Oracle logo on dark (Wikimedia Commons, public domain)
Oracle falls 7.2% as rate hike bets weigh on AI stocks
Nebius and CoreWeave also declined as investors questioned the cost and returns of the AI infrastructure buildout.
Oracle shares fell 7.2% in Wednesday trading as rising expectations of another Federal Reserve rate increase pressured debt-heavy AI infrastructure companies, Reuters reported on October 14.
Nebius dropped 15.1% and CoreWeave fell 9.5% in the report’s market snapshot. Data center operators Applied Digital and IREN declined 8.8% and 9.9%, respectively. Most of Oracle’s dollar bonds also fell.
Hot consumer inflation data increased expectations of a second Fed rate hike as soon as this month. Ten-year Treasury yields rose 3.6 basis points, while two-year yields gained 7.2 basis points, Reuters reported.
Higher borrowing costs would increase the expense of financing data centers and AI chips. Bokeh Capital Partners Chief Investment Officer Kim Forrest said investors were questioning whether the buildout would deliver expected returns.
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Dell and HPE fell 10.3% and 6.4% after Barclays cut both stocks to equal-weight from overweight. The bank cited higher valuations and limited evidence of a meaningful AI inflection.
Default protection costs for some AI companies, including Oracle and CoreWeave, reached record highs, according to S&P Global Market Intelligence data cited by Reuters. At the reported trading levels, CoreWeave was on course to lose about a quarter of its value this month and Nebius nearly a fifth.