U.S. stock markets ended a volatile week lower, with the Dow down 1.8% for the week to 48,405, the S&P 500 falling 0.6% to 6,829, and the Nasdaq slipping 1.7% to 23,195. The week started with optimism following the Fed’s rate cut on Wednesday, but sentiment soured by week’s end as major AI companies disappointed investors. Friday’s selloff was led by Broadcom, which plunged 11.5% despite beating earnings estimates, as investors worried about shrinking profit margins in the AI infrastructure business.

The week’s biggest story was the shift in how investors view AI investments. Early in the week, tech stocks rallied on the Fed rate cut and positive AI news. But by Thursday and Friday, the mood changed dramatically. Broadcom’s earnings showed that even companies winning AI business face pressure on profit margins. Oracle also stumbled earlier in the week on similar concerns. The lesson: investors are now being pickier, separating companies that can make money soon with healthy margins from those burning cash on infrastructure without clear payoffs. When one major AI stock drops on margin concerns, it often triggers selling across the entire sector.

Market outlook: The market is currently caught between two forces: rising long-term interest rates (which hurt expensive tech stocks) and the Federal Reserve cutting rates (which helps the economy and other sectors). As we head into year-end, watch three things: (1) whether long-term bond rates keep rising, (2) which tech companies can prove they’re converting AI hype into actual cash profits, and (3) how trading gets choppy as fewer people are active in the market during the holidays. Investment advice: Don’t just buy a stock because it’s labeled “AI”—make sure the company has a real plan to generate cash flow, not just exciting press releases.