South Korea posted double-digit gains, tracking Nvidia’s surge.
Analyst Commentary
- Goldman Sachs: “AI continues to anchor the growth premium. This quarter shows that tech earnings power remains underappreciated.”
- Morgan Stanley: “Markets are learning to distinguish between macro noise and micro strength. Tech is demonstrating the latter in spades.”
- Wedbush: “The AI arms race is real and accelerating. We maintain a bullish overweight on software, semiconductors, and cloud infrastructure.”
Fed Watch
Despite strong equity gains, Fed commentary remained firm. Richmond Fed President Thomas Barkin reiterated that inflation progress is “encouraging but not conclusive,” and the Fed remains open to keeping rates elevated.
Traders, however, took comfort in the idea that earnings strength can coexist with higher policy rates if growth remains robust.
Portfolio Positioning Implications
- Equities: Re-engage with growth sectors, particularly AI and cloud
- Fixed Income: Maintain cautious duration exposure amid earnings-driven risk appetite
- Crypto and Alternatives: Use momentum to reassess allocation levels and risk/reward profiles
Conclusion
May 22 delivered a clear message: tech is back. Strong AI-related earnings, led by Nvidia and its peers, reignited risk appetite and helped shift the market narrative from policy anxiety to profit optimism.
The Nasdaq’s sharp rally, combined with global tech outperformance, illustrates that the sector’s fundamental story remains intact. While macro risks persist, the market showed today that strong corporate execution can override interest rate headwinds—at least temporarily.
As investors recalibrate, the focus will remain on forward guidance from AI leaders and whether earnings momentum can be sustained into Q2. For now, the bulls have reclaimed the driver’s seat, powered by chips, code, and confidence.
