Oracle weighs on Wall Street, ASX set to rise
Stan Choe
Most U.S. stocks are higher on Thursday, but a selloff at Oracle is weighing on Wall Street as investors question whether its big spend on artificial intelligence technology will pay off.
The S&P 500 fell 0.4 percent, moving further away from its all-time high set in October. While declines in AI-related stocks dragged the Nasdaq composite down 1.2 percent, the Dow Jones fared much better with a gain of 465 points, or 1 percent.
The Australian share market is poised to rise, with futures at 4.54am AEDT pointing to a 93-point, or 1.1 per cent, rise at the open. The ASX gained 0.2 per cent on Thursday.
Oracle lost 14.4 percent and was on track for its worst day since 2001, when the dot-com bubble continued to collapse. It reported 14 percent growth in revenue in the latest quarter; This was well below analysts’ expectations, although its profit was above forecasts.
Doubts remain about whether all of Oracle’s spending on AI technology will deliver the increased profits and productivity returns that backers promise. Analysts said they were surprised by how much Oracle could spend on AI investments this fiscal year, and questions remain about how the company will pay for it.
Such doubts are putting general pressure on the AI industry as billions of dollars continue to flow. These questions helped drag the broader U.S. stock market into some sharp and frightening swings last month.
Nvidia, the chip company that has become the poster child of the artificial intelligence boom and generates close to $20 billion ($30 billion) in revenue each month, fell 3.6 percent on Thursday. This was the S&P 500’s top weight.
Oracle Chairman Larry Ellison said that it will continue to buy chips from Nvidia, but that they now follow a policy of “chip neutrality” in which they will use “chips that our customers want to buy.” “There will be many changes in AI technology over the next few years, and we need to remain agile in response to these changes.”
Despite struggles for AI-related companies, much of the U.S. market rose on Thursday, including three out of four stocks in the S&P 500.
Eli Lilly led the way, rising 3.6 percent after announcing encouraging results from a clinical trial on adult patients who did not have diabetes, knee osteoarthritis, and were obese or overweight.
Walt Disney Co. gained 1.2 percent after OpenAI said the entertainment giant would invest $1 billion in it. It’s part of a three-year deal that also allows OpenAI to use more than 200 Disney, Marvel, Pixar and Star Wars characters to create short, user-driven social videos.
Planet Labs PBC rose 30.6 percent after the provider of satellite imagery used by governments and businesses reported stronger results than analysts expected in the latest quarter.
On Wall Street’s losing side, Oxford Industries tumbled 23.1 percent after the company behind Tommy Bahama and Lilly Pulitzer noted how its customers are looking for deals and are “extremely value-oriented.” CEO Tom Chubb said the start of the holiday shopping season was weaker than the company expected and he lowered its revenue forecast for the full year.
Meanwhile, Vera Bradley fell 22.9 percent after reporting a larger-than-expected loss in the latest quarter.
In the bond market, Treasury yields fell after a report said the number of U.S. workers applying for unemployment benefits rose more than economists expected last week. This is a potential indicator of increased layoffs and could encourage the Federal Reserve to continue lowering interest rates to support the job market.
A day earlier, yields fell after the Fed cut its key interest rate for the third time this year and indicated another rate cut could occur in 2026. Wall Street likes lower interest rates because they can stimulate the economy and raise investment prices, even if they potentially worsen inflation.
The yield on the 10-year Treasury note fell to 4.12 percent from 4.13 percent on Wednesday and 4.18 percent on Tuesday.
Indices in stock markets abroad started to rise in Europe after falling in most of Asia.
Japan’s Nikkei 225 index fell 0.9 percent, hurt by the sharp decline of SoftBank Group, a major investor in artificial intelligence.
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