SPX: AI-valuation worries, just temporary?S&P 500SP:SPXXBTFXThe FOMC week is usually the one followed by higher volatility, as investors' “nervousness” increases. The S&P 500 reached its highest level on Thursday at 6.903, however, tumbled down by more than 1% at Friday's trading session, closing the week at 6.827. Softening in AI valuations was one of the main drivers behind the drop. Oracle (ORCL) posted its quarterly earnings, right after the FOMC decision, which was indeed interesting timing for posting results. The company reported higher capital expenditures and delays in key AI-data center projects, which rattled confidence in the near-term profitability. This slump was also reflected to the other companies in the tech sector. Broadcom (AVGO) shares declined around 8% on guidance signaling margin pressure as AI-related product mix grows. While revenue outlook remains strong, investors focused on thinner future profit margins amid rising sales of custom AI systems, fuelling concerns about valuations in AI hardware. Market favorite Nvidia (NVDA) also softened on AI valuation worries, with modest declines as traders reassessed demand and capex expectations under current macro conditions. At this moment the market sentiment is showing some rotation out of high-growth AI names into other sectors such as value and cyclical segments. Still, analysts from UBS believe that the equity rally still has room to run, potentially extending for another year. UBS is projecting that the S&P 500 could climb to 7,700 by the end of 2026, with the so-called Magnificent Seven once again playing a central role in driving gains, according to a note from UBS posted on Friday.