Key Highlights

● Microsoft rose $12.46 to close at $535.07 on Friday, recovering from a decline on Thursday, with no company announcement.

● The Nasdaq-100 rose 157.34 points to 30,883.15, and the Dow, which also counts Microsoft, climbed 423.31 points to 51,654.95.

● Oracle rose $6.21 to $141.40, Amazon gained $8.37 and Palantir added $10.27, while Nvidia and AMD slipped.

● Microsoft is OpenAI's biggest backer and cloud partner, and it sells AI tools through its Azure cloud and Office software.

Microsoft (NASDAQ:MSFT) rose $12.46 to close at $535.07 on Friday, recovering from a decline on Thursday. There was no specific company announcement behind the move. Rather, the software giant was carried higher by a broad rebound in software and Cybersecurity stocks after a rough session for anything tied to artificial intelligence.

Given its size, Microsoft's gain added meaningfully to the major indexes. The Nasdaq-100 rose 157.34 points to 30,883.15, the Nasdaq Composite gained 172.83 points to 27,366.17, and the S&P 500 added 46.18 points to 7,811.54. The Dow Jones Industrial Average, which also counts Microsoft as a member, climbed 423.31 points to 51,654.95.

From scare to recovery

The AI wobble began on Thursday when a media report said that OpenAI's annualized Revenue was about $50 billion at the end of September, roughly $20 billion below a figure of around $68 billion to $70 billion that had circulated in late September. That earlier figure appears to have included gross or partner revenue. Microsoft is OpenAI's biggest backer and cloud partner, so the report hit sentiment toward the stock.

On Friday, a separate media report said OpenAI expects to reach or exceed $70 billion by year-end, and investors returned to software. The IGV software fund and the CIBR cybersecurity fund both jumped. Oracle (NYSE:ORCL), another major OpenAI infrastructure partner, rose $6.21 to $141.40, Amazon (NASDAQ:AMZN) gained $8.37 and Palantir (NASDAQ:PLTR) added $10.27.

Software over chips

The rebound was selective. Chipmakers lagged: Nvidia (NASDAQ:NVDA) slipped $1.20, AMD (NASDAQ:AMD) fell $12.58 and the PHLX Semiconductor index edged lower. Over the week, software rose while semiconductors fell sharply, which one weekly review described as Leadership moving out of the AI trade.

That shift may reflect a view that software companies, which sell AI features to businesses, could benefit even if spending on AI hardware cools. Microsoft sits on both sides, as it spends heavily on data centers while selling AI tools through its Azure cloud and Office software.

Risks remain

Not all strategists are relaxed. Deutsche Bank (NYSE:DB)'s George Saravelos said: "The biggest systemic risk in the market next year is not France but 'something going wrong' in the AI ecosystem". Nvidia-backed Firmus also withdrew its planned Australian IPO, citing market Volatility and poor demand, according to market data.

Rates are another headwind. The 10-year Treasury Yield held near a 24-year high. The Fed raised rates in September for the first time since 2023, and Fed Governor Christopher Waller said Thursday he anticipates additional hikes to bring Inflation back to the Fed's goal. Higher yields reduce the present value of future profits, which tends to weigh on technology valuations.

Still, investors kept faith with the theme. Tech sector funds took in $4.53 billion in the latest week, according to market data, even as US Equity funds overall saw $5.11 billion of outflows.

Further OpenAI Revenue Detail Remains the Swing Factor for Microsoft Ahead of TSMC's Report

Stocks trade on Monday, October 12, Columbus Day, while the Bond Market is closed. September consumer prices are due Wednesday, October 14, with producer prices and retail sales on Thursday. Bank Earnings begin Tuesday with JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS), Citi (NYSE:C) and Wells Fargo (NYSE:WFC). The Fed meets October 27–28. Taiwan Semiconductor (NYSE:TSM) reports on Thursday, October 15, a key gauge of AI demand. For Microsoft, any further detail on OpenAI's revenue and spending plans will remain a swing factor.