Written by: Trends Research

The AI arms race has started to shift from "whose chip is stronger" to "who can turn money into computing power the fastest."

On June 2, the market witnessed both sides of the coin: Jensen Huang's casual remark at Computex in Taipei boosted Marvell's market value by $47 billion in a day; meanwhile, Alphabet was forced to raise capital through a stock issuance for the first time in 20 years, raising $80 billion, simply because the existing profits were no longer sufficient to feed the appetite of AI infrastructure.

One is glorified on stage, while the other bleeds behind the scenes. This is the true face of the technology industry in 2026.

All indices closed higher: all three major indices hit new highs

On Tuesday, the S&P 500 closed at 7,609.78 points, up 0.13%, marking the first time in history it has surpassed the 7,600 point level. The Dow rose 229 points to 51,307.79 points (+0.45%). The Nasdaq edged up 0.03% to 27,093.90 points, also setting a record.

But the most notable gain did not come from large-cap stocks. The Russell 2000 rose by 0.90%, the largest increase among the four major indices. The resilience of small-cap stocks suggests that market confidence in the economic fundamentals is not limited to a few trillion-dollar giants.

The S&P 500 has now risen for ten consecutive weeks (including the previous week). The last time such a streak occurred was during the AI rally at the end of 2024.

Semiconductor Night: Computex became Wall Street's remote trading platform

The semiconductor sector on June 2 was ignited by the Computex event in Taipei.

Marvell Technology (MRVL): +32.52%, the largest single-day gain in the company's 26-year history.

When Jensen Huang shared the stage with Marvell CEO Matt Murphy at Computex, he casually tossed out six words, "The next trillion-dollar company, ladies and gentlemen."

This was not small talk. In March, NVIDIA had just invested $2 billion in Marvell, acquiring its networking and custom chip capabilities. Huang's logic was straightforward: when a computing task is executed across thousands of chips in a data center, the "nervous system" connecting the chips is as critical as the chips themselves. Marvell creates this nervous system.

Based on the closing price, Marvell's market value skyrocketed from $192 billion to about $255 billion in a day. Although it is still five times away from the "trillion-dollar club," the market has clearly viewed Huang's words as a roadmap rather than polite remarks.

On the day before, during the Computex opening, Huang announced the RTX Spark super chip, NVIDIA's first PC processor, directly targeting Intel and AMD. As a result, NVDA rose by 4.8%. By the next day, funds flowed from NVIDIA to its "ecosystem members," and this rotation itself tells a story: the marginal returns on AI investments are spreading from the "core" to the "periphery."

Hewlett Packard Enterprise (HPE): skyrocketed nearly 25%, the largest single-day gain since listing.

HPE's Q2 financial report was a typical "comprehensive crushing": adjusted EPS of $0.79, exceeding Wall Street's expectation of $0.53 by 49%; revenue of $10.68 billion, against an expectation of $9.79 billion, growing 40% year-on-year. Server business revenue reached $5.45 billion, nearly 20% above expectations.

Even more critical is the guidance: HPE raised its full-year EPS forecast from $2.30-$2.50 directly to $3.35-$3.45, an increase of a full dollar. CEO Antonio Neri stated that HPE is "two years ahead of its long-term financial plan."

For the past few years, HPE has been viewed by the market as a "relic of the old era." The significance of this financial report lies in the fact that the dividends of AI do not solely belong to NVIDIA and those designing chips; the "brick movers" selling servers are also benefiting from this era.

Alphabet selling stock to raise capital: anxiety behind the $80 billion share issuance

The biggest short catalyst of the day was Alphabet's announcement of an $80 billion equity financing plan. The parent company of Google had not issued additional stock since shortly after its IPO in 2005; it hasn’t touched this path for 20 years.

The financing will occur in three steps: Berkshire Hathaway will subscribe for $10 billion at a discounted price (Class A shares at about $351.81 each, Class C shares at about $348.20 each); $30 billion will be issued publicly through underwriters (half of which will be mandatory convertible preferred stock); and another $40 billion will be gradually sold in the secondary market starting in the third quarter through an "at-the-market" (ATM) method.

Alphabet's reasoning is simple: capital expenditures will exceed $180 billion in 2026, double that of 2025, and even more in 2027. Even with Google’s advertising and cloud businesses generating over $100 billion in cash flow each year, it isn’t enough.

GOOGL closed down about 4% on the day. Market concerns are not about "Google running out of money," but rather "the cash-burn rate of AI is faster than everyone expects." According to Goldman Sachs, the total expenditure of U.S. tech giants on AI-related capital investments is expected to reach about $800 billion by 2026. When even Alphabet needs to finance through dilution of shares, investors must recalculate: is the outcome of this arms race winner-takes-all, or will everyone be crushed under capital expenditures?

A banking professional succinctly remarked to Al Jazeera: for large-scale companies, "under-investment is a survival threat, while over-investment is merely an expensive cost." This statement precisely summarizes the current industry psychology, where it is better to burn more money than to fall behind.

Sector divergence: AI boosts technology, Alphabet drags down communications

Among the 11 sectors of the S&P 500, 7 rose, while 4 fell.

The technology and utilities sectors led the gains. Tech stocks were boosted by Marvell and HPE, with the semiconductor sub-sector strengthening overall (SOXX +5.79%). The rise in the utilities sector was somewhat unexpected, as some funds began to buy on the dip after a 4.9% pullback in May.

The communication services sector was the weakest of the day, completely dragged down by Alphabet. Alphabet has a disproportionately large weight in the S&P 500 communication services sector, and when it falls, the entire sector has a hard time recovering.

The financial sector dipped slightly. Despite the index hitting a new high, bank stocks are waiting for the guidance from Friday’s non-farm data and JOLTS job vacancy data.

Market sentiment: Fear indicator running low, but undercurrents are flowing

The VIX volatility index remained in the 15-16 range, close to its year-to-date low, giving an impression of tranquility. The yield on the 10-year U.S. Treasury bond rose slightly to 4.46%, up 1 basis point from the previous day.

However, two signals are worth noting:

First, Julian Emanuel of Evercore ISI pointed out, "The record concentration of AI names is boosting the indices while masking the side effects of a challenging geopolitical and consumer landscape." Micron, NVIDIA, and Alphabet contributed to over 40% of the S&P 500's EPS revision this year. There is a noticeable divergence between the strength of the index and the performance of most stocks.

Second, on the geopolitical front, Iran announced the suspension of indirect negotiations with the U.S. on the day of the Computex opening in protest of Israel's military actions in Lebanon. Oil prices spiked at one point, and although Trump later stated on Truth Social that negotiations were still "progressing rapidly," the Middle East situation remains a looming sword of Damocles hanging over the market.

Post-market focus: Palo Alto Networks reports better than expected

Palo Alto Networks (PANW) rose over 8% in after-hours trading. The company’s Q1 results exceeded analysts' expectations, reaffirming the resilience of cybersecurity spending. This is a positive signal for the tech sector opening on Wednesday.

Another upcoming heavyweight: Broadcom (AVGO) will announce its Q2 earnings on June 3 (Wednesday). As another key player in custom AI chips, Broadcom's performance will directly test the market's most concerned question: "Is AI chip demand still accelerating?"

This week's calendar: Non-farm data will determine the next step for the market

On Tuesday morning, April JOLTS job vacancy data will be released, expected to remain stable at around 6.8 million. But the real showdown happens on Friday, with the May non-farm employment report.

Market expectations for Federal Reserve policy are undergoing subtle changes. With inflation remaining high, the probability of a rate hike by the end of the year has exceeded 60%. If the non-farm data comes in strong, U.S. Treasury yields may rise further, putting pressure on high-growth stocks that rely on low-interest-rate valuations.

But currently, the market's choice is: to chase AI first, without regard to interest rates.