The Nasdaq is erasing three weeks of AI gains as Broadcom's weak outlook, hot jobs data, and Middle East tensions converge; Oracle reports tonight and a blowout quarter may be the only cure.
The Nasdaq 100 is on track for its first close below 29,000 since mid-May, giving back everything the artificial intelligence (AI) rally built over the past three weeks in less than a week of selling.
Broadcom’s (AVGO) fiscal second-quarter results served as the trigger for the sell-off, as traders looked past the earnings beat and focused instead on the unchanged guidance. The outlook cracked the AI trade wide open, and a hotter-than-expected May nonfarm payrolls report accelerated the selling on Friday, with AI-levered stocks leading the declines.
Although stocks staged a comeback on Tuesday, renewed selling pressure emerged as traders reacted to U.S. President Donald Trump’s warning of retaliation after Iran shot down an Apache helicopter. The sell-off intensified by mid-session, though equities later recouped part of their losses. The weakness spilt over into Wednesday’s session as traders digested a mixed May inflation report and weighed in on Trump’s mixed war messaging.
Meg-Cap Rout
Source: TradingView
Legacy giant, $553 billion AI backlog
With a bruised Nasdaq in the background, traders are now pinning their hopes on a strong earnings report tonight from Oracle (ORCL), a company that has quietly pulled off one of the most remarkable reinventions in corporate America.
Most people know Oracle as the company that sold the databases sitting behind the scenes at banks, hospitals, and government agencies for the past four decades. Then the AI boom changed everything. Oracle's cloud infrastructure platform attracted AI giants like OpenAI and Meta, who needed enormous computing power to train their models. The Larry Ellison-founded company had quietly built exactly the kind of high-speed network they required.
The stock hit an all-time intraday high of around $346 in September last as Wall Street re-rated it from a boring "value" name into a bona fide AI growth story.
ORCL’s AI-driven Rally
Source: TradingView
The numbers back up the hype. Just last quarter, Oracle posted its strongest revenue growth in over 15 years, with cloud revenue surging 44% and cloud infrastructure, the AI engine of the business, up 84%. The company is sitting on $553 billion in signed future contracts, up 325% from a year ago.
Analysts want to see $1.96 in fiscal year 2026 fourth-quarter earnings per share on $19.1 billion in revenue, and more importantly, proof that all those signed contracts are actually turning into real revenue. The concern is that renting out computing power to AI firms is a lower-margin business than Oracle's old software model, and the company has committed to spending $50 billion this year building out the infrastructure to honour its backlog.
Other Catalysts to Watch on Thursday
The macro calendar adds another layer of complexity to an already fragile tape. May Producer Price Index (PPI) data lands at 8:30 AM ET. A second consecutive inflation surprise in either direction could meaningfully reprice Fed rate expectations and amplify or dampen the tech sector's rate sensitivity.
The European Central Bank (ECB) also delivers its rate decision Thursday, and while a 25 basis point cut is widely expected, any hawkish language in the accompanying statement could strengthen the euro and weigh on U.S. multinationals with heavy European revenue exposure.
Weekly jobless claims round out the morning data, with the labour market's resilience having been a key driver of the recent hawkish repricing.
Nasdaq 100 Technical Outlook: Support in Focus
The Nasdaq 100's technical picture has deteriorated sharply. The index has sliced through its 20-day moving average, and this which supported the entire May rally, has now flipped to resistance.There is no meaningful support until the rising 50-day SMA at 27,794.
Source: TradingView
The Relative Strength Index (RSI) is approaching oversold territory on the daily chart but has not yet reached levels that have historically triggered durable reversals, suggesting the path of least resistance remains lower unless Oracle delivers a blowout quarter capable of reigniting conviction in the AI trade.