Stocks bounce back on inflation relief, but AI spending fears linger
U.S. stock markets saw a modest rebound on Friday, lifted by better-than-expected inflation data. The gains came after a week of losses, though concerns over heavy AI spending continued to weigh on investor confidence. Trading will pause on Monday for a public holiday.
The S&P 500 closed 0.65 percent higher at 6,877 points, while the Dow Jones Industrial Average rose by 0.49 percent to 49,695 points. The Nasdaq 100 performed best, climbing 0.90 percent to 24,909 points. Despite the daily gains, all three major indices remained in negative territory for the week.
Several companies drove the rally. Applied Materials surged over 8 percent after reporting strong quarterly results and rising demand. Airbnb shares jumped more than 5 percent following an upbeat first-quarter revenue forecast. Rivian led the gains with a 27 percent spike, as the electric vehicle maker exceeded its 2026 delivery targets.
Yet uncertainty lingered over the tech sector. Analysts warned that massive AI investments—projected to exceed $500 billion by 2026 from firms like Google, Microsoft, and Meta—are outpacing revenue growth. The focus has shifted from hype to real-world execution, with investors now scrutinising whether these costs will translate into sustainable profits.
Markets will remain closed on Monday for the holiday. While Friday's inflation figures provided temporary relief, the long-term impact of soaring AI expenditures remains a key concern. Investors will watch closely as companies balance ambitious AI spending with financial performance in the coming months.
