Semiconductor shares spark a market recovery, but escalating U.S.-Iran tensions keep investors on edge.
MARKET INSIDER – Wall Street staged a cautious rebound on Thursday as investors rushed back into beaten-down artificial intelligence and semiconductor stocks, offsetting concerns over a sharp escalation in U.S.-Iran tensions. The recovery highlights a growing reality in global markets: even the threat of a wider Middle East conflict is struggling to outweigh the powerful momentum behind the AI investment boom.
The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.5%, and the Dow Jones Industrial Average climbed nearly 300 points. Yet beneath the surface, markets remained caught between two of the most powerful forces shaping the global economy in 2026: geopolitical risk and the relentless race to dominate artificial intelligence infrastructure.
Investor sentiment was tested after U.S. President Donald Trump declared on Truth Social that America would strike Iran “VERY HARD TONIGHT,” while also signaling potential efforts to take control of key Iranian oil infrastructure, including Kharg Island, a critical export hub. The comments followed additional U.S. military strikes against Iranian targets, raising fears of further disruptions to global energy markets.
Oil prices initially surged on the news before stabilizing near $90 per barrel, suggesting traders are becoming increasingly accustomed to geopolitical shocks. Market participants appeared more focused on inflation data that showed price pressures remain relatively contained despite elevated energy costs. The latest Producer Price Index rose 1.1% in May, above expectations, while core inflation came in slightly below forecasts, reinforcing the view that the U.S. economy remains resilient even amid geopolitical uncertainty.
The strongest gains came from the semiconductor sector, where investors returned aggressively after a sharp selloff earlier this week. Shares of companies such as Micron Technology, Advanced Micro Devices, and Intel rebounded, helping lift the broader technology sector. The semiconductor rally was further fueled by optimism surrounding the highly anticipated debut of SpaceX, whose expected $1.8 trillion valuation is being viewed as another major catalyst for AI-related investment spending across the global economy.
Not all technology stocks participated in the recovery. Shares of Oracle fell 11% after the company announced plans to raise an additional $20 billion through equity and debt financing to fund its expanding AI ambitions. The move underscores the extraordinary capital requirements associated with the next phase of artificial intelligence development, where even the world’s largest technology companies are racing to secure financing for massive data center and computing infrastructure investments.
The bigger story may be what markets chose to ignore. Historically, direct military threats involving major oil-producing regions would trigger widespread risk aversion across global assets. Instead, investors appear increasingly convinced that AI-driven growth, resilient corporate earnings, and moderating inflation can absorb even significant geopolitical shocks. Whether that confidence proves justified may depend less on tomorrow’s headlines from Tehran and Washington—and more on whether the AI boom can continue delivering the growth expectations currently embedded in global equity markets.
