Oracle's AI Spending Shakes Markets Amid Fed's Steady Move

Concerns over Oracle's AI spending overshadowed optimism about Fed's rate pause, causing market declines. Oracle's stocks dropped due to increased AI investment and potential debt reliance. Meanwhile, a Fed rate cut brought temporary market relief. Eli Lilly's new obesity drug showed positive performance.

On Thursday, U.S. stock markets are set to open lower as Oracle's significant AI spending plans create fresh concerns, overshadowing the Federal Reserve's less aggressive interest rate stance. Oracle's stock plunged 13% in premarket trading following a disappointing quarterly forecast and plans for an additional $15 billion in annual spending, mainly for AI advancements.

Worries about an AI bubble are growing as Oracle appears to be rapidly amassing debt, reminiscent of the early 2000s' dotcom bust. Investors anticipate Oracle's sustained volatility, with increased spending and opaque capital expenditures further fueling concerns. Other AI-related stocks, including chipmakers Nvidia and Broadcom, as well as tech giants like Microsoft and Amazon, saw declines.

In more positive news, Eli Lilly's stock rose as its latest obesity drug outperformed its blockbuster counterpart. Elsewhere, the Federal Reserve's decision to lower borrowing costs provided a brief market reprieve, though fears over future rate movements remain amid ongoing economic growth concerns.

(With inputs from agencies.)