What’s News in Markets: AI Reality Check, Oil’s Tipping Point, Crypto Winter

0:00From the Goldman Sachs trading floor, in 10 minutes or less, investors and analysts share timely analysis on the week's market activity. The Markets podcast from Goldman Sachs. Listen now. Hey, listeners. Your money briefing is still on a break, but we'll be back with more personal finance information for you in the future. Until then, here's the news moving the markets this week.

0:27Hey listeners, it's Saturday, June 6th. I'm Imani Moise for The Wall Street Journal. And this is what's news in markets. Our look at the biggest stock moves of the week and the news that drove them. Let's dive in. Markets hit the brakes this week. With major indexes falling after setting record highs just last week. A strong jobs report and rising tensions in the Middle East stoked fears about inflation. A conservative revenue outlook from one of the world's biggest chipmakers caused investors to question whether AI growth expectations were beginning to lose touch with reality. And a sale by one of Bitcoin's biggest bulls triggered a crypto sell-off.

1:06The tech-heavy Nasdaq tumbled 4.7 percent, and the S &P snapped a nine-week winning streak, ending 2.6 percent lower. Those were the worst weekly declines for those indexes so far this year. The Dow declined 0.3 percent. The AI trade hit a speed bump this week as one of the industry's biggest chip makers prompted investors to rethink some of their loftiest expectations. Broadcom reported an explosive 48 % surge in revenue and said it expects to generate more than$100 billion in annual AI semiconductor revenue by next year. Most people would think that those numbers would send a stock soaring. Instead, investors erased roughly$300 billion from Broadcom's market value in a single day.

1:53Now let's make that make sense. Analysts say the decline wasn't really about Broadcom's results. It was about its outlook. Investors have gotten used to AI chip companies exceeding expectations and raising their outlooks. NVIDIA has repeatedly blown past expectations with its quarterly numbers. And earlier this week, ST Microelectronics nearly doubled its revenue guidance from above$500 million to well above$1 billion. But Broadcom held the line. Executives stuck with the company's previous forecast, suggesting growth remained strong, but maybe not accelerating as quickly as investors had hoped.

2:26Broadcom shares ended the week more than 13 % lower. The reaction rippled across the chip sector, as investors reconsidered just how much future growth is already priced into some of the market's biggest winners. Shares of Micron dropped 11%, and AMD fell roughly 10%.

2:50The conflict in the Middle East came back into focus on Wall Street this week after fresh missile attacks raised questions about the future of the Strait of Hormuz, helping to make energy the best-performing sector in the S &P 500. Brent crude rose about 2 percent to$93.09 a barrel as another week passed by without a peace deal, reinforcing concerns that supply disruptions could last longer than expected. Until recently, investors had largely looked past the war, betting that ample oil inventories would help cushion the global economy from supply disruptions. But that assumption is starting to crack.

3:24Commodity trading giant Trafigura warned this week that energy markets are approaching an inflection point as inventories shrink and supply constraints persist. If a peace deal is reached soon, analysts say it could take months for oil production and shipping flows to fully recover. The S &P Energy Index rose about 2.5 % over the week. And even after this week's chip stock slump, the AI trade has helped push major U.S. indexes to record highs. But there's one corner of the market missing out on the rally, crypto. Bitcoin has fallen 30 percent this year and lost about half of its value since peaking at above$126 ,000 last October.

4:04Analysts say one reason is that crypto is no longer the market's favorite speculative trade. For much of the past year, investors who once chased Bitcoin gains have instead been piling into AI stocks. While Bitcoin struggles, semiconductor stocks are dominating Wall Street's leaderboard for the year. One crypto trader put it bluntly. What Bitcoin needs is for some air to come out of the AI trade. The shift in investor attention is now beginning to pressure some of crypto's biggest believers. Strategy, one of Bitcoin's most outspoken supporters, sold a portion of its holdings for the first time since the last crypto winter in 2022.

4:39The moves rattled investors because strategy executive chairman Michael Saylor built a reputation on a simple message. Never sell your Bitcoin. Shares of crypto-linked companies ended the week lower. Strategy tumbled about 24 percent. Coinbase slipped 19 percent. And Robinhood dropped more than 12 percent.

5:01And now you know what's news in markets this week. You can read about more stocks that moved on the week's news in our live markets coverage on wsj.com. Today's show was produced by Anthony Bansy with supervising producer Melanie Roy. I'm Imani Moise. Have a great weekend and catch you next Saturday.

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