Closing post
Time to wrap up…
Oracle’s shares have tumbled by up to 15% today after its latest quarterly financial results disappointed Wall Street.
The business software company, co-founded by Donald Trump ally Larry Ellison, saw roughly $80bn vanish from its value, falling from $630bn to $550bn in market capitalization and fuelling fears of a bubble in artificial intelligence-related stocks. Shares of chipmaker Nvidia, seen as a bellwether for the AI boom, fell after Oracle’s.
The drop extended a 11.5% fall during after-hours trading that followed results showing a lower-than-expected 14% rise in revenues to $16bn (£12bn) in the latest quarter.
Investors were also spooked by Oracle raising forecasts for its already-enormous investment in AI. It expects capital expenditure to jump by 40% to $50bn, with the bulk of the increase aimed at building datacentres.
In a busy day for AI news, Walt Disney has announced a $1bn equity investment in OpenAI, enabling the AI start-up’s Sora video generation tool to use its characters….
…while Google DeepMind is to build its first “automated science laboratory” in the UK, in a boost to the country’s artificial intelligence ambitions.
Meanwhile in Scotland, two green biotechnology firms have announced they will build new factories at the Grangemouth site which will employ up to 460 people.
Interest rates were cut in Turkey…
..and held at zero in Switzerland.
FTSE 100 closes higher
Britain’s stock market has ended the day higher, as the City shrugs off AI bubble worries.
The FTSE 100 share index has closed 47 points higher at 9703, up 0.49%, its highest closing level in a week.
Metlen Energy (+5.3%), Ashtead Group (+4.7%) and JD Sports (+3.5%) led the risers, with Informa (-3.2%) and Smith & Nephew (-2.7%) the top fallers.
“US tech stocks pulled back after Oracle shocked the market with weaker than expected results and plans to keep doling out the cash on AI-related investments,” says Dan Coatsworth, head of markets at AJ Bell, adding:
“Names in the broader AI universe were in the red, including Arm Holdings, Broadcom, Advanced Micro Devices and Nvidia, as tech investors wondered if there has been too much exuberance in the space.
“It’s stoked bubble fears again, leading to a wobbly market just days before Christmas. Investors want to know when all this AI money is going to generate a positive financial return, and it’s unclear if that’s happening sooner or later.
“Hot on the heels of a US interest rate cut were jobless claims figures that came in higher than expected. The Fed is watching the labour market closely for signs of weakness and any notable deterioration would strengthen the argument for more interest rate cuts down the line.
“Meanwhile on this side of the Atlantic, the FTSE 100 burst to life in afternoon trading, with materials, consumer cyclicals and healthcare leading the way.”
