Technology stocks extended their gains last week, with Meta Platforms and Microsoft among the companies helping the sector advance despite a sharp increase in US Treasury yields. The resilience of large technology companies highlights the strength of the artificial intelligence investment theme, even as higher long-term borrowing costs create a more challenging backdrop for equity valuations.

Big Tech Resilience Defies Rising Bond Yields

The performance of major technology companies stands out because Treasury yields moved sharply higher during the same period. The US 10-year Treasury yield reached 5.2297% on September 25, its highest level since 2007, before retreating later in the session. Rising yields generally increase the discount rate applied to future corporate earnings, creating pressure on growth-oriented equities.

Despite that pressure, investors continued to allocate attention toward companies viewed as major participants in the AI expansion. Meta has been investing heavily in AI infrastructure and applications, while Microsoft has been integrating AI capabilities throughout its enterprise software and cloud ecosystem. Their ability to maintain market momentum suggests that investors remain focused on the potential earnings and productivity effects of AI.

AI Spending Remains a Central Market Theme

The strength of technology stocks reflects the continuing importance of AI-related capital spending across the technology industry. Companies are expanding data-center capacity, developing increasingly sophisticated models and incorporating AI into software products, creating demand across semiconductors, cloud infrastructure and enterprise applications.

Microsoft’s recent expansion of Copilot illustrates this strategy. The company has added code-generation capabilities and agentic AI tools while integrating Word, Excel and PowerPoint directly into Copilot. The move positions AI more deeply within everyday corporate workflows and demonstrates how technology companies are attempting to convert large-scale AI investment into recurring commercial use.

Meta has pursued a similarly broad AI strategy, spanning advertising, recommendation systems, consumer assistants and new hardware. The breadth of these initiatives provides investors with multiple potential channels through which AI spending could influence future revenue and operating performance.

Bond Market Sends a Different Signal

The strength of technology shares contrasts with growing stress in fixed-income markets. The sharp increase in Treasury yields reflects concerns over persistent inflation, government borrowing and the possibility of additional Federal Reserve rate increases. Higher yields can increase financing costs throughout the economy and eventually affect corporate investment and consumer demand.

Bond-market volatility has also increased significantly. The ICE BofA MOVE Index, which measures expected volatility in US Treasury markets, rose roughly 30% during the week, its largest weekly increase since April 2025. The move indicates that investors are facing greater uncertainty over the direction of interest rates and government bond prices.

Market Leadership Faces a More Difficult Test

The divergence between technology stocks and bonds creates an important test for the broader equity rally. Large technology companies can remain resilient if earnings expectations and AI-related growth continue to offset the impact of higher discount rates, but sustained increases in long-term yields could eventually place greater pressure on valuations.

Going forward, investors will monitor Treasury yields, inflation data, Federal Reserve policy signals and corporate AI spending for evidence of whether the current technology leadership can persist. The key question for global markets will be whether AI-driven earnings potential can continue to outweigh the financial impact of higher interest rates and tighter capital conditions.