U.S. equities posted back-to-back gains on Wednesday, with the S&P 500 closing at 6,946.13, up 0.81%, as investors positioned ahead of Nvidia’s closely watched earnings report. The Nasdaq Composite advanced 1.26% to 23,152.08, while the Dow Jones Industrial Average gained more than 300 points to settle at 49,482.15. The move reflects a broader recalibration in how markets are pricing artificial intelligence leaders, after weeks of volatility tied to valuation concerns and rising capital expenditures among hyperscalers.

AI Leaders Drive the Advance

Nvidia rose 1.4% ahead of its earnings release, marking a fourth consecutive day of gains. Investors are scrutinizing whether the chipmaker can justify elevated multiples amid growing skepticism about the sustainability of AI-related spending. With major cloud providers announcing fresh increases in capital expenditures, markets expect Nvidia to forecast revenue above consensus estimates and demonstrate continued demand resilience.

Oracle added 1% after receiving an upgrade from Oppenheimer, which cited a favorable risk-reward profile following its recent pullback. The broader software complex also extended gains. The iShares Expanded Tech-Software Sector ETF surged 3%, building on a nearly 2% rise the prior session, as names such as Microsoft and Palantir Technologies advanced.

Portfolio managers note that sentiment appears to be shifting from indiscriminate selling toward selective positioning. Rather than treating all AI-linked companies as a single thematic trade, investors are increasingly differentiating between firms with durable cash flows and those dependent on speculative growth narratives.

From Fear to Reassessment

Tuesday’s rebound was partly fueled by easing fears of immediate AI disruption after Anthropic unveiled new enterprise integrations for its Claude platform. That development reduced concerns that legacy software providers would face sudden revenue erosion.

Market psychology has also evolved. The earlier “sell first, ask questions later” phase appears to be transitioning into a more analytical posture, where earnings quality and forward guidance carry greater weight than headline risk. This shift is particularly relevant for institutional investors in Israel and the U.S., who have significant exposure to U.S. technology benchmarks.

Macro Crosscurrents Remain

Despite the rally, macro uncertainty lingers. A 10% global import tariff took effect this week, with President Donald Trump signaling the possibility of raising the rate to 15%. Geopolitical tensions with Iran continue to hover over energy markets, while fiscal proposals discussed during the State of the Union address add further variables to the policy outlook.

Bond yields and currency movements will likely influence whether equity momentum can persist. If real rates remain contained and AI earnings exceed expectations, equities could test new highs. However, any revenue shortfall from Nvidia or signs of capex fatigue among hyperscalers could quickly temper enthusiasm.

The next catalyst lies squarely in earnings execution. Investors will watch closely whether Nvidia validates current optimism or triggers another round of valuation reassessment. In a market priced for resilience, delivery—not rhetoric—will determine the durability of this advance.