Last week, the Major Markets pulled back as investors weighed the growing cost of AI against otherwise solid corporate earnings. The Nasdaq led the decline, falling 2.1%, while the S&P 500 slipped 0.6% and the Dow lost 0.4%.

The biggest story came after Alphabet and Tesla reported earnings . While both companies highlighted strong demand for AI, they also announced significantly higher capital spending, raising concerns about future profitability and free cash flow.

Interestingly, market participants continued to support the companies supplying AI infrastructure, with semiconductor stocks finishing the week higher, suggesting confidence in long-term AI demand remains intact.

Meanwhile, oil prices surged more than 10% amid escalating Middle East tensions. This pushed Treasury yields higher and created additional pressure on growth stocks. As a result, Energy was the week’s best-performing sector, while leadership broadened into utilities and industrials.

Looking ahead, investors will focus on another busy week of earnings and the Federal Reserve meeting, both of which could shape market direction as questions around AI spending, interest rates, and economic growth remain front and center.