Stock markets wobble as AI jitters test rally; AMAT and Arista jump after hours
U.S. stock markets looked unsteady early Friday in Eastern Time trading after a broad slide the prior session pushed the S&P 500 beneath a closely watched support line. Futures slipped in premarket trade, while two high-profile AI hardware names — Applied Materials and Arista Networks — surged following their latest results, keeping attention squarely on the fast-evolving artificial intelligence trade.
Futures dip before the open
Index futures were modestly lower ahead of the opening bell Friday, extending the cautious tone that emerged after Thursday’s drop. The retreat follows a period of choppy action and narrower leadership, with investors recalibrating risk exposure as earnings season intersects with heightened debate over the winners and losers from AI adoption.
Positioning around mega-cap technology, chip suppliers, and data-center infrastructure has grown more tactical in recent sessions. Traders are weighing whether a pullback can reset stretched areas without derailing the broader uptrend. For now, futures indicate a tentative start, with the cash open set to test whether dip buyers will reemerge after the latest slide.
S&P 500 breaks its 50-day trendline
The S&P 500’s drop below its 50-day moving average on Thursday marked a notable technical shift. That trendline often serves as an intermediate gauge of momentum; breaking underneath it can invite further volatility as systematic and technically driven flows adjust.
While a brief undercut does not by itself signal a trend change, reclaiming the level quickly is typically seen as a constructive sign for bulls. Failure to do so could encourage more defensive positioning and heavier scrutiny of richly valued corners of the market. The broader takeaway: sentiment has cooled from the early-year march higher, and follow-through buying will be crucial to stabilize the tape.
Earnings light up AI hardware names
After the close Thursday, shares of Applied Materials and Arista Networks jumped as investors cheered their latest quarterly updates. Both companies sit at the heart of the AI infrastructure buildout: Applied Materials supplies chipmaking equipment that benefits from surging demand for advanced processors, while Arista’s high-speed networking gear is a core ingredient in modern AI data centers.
The after-hours strength underscores an ongoing theme this year — hardware and infrastructure tied to AI workloads continue to draw interest even as the rest of tech swings more sharply day to day. Friday’s regular session will test whether those gains stick and whether they can stabilize sentiment across semiconductors and data-center plays more broadly.
Rotation watch: software feels the heat as AI disruption debate widens
The latest pullback has intensified a rotation watch within technology. Investors have been grappling with how rapidly improving AI capabilities might shift profit pools across the sector. Hardware beneficiaries have generally fared better, while parts of software — especially where AI may compress pricing, alter competitive dynamics, or raise cost structures — have come under pressure.
This push-and-pull is widening market dispersion: areas levered to compute, memory, and networking for AI clusters have shown relative resilience, whereas other growth cohorts have faced heavier selling. Such rotations can persist as investors sift through earnings guidance, backlog commentary, and capex signals from cloud and enterprise customers to separate durable beneficiaries from those facing tougher transitions.
What to watch into Friday’s session
Several markers will set the tone into the weekend. First, whether the S&P 500 can quickly retake its 50-day average will shape short-term momentum. Second, breadth — advances versus declines — will reveal if buying is broadening beyond a handful of AI infrastructure winners. Third, the open in Applied Materials and Arista Networks will be a sentiment barometer for semiconductors and networking, where leadership has frequently rotated within the same day.
Traders will also monitor intraday volatility, which has picked up as headline sensitivity around AI, earnings, and guidance rises. With confidence in the prior uptrend tested, risk management and selective exposure have become more prominent. Holding key support, stabilizing breadth, and constructive reactions to results would help calm nerves; a deeper break could embolden a more defensive stance across stock markets.
The bigger picture
The market’s AI story remains intact but messier: infrastructure-linked names continue to attract capital, while the disruption narrative weighs on other corners of tech. Thursday’s slip below the 50-day moving average turns the next few sessions into a credibility check for the rally. A swift repair would suggest a healthy pause; lingering weakness could signal a more drawn-out consolidation.
Either way, leadership is fluid. As earnings roll on, the companies with clear demand visibility into AI buildouts — and those showing they can harness AI without eroding economics — are setting the tone. For the rest of the field, proof points and prudent guidance may be the difference between quick recoveries and deeper resets.
