What’s News in Markets: Bubble Fears, AI Slop, Toilet Stocks

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Hey, listeners. It's Saturday, May 9th. I'm Imani Moise for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's dive in. Investors spent this week chasing the next phase of the AI boom, but analysts can't decide whether the AI trade looks more like the future or 1999

The S&P 500 and NASDAQ both climbed to fresh records. Tech stock surged, software companies staged a comeback, and investors poured into everything from cybersecurity firms to Japanese toilet makers. The NASDAQ led the way rising 4.5 percent over the week, while the S&P 500 grew 2.3 percent. The Dow was up 0.2 percent.

Tech stocks stole the show this week, surging 7 percent, making it the best performing corner of the S&P 500 by a mile. The rally extended far beyond just the Magnificent 7, as a wide range of tech companies from Uber to Pinterest reported better than expected earnings. Even software stocks got a boost after being beaten down in recent weeks due to fears that their products would eventually be replaced by AI.

Datadog was a top performer in the S&P this week. Its shares soared 42 percent after the company reported stronger than expected revenue growth and said customers are increasingly using its tools to monitor AI infrastructure.

Cybersecurity company Fortinet jumped 32 percent after earnings also pointed to rising demand tied to AI. But as the rally gains momentum, comparisons to the.com bubble are getting harder to ignore. Many of today's hottest AI stocks resemble the market leaders of March 2000, right before the tech bubble burst. Strategists at BTIG found the top performing NASDAQ stocks this year have actually outpaced the gains of the NASDAQ's biggest winners during the peak of the.com era. But unlike many internet companies during that boom, current AI leaders are generating enormous profits and posting strong earnings growth. And for now, investors seem more focused on those results than fears of a bubble.

One company learned that even in an AI mania, investors are still being selective. Palantir was one of the worst performing stocks in the S&P this week, despite reporting record revenue and profit on Tuesday. The data analytics company has become one of Wall Street's favorite AI trades, thanks to growing demand for software used by corporations and government agencies. Analysts at Benchmark Equity Research said Palantir has effectively been priced for perfection, noting the company trades at roughly 98 times the projected earnings over the next 12 months. During the earnings call, executives tried to set the company apart from rivals that they accused of offering AI slop, while pitching Palantir's own platform as a no-slop zone. Still, some investors are beginning to question whether Palantir's software is truly indispensable or simply built on top of AI models that are rapidly becoming cheaper. Palantir's shares fell 4% over the week.

And while investors may be applying more scrutiny to Wall Street's biggest AI darlings, they're still hunting for new ways to cash in on the AI boom. And that search is leading them to some unexpected corners of the stock market, like a 175-year-old glass company and a Japanese toilet maker. Shares in glass maker Corning jumped on Wednesday after NVIDIA announced plans to invest $500 million to expand the company's fiber optic manufacturing, which is used in AI data centers. Corning stock ended the week 18% higher. Construction equipment maker Caterpillar also rallied on growing demand for power generation equipment, which you may have guessed is also used in data centers. Caterpillar shares rose 0.9% over the week and are up more than 55% for the year. And one of the most unlikely winners of the AI trade is Japanese toilet maker Toto, best known for luxury bidets and high-tech toilets. That's thanks to growing demand for specialized ceramics used in semiconductor manufacturing. Shares are now up more than 60% in 2026 The moves highlight how investors are increasingly looking beyond chipmakers and software companies for ways to profit from the AI buildout, betting that companies supplying the industry's infrastructure could benefit no matter which AI firms ultimately come out on top.

And now you know What's News in Markets this week. You can read about more stocks that moved on the week's news in our live markets coverage on wsj.com. Today's show was produced by Anthony Bansi with supervising producer Melanie Roy. I'm Imani Moise. Have a great weekend and catch you next Saturday.