Microsoft surges 3.4% on AI model plans and $9.7 billion Pentagon contract; Nasdaq and S&P 500 gain

Microsoft added roughly $107 billion to its market cap with a 3.4% gain. The software giant will unveil proprietary AI models at next week's Build developer conference, reducing reliance on external partners like OpenAI. Dell Technologies won a five-year Pentagon contract worth $9.7 billion to consolidate Microsoft software licenses across the U.S. military, intelligence community, and Coast Guard.

The Nasdaq Composite jumped 0.8% by 1:40 p.m. ET and the S&P 500 gained 0.6%, while the Dow Jones Industrial Average barely moved. Arm Holdings surged 13.5%, adding approximately $49.5 billion in market capitalization. Caterpillar dropped 1.7%, offsetting broader gains.

Market action reflects investor focus on concrete business developments over geopolitical headlines. Strong fundamentals in AI software and defense contracts outweighed simultaneous Iran–U.S. military exchanges, with oil up 0.1%, gold gaining less than 1%, and average U.S. fuel prices dropping 0.7% in the past 24 hours.