AI Concerns Lead to Market Shifts: Investors Seek Value Amidst Fed Decisions

Futures for the S&P 500 and Nasdaq declined due to Broadcom's financial outlook, intensifying fears of an AI bubble. Despite this, Wall Street saw gains as investors shifted from AI-centric stocks to value sectors like healthcare following the Federal Reserve's less aggressive monetary stance earlier in the week.

The futures tracking the S&P 500 and Nasdaq declined on Friday, fueled by concerns over chipmaker Broadcom's latest financial results. The company's outlook raised fresh alarms about a potential artificial intelligence bubble, overshadowing investor optimism stemming from the Federal Reserve's recent monetary policy decisions.

In premarket actions, Broadcom's shares fell by 5%, citing anticipated lower future margins on its AI system sales. This news came even as the company forecasted strong quarterly revenue, prompting concerns regarding the profitability of investments within the AI technology sector. Notably, other chip stocks such as Advanced Micro Devices and Nvidia also reported losses.

Despite apprehensions, major Wall Street indices, including the S&P 500, Dow, and Russell 2000, posted gains, buoyed by the Fed's decision to lower borrowing costs. Analysts observed a strategic shift as investors moved from technology stocks to value sectors. Market players are also closely watching upcoming remarks from several Federal Reserve policymakers.

(With inputs from agencies.)