Markets ended the week lower, halting the S&P 500’s streak of consecutive weekly gains at nine. Following weeks of unfettered enthusiasm for all things AI, investors turned more cautious following the strong AI-driven gains which drove valuations to levels that appeared to turn investors more cautious.
The week was capped with a sharp selloff on Friday, which was particularly pronounced in the technology sector. The tech-heavy NASDAQ sold off 4.2% on the day, its largest one-day decline since April 2025. Within the NASDAQ a subindex of chipmakers fell 10%.
Friday’s better-than-expected jobs report also weighed on equity markets as investors increased the odds of a Fed rate hike by December from 45% to 75%. Expectations of higher rates tend to be a headwind to equities as they reduce the present value of future earnings which investor use to value companies, leading to higher current valuations.
Prior to Friday’s selloff, multiple deals announced during the week involving AI-related stocks highlighted investors’ insatiable demand for all things AI. On Wednesday, Google-parent Alphabet announced an $85B stock sale to fund additional AI investments. Last month, Google announced it expects to spend ~$180-190B, largely on AI infrastructure and data centers, in 2026. On Friday, Apollo Global Management and Blackstone announced a $35B financing deal for Anthropic, maker of AI agent Claude, to increase its AI infrastructure.
