U.S. artificial intelligence stocks were in negative territory premarket Friday, extending their losses into their third day.
Oracle was down 0.9% in pre-market trading, paring earlier losses that saw it fall 1.3%. Nvidia lost 0.7%, Micron fell 0.9%, and CoreWeave was down 1.3% as of 5:16 a.m. ET.
Broadcomwhich posted a strong quarter on Thursday, was last seen down 5%.
Cloud computing and database software maker Oracle’s stock price fell on Thursday, ending the session down about 11% after earnings beat analysts’ expectations on Wednesday.
It has dragged other AI-related names with it despite a record rally elsewhere on Wall Street, suggesting investors are moving away from the technology and toward other parts of the market.
The heavy on technology Nasdaq Composite fell 0.26% on Thursday, despite the Dow Jones Industrial Average and S&P 500 hitting new record highs in late trading.
Despite growing demand for Oracle’s artificial intelligence infrastructure, the company reported mixed results this week. Revenue came in at $16.06 billion, compared to $16.21 billion expected by analysts, according to data compiled by LSEG.
This followed widespread speculation about the long-term health of the company, with investors cautious about its reliance on debt to execute the build of its AI infrastructure. The striking of circular deals within the industry as a whole has also raised eyebrows.
“We believe recent investor scrutiny over the potential of artificial intelligence and circular trading on GPUs may be too punitive for major AI vendors like Oracle,” said Luke Yang, equity analyst at Morningstar. “Oracle remains a respectable cloud provider that benefits from high switching costs across its entire suite of databases, applications and infrastructure. »
“We have lowered our long-term earnings outlook as it now proves more difficult to deliver Oracle’s planned capacity on time. However, we continue to view the shares as undervalued,” Yang added.
