The broad index of large-cap companies in the S&P 500 closed flat, but the tech-heavy Nasdaq 100 rose 0.55%. Tech stocks were led by Nvidia, which was up 3%, and now has a market cap of more than $5 trillion. (Its stock is down 0.7% premarket this morning, suggesting that some traders are taking their overnight gains.) To put that in perspective, Nvidia’s market cap is bigger than the GDP of every G7 country except the U.S. and Japan.

Powell’s remarks about AI were extensive—he was asked about it repeatedly in a Q&A session with reporters. At every turn, he insisted that the Fed was unbothered by the run-up in valuations of AI companies and the massive amount of capital expenditures they have triggered.

“I don’t think that the spending that happens to build data centers all over the country is especially interest-sensitive. It’s based on longer-run … assessments that this is an area where there’s going to be a lot of investment and that it’s going to drive higher productivity and that sort of thing,” he said.

“These companies—the companies that are so highly valued—actually have earnings and stuff like that. So if you go back to the ’90s and the dotcom, they were—these were ideas rather than companies … So there’s a clear bubble there. Whereas the—you know, I won’t go into particular names, but they actually have earnings, and, you know, it looks like they have business models and profits and that kind of thing. So it’s really a different thing,” he added.

Powell all but gave the tech sector the green light to keep investing in AI, in other words, because he said he doesn’t need to raise interest rates to choke off any irrational exuberance.

Investors—after digesting earnings reports from Meta, Microsoft, and Alphabet—reacted soberly. Meta shares are down 8.6% premarket after closing flat yesterday, in part because investors were unimpressed with the company’s spending on AI.

It was a similar story at Microsoft, which is down 2.64% premarket after closing flat yesterday.

But Alphabet (Google) shares are up 7% premarket, even though that company is also continuing to spend big on AI. 

“Microsoft, Meta, and Alphabet send contrasting signals on the payoffs from the AI investment boom. The three tech giants saw their joint capex bill rise +89% y/y to $78bn in the latest quarter. But with Meta delivering in line revenue guidance for the current quarter ($56-59bn vs $57.4bn est.) and Microsoft saying that capacity was still constraining growth in its cloud unit (+39% y/y vs +37% est.), this left questions hanging over increasingly lofty expectations,” Jim Reid et al. at Deutsche Bank told clients this morning.

“There has simply never been a company like it in the history of financial markets. With Microsoft (-0.10%) also surpassing $4tn earlier this week, and Apple (+0.26%) doing so yesterday, these companies are now more akin to countries than corporations,” Reid said.

Here’s a snapshot of the markets ahead of the opening bell in New York this morning:

• S&P 500 futures were down 0.2% this morning. The last session closed flat at 6,890. 
• The STOXX Europe 600 was down 0.44% in early trading. 
• The U.K.’s FTSE 100 was down 0.4% in early trading. 
• Japan’s Nikkei 225 was flat. 
• China’s CSI 300 was down 0.8%. 
• The South Korea KOSPI was up 0.14%. 
• India’s NIFTY 50 was down 0.68%. 
• Bitcoin was down to $110K.