AI Spending Sparks Fear on Wall Street

Wall Street's Nasdaq dipped as concerns over Oracle's AI spending plans overshadowed positive signals from the Federal Reserve. Oracle stock plunged due to underwhelming forecasts, prompting fears of an AI bubble. Other tech stocks fell, while the Dow saw gains amid economic movements.

Wall Street witnessed a downturn in the Nasdaq index on Thursday, as Oracle's aggressive AI spending plans eclipsed optimism stemming from the Federal Reserve's dovish economic signals.

Oracle shares plummeted by 14% following disappointing quarterly forecasts and increased spending projections, reviving fears of a decelerating profitability trajectory for AI companies. This led to a surge in the cost of insuring Oracle's debt, reminiscent of the early 2000s dotcom bust.

The broader tech sector also experienced declines, with the S&P 500 technology segment dropping 1.6% and Nvidia's shares falling by 3.1%. Meanwhile, the Federal Reserve reduced borrowing costs, though Chair Jerome Powell hinted at pausing easing actions, bringing some investor relief amidst global expectations of higher interest rates by 2026.

(With inputs from agencies.)