(Recasts with preliminary close of trading, adds market details)

* Micron joins $1 trillion market-cap club, surges after

UBS triples PT

* S&P 500, Nasdaq, Russell 2000 touched intraday record

highs

By Saeed Azhar, Twesha Dikshit and Utkarsh Hathi

NEW YORK, May 26 (Reuters) - The S&P 500 hit a record

closing high on Tuesday, while the tech-heavy Nasdaq notched

further gains, as AI-fueled optimism offset concerns over Middle

East peace talks, which were compounded by recent U.S. strikes

on Iran.

Semiconductor stocks, which have surged on AI-driven demand, led

gains, with Micron gaining sharply, hitting $1 trillion

in market value for the first time after UBS increased its price

target on the stock to $1,625 from $535.

Upbeat earnings and renewed confidence in AI trade have

driven U.S. equities higher despite the ongoing conflict with

Iran, with investors now turning their attention to IPOs of some

of the largest private AI companies, including SpaceX.

"For those of us that have been working that long, the tech

rallies we've been seeing this year are reminiscent of the boom

at the end of the 1990s," said Chris Zaccarelli, chief

investment officer for Northlight Asset Management.

"It's also possible that some of the lessons that were

learned after the tech bubble burst over 25 years ago will

prevent the same thing from happening again."

The market took comfort from comments by U.S. Secretary of State

Marco Rubio, who said that a deal with Tehran to halt the

conflict could "take a few days," while Iran's Tasnim news

agency reported that Tehran was seeking the release of $24

billion of Iranian funds frozen overseas.

"Even though we don't have an end of the war yet, there's a

very high likelihood the situation will resolve itself in a

peaceful fashion sooner rather than later," said Adam Sarhan,

chief executive of 50 Park Investments.

"But the reality is that earnings are expected to grow even

with high inflation. The economy is still growing, and the

market is a mirror of the economy to a large extent."

According to preliminary data, the S&P 500 gained

46.00 points, or 0.62%, to end at 7,519.47 points, while the

Nasdaq Composite gained 311.92 points, or 1.18%, to

26,655.89. The Dow Jones Industrial Average fell 106.60

points, or 0.21%, to 50,473.10.

The S&P 500, the Nasdaq and the Russell 2000 touched

intraday record highs on Tuesday, underscoring the strength of

the recent rally.

Brent crude futures climbed about 4% on Tuesday after the

U.S. military carried out strikes in Iran, adding to uncertainty

over whether a deal would be reached soon to end the war and

open up shipping flows through the Strait of Hormuz.

Qualcomm ( QCOM ) rose after Bloomberg News reported it reached

a deal with TikTok owner ByteDance to supply chips, while

Marvell Technology ( MRVL ) ended higher. The Philadelphia SE

Semiconductor Index hit an all-time high.

With the earnings season winding down, first-quarter

earnings growth is expected to be 29% year-on-year compared with

the 16.1% estimated a month ago, according to LSEG data from

Friday.