US stock market futures declined sharply Thursday morning after database giant Oracle reported weaker-than-expected quarterly revenue, sending technology stocks lower across global markets and abruptly ending a rally sparked by the Federal Reserve’s interest rate cut.
Tech-Heavy Indexes Lead Decline
Futures contracts tracking the Nasdaq 100 index fell 1.1 percent in early trading, while S&P 500 futures dropped 0.8 percent. The declines signal a difficult opening for US markets following Wednesday’s record highs.
Oracle’s third-quarter revenue of $16.2 billion missed analyst estimates, triggering an 11.5 percent plunge in the company’s shares during after-hours trading. The disappointing results overshadowed positive sentiment from the Federal Reserve’s rate cut decision announced earlier Wednesday.
AI Investment Concerns Resurface
Jim Reid, global head of macro research at Deutsche Bank, described Oracle’s results as “disappointing” and noted that concerns about artificial intelligence investments remain prominent despite recent Fed reassurance.
“Even as investors were reassured by the Fed’s latest rate cut, familiar concerns about AI are still very much top of mind right now,” Reid wrote.
The Oracle miss highlights ongoing investor uncertainty about whether massive spending on AI infrastructure will translate into proportional revenue growth for technology companies.
Fed Rate Cut Provides Brief Relief
US stocks had reached record highs Wednesday after the Federal Reserve cut interest rates to a three-year low, meeting widespread Wall Street expectations. The central bank’s decision was intended to support economic growth amid signs of labor market weakness.
Mohit Kumar, chief European economist at Jefferies, noted that Fed Chair Jay Powell’s press conference was “less hawkish than feared,” with Powell emphasizing weakness in the labor market rather than inflation concerns.
“The door remains open for further easing,” Kumar said, suggesting additional rate cuts remain possible depending on economic conditions.
Global Ripple Effects
Asian markets declined Thursday following the Oracle results. South Korea’s Kospi 200 dropped 0.9 percent, matching the decline in Tokyo’s Topix index. South Korean chipmaker SK Hynix, a key supplier for AI data centers, fell 3.7 percent.
Hong Kong’s Hang Seng tech index dropped 0.8 percent as Chinese technology stocks also felt pressure from the Oracle disappointment.
European markets followed suit, with a technology sub-index of the Stoxx Europe 600 falling 0.5 percent in early Thursday trading.
What This Means for Markets
The swift reversal in market sentiment demonstrates the fragility of the current technology stock rally. Despite supportive monetary policy from the Federal Reserve, investors remain highly sensitive to any signs that AI-related revenues are not meeting elevated expectations.
Oracle’s miss is particularly significant because the company has positioned itself as a major player in cloud infrastructure for AI applications. Weakness in this area raises questions about the broader AI spending cycle and whether technology companies can justify their current valuations.
The global nature of Thursday’s decline also shows how interconnected technology markets have become, with a single earnings disappointment from a US company quickly affecting sentiment across Asian and European technology stocks.
For cryptocurrency markets, which often move in correlation with risk assets like technology stocks, the broader sell-off in equities could create additional downward pressure on digital asset prices. Bitcoin and other cryptocurrencies frequently decline when investors reduce exposure to speculative technology investments.
The coming days will reveal whether this represents a temporary setback or the beginning of a broader reassessment of technology stock valuations, particularly for companies heavily invested in AI infrastructure.
