European Markets Stay Flat as AI Valuation Jitters Weigh on Stocks; Novo Nordisk Slips After Drug Price Deal

European stocks were largely unchanged on Friday, with major indices struggling to recover from Thursday’s losses as investors grew cautious over inflated valuations in the artificial intelligence (AI) sector. The pan-European Stoxx 600 hovered around the flatline in early London trading, reflecting mixed sentiment across regional markets.

The U.K.’s FTSE 100 led the decline, slipping 0.3%, while France’s CAC 40 edged up slightly and Italy’s FTSE MIB advanced 0.2%. Germany’s DAX remained marginally positive. The quiet session follows a week of volatility fueled by concerns that the AI-driven rally may be losing momentum — a trend that has mirrored the recent tech sell-off on Wall Street.

Among notable movers, Novo Nordisk shares dropped more than 2% after the Danish pharmaceutical company struck a deal with U.S. President Donald Trump to reduce prices on its popular weight-loss drugs. The company had already lowered its growth forecasts earlier this week, adding pressure to its stock. Meanwhile, drinks giant Diageo, which plunged 6.5% on Thursday after cutting full-year guidance due to weaker demand in China and the U.S., rebounded slightly on Friday, gaining 0.3%.

Investors are also digesting fresh earnings reports from major European companies including Richemont, Daimler Truck, Amadeus IT Group, and IAG. Economic data from Germany and France, alongside the U.K.’s latest House Price Index, are expected to shape market sentiment heading into the weekend. The Bank of England and Norway’s central bank both kept rates unchanged this week, but BOE Governor Andrew Bailey hinted that a rate cut could come before Christmas, suggesting that monetary policy is now “past peak restrictiveness.”

Globally, the cautious tone was echoed across Asia, where markets fell sharply overnight. Japan’s Nikkei 225 slid 2% as AI-related stocks led losses, with SoftBank tumbling over 8%. In the U.S., major tech names like Nvidia, Microsoft, and AMD also slipped, as analysts warned of an overheated AI sector. Despite the downturn, Tesla shares drew attention after billionaire Elon Musk secured shareholder approval for a record-breaking $1 trillion pay package.

source: cnbc