NEW YORK: The Dow Jones Industrial Average blew past the historic 50,000 mark on Friday and the S&P 500 ended sharply higher, as Nvidia and other chipmakers soared and Amazon tumbled after the cloud heavyweight forecast a sharp increase in spending on AI infrastructure.
Amazon dropped 5.6% after saying it planned a more than 50% jump in capital expenditures this year, intensifying a race to dominate AI technology and following a similar announcement from Alphabet on Wednesday.
However, chip stocks rallied on expectations they would benefit from increased spending on AI data centers by Amazon and Alphabet.
Nvidia, the world’s most valuable company, jumped 7.8%. Advanced Micro Devices surged 8.3% and Broadcom climbed 7.1%, while the PHLX semiconductor index closed up 5.7%.
Friday’s rallies in the S&P 500 and the Nasdaq followed three straight days of losses marked by worries about AI. Several software companies were hit this week by concerns that AI could create more competition and hurt their margins, while investors have also fretted about elevated valuations following years of steep gains in AI-related stocks.
“This trade has been volatile, and there have been selloffs at times, but I think there’s enough evidence that there’s real demand for AI products, real promise with what they can do, and a necessity of a lot of spending to get there,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
“So when there’s this kind of a selloff, I think there’s a floor where there’s going to be a certain set of investors that steps in and starts buying these names.”
Software and data services companies rebounded from recent losses.
CrowdStrike and Palantir both rose more than 4%. The S&P 500 Software & Services index added 2.4% and ended seven straight sessions of losses, although its weekly drop of around 8% was its poorest weekly performance since March 2020.
The Dow outperformed the S&P 500 and Nasdaq this week, reflecting a recent diversification by investors away from tech stocks that have led Wall Street in recent years and toward companies that have missed out on those big gains. Reflecting the same trend, the Russell 2000 index of small-cap companies also rallied this week.
The S&P 500 climbed 1.97% to end the session at 6,932.30 points.
The Nasdaq gained 2.18% to 23,031.21 points, while the Dow rose 2.47% to 50,115.67 points, its highest close ever.
Nine of the 11 S&P 500 sector indexes rose, led by information technology, up 4.1%, followed by a 2.84% gain in industrials.
The S&P 500 energy sector index hit a record high, along with industrials and consumer staples.
For the week, the Dow added 2.5%, the S&P 500 lost 0.1% and the Nasdaq slid 1.9%.
The S&P 500 was less than 1% below its record-high close set last week, and the Nasdaq was down 4% from its record-high close last October.
The CBOE volatility index, Wall Street’s fear gauge, dropped for the first time in three days.
Over half of S&P 500 companies have reported their quarterly results, and roughly 80% topped analysts’ expectations, according to LSEG data, well above the typical beat rate of about 67%.
Molina Healthcare slumped 25.5% after the health insurer forecast 2026 profit at less than half of Wall Street’s expectations.
Roblox rallied almost 10% after the video game platform projected fiscal 2026 bookings above estimates.
Reddit fell 7.4%, even after the social media platform forecast first-quarter revenue above analysts’ estimates.
Advancing issues outnumbered falling ones within the S&P 500 by a four-to-one ratio.
The S&P 500 posted 88 new highs and 13 new lows; the Nasdaq recorded 214 new highs and 181 new lows.
Volume on US exchanges was steady, with 20.1 billion shares traded, compared with an average of 20.5 billion shares over the previous 20 sessions.
