U.S. stocks opened slightly higher on Wednesday evening, Beijing time. The S&P 500 and Nasdaq indices continued their upward momentum, driven by technology stocks led by memory chipmaker Micron Technology. Oil prices fell sharply on hopes for a U.S.-Iran ceasefire.

The Dow Jones Industrial Average rose 25.48 points, or 0.05%, to 50,487.16; the Nasdaq Composite gained 34.75 points, or 0.13%, to 26,690.93; and the S&P 500 increased 6.89 points, or 0.09%, to 7,526.01.

Micron Technology surged on Wednesday, extending its recent epic rally. The stock soared 19.3% on Tuesday, pushing its market capitalization above the $1 trillion mark for the first time.

Wall Street analysts are generally optimistic about the stock's prospects, with UBS being particularly bullish, suggesting long-term agreements could drive the stock price to more than double. Despite a sell-off in the broader memory chip sector early last week, Micron ended the week with significant gains.

Additionally, reports indicated that former U.S. President Donald Trump publicly praised Micron Technology at a large rally in Suffern, New York on May 22, calling the company "really great." Notably, hours before the rally began, the options market saw several large bullish bets on Micron. The most aggressive was a contract with a strike price of $1,400 expiring in January 2027, with a single premium exceeding $1.41 million. This implies Micron's stock price would need to surge nearly 90% from around $745 in less than eight months for the investor to profit.

Investors are turning their attention to memory chip manufacturers as preferred investments to participate in the artificial intelligence bull market. Micron's South Korean peer, SK Hynix, also achieved a $1 trillion market capitalization overnight.

Micron's stock price has more than tripled so far this year. It received a further boost on Tuesday after UBS stated the stock still has the potential to more than double as memory suppliers sign long-term agreements to advance AI applications.

However, some strategists expressed concern about the narrowing market breadth. Matt Stucky, Chief Equity Portfolio Manager at Northwestern Mutual Wealth Management, noted that the percentage of companies outperforming the S&P 500 has plummeted from 65% at the start of the year to just 24% since the Iran conflict. "When the market becomes this narrow, as an investor, you start to question the durability and resilience of that market," he said.

In the previous session, gains in the technology sector propelled both the broader market index and the tech-heavy Nasdaq Composite to new intraday and closing highs. The S&P 500 rose 0.61%, and the Nasdaq surged 1.19%, while the blue-chip Dow Jones Industrial Average fell 118.02 points, or 0.23%.

Investors were also encouraged by comments from former President Trump, who stated that negotiations to end the war with Iran were "going well." Although the U.S. conducted a "self-defense" strike in southern Iran early Tuesday, Central Command spokesman Tim Hawkins said the U.S. exercised restraint during a "period of sustained ceasefire."

U.S. crude oil prices fell about 6% in pre-market trading Wednesday following reports that Iran would restore transit through the Strait of Hormuz as part of a framework agreement with the United States.

As of 8:33 a.m. ET, West Texas Intermediate crude futures were down 5.7% to $88.53 per barrel. The international benchmark Brent crude fell about 4.7% to $94.91 per barrel.

According to reports from Iranian state television, Tehran has committed to restoring commercial transit through the Strait of Hormuz to pre-war levels within a month of reaching an agreement with the U.S.

However, Iranian state TV also reported that Iran would cooperate with Oman to manage ship traffic through the Strait of Hormuz. The report added that U.S. forces would withdraw from near Iran and lift the maritime blockade.

Expectations for easing tensions with Iran, coupled with a strong earnings season, have driven the stock market to record highs this month. However, Drew Pettit, U.S. Equity Strategist at Citigroup, believes there is limited room for further gains.

"Right now, you have high yields, with the U.S. 10-year Treasury yield around 4.50%, inflation expectations are moving higher, and the yield curve has actually flattened this year. All of these factors do not support sustainably higher valuation multiples at current levels," Pettit said. His year-end target for the S&P 500 is 7,700, implying only a modest 2% upside from current levels.

Goldman Sachs holds a different view. The firm raised its year-end S&P 500 target from 7,600 to 8,000 late Tuesday, citing expectations for continued strong earnings growth despite some geopolitical headwinds.