Investing.com -- The S&P 500 rallied Friday, clinching its best week since November, as stronger-than-expected earnings from Microsoft and Alphabet revived investor optimism in the AI-led tech bull run.    

AT 16:00 ET (20:00 GMT), Dow Jones Industrial Average gained 153 points, or 0.40%, the S&P 500 rose 1%, while the tech-heavy NASDAQ Composite soared 2%. The S&P 500 rose 2.7% for the week, snapping a three-week losing week.

Microsoft surges, Alphabet hits record high on strong Q1 earnings; Intel stumbles

Google-parent Alphabet (NASDAQ:GOOGL) gained 10%, hitting an indicated record high, after the tech giant reported stronger-than-expected first-quarter earnings on robust demand for its new AI offerings. Alphabet also declared its first ever dividend, of 20 cents per share. 

The quarterly results show that Google is "more than weathering the GenAI concerns, RBC said in a note, keeping the stock in the core holding bucket for investors.

Microsoft (NASDAQ:MSFT) shares rose 2%, as strong demand for AI products also helped the firm report stronger-than-expected first-quarter earnings.

"As each key growth driver - especially Azure and Gaming - continues to perform well, MSFT remains our top GenAI pick," Macquarie said in a Friday note.

In chip stocks, Intel Corporation (NASDAQ:INTC) fell more than 9% after its weaker Q2 guidance stoked concerns that the chipmaker is set to fall further behind its rivals in the race to cash in on artificial intelligence.    

Fed's preferred inflation guage comes in as expected 

Data released earlier Friday showed that the personal consumption expenditures price index rose 0.3% in March, largely as expected. In the 12 months through March, PCE inflation advanced 2.7% against expectations of 2.6%.

Excluding the volatile food and energy components, the PCE price index increased 0.3% last month, as expected, rising 2.8% on an annual basis versus forecasts of 2.7%.

There had been fears, driven largely by hawkish comments from a number of Fed officials, that the Fed's favorite gauge of inflation would come in way ahead of expectations, pushing back further the likelihood of rate cuts this year.

Snap pops on strong earnings; Roku, Exxon Mobil stumble on earnings stage

Snap (NYSE:SNAP) stock rallied 27% after the social media firm posted stronger-than-expected first-quarter earnings, while also offering an upbeat outlook. 

Roku Inc (NASDAQ:ROKU) fell 10% after streaming device maker flagged “difficult year-over-year growth rate comparisons following past price hikes. 

Exxon Mobil Corp (NYSE:XOM) rose nearly 3% after reporting Q1 results that fell short of estimates, pressured by a fall in refining margins and a slump in natural gas prices. 

(Peter Nurse, Ambar Warrick contributed to this article.)