Oracle leads tech sell-off on worries about AI
Shares in Oracle ORCL.N down more than 5% eying biggest two-day sell-off since late October, leading Friday's losers in the S&P 500 technology index .SPLRCT as the software company appeared caught in crosshairs of Alphabet-OpenAI square-off
Latest sign of jitters that recent gains artificial intelligence related stocks could burst like a bubble amid high valuations, fierce competition
Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut said investors are still digesting Alphabet's GOOGL.O Tuesday launch of Gemini 3 update to its AI model which was favorably recieved vs OpenAI's ChatGPT
O'Rourke described Oracle as a publicly traded proxy strongly levered to OpenAI, partly owned by Microsoft Corp MSFT.O
"They are taking on massive financial commitments in order to build out the data centers OpenAI needs. Oracle is taking on significant debt to do so," the strategist said.
"The market’s major AI bubble fear has been that with $1.4 Trillion in spending commitments at all of the major U.S. tech companies, if OpenAI stumbles everyone feels it," he told Reuters
ORCL, last trading at $199.81, pared some losses from its Friday low of $193.58 - its nearest trade so far to its June 11 $176.38 close.
ORCL started massive AI-inspired rally when it breached the $200-mark for the first time on June 12 after raising annual revenue forecast on strong demand for its AI-related cloud services. It hit a record high of $345.69 on Sept 10 before gradually losing ground since then
YTD shares in ORCL still up 20.8% vs gain of ~19% for SPLRCT
On Friday, Alphabet shares were up ~2%, erasing some losses from Thursday, when it got caught in a broader market sell-off. After the Gemini 3 release GOOGL hit intraday records Wednesday and Thursday
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