The dominant theme in U.S. equity markets last week was the sharp repricing of hyperscalers, prompted by investors showing little tolerance for rising capital expenditures tied to AI infrastructure.

A sharp selloff in global memory chip stocks accelerated through the week, sparking concerns over the sustainability of the artificial intelligence investment cycle, while renewed hostilities in the Middle East and shifting Federal Reserve expectations drove broad sector rotation across global equity markets.

Concerns over the durability of the artificial intelligence rally and renewed geopolitical tensions in the Middle East dominated global equity markets this week. Selloffs in memory chip companies early in the week were tied to Samsung’s preliminary earnings report, in spite of the fact that the company forecasted a nearly 20-fold year-over-year increase in profits.

A lackluster showing for the labor market took center stage last week—June’s 57k new jobs number was nearly 50% below expectations, while the previous two months’ figures were revised down by a combined 74k.

Last week’s overarching story in equity markets was the artificial intelligence trade—after an extraordinary run, investors decided it had become overextended. Heavy declines in Samsung Electronics and SK Hynix fueled an over 10% decline in South Korea’s KOSPI index on Tuesday, a market that is still up 125% YTD.

As the week began, investors extended the previous week’s relief rally, fueled by news of a deal to end the U.S. Iranian conflict and the potential that the Strait of Hormuz may reopen soon. Lower energy prices supported the Industrials and Materials sectors, and Technology benefited from the overall improvement in risk sentiment.