US stocks turned lower on Wednesday, with tech names leading the retreat. The Nasdaq Composite fell 1.3% by 17:00 GMT as investor caution around AI spending persists.
Broadcom, Palantir, and Oracle, key players in the AI infrastructure buildout, all fell further after last week’s sharp declines. While the stocks remain up for the year, the ongoing debate over whether AI spending will generate sufficient returns continues to shape trading.
Broadcom and Oracle beat revenue forecasts but left investors focused on financing and profitability. Oracle, relying heavily on debt to fund data centre expansion, raised its capital expenditure estimate to $50 billion for the current fiscal year, up from $35 billion. The company also disclosed $248 billion in lease commitments for data centres and cloud capacity, set to run 15–19 years, a 148% increase since August.
Broadcom CEO Hock Tan said AI chip sales this quarter are expected to double year-on-year to $8.2 billion, supported by custom chips and AI networking semiconductors. CFO Kirsten Spears warned that gross margins would be lower for some AI systems due to rising production costs.
Oracle shares fell around 4% following a Financial Times report that its $10 billion data centre project lost backing from private lender Blue Owl Capital. The report highlighted scrutiny of the sector’s use of debt and off-balance-sheet arrangements to fund AI infrastructure.
Investors remain focused on how AI investments translate into earnings, with high costs and rising debt continuing to weigh on sentiment across the sector.