AI Stock Surge Takes a Tumble: Markets React to Profitability Concerns

Investors are growing uneasy as tech-heavy stock markets face their sharpest weekly drops in seven months, primarily due to concerns about the rapid rally in artificial intelligence stocks. As a result, safer assets like bonds and the yen are becoming more attractive, with significant gains noted.

The Nasdaq saw a decline of 2.8% this week, potentially the largest one-week drop since April. European and FTSE futures also experienced reductions, and Asian markets saw declines with Japan's Nikkei falling 5% weekly and Seoul's Kospi experiencing the largest drop in a year.

The mood shift is underpinned by profitability concerns in the AI sector and a trend towards U.S. Treasury bonds amid job market worries. The 10-year Treasury yields fell alongside a stable euro and a slight rise in yen value, while commodities like gold and crude oil showed mixed reactions.