Tech Giants Rethink Strategies Amid AI Funding Challenges and Market Fluctuations

On Wall Street, there has been a noted decline in the stock value of technology companies linked with artificial intelligence. This downturn began following news that a major investor withdrew funding from Oracle’s $10 billion data center project. Oracle’s shares fell nearly 5% after the Financial Times reported that Blue Owl Capital, the largest sponsor of Oracle’s data centers in the U.S., decided not to finance a new data processing center in Michigan.

The Nasdaq Composite Index, which focuses on tech companies, decreased by 1.1%. The situation was similar last week when a drop in Oracle and semiconductor maker Broadcom’s stock negatively impacted the entire market. On Wednesday, Broadcom’s shares fell by 5.5%. Investors are worried about the company’s slowing growth rates, despite it recently surpassing analysts’ forecasts for profits and sales. Nvidia’s stock decreased by more than 3%, and Alphabet (Google’s parent company) nearly 3%.

Goldman Sachs analysts note that investors will pay increased attention to monetization, creating real value, and the return on investments in AI. They also believe that there will be increased scrutiny over the financial state of companies developing models, as these occupy a growing share of chipmakers’ revenues.

Oracle, owned by billionaire Larry Ellison, has seen its stock fall by about 14% over the last six months. Blue Owl Capital’s withdrawal is the second setback for Ellison. Previously, the Warner Bros Discovery board rejected Paramount Skydance’s acquisition proposal worth $108.4 billion. Paramount is controlled by the Ellisons.

Other major Wall Street stock markets also declined, though not as significantly as the Nasdaq. The S&P 500 index fell by 0.8%, and the Dow Jones Industrial Average decreased by 0.3% in the first half of the trading day in New York.

Barclays analyst Venu Krishna highlighted that major technology companies remain the main driver of growth in the American stock market, driven by unprecedented investments in AI. According to him, 10 major stocks now account for about a third of the S&P 500’s profits and more than 40% of the total market capitalization, the highest figure since 1980.