Dow Jumps 700 Points as Markets Rebound From AI-Driven Tech Selloff

U.S. stocks surged Friday as investors stepped back into equities following a bruising week dominated by fears that artificial intelligence could upend the traditional software business model.

The Dow Jones Industrial Average climbed more than 700 points, or about 1.6%, led by strength in industrial and financial shares. The S&P 500 rose roughly 1%, while the Nasdaq Composite added about 0.7%, marking a tentative recovery after days of heavy selling in technology stocks.

Despite Friday’s rebound, the week remained volatile. The S&P 500 clawed back into positive territory for 2026, but both it and the Nasdaq were still on pace for weekly losses of roughly 1% and 3%, respectively. The Dow, by contrast, was tracking a gain of more than 1% for the week.

Rotation Within Tech

Friday’s rally came even as Amazon shares plunged 9% after the company reported earnings per share that narrowly missed expectations and warned investors to brace for $200 billion in capital expenditures this year. The announcement reignited concerns over runaway AI infrastructure spending.

Still, beaten-down tech leaders saw buyers return. Nvidia rose about 3%, while Microsoft gained nearly 1%, after both stocks suffered close to double-digit losses earlier in the week.

The sharpest pain remained concentrated in software. The iShares Expanded Tech-Software Sector ETF fell another 5% on Thursday before rebounding 1% Friday. Even with the bounce, the fund was down roughly 10% for the week, putting it on track for its worst weekly decline since 2008.

AI Repricing, Not Capitulation

Strategists cautioned against reading the week’s turbulence as a fundamental break in the AI trade.

“The reassessment of AI sentiment does not materially alter our constructive view on the fundamentals of the Big Tech companies at the center of the AI capex cycle,” said Venu Krishna, equity strategist at Barclays. He added that valuations remain compelling and earnings profiles resilient, even as markets temporarily step back from AI-driven narratives.

Cross-Asset Volatility Persists

Risk appetite remained fragile across asset classes. Bitcoin slid as much as 16% overnight, briefly falling below $61,000, before rebounding roughly 7% to trade back above $68,000 on Friday.

Precious metals also reflected choppy sentiment. Silver — a volatile trade that has attracted significant retail interest — extended its recent selloff in futures markets, even as spot prices showed signs of stabilization.

The day’s rally suggests investors may be distinguishing between long-term AI beneficiaries and areas most vulnerable to disruption. Whether the rebound marks a durable turn or just a pause in a broader repricing remains the key question heading into next week.

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