Tech Sector Faces AI Bubble Fears Amid Oracle Setback

Investor concerns over a potential AI bubble are mounting as Oracle's disappointing earnings results loom over global markets. Despite ongoing AI spending, Oracle's miss on profit and revenue forecasts has affected stock futures in the U.S. and Europe, drawing attention to upcoming Broadcom earnings.

Investor anxiety over a potential tech bubble has resurfaced, sparked by Oracle's disappointing earnings, despite unrelenting AI expenditure. The challenges the sector faces in converting such spending into profit continue to persist.

The optimism surrounding the Federal Reserve's less hawkish stance at its last meeting faded quickly. Oracle's cloud computing forecast showed a deficit, as spending increased beyond expectations, affecting market futures in both Europe and the U.S.

Oracle's results, now a gauge of an AI bubble, saw shares plummet over 11% in after-hours trading. This shifted investor focus to Broadcom's expected earnings. Meanwhile, a 25-basis-point rate cut from the Fed brought short-lived relief, with the U.S. dollar facing pressure and the euro nearing two-month highs.

(With inputs from agencies.)