Tech Sector Stumbles as Oracle’s Spending Plans Spark Investor Anxiety

Friday's trading session saw significant divergence in U.S. equity markets. While the S&P 500 hovered near its record levels, the technology-heavy Nasdaq 100 faced substantial selling pressure. The primary catalyst was a dramatic sell-off in Oracle shares, which cast a shadow over the entire sector and reignited a critical debate: are the massive capital expenditures required for artificial intelligence infrastructure ultimately eroding potential returns?

Oracle's stock plummeted by over 15%, dragging down the broader technology segment. The cloud computing giant reported a robust 68% revenue growth in its cloud business for the quarter. However, it simultaneously missed overall revenue expectations by $155 million. The market's focus swiftly shifted to a separate announcement: Oracle intends to allocate an additional $15 billion toward AI-related investments by 2026.

Investor reaction was unequivocal. Rather than celebrating growth ambitions, the market interpreted the news as a signal of spiraling costs with no clear timeline for profitability. The core concern is that spending on AI infrastructure is outpacing the revenue it generates. This skepticism spilled over to other hardware and infrastructure stocks. Broadcom also faced pressure after its revenue forecast for AI-related segments fell short of analyst expectations.

Macroeconomic Headwinds Compound Tech Weakness

Adding to the sector's challenges was a shift in the macroeconomic backdrop. The yield on the benchmark 10-year U.S. Treasury note climbed to a three-month high. Rising interest rates typically compress the valuation multiples of high-growth, expensive technology stocks. In a related development, analysts at JPMorgan now anticipate the U.S. Federal Reserve will only lower its key interest rate to 3.4% by the end of 2026—a more modest reduction than previously forecast.

Should investors sell immediately? Or is it worth buying NASDAQ 100?

Nvidia and Tesla Face Specific Pressures

The negative sentiment enveloped other major tech constituents. Nvidia extended its recent losses, shedding approximately 7% over the preceding five trading days. The chipmaker's shares are contending with growing market skepticism regarding the narrative of "infinite demand" for AI hardware. Tesla also found itself in the crosshairs of sellers. Analyst projections suggest the electric vehicle maker could see a second consecutive annual sales decline in 2025, with an estimated drop of 8%. Furthermore, the robotaxi fleet championed by CEO Elon Musk is not expected to enter series production until 2026 at the earliest.

Divergent Signals: Crypto and Options Activity

Interestingly, the risk-off mood was not uniform across all asset classes. Ethereum advanced by 7%, trading near $3,320. In contrast, Bitcoin traded approximately 30% below its October highs at under $85,000, highlighting fragmented risk appetite.

A notable technical signal emerged in derivatives markets. Trading volume for put options on the QQQ ETF, which tracks the Nasdaq 100, surged to levels last observed in April 2025 and during the 2022 bear market. From a contrarian perspective, such extreme hedging activity can sometimes indicate that a market bottom is forming, provided key support levels hold.

The coming week will reveal whether this "capex anxiety" continues to spread or if bargain hunters begin to step into battered stocks like Oracle. The trajectory of bond yields will remain a crucial factor for the technology sector's valuation environment.