US STOCKS-Dow hits 50,000, Nvidia soars as traders focus on AI spending

Updates with afternoon trading, adds market details

By Noel Randewich and Pranav Kashyap

Feb 6 (Reuters) - Wall Street jumped on Friday and the Dow Jones Industrial Average hit a record 50,000 points, while Nvidia and other chipmakers soared and Amazon tumbled after the cloud heavyweight forecast a sharp increase in spending on AI infrastructure.

Amazon AMZN.O dropped almost 7% 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 GOOGL.O on Wednesday.

Chip stocks rallied on expectations they would benefit from increased spending on AI data centers by Amazon and Alphabet.

Nvidia NVDA.O, Advanced Micro Devices AMD.O and Broadcom AVGO.O all jumped more than 7% and the PHLX semiconductor index .SOX surged 5.5%.

Friday's rallies in the S&P 500 and the Nasdaq followed three straight days of losses 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 a floor where there's going to be a certain set of investors that steps in and starts buying these names."

Software and data-services companies rebounded from recent losses.

CrowdStrike CRWD.O and Palantir PLTR.O were up over 4% each. The S&P 500 Software & Services index .SPLRCIS ended seven straight sessions of losses, although it was set for a weekly drop of around 8% - its weakest performance since March 2020.

The S&P 500 was up 1.73% at 6,915.96 points.

The Nasdaq gained 1.91% to 22,970.31 points, while the Dow Jones Industrial Average jumped 2.24% to 50,005.78 points, an intraday record.

Nine of the 11 S&P 500 sector indexes rose, led by information technology .SPLRCT, up 3.74%, followed by a 2.67% gain in industrials .SPLRCI.

The S&P was about 1% below its record-high close set last week, and the Nasdaq was down about 4% from its record high close last October.

The CBOE volatility index .VIX, Wall Street's fear gauge, dropped for the first time in three days.

The Russell 2000 index .RUT of small-cap companies rallied 3.3%, extending a recent trend of investors shifting money into areas overlooked in Wall Street's rally in recent years.

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%.

Molina Healthcare MOH.N slumped 25% after the health insurer forecast 2026 profit at less than half of Wall Street's expectations.

Roblox RBLX.N rallied 11% after the video game platform projected fiscal 2026 bookings above estimates.

Reddit RDDT.N fell 4%, even after the social media platform forecast first-quarter revenue above analysts' estimates.

Advancing issues outnumbered falling ones within the S&P 500 .AD.SPX by a 3.2-to-one ratio.

The S&P 500 posted 80 new highs and 12 new lows; the Nasdaq recorded 199 new highs and 164 new lows.

(Reporting by Noel Randewich in San Francisco; Additional reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Shilpi Majumdar and Matthew Lewis)

((noel.randewich@thomsonreuters.com))