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Stocks dipped as the AI-driven rally, led by OpenAI and the Magnificent 7, continues to dominate, with 75% of S&P 500 gains since November 2022 concentrated in a few dozen AI and data center stocks. Narrow gains raise concerns about market health and potential sharp corrections. Gold, silver, and Bitcoin hit record highs this week as investors seek safe havens.
Stocks fell after a report revealed Oracle’s AI server division had only 14% gross margins, raising concerns about AI investment returns. ORCL stock tumbled, dragging down the tech sector, which sent market indexes lower while gold broke through the $4,000 per ounce threshold. That isn't stopping Nvidia from continuing to make big bets on AI, investing $2 billion into Tesla's xAI, which will buy its AI accelerators. The deals continue to raise questions about the circular nature of the financing.
Stocks are set to open lower after the S&P 500 and Nasdaq hit new highs, but the Russell 2000 small-cap index continues on its trajectory higher, closing above 2,500 for the first time ever. Despite AI stocks like AMD surging on a massive deal with OpenAI, valuation concerns remain over giants like Nvidia, pushing investors toward small-caps. The Russell 2000 has outperformed the S&P 500 since April, gaining 35% compared to 30%, as its broader base of coverage reduces correction risks.
Stocks continue to press higher, but the biggest tech names eased back on Friday on concerns of valuation and AI's ROI. Instead, we're seeing a rotation into small cap stocks that have long lagged behind their larger brethren in the high-interest rate environment. From the stock market's April dunking over tariffs, small-caps are beating large-caps by an increasing margin. Gold remains as lustrous as ever and is jumping today as traders seek out safe-haven assets.
Stocks hit new records despite a weakening labor market and government shutdown. Global markets, especially in Asia, rose after AI deals involving Hitachi, Fujitsu, OpenAI, and Nvidia. The S&P 500 marked its 27th record since June amid "bubble" concerns and stretched valuations, making protecting your downside risk crucial.