Oracle’s AI Spending Casts Shadow Over Tech Sentiment

NASDAQ 100 US6311011026

A wave of selling pressure hit technology stocks on Thursday, with futures tracking the Nasdaq 100 index declining by approximately 1.1%. This sharp reversal completely erased the previous session's gains, driven primarily by a disappointing earnings report from software giant Oracle that has reignited concerns over the profitability of massive artificial intelligence investments.

The negative pivot marks a stark contrast to the optimism that followed the U.S. Federal Reserve's decision on Wednesday to cut its key interest rate by 25 basis points. That positive sentiment proved short-lived. After the closing bell, Oracle released quarterly results that fell short of analyst projections, reporting revenue of $16.06 billion against expectations of $16.21 billion. More alarmingly for investors, the company signaled a significant ramp-up in capital expenditures for AI infrastructure without providing clear visibility on a near-term return on investment.

The market's reaction was immediate and severe. Oracle shares plummeted 11.5% in pre-market trading. The sell-off contagion spread across the technology sector. In European trading, SAP shares dropped 2.9%. Meanwhile, Nvidia faced additional pressure from reports concerning illegal chip shipments to China.

Technical Levels Under Scrutiny

From a chart perspective, the Nasdaq 100 is now testing a critical support level at 25,165 points. A sustained break below this threshold could trigger further selling and potentially open a path toward the index's 50-day moving average. On the upside, resistance at 25,745 points remains a key hurdle; a conclusive move above this level would be needed to improve the technical outlook.

Interestingly, broader market internals present a more nuanced picture. Recently, 65% of Nasdaq 100 constituents were trading above their 20-day moving average, a notable improvement from the 23% recorded in mid-November. This indicates the recent rally had been broadening, which provides some context for today's pullback.

Multiple Headwinds Converge

Trading volumes are expected to be elevated at the open as institutional investors recalibrate their portfolios following the Oracle news. In a contrasting signal, the yield on the 10-year U.S. Treasury note fell to 4.12%, a development that typically supports growth-oriented technology stocks. However, today that positive factor is being overshadowed by renewed concerns over corporate earnings growth and spending.

The immediate question for traders is whether buyers will emerge at the current support zone or if skepticism toward the AI investment cycle will prevail. While the Federal Reserve has provided monetary policy support with its rate cut and the prospect of further easing in 2026, its ability to fully offset worries over fundamental business performance will be tested throughout the trading session.