The Dow Jones blew past the historic 50,000 mark on Wall Street on Friday and the S&P 500 ended sharply higher, as Nvidia and other chipmakers soared.
But Amazon tumbled after the cloud heavyweight forecast a sharp increase inspending 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 centres 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 days of losses in a row 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 afloor where there’s going to be a certain set of investors that steps in and starts buying these names,” he added.
Software and data services companies also rebounded from recent losses.
The Dow Jones outperformed the S&P 500 and Nasdaq last 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.
Overall, the S&P 500 climbed 1.97% to end the session at 6,932, while the Nasdaq gained 2.18% to close at 23,031 and the Dow Jones rose 2.47% to 50,115 points – its highest close ever.
For the week, the Dow Jones 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%.
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.