WARNING: AI FEAR JUST GOT MORE SERIOUS...
In a Nutshell
Oracle's $20B revenue miss triggered a $500B market selloff, with AI stocks like Nvidia, Micron, and Intel dropping 3-5% as investors question $2T valuations on missing targets. Oracle's revenue slowdown and data center delays, plus Starlink's new telecom threat, drove sharp declines in chip and telecom sectors. Fed rate pause odds sit at 84% ahead of critical CPI data next week that could confirm returning inflation.
These notes were generated by AI and may contain inaccuracies.
The trading session closed with a significant sell-off during normal trading hours rather than overnight, driven by Oracle's announcement rather than political news. Oracle's revenue slowdown announcement triggered selling across memory chip stocks, with the NASDAQ experiencing a sharp retracement. The speaker exited their Micron position with $10,528 in profits, maintaining only one share, and had previously shorted WDC in the live trading session.
$500 billion has been wiped from the US market following news that OpenAI's revenue came in $20 billion short of expectations. OpenAI was previously expected to generate $70-100 billion in revenue but achieved only $50 billion. Despite this shortfall, companies like Micron, SK Hynix, and SanDisk are reporting higher net profits and are cash-rich quarter-over-quarter. The concern centers on AI companies attempting to maintain $2 trillion valuations while missing revenue targets significantly.
Semiconductors dropped 3.4-4% overall, with the Financial Times reporting OpenAI's annualized revenue was $20 billion below company guidance. Nvidia fell 3% as the worst-performing Dow name, while Intel dropped 5%. Micron was among NASDAQ's biggest losers. Oracle's announcement included both revenue slowdown and production delays at its Jupiter plant data center in New Mexico, where OpenAI is the final occupant, raising concerns about contract viability given Oracle's position as the worst-financed hyperscaler trading 50% below all-time highs.
AT&T, Verizon, and T-Mobile all sold off following Elon Musk's SpaceX announcement that Starlink plans to become a major US mobile carrier. Ticker T was down 6.39%. Despite the immediate sell-off, Verizon is described as a well-run business with long-term bullish prospects. The market reaction to these telecom stocks will be closely monitored.
Micron is approaching the lower end of its thousand support level based on recent trading range. A break below this thousand support could lead to retesting lows around 900. The stock is approaching oversold conditions. Markets are described as bullish with strong higher highs and higher lows, though breaking current support could lead to significant downside given elevated valuations based on AI company estimates.
The Federal Monitor tool shows an 83.9% probability that the Federal Reserve will pause interest rates and a 16.1% probability of raising rates. Next week's CPI data report will be crucial, as it will use the original calculation method rather than the adjusted methodology that previously showed lower inflation. Recent increases in pump prices indicate inflation pressures are returning, making this upcoming report particularly significant for market direction.
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