Markets
markets
Matt Phillips

Oracle slides as traders sour on the recently anointed AI darling

Oracle is getting hit hard as investors question the durability of the AI boom.

Since the stock hit an all-time high in September, powered by the company’s $300 billion deal with OpenAI, shares are down about 40%.

And it’s not just the company’s share price that’s reflecting investors’ newfound jitters.

Volume in the market for credit default swaps — essentially a kind of insurance against a company defaulting on its debts — is surging as the company has supercharged its borrowing to finance its AI ambitions, Bloomberg’s Caleb Mutua reports:

“The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected, according to ICE Data Services.

As AI skeptics rushed in, trading volume on the company’s CDS ballooned to about $5 billion over the seven weeks ended Nov. 14, according to Barclays Plc credit strategist Jigar Patel. That’s up from a little more than $200 million in the same period last year.”

The activity in the Oracle CDS market underscores continued focus from investors on the risks associated with AI, even after Nvidia’s knockout earnings results Wednesday and efforts to quell persistent questions about an AI bubble.

Such concerns seem to have gotten the better of the market yesterday, with the S&P 500, after being up almost 2%, reversing hard back into the red. Today, markets are being propped up, in part, by a key Fed official's comments supporting a "near term" rate cut.

A Hedge Against AI Crash Emerges as Oracle CDS Market Explodes

A Hedge Against AI Crash Emerges as Oracle CDS Market Explodes

Volume in the market for credit default swaps — essentially a kind of insurance against a company defaulting on its debts — is surging as the company has supercharged its borrowing to finance its AI ambitions, Bloomberg’s Caleb Mutua reports:

“The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected, according to ICE Data Services.

As AI skeptics rushed in, trading volume on the company’s CDS ballooned to about $5 billion over the seven weeks ended Nov. 14, according to Barclays Plc credit strategist Jigar Patel. That’s up from a little more than $200 million in the same period last year.”

The activity in the Oracle CDS market underscores continued focus from investors on the risks associated with AI, even after Nvidia’s knockout earnings results Wednesday and efforts to quell persistent questions about an AI bubble.

Such concerns seem to have gotten the better of the market yesterday, with the S&P 500, after being up almost 2%, reversing hard back into the red. Today, markets are being propped up, in part, by a key Fed official's comments supporting a "near term" rate cut.

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Paige Oamek & Luke Kawa

MongoDB sees knee-jerk drubbing then massive gains after impressive Q1 results, boost to full-year guidance

At first, it looked like another case of a software company selling off despite reporting strong results, with traders (or algorithms) sending MongoDB 21% lower in postmarket trading. That drubbing came even as the distributed database platform company beat Wall Street estimates on the top and bottom lines and lifted its full-year fiscal 2027 guidance.

What a difference seven minutes make. Those losses vanished, and then the stock proceeded to trade more than 20% higher.

Here are the Q1 numbers:

  • Revenue of $687.6 million (compared to analyst estimates of $664.5 million).

  • Adjusted earnings per share of $1.32 (estimate: $1.19).

Management hiked its full-year adjusted EPS guidance to a range of $5.95 to $6.14, up from a previous view of $5.75 to $5.93 and north of the $5.88 that analysts are anticipating. The annual sales outlook was also lifted to a range of $2.92 billion to $2.96 billion, up $600 million from its prior guidance and above the $2.9 billion consensus estimate.

The Q2 outlook provided by the company also bettered what the Street had penciled in for the top and bottom lines.

So for those keeping score at home, that’s a $5.6 billion drop in market cap as a knee-jerk reaction, followed by a $12.6 billion surge in value off the lows. Price discovery; it’s truly a beautiful thing.

Shares are still down year to date even after today’s volatility, but hey, the way things have been going, just give it a few minutes.

markets
Paige Oamek

Costco misses out on the retailer rally after mixed Q3 report

Wall Street is giving it less than five big booms.

Costco’s shares were effectively flat in after-hours trading Thursday immediately following the company’s fiscal third-quarter earnings report. The retailer managed to outperform Wall Street estimates on earnings per share and membership fees, but missed on revenue overall as budget-conscious consumers looking for bulk discounts spent less than analysts had expected.

Here are the numbers:

  • Revenue of $69.2 billion (estimate: $69.6 billion).

  • Adjusted earnings per share of $4.93 (estimate: $4.91).

  • Membership fees of $1.37 billion (estimate: $1.35 billion).

At least some of the company’s revenue in Q3 was likely boosted by rising gas prices — especially because drivers often flock to Costco’s pumps looking for relatively cheaper fuel when prices elsewhere spike.

Other retailers had rosier earnings today. Kohl’s, Best Buy, and Dollar Tree all put up double-digit gains on Thursday and surpassed estimates, surprising some investors who expected to see shoppers pulling back given weakened consumer confidence.

Costco’s stock is up 17% since the beginning of the year. One buyer is President Donald Trump, who bought millions in Costco in the first calendar quarter of the year.

markets
Luke Kawa

Dell soars after delivering blowout quarterly results and boosting full-year guidance

Dell is holding onto its eye-watering gains, up nearly 40% in the early trading action on Friday, after delivering blockbuster quarterly results and significantly raising its full-year guidance yesterday afternoon.

For its fiscal 2027 Q1, the PC and server company reported:

  • Net revenue of $43.8 billion (compared to analyst estimates of $35.5 billion and guidance for $35.2 billion, plus or minus $500 million).

  • Adjusted earnings per share of $4.86 (estimate: $2.99, guidance for $2.90).

Management now sees full-year sales of about $167 billion (plus or minus $2 billion), up significantly from its prior $140 billion outlook. That’s well above the $142 billion anticipated by analysts.

The bottom-line boost is even bigger, with the midpoint of its adjusted EPS guidance at $17.90, up from $12.90 previously (estimate: $13.14 billion).

Dell’s undergone a major transformation under the hood thanks to the AI boom. AI server sales, the biggest unit within its Infrastructure Solutions Group, didn’t exist until late 2023. That segment now contributes more to Dell’s top line than the entire Client Solutions Group, its mature PC-focused business. The company expects to book roughly $60 billion in AI server sales this year, up from prior guidance of about $50 billion.

The company got a big win ahead of this earnings report, receiving a $9.7 billion contract from the Pentagon to manage Microsoft software licenses across different swaths of the military.

Dell's rosy outlook for its AI-powering servers has given a leg up to HP Enterprise, which is also up 18% this morning.

Tasha Matsumoto
14h
Stocks close at new records

Axios reported that the US and Iran have reached a tentative deal to extend the ceasefire by 60 days, pending President Trump’s approval.

Chicago Bulls Dennis Rodman (91), Scottie Pippen (33) and Michael Jordan (23) during game vs Miami Heat. Miami, FL 2/23/1996
markets
Luke Kawa

Super Micro soars on heavy call volume as management trumpets its work with Taiwan to avoid chip smuggling into China

Super Micro Computer is spiking on elevated call demand amid the company’s push to show it’s part of the chip-smuggling solution, rather than the problem.

Call volumes are running at 392,857 as of 12:16 p.m. ET, already well north of the 214,893 average over the past 20 sessions. The put/call ratio of 0.16 is also well below the 20-day average of 0.29, underscoring the bullish tilt in options.

This morning, management put out a statement saying that the company had “worked closely with Taiwanese authorities” to help prevent its servers (which contain Nvidia’s AI chips) from making their way into China in violation of export controls, and that this collaboration “resulted in the arrest of three suspects and the seizure of 50 servers that had been deceptively acquired after being sold by Supermicro to an authorized reseller.”

The company also aimed to emphasize that none of this was its fault.

“This case highlights the challenges that can arise when products are resold through multiple downstream parties beyond direct manufacturer control,” per the statement.

Back in March, Super Micro’s cofounder was among those charged by US prosecutors for allegedly attempting to sell $2.5 billion in servers with Nvidia GPUs to China. The stock had swooned on the news and lifted fellow server companies that weren’t tainted by this association. One analyst even suggested that Super Micro lost a billion-dollar contract with Oracle in part because of these allegations.

Shares have since recovered all those losses, and then some.

On the conference call following Super Micro’s big Q3 earnings beat, CEO Charles Liang said he didn’t “feel a negative feeling” from customers at the time despite these charges.

CFO David Weigand added that the company also hasn’t seen a decrease in its allocation of chips from Nvidia in the wake of this news.

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