Oracle Stumbles: AI Spending Sparks Stock Market Jitters

U.S. stock futures fell as Oracle's forecast spooked investors worried about AI spending. Oracle's shares dropped 12% amid concerns over debt financing and missed quarterly estimates. Other AI-related stocks like Nvidia and Microsoft also saw declines despite the Federal Reserve’s recent rate cut and signals of a pause in easing.

On Thursday, U.S. stock index futures plunged following disconcerting forecasts from Oracle, which raised alarms over elevated AI spending. This overshadowed any optimism built by the Federal Reserve's less hawkish stance, causing Oracle's shares to plummet 12% in premarket trading.

Oracle's quarterly projections failed to meet analysts' expectations as the company announced an increase in annual spending by $15 billion. Initially, Oracle had gained traction by securing deals to construct AI cloud data centers for OpenAI, but now faces its steepest quarterly decline since 2002 due to concerns about debt reliance.

Negative sentiment rippled through the market, affecting other AI-related companies. Shares of Nvidia and Broadcom dipped, while Microsoft's and Amazon.com's fell marginally. Despite the Federal Reserve's rate cut and Chairman Powell's cautious approach, traders remain wary, anticipating more monetary easing next year.

(With inputs from agencies.)