Palantir Leads AI Stock Rebound From Tariff Rout

Palantir Technologies (PLTR) led a rally in AI stocks on Friday as markets rebounded after slumping into a correction on Thursday. 

Shares of Palantir ended up 8% Friday, making the software maker one of the best-performing stocks in both the S&P 500 and the tech-heavy Nasdaq 100. Other top performers on Friday included AI server maker Super Micro Computer (SMCI) and AI bellwether Nvidia (NVDA), up nearly 8% and 5%, respectively. 

The tech sector led a broad rally Friday. About 90% of the S&P 500’s components were trading in the green after Senate Minority Leader Chuck Schumer said he would support a Republican-led effort to avert a government shutdown and keep the federal government funded through the end of the fiscal year. Schumer’s support makes it very likely—though not guaranteed—that the Republican funding measure will pass in a vote on Friday.

The threat of a government shutdown was just one risk that has weighed on the stock market this week. Investors have also grown increasingly anxious about the possible consequences of President Donald Trump’s on-again, off-again tariffs and his advisor Elon Musk’s efforts to cancel government contracts en masse and cull the federal workforce. Some economists warn that tariffs and mass firings threaten to increase prices and discourage investment and hiring. There’s already evidence that White House policies have shaken consumer confidence and raised inflation expectations, which can contribute to future inflation. 

S&P 500 Enters First Correction Since October 2023

All the uncertainty has weighed on stocks recently. The S&P 500 entered its first correction since October 2023 on Thursday. It took the index just 16 sessions to fall 10.1% from its Feb. 19 record high, making this the seventh-fastest correction since 1929, according to a Bloomberg analysis.

Highflying AI stocks, among the market’s best performers last year, were hit particularly hard by the recent sell-off. Palantir stock plummeted on Feb. 19 because of reports the Trump administration was preparing to slash the defense budget, a headwind for the company’s sizable military business. Palantir shares continued to slide in the following weeks, ultimately losing nearly 40% of their value. 

AppLovin (APP), another AI favorite, experienced a similar crash in late February, triggered by two short-seller reports. Nuclear power providers Vistra (VST) and Constellation Energy (CEG), which soared last year on AI-driven electricity demand, each pulled back more than 40% from their record highs during the recent slump. Their shares finished up 5% and 3%, respectively, Friday, while AppLovin jumped 7.6%.