Dow Jones jumps 400 points and S&P 500 rises as software stocks recover

US stocks rose on Tuesday, driven by gains in Advanced Micro Devices shares and software stocks, as investor concerns eased over the disruptive impact of artificial intelligence on certain industries.

The S&P 500 climbed 0.8%, while the Nasdaq Composite advanced 1.1%. The Dow Jones Industrial Average added 416 points, or 0.9%, supported by a 3% rise in Home Depot shares after the company reported earnings that exceeded expectations for the first time in a year. The recovery in IBM — which had fallen sharply in the previous session due to AI-related concerns — also helped support Dow gains.

AMD surged 10% after Meta announced a multi-year agreement with the semiconductor company. The partnership involves deploying up to 6 gigawatts of AMD graphics processing units (GPUs) in AI data centers. Meta will also invest in AMD through a performance-based warrant agreement allowing it to purchase up to 160 million shares.

The move follows Meta’s announcement last week that it is using millions of Nvidia chips in its data center expansion plans. Nvidia shares rose 1%.

DocuSign was also among the gainers, climbing 4% after Anthropic announced that its “Claude Cowork” tool can now integrate with DocuSign, in addition to other enterprise tools such as Google Drive and Gmail. The announcement gave investors optimism that artificial intelligence could complement software companies rather than replace them.

This optimism extended across other software names. Salesforce — which also collaborates with Anthropic — rose 4%, while ServiceNow gained 2%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 3%, although it remains more than 30% below its 52-week high.

Anshul Sharma, Chief Investment Officer at Savvy Wealth, told CNBC: “It seemed to me that the market was adopting a sell-first, ask-questions-later mindset. That approach persisted for some time, which is why even enterprise software companies came under significant pressure.” He added that today’s moves represent a “classic rebound after a selloff.”

Sharma also said he is not fully convinced by the recent Wall Street narrative suggesting that artificial intelligence will quickly replace much of enterprise software.

He said: “From a legal-risk perspective, it is unrealistic to think large companies would suddenly abandon enterprise software — which is proven, tested, and aligned with their risk management standards — and build internal alternatives in the next few months or quarters.” He added that the recent decline in software stocks was an overly immediate reaction.