DigitalOcean (NYSE:DOCN) jumped 4.7 percent Friday morning, leading a rebound in technology equities as dip-buyers re-entered the market. The S&P 500 rose 0.6 percent to 7,812, while the Nasdaq Composite climbed 0.6 percent to 27,366—a recovery following Thursday's sharp selloff in artificial intelligence and broader technology stocks.
The decline was triggered by an OpenAI revenue report that raised questions about near-term monetization in AI. Investors worried how quickly massive capital investments in artificial intelligence will generate sustainable corporate profits.
Other software and technology stocks also gained ground. JFrog (NASDAQ:FROG) rose 2.4 percent, Bandwidth (NASDAQ:BAND) increased 1.9 percent, Qualys (NASDAQ:QLYS) advanced 2.5 percent, and Asure Software (NASDAQ:ASUR) gained 1 percent.
DigitalOcean shares exhibit significant volatility, with 71 moves greater than five percent over the last year. Friday's 4.7 percent gain suggests the market sees the recent AI news as meaningful but not a fundamental shift in the business.
The tech selloff follows a separate decline 11 days earlier, when DigitalOcean dropped 2.5 percent during a Treasury selloff that pushed the 10-year yield to 5.218 percent. Higher yields weigh on software and technology stocks whose valuations rest on profits projected far into the future. When investors can earn more than five percent on U.S. government bonds, the appeal of distant future earnings from growth stocks diminishes.
