Tech stocks, and the artificial intelligence investment trade, roared back to life this week, lifting the S&P 500 to its first all-time high in more than two months and defying market historians expecting a classic August pullback.

The S&P 500, in fact, has powered more than 3.3% higher since the end of July, running a four-day winning streak and reaching a record high of 7736. The gains are mainly tied in part to 7.7% gain for the PHLX semiconductor index and more modest 4.3% bump for an index of the Magnificent Seven tech giants.

All three of the market's major sectors that include the biggest tech stocks, in fact, are pacing gains for the week, with consumer discretionary leaping 6.6%, communications services rising 3.4%, and information technology rising 2.1%.

Collectively, that's helped the Nasdaq Composite jump nearly 6% this month, traditionally one of the weakest of the year in terms of historical performance, and sets markets up for a late summer rally that could test the 27,000 point mark for the tech sector benchmark.

"Positive sentiment continues to dominate the U.S. equity market, with technology, semiconductor and artificial intelligence-related stocks remaining the key drivers of the rally," said Linh Tran, market analyst at XS.com.

'But the most important force behind the current advance is no longer based solely on expectations surrounding AI," she added. "It is increasingly being supported by actual business performance."

That's made the boost in AI spending, which is largely where the big increases in capital spending plans are focused, far more palatable for investors.

The four biggest hyperscalers, or the companies that are building out AI infrastructure in order to sell or lease it further down the line, are set to spend more than $750 billion this year.

Microsoft, Google, Amazon and Meta Platforms, in fact, will likely shell out more than $1 trillion next year, as well, a level that is more than three times the spending plans of just three years ago.

"The capital expenditure boom that is being led by the Magnificent Seven group of stocks is, well, magnificent, and it's clear the spending boom is expected to continue," said Blake Anderson, director of portfolio management at Carson Group. "And the companies are starting to show how they're monetizing all this spend."

That trend was also evident in a host of second-quarter earnings calls and updates, according to Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, who noted that AI investments, alongside a growing number of use-cases outside of the tech sector, were key management themes in discussions with investors.

"The quote that jumped out the most to us came from an IT services group, which highlighted how many companies have yet to fully realize AI-driven productivity gains, and their own role in assisting them," she said.

Whether markets are set up for the "monetization" phase of the AI cycle, or willing to accept any result that doesn't meet the loftiest of standards, remains to be seen.

Companies such as Elon Musk's SpaceX are bracing for a big opening bell decline after posting a massive $18.4 billion capex spending tally, nearly two and a half times its second-quarter revenue, in the group's first official update last night.

Advanced Micro Devices shares are also on the back foot, and expected to fall 8.8% at the start of Wednesday trading, after smashing second-quarter earnings estimates but only topping third-quarter sales forecasts by around half a billion dollars.

Still, the market's recent reset, particularly in the tech space, augurs well for the next few weeks, with eyes to Nvidia's second-quarter update later this month and the Federal Reserve's next rate decision on Sept. 16.

"We remain tech bulls and continue to view AI as the dominant secular theme driving this market cycle," said Keith Lerner, chief investment officer at Truist Wealth.

"July demonstrated that healthy bull markets often reset through rotation rather than broad liquidation," he added. "The weight of the evidence continues to support giving the bull market the benefit of the doubt."