Dow Hits Record High While Tech Stocks Fall on Oracle Shock

The Dow Jones Industrial Average hit an all-time high while the tech-heavy Nasdaq Composite declined as Oracle reignited concerns about an artificial intelligence industry bubble.

On Wednesday, the Dow Jones Industrial Average rose 646.26 points, or 1.34%, to close at 48,704.01 on the New York Stock Exchange, marking a record high. The S&P 500 also gained 14.32 points, or 0.21%, to finish at 6,901.00. The Nasdaq, however, fell 60.30 points, or 0.26%, to close at 22,593.86.

Among large-cap stocks, AI-related names broadly retreated, including Nvidia (-1.55%), Apple (-0.27%), Amazon (-0.65%), Alphabet (-2.43%), Broadcom (-1.60%), and Palantir (-0.20%). Microsoft (+1.03%) and Meta (+0.40%) held up relatively well.

The divergence between blue-chip and tech stocks was triggered by Oracle's fiscal second-quarter results for the September-November period, released after the market close the previous day. With quarterly revenue and operating profit slightly missing market expectations, anxiety over AI investment spread rapidly after Oracle raised its capital expenditure outlook.

Oracle reported second-quarter capital expenditure of approximately $12 billion, a sharp increase of $3.5 billion from $8.5 billion in the first quarter. This far exceeded the market estimate of $3.7 billion in growth. The company also projected full-year fiscal 2026 capital expenditure of approximately $50 billion, $15 billion higher than previous forecasts. As concerns about overinvestment intensified, Oracle's credit default swap premium, which reflects default risk, reached its highest level since 2009.

Oracle's cloud infrastructure revenue, the metric Wall Street watched most closely, rose 68% to $4.08 billion but fell short of market expectations. Cloud sales increased 34% to $7.98 billion, also missing forecasts. The remaining performance obligations backlog grew by $68 billion from $455 billion at the end of the first quarter to $523 billion at the end of the second quarter. Oracle shares tumbled 10.84% on the day amid these headwinds.

Blue-chip stocks' resilience appeared partly influenced by the Federal Reserve's decision at its Federal Open Market Committee meeting the previous day, when it cut rates once more and struck a less hawkish tone than before. The Nasdaq, which had been down more than 1% at one point, pared some losses as bargain hunters stepped in late in the session.

Among individual stocks, Walt Disney rose 2.42% after announcing a $1 billion equity investment in OpenAI. Eli Lilly gained 1.58% on news that its next-generation obesity treatment showed positive results in clinical trials.

Crude oil prices also reversed course and fell as Oracle dampened investor sentiment. West Texas Intermediate crude for January delivery declined $0.86, or 1.47%, to settle at $57.60 per barrel on the New York Mercantile Exchange, the lowest level since October 20.