2 Reasons Nvidia Stock Is Getting Hit By Oracle’s Earnings

Nvidia is the preferred provider of artificial-intelligence chips. (Joel Saget/AFP via Getty Images)

Key Points

• Nvidia shares decreased by 3.4% to $177.63, influenced by concerns about an AI bubble after Oracle’s earnings report.
• Oracle’s capital expenditures reached a record $12 billion, exceeding expectations of $8.4 billion, and its full-year forecast increased from $35 billion to $50 billion.
• Oracle announced a ‘chip neutrality’ policy, committing to work with various CPU and GPU suppliers, including an expanded partnership with AMD.

Nvidia was falling early on Thursday. The chip maker was being dragged down by fears of an artificial-intelligence bubble reignited by earnings from software and cloud-computing company Oracle .

Nvidia shares were down 3.4% at $177.63 in early trading. The benchmark S&P 500 was falling 0.6%.

Stocks exposed to the AI trend were being hit as Oracle slumped 12% in the premarket following earnings where guidance came in short of estimates and it raised its spending forecast. Oracle spent a record $12 billion in capital expenditures in its most recent quarter, higher than the $8.4 billion Wall Street was expecting. It also boosted its full-year capital-expenditure forecast from $35 billion to $50 billion.

While capex investment has been a boost for Nvidia and other chip companies making the graphics-processing units and central-processing units powering AI, investors look to be worried such spending is unsustainable. A particular concern is the extent to which Oracle and other cloud-computing companies depend on deals with ChatGPT-developer OpenAI.

“Heightened capex and debt expenses, as well as the tight alignment with OpenAI’s success, make this somewhat of a show-me story,” wrote William Blair analyst Sebastien Naji in a research note.

Nvidia shareholders might also have been spooked by Oracle’s comments that it will also strike deals with competing providers of chips.

“We are now committed to a policy of chip neutrality where we work closely with all our CPU and GPU suppliers. Of course, we will continue to buy the latest GPUs from Nvidia, but we need to be prepared and able to deploy whatever chips our customers want to buy,” said Oracle executive chair Larry Ellison in a statement.

Oracle said in October that it would expand its relationship with Advanced Micro Devices , as a launch partner for the first publicly available AI “supercluster” powered by AMD’s next-generation Instinct MI450 graphics processing units, or GPUs. The pair will deploy 50,000 chips starting in the third quarter of 2026.

Among other chip makers, Advanced Micro Devices was down 4.4% and Broadcom was falling 3.4%. Broadcom will report earnings after the market close on Thursday.

Write to Adam Clark at adam.clark@barrons.com