While this morning brings several hot topics—from a strong September NFP print to Japan’s sudden surge in exports accompanied by the new government’s announcement of a massive fiscal stimulus—we will again focus on the tech sector and the dramatic reversal seen yesterday in equity markets.
U.S. markets closed sharply lower, despite having risen more than 2% earlier in the session (Nasdaq +2.6%, S&P 500 +1.9%). Another better-than-expected quarterly report from NVDA initially pushed indices higher. The outlook appeared particularly encouraging: the company’s CFO projected anticipated revenues of half a trillion USD, and CEO Jensen Huang triumphantly stated that from their “vantage point,” they saw no signs of an AI bubble.
So what explains one of the largest (and unfortunately negative) reversals of recent months, affecting not only tech but broader markets? Some analysts believe the real concern lies with companies taking on substantial debt—both to build models and, more significantly, to construct data centers—without having a sufficiently solid financial base. Oracle, a long-established name and one of the protagonists of the dot-com bubble 25 years ago, stands out among these.
On September 10, the company surprised markets with excellent results and a 45% increase in data-center revenues. On the same day, Oracle announced plans to increase investment in these infrastructures by 14x to $144 billion by 2030. No less significant—indeed even more so—was the announcement of a $300 billion deal with OpenAI.
But there was a catch: the company carries roughly $95 billion of debt maturing in 2025, with interest expenses alone amounting to nearly 20% of EBIT and—according to JP Morgan—a net-debt-to-EBITDA ratio of around 400%. Moreover, free cash flow in 2024 was negative at –$0.39 billion.
Technical Analysis
On September 10, Oracle shares recorded their largest single-day gain ever, rising 35.95% and reaching an all-time high of $345.12. Since then, the stock has done nothing but fall, hitting $210.69 yesterday (–6.58%), a decline of 38.95% from the highs in roughly two months.
On October 30, the stock lost its 50-day moving average; a few days later, on November 3, it slipped below the 100-day. That same week, the September upside gap was fully closed at $242. As of today, the stock rests on the psychologically important 200-day moving average.
Selling volumes have been consistently and persistently high. To be fair, RSI is in oversold territory, but as you may know, a trend reversal often requires a divergence—which can take months to form. Key static support levels lie at $189 and then $163 (clearly, this is long-term analysis). It is also worth noting that the earliest and least steep ascending trendlines—those on which Oracle’s broader technical uptrend was built—now sit around $135 and $80.
To be clear, we are not saying these levels will be reached, much less in the near term: making reliable long-term forecasts with price targets nearly 50% away from current levels is speculative at best. However, with deteriorating fundamentals, the stock may be one to place on a watchlist for those who consider themselves short-sellers—while carefully calibrating entry levels.
