U.S. stocks climbed Friday as a wave of chip optimism from Taiwan Semiconductor Manufacturing Co. combined with stronger-than-expected bank results to lift the major indexes. The S&P 500 edged about 0.3% higher, the Dow added roughly 100 points, and the Nasdaq rose around 0.5% as traders tried to end the week on a bullish note.
Chips lead, again
The mood on the tape was set by TSMC’s blockbuster numbers and an upbeat outlook that suggested the AI buildout still has legs. The contract chipmaker reported a jump in quarterly profit — roughly a 35% increase year-over-year — and said it will meaningfully step up capital spending into 2026. Those forecasts sent suppliers and equipment makers higher: Nvidia bounced back, ASML and other gearmakers popped, and a broader group of semiconductor names rallied on signs demand for advanced chips is real, not just hype.
TSMC’s willingness to pour tens of billions into capacity feeds a much larger story about where tech spending is going. That’s not just about chips — it’s also about data-center power, networking and the infrastructure race that will underpin AI deployment globally. Even unconventional ideas, like cloud and space-bound data center plans, are part of that conversation as companies chase capacity and resiliency (Google’s Project Suncatcher is one example of how ambitious the thinking has become).
C.C. Wei, TSMC’s CEO, dismissed bubble talk on recent calls, arguing the multiyear AI trend is “fundamental.” Traders took him at his word — at least for the session — and rotated money back into semiconductor names that had been pummeled in earlier pullbacks.
Banks and flows: two more engines
It wasn’t only chips. Investment banks and asset managers also played a role in the market’s lift. Fourth-quarter results from Goldman Sachs and Morgan Stanley surprised to the upside as trading and dealmaking picked up, and BlackRock reported record assets under management, nudging its shares higher. Those earnings helped stabilize financials, a sector that’s been volatile but is sensitive to shifts in market activity and capital flows.
That combination — stronger trading revenue, deal fees and asset-gathering — is soothing for investors who were worried that the market’s breadth had been narrowing into megacap stocks. Still, breadth remained mixed on the day: more NYSE-listed names fell than rose, a reminder that index-level gains can mask underlying weakness.
Geopolitics cooled, commodities slid
Relief from geopolitical jitters also played a part. Oil prices dipped sharply after comments suggesting the U.S. might hold back on immediate military action in the Middle East, which eased a recent spike in crude. Brent and WTI plunged roughly 3–4% on the news, and precious metals pared earlier gains.
Lower oil softens an inflationary fear and can be a subtle tailwind for equities, particularly if it means central-bank rate paths remain more stable than feared.
The Fed question and other risks
Even as markets cheered corporate beats and AI spending, worries remain. Observers note stretched valuations in many growth names, and record retail equity ownership means investor sentiment could flip quickly on disappointing headlines. Separately, developments in Washington — including a Justice Department inquiry that touched the Federal Reserve and public friction between branches of government — have raised questions about central-bank independence. Fed officials and market strategists warn that political noise could translate into volatility if investors fear policy distortions.
Raymond James’ Larry Adam summed up the tone: fundamentals look healthy with solid earnings growth and the prospect of rate cuts this year, but expensive valuations and political risks argue for some caution.
What this session says about 2026
If there’s a through-line from this week’s action, it’s that AI continues to be the market’s organizing principle — not only for chip stocks but for a wider set of industries that supply compute, power and services. That’s reflected in who’s rising (equipment makers, foundries, memory suppliers) and who’s stabilizing (banks, asset managers riding flow activity).
Yet markets are complicated. A rally led by a handful of powerful themes can lift indexes while leaving many stocks behind. Investors watching the spurts of volatility in single names should remember those swings can be both opportunity and risk.
Some companies are already positioning for longer-term shifts in how AI will be built and paid for — from chip fabs to software layers. Even consumer tech shifts — like Apple’s deals to integrate advanced AI models into devices — show how the ecosystem is remaking itself (Apple's move to use Google's Gemini is one more piece of that puzzle).
Expect more headline-driven sessions. For now, the market closed Friday with a little more confidence than it opened the week with — propped up by TSMC’s bullishness, solid financial results, and a temporary easing in geopolitical risk.