Nasdaq collapses 1.8%: Oracle has forced tech sector investors to seek protection
The Nasdaq Composite Technology Index plunged nearly 2% on December 17 as Oracle's stock plunged, pulling other AI-related securities with it. The FT reported that Oracle lost an investor in one of its data center projects: this triggered a new wave of fears on Wall Street about the AI bubble. Investors decided to bet on more reliable "value stocks" and take a more defensive stance at the end of the year, analysts said.
Details
- The Nasdaq Composite Technology Sector Index fell by 1.8% on December 17. The main contribution to the decline was made by Oracle, Nvidia, Broadcom, AMD and Alphabet, which came under pressure due to investors' concerns about the overvaluation of AI stocks and doubts about the timing of monetization of projects with artificial intelligence, CNBC writes.
- The broad market index S&P 500 declined 1.16%, extending the series of losses to four consecutive sessions. Pressure on the index was also exerted by a sell-off in shares of companies related to AI infrastructure.
- The blue-chip index Dow Jones Industrial Average, which includes the 30 largest U.S. companies, lost 0.47%. Its decline was more moderate due to a smaller share of technology companies compared to the Nasdaq and S&P 500, but the index also fell for the fourth consecutive session.
What impacted the stock
Shares of Oracle, which had previously been among the leaders of the AI rally, fell 5% after the Financial Times reported on the refusal of its key partner, Blue Owl Capital, to participate in the financing of a new data center project in Michigan worth $10 billion. The publication's sources pointed, in particular, to Blue Owl's concerns related to Oracle's debt load and level of expenses. Oracle said that negotiations on the deal are "on schedule" and do not include Blue Owl.
Investors have been unnerved in recent weeks by risky financing schemes related to large-scale data center construction, CNBC writes. Just last week, Oracle denied Bloomberg's report about allegedly postponing part of the projects for OpenAI to 2028.
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