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U.S. technology stocks and Bitcoin rose strongly on Friday after three days of heavy selling fueled by investor concerns over the companies’ huge AI investments.
The tech-heavy Nasdaq Composite index rose 1.9 percent on Friday, trimming its losses for the week to nearly 2 percent.
Chip-making giant Nvidia led the rebound with a 7.3 percent rise, with Broadcom and Intel also jumping.
Bitcoin also bounced back after falling to its lowest level since 2024 in the previous session. It was recently trading up 12 percent at $70,367. Michael Saylor’s bitcoin-hoarding company strategy gained 24.4 percent.
Amazon was an outlier, with shares falling 6.9 percent on Friday after it said its capital spending this year would reach $200 billion, but the broader market clawed back part of the week’s steep losses.
Friday’s gains were relatively broad and extended beyond tech names. The Russell 2000, which consists of economically sensitive small-cap stocks, jumped 3.3 percent. Wall Street’s benchmark S&P 500 index was up 1.7 percent and the Dow Jones Industrial Average rose more than 2 percent, surpassing the 50,000 level for the first time.
The selloff earlier this week was driven by investor jitters about the sheer scale of tech giants’ investments in AI, and fears that the technology would disrupt the business models of capital-less stocks like data analytics, publishers and software providers.
“The market is rethinking its approach to AI,” said Fabiana Fedeli, chief investment officer of equities at M&G. He said investors are now “much more selective about which companies they decide to bet on”.
But Arun Sai at Pictet Asset Management said “the return of the AI ecosystem versus the broader market is strategically spread. So some dip buying is emerging as valuations look more playable for some investors”.
Amazon, Google, Meta and Microsoft have unveiled plans to spend a combined $660 billion this year on AI build-out, a 60 percent increase from their 2025 spending.
The numbers prompted a new wave of investor scrutiny about when the huge spending is likely to generate returns.
“We are concerned in places where we are seeing huge increases in spending but we can’t see what the outcome of that is going to be,” said Michael Plakman, head of global equities at asset manager Robeco.
“You have to sit down with the names to see if they are in the right camp and doing the right thing,” he said.
The release of new software by AI group Anthropic has sparked a massive selloff in software stocks considered at risk from the technology.
Anthropic last week launched a series of open-source plug-ins for its AI coding tool, Cloud Code, that are tailored to specific corporate uses, such as automating legal contract reviews.
Private credit groups including Ares and Blue Owl, which have been big lenders to software companies, were also hit by the selloff.
But software stocks rose Friday as some investors said the debacle had gone too far. Caroline Shaw, multi-asset portfolio manager at Fidelity International, said “mission-critical” corporate software is unlikely to be quickly replaced by AI. “The investment case is not broken so this is more of a buying opportunity,” he said.
Additional reporting by Rachel Rees in London
