{"id":344533,"date":"2025-12-14T11:14:15","date_gmt":"2025-12-14T11:14:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/344533\/"},"modified":"2025-12-14T11:14:15","modified_gmt":"2025-12-14T11:14:15","slug":"oracle-broadcom-one-two-punch-hits-ai-trade-but-investor-optimism-persists","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/344533\/","title":{"rendered":"Oracle-Broadcom one-two punch hits AI trade, but investor optimism persists"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Oracle\u2019s shares slumped as much as 17 per cent since Wednesday\u2019s close after the company warned capital expenditures for fiscal 2026 are expected to be $15-billion higher than it estimated in September.TOM BRENNER\/Reuters<\/p>\n

The red-hot trade backing artificial intelligence-related stocks has taken a bruising from back-to-back troubling updates from Oracle and Broadcom, reigniting concerns about frothy valuations and an AI bubble.<\/p>\n

Still, investors say reasons for optimism about AI remain intact, and many are wary about calling a top.<\/p>\n

Investors have piled into AI-related companies this year as the technology has taken off, with promises to make Corporate America more efficient.<\/p>\n

But some investors feel AI-related shares are overvalued. High-profile names such as Michael Burry have been bearish, comparing the recent AI boom to the 1990s dot-com era. For now, however, short-selling has been limited to smaller companies, with few pressing bearish bets against the biggest AI names.<\/p>\n

Markets today: A tech-led selloff, Citi\u2019s outlook for 2026, and the pot stock faithful have their day<\/a><\/p>\n

Oracle misses sales and operating profit estimates as shares decline, indicating drop in corporate spending<\/a><\/p>\n

The latest concerns centred on Oracle and Broadcom. Oracle\u2019s shares slumped as much as 17 per cent since Wednesday\u2019s close after the company, which has taken on debt to finance its ambitious AI spending, warned capital expenditures for fiscal 2026 are now expected to be US$15-billion higher than it estimated in September.<\/p>\n

Oracle stock came under fresh pressure on Friday following a Bloomberg report that the company has pushed back the completion dates for some of the data centres it is developing for OpenAI to 2028 from 2027.<\/p>\n

Broadcom shares fell more than 11 per cent on Friday, a day after the chip maker warned growing sales of lower-margin custom AI processors were squeezing profitability, sparking worries that the business may be less lucrative.<\/p>\n

The hit to Oracle and Broadcom weighed on other tech shares during the day, as investors worried about AI spending and the lack of a clear timeline on returns from the investments. The tech-heavy Nasdaq sank 1.4 per cent, while the S&P 500 Index fell 0.9 per cent on Friday afternoon, a day after finishing at a record high.<\/p>\n

\u201cI still think the AI trade is intact,\u201d said Chuck Carlson, chief executive at Horizon Investment Services in Hammond, Ind. \u201cI don\u2019t think this is the beginning of a sustained significant decline.\u201d<\/p>\n

The turbulence this week for AI-linked stocks seemed similar to shorter-term selling in the wake of the DeepSeek news earlier this year and other AI \u201cblips downward\u201d in 2025, said Carlson.<\/p>\n

He was not recommending that clients sell AI-exposed stocks such as Nvidia, and said the outlook for many such stocks remained solid.<\/p>\n

\u201cIs there going to be potentially more subdued performance in those stocks [heading into 2026]? Yeah, but I mean, they\u2019ve been gangbusters and it\u2019s hard to maintain that,\u201d he added.<\/p>\n

Oracle, on Thursday, declined to comment on its share price move or the AI trade. Broadcom did not immediately respond to a request for comment on Friday.<\/p>\n

Investors have been growing more picky in the AI space, some market participants said, with less willingness to indiscriminately reward spending on AI.<\/p>\n

\u201cYou\u2019ve seen this really positive correlation between really aggressive capital spending and stock prices … That has changed pretty significantly beneath the surface over the last couple of months,\u201d said Mark Hackett, chief market strategist at Nationwide.<\/p>\n

In late November, Meta shares slumped 11 per cent after the Facebook and Instagram parent forecast \u201cnotably larger\u201d capital expenses next year due to AI investments, including aggressively building data centres.<\/p>\n

Capital spending, a crucial component of the AI trade, has propelled equities following the launch of AI assistant ChatGPT in November, 2022.<\/p>\n

\u201cI think a leadership shift is absolutely warranted and it\u2019s underway. But that doesn\u2019t mean the AI story switches off like a light switch,\u201d Hackett said.<\/p>\n

Even investors who question the AI trade are wary of betting against it.<\/p>\n

\u201cI believe today the stock market is in a phase that could become a blow-off top of extreme magnitude on the upside,\u201d Burry, the famed investor whose successful 2008 bets against the U.S. housing market were dramatized in the movie The Big Short, wrote in a post.<\/p>\n

Burry recently stepped up criticism of tech heavyweights including Nvidia and Palantir Technologies, questioning the cloud infrastructure boom. He has a short position on Palantir.<\/p>\n

Two leading U.S. fund managers, who requested anonymity, said worries about a bubble are exaggerated. They said Big Tech \u201chyperscalers\u201d were still struggling to meet unrelenting demand for more data centres.<\/p>\n

\u201cAcross our basket of 61 AI-related stocks, we don\u2019t yet see positioning that looks like investors aggressively betting on an AI bubble bursting,\u201d said Peter Hillerberg, cofounder at data and analytics company Ortex Technologies. Investors have shown a pick-up in appetite to short the smaller and mid-cap AI names, yet the largest AI beneficiaries remain only lightly shorted, Ortex data showed as of Thursday.<\/p>\n

\u201cWe have seen stock-specific spikes in short interest around earnings and headline risk in certain AI-linked names, including Oracle, and some of those trades will naturally look smarter after sharp post-results moves,\u201d Hillerberg said.<\/p>\n

\u201cBut taken together, the data look more like targeted skepticism in individual AI stories than a broad, coordinated attempt to call the top of an AI bubble.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Oracle\u2019s shares slumped as much as 17 per cent since Wednesday\u2019s close after…\n","protected":false},"author":2,"featured_media":344534,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,901,276,277,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-344533","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-alberta","tag-artificial-intelligence","tag-artificialintelligence","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/344533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=344533"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/344533\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/344534"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=344533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=344533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=344533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}