Artificial intelligence continues to shoulder much of the momentum in U.S. markets, with major tech players driving gains even as the broader market shows signs of fatigue. The S&P 500 and Nasdaq Composite climbed modestly on Monday, powered by Amazon’s $38 billion cloud deal with OpenAI and renewed enthusiasm for AI chipmaker Nvidia.

While these tech giants pushed benchmarks higher, the underlying picture was less encouraging: more than 300 stocks in the S&P 500 finished in the red, signaling that Wall Street’s recent rally remains heavily dependent on a small group of AI-linked firms.

AI Dominates as Amazon and OpenAI Deepen Ties

Amazon’s blockbuster deal with OpenAI marks a major shift in the artificial intelligence ecosystem. The agreement allows OpenAI to use Amazon Web Services’ infrastructure, diversifying its reliance away from Microsoft and potentially signaling readiness for an initial public offering (IPO). Analysts see this as a strategic move by OpenAI to demonstrate independence and operational maturity after years of exclusive collaboration with Microsoft’s Azure cloud platform.

Amazon’s shares surged to a record high following the announcement, reinforcing the company’s dominant position in cloud computing and AI services. Meanwhile, Nvidia gained ground after U.S. regulators granted Microsoft permission to export the chipmaker’s advanced AI processors to the United Arab Emirates, highlighting the geopolitical and economic significance of chip supply chains in the AI race.

However, the outsized gains from a handful of technology firms underscore a concerning market concentration risk. With the AI sector increasingly dictating market sentiment, analysts warn that any slowdown in the pace of AI adoption or regulatory pushback could trigger sharp corrections.

Corporate Headlines Beyond AI

Outside the technology spotlight, corporate earnings and strategic moves presented a mixed picture. Starbucks announced a $4 billion joint venture with Boyu Capital to operate its China outlets, with Boyu taking a 60% stake. The move is designed to accelerate Starbucks’ long-term growth in its second-largest market but also reflects the growing trend of Western brands seeking local partnerships in China’s evolving business landscape.

In the energy sector, Saudi Aramco reported a 0.9% rise in third-quarter profit, beating analyst estimates despite declining crude prices. The world’s largest oil producer posted adjusted net income of $27.98 billion, supported by increased production efficiency and stable cash flow generation.

Meanwhile, Palantir Technologies exceeded Wall Street expectations with quarterly revenue of $1.09 billion and projected sales of $1.33 billion for the next quarter. Still, the stock dropped 4.3% in after-hours trading, as investors questioned whether the company’s massive valuation can be justified by its growth trajectory. CEO Alex Karp struck a defiant tone, calling out skeptics who doubt Palantir’s long-term AI potential.

A Narrow Rally Raises Market Fragility Concerns

Despite Monday’s positive session for indexes, market breadth remains weak—a classic warning sign of fragility beneath the surface. The Dow Jones Industrial Average fell 0.5%, diverging from tech-led gains. This narrowing rally suggests investors are clustering around the few sectors offering visible growth prospects—mainly AI and digital infrastructure—while other sectors struggle under the weight of high borrowing costs and slowing demand.

European markets, which recently hit yearly highs, are showing similar dynamics. Analysts warn that rising fiscal pressures, political uncertainty, and potential central bank policy shifts could derail the continent’s fragile upward trajectory.

The Bigger Picture: A Market on AI Life Support

For now, AI remains the engine of global equity optimism, with investor confidence anchored in the belief that machine learning and automation will drive the next phase of productivity growth. Yet this reliance carries risks. As HSBC and General Atlantic warned earlier this week, AI spending may be outpacing real revenue growth, raising fears of overvaluation and “irrational exuberance.”

If AI momentum slows—or if broader sectors fail to recover—U.S. markets could face a reckoning. For investors, the challenge will be distinguishing between sustainable innovation and speculative enthusiasm in what remains a highly polarized market.