Market Faces AI Bubble Concerns Amid Fed's Rate Optimism

The stock market experienced volatility as Broadcom's AI margin warnings caused initial concerns of an AI bubble, despite the Federal Reserve's positive rate forecast. Technology and cloud companies saw mixed performance, while some cannabis stocks surged following reports of potential regulatory easing.

The stock markets experienced mixed fortunes on Friday. Broadcom's latest results warned of slimmer margins on AI system sales, intensifying fears of an AI bubble. This countered recent optimism about the Federal Reserve's hints at potential rate cuts by 2026.

Despite Broadcom's 6.3% slide in premarket trade, its projected strong quarterly revenue kept some investor sentiment buoyant. Meanwhile, chip stocks displayed varied performances, with Nvidia rising following news of a potential increase in H200 chip production amid strong Chinese demand.

While AI stocks fluctuate, market indices such as the S&P 500 and Russell 2000 have reached record highs, as investors turn to value stocks. In related news, notable gains were seen in cannabis stocks due to possible regulatory changes under President Trump.