Oracle and Broadcom’s recent setbacks shake AI stocks, but investors remain confident the technology’s long-term growth story is intact.
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| AI stocks dip after Oracle and Broadcom warn on costs and margins, but investors remain selective and optimistic about long-term AI potential. Image: CH |
New York, United States — December 13, 2025:
The AI stock boom faced a jolt this week as Oracle and Broadcom delivered updates that rattled investors, reigniting concerns about frothy valuations and potential overheating in the sector. Yet despite the selloff, optimism for the broader AI trade remains firmly intact.
Oracle’s shares plunged as much as 17% after the company warned its fiscal 2026 capital expenditures would be $15 billion higher than previously expected, reflecting the enormous costs of expanding AI infrastructure. Investor unease grew further after reports that some Oracle data centers for OpenAI will now be completed in 2028 instead of 2027.
Broadcom followed with a warning that lower-margin custom AI processors are squeezing profitability, causing shares to drop more than 11%. Together, these announcements weighed on other tech stocks, dragging the Nasdaq down 1.4% and the S&P 500 down 0.9% just a day after record highs.
The events highlight a subtle but meaningful change in how investors approach AI. For the past two years, aggressive AI spending often triggered automatic stock gains. Now, investors are more selective, scrutinizing whether massive outlays on AI will deliver sustainable profits.
Mark Hackett, chief market strategist at Nationwide, noted that the correlation between aggressive capital spending and stock price has weakened, signaling that investors are looking more closely at execution and profitability. Similar patterns followed Meta’s warnings in November about rising AI-driven data center costs, which triggered a sharp decline in its shares.
High-profile skeptics, including Michael Burry, have raised alarm bells, comparing the current AI frenzy to the 1990s dot-com bubble and taking selective short positions on tech names like Palantir. But most data suggest that short-selling remains concentrated in smaller AI-related companies, while the largest AI beneficiaries—such as Nvidia—remain lightly shorted.
Peter Hillerberg, cofounder of Ortex Technologies, said, “Taken together, the data look more like targeted skepticism in individual AI stories than a broad, coordinated attempt to call the top of an AI bubble.” Demand for data centers and AI computing power continues to outpace supply, supporting ongoing optimism.
Analysts suggest the market is entering a phase of selective investment, favoring companies that can turn AI spending into sustainable profits rather than rewarding any firm associated with AI. As Chuck Carlson of Horizon Investment Services put it, subdued performance may occur, but the broader AI story is far from over.
The Oracle-Broadcom turbulence underscores that while AI stocks are no longer immune to scrutiny, the technology’s transformative potential keeps investor confidence strong. For now, the message is clear: the AI trade may be maturing, but it is far from losing momentum.