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Stock market rotation out of AI is just getting started, analysts say

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Investors rushed out of the AI trade this past week and piled into materials, industrials, financials and healthcare, representing a sector rotation that could have staying power, according to Wall Street analysts.

Oracle stock led the latest AI selloff after the hyperscaler’s earnings report and spending guidance renewed fears about excessive capital expenditures.

Jeremy Siegel, Wharton professor emeritus and WisdomTree chief economist, told CNBC on Friday that it’s hard to be certain about the current stock market rotation because there have been “so many head fakes in the past.”

“But as I said, this one has more legs in the sense that there are more things that are happening that throw doubt on how fast or how profitable all the AI buildout is going to be,” he added.

In Oracle’s case, recent delays in data center construction may actually end up being a silver lining if it slows expenditures, but there are still more questions than answers about the profitability of AI, Siegel said.

He noted his research has shown that when companies grow spending faster than their income, they ultimately overexpand, hitting profits and stock returns.

“I’m not saying that that’s necessarily going to happen to AI or certainly all the AI, but that narrative has to come in mind,” Siegel warned.

Also on Friday, Bank of America Securities investment strategist Michael Hartnett said markets are frontrunning a “run-it-hot” scenario expected for next year by rotating into a Main Street trade made up of mid- and small-cap stocks, while getting out of a Wall Street trade consisting of mega-cap names.

Eric Teal, chief investment officer for Comerica Wealth Management, had a similar view in a note on Thursday, saying that the market was dominated by momentum and AI stocks during the first eight months of the year.

But since then, concerns about valuations, margin sustainability, and high debt shifted sentiment around the technology sector.

Financial and healthcare stocks have been more appealing, while small caps and even “micro-cap stocks” will benefit from falling short-term rates, he added.

“More importantly, we foresee this rotation in the early stages with relative valuations remaining attractive,” Teal predicted. 



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At least 2 killed and several more hurt in shooting at Brown University in Rhode Island

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At least 2 people were killed and several more injured in a shooting in the area of Brown University on Saturday, a law enforcement official said, as the Ivy League school issued an active shooter alert and urged students and staff to take shelter during the second day of final exams.

Police did not immediately release details about the number of victims, their conditions or the circumstances of the shooting. The official who gave the tally of at least two dead could not publicly discuss details of the ongoing investigation and spoke to AP on condition of anonymity.

University officials initially told students and staff that a suspect was in custody, before later saying that was not the case and that police were still searching for a suspect or suspects, according to alerts issued through Brown’s emergency notification system.

“We’re still getting information about what’s going on, but we’re just telling people to lock their doors and to stay vigilant,” said Providence Councilmember John Goncalves, whose ward includes the Brown campus. “As a Brown alum, someone who loves the Brown community and represents this area, I’m heartbroken. My heart goes out to all the family members and the folks who’ve been impacted.”

The reported shooting occurred near the Barus & Holley building, a seven-story complex that houses the university’s School of Engineering and physics department. According to the university’s website, the building includes more than 100 laboratories, dozens of classrooms and offices.

Engineering design exams were underway in the building when the shooting occurred.

President Donald Trump said late in the afternoon that he has been briefed on the shooting.

“God bless the victims and the families of the victims!” he said on his social media site.

Students were urged to shelter in place as police responded to the scene, and people were told to avoid the area. A police officer warned media to take cover in vehicles because the area was still an active scene.

Officials cautioned that information remained preliminary as investigators worked to determine what had occurred.

Police were actively investigating and still gathering information from the scene, said Kristy DosReis, the chief public information officer for the city of Providence. The FBI said it was assisting in the response.

Brown is a private institution with roughly 7,300 undergraduate students and more than 3,000 graduate students. Saturday was the second day of final exams for the fall semester.



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Microsoft’s AI boss calls Elon Musk a ‘bulldozer’ with ‘superhuman capabilities’

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Microsoft AI CEO Mustafa Suleyman said he’s in regular contact with his peers in artificial intelligence, including OpenAI’s Sam Altman, Anthropic’s Dario Amodei, and Google DeepMind’s Demis Hassabis.

In fact, Suleyman and Hassabis once worked together as cofounders of DeepMind, though Suleyman went on to cofound Inflection AI then joined Microsoft last year.

In a wide-ranging interview with Bloomberg on Friday, he was asked to share his thoughts on some of his fellow AI leaders, including Altman, whose startup recently completed a for-profit restructuring and revamped its partnership with Microsoft.

He described Altman as “courageous,” noting that OpenAI is aggressively building out a fleet of AI data centers to handle the massive amount of computing power needed to run ChatGPT.

“He may well turn out to be one of the great entrepreneurs of our generation,” Suleyman added. “He’s certainly achieved a lot. He’s building data centers at a faster rate than anyone in the industry, and if he can pull it off, it will be pretty dramatic.”

And despite concerns that OpenAI’s investment commitments far outstrip its current level of revenue, he said he has every confidence the company can pull it off.

As for Hassabis, Suleyman called him a great scientist. “I think he’s a great thinker and he’s a good polymath. He’s made massive contributions in the field, multiple times. He’s truly exceptional.”

Suleyman also revealed that even though the one-time collaborators are now competitors, they remain good friends and stay in touch regularly. He even texted Hassabis recently to congratulate him on Nano Banana, Gemini 3 and AlphaFold.

Then he was asked about Elon Musk, who is an OpenAI cofounder but has since fallen out with Altman and is pursuing AI through his startup xAI. Suleyman called him a “bulldozer.”

“He’s kind of got superhuman capabilities to bend reality to his will and has, you know, pretty incredible track record,” he added. “And somehow he sort of mostly manages to pull off what appears to be impossible.”

Not only did Musk disrupt the auto and space sectors with Tesla and SpaceX, respectively, he’s charging into medical technology with Neuralink and transportation with the Boring Co.

He also dove into politics, becoming the top Republican donor last year, and briefly joining the Trump administration. He feuded with the president this summer, but they have shown some signs of warming up lately.

While Musk has a “different kind of set of values,” Suleyman said, “I kind of like that he speaks his mind. He’s very unfiltered.”



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Danish intelligence report warns of US economic leverage and military threat under Trump

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The United States is using its economic power to “assert its will” and threaten military force against friend and foe alike, a Danish intelligence agency said in a new report.

The Danish Defense Intelligence Service, in its latest annual assessment, said Washington’s greater assertiveness under the Trump administration also comes as China and Russia seek to diminish Western, especially American, influence.

Perhaps most sensitive to Denmark — a NATO and European Union member country, and a U.S. ally — is growing competition between those great powers in the Arctic. U.S. President Donald Trump has expressed a desire to see Greenland, a semiautonomous and mineral-rich territory of Denmark, become part of the United States, a move opposed by Russia and much of Europe.

“The strategic importance of the Arctic is rising as the conflict between Russia and the West intensifies, and the growing security and strategic focus on the Arctic by the United States will further accelerate these developments,” said the report, published Wednesday.

The assessment also follows the release last week of a new Trump administration national security strategy that depicts European allies as weak and aims to reassert America’s dominance in the Western Hemisphere.

Russian President Vladimir Putin has said Russia is worried about NATO’s activities in the Arctic and will respond by strengthening its military capability in the polar region.

The findings and analyses in the report echo a string of recent concerns, notably in Western Europe, about an increasingly go-it-alone approach by the United States, which under Trump’s second term has favored bilateral deals and partnerships at the expense of multilateral alliances like NATO.

“For many countries outside the West, it has become a viable option to forge strategic agreements with China rather than the United States,” read the report, which was written in Danish. “China and Russia, together with other like-minded states, are seeking to reduce Western – and particularly US – global influence.”

“At the same time, uncertainty has grown over how the United States will prioritize its resources in the future,” it added. “This gives regional powers greater room for maneuver, enabling them to choose between the United States and China or to strike a balance between the two.”

The Trump administration has raised concerns about respect for international law with its series of deadly strikes on alleged drug-smuggling boats in the Caribbean Sea and eastern Pacific Ocean — part of a stepped-up pressure campaign against President Nicolás Maduro of Venezuela.

Trump has also refused to rule out military force in Greenland, where the United States already has a military base.

“The United States is leveraging economic power, including threats of high tariffs, to assert its will, and the possibility of employing military force – even against allies – is no longer ruled out,” the report said.



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