Semiconductor stocks declined on Thursday as Oracle Corporation’s (NYSE:ORCL) latest quarterly report delivered a mixed message to Wall Street, dragging major chip names lower in early trading.
Nvidia Corp. (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO), Advanced Micro Devices Inc. (NASDAQ:AMD), Marvell Technology Inc. (NASDAQ:MRVL), Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), Micron Technology Inc. (NASDAQ:MU), Intel Corp. (NASDAQ:INTC) and Arm Holdings plc (NASDAQ:ARM) all traded in the red following the update.
Oracle outlined an aggressive plan to scale its artificial intelligence infrastructure, even as the results left investors divided. The company intends to boost capital expenditures by $15 billion in fiscal 2026 to help convert what it called a record $523 billion backlog into revenue.
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Quarterly Results: Strong EPS, Soft Revenue
Oracle also projects an additional $4 billion in sales by fiscal 2027 as AI-driven demand accelerates. The quarter delivered a 54% jump in adjusted earnings per share to $2.26, beating expectations, but revenue came in light at $16.06 billion.
Remaining performance obligations surged 433% year-over-year to $523 billion, reflecting swelling demand for the company’s cloud and AI services.
CFO Doug Caring said Oracle will expand capacity only when it meets profitability targets, noting that much of the backlog is linked to multi-year AI infrastructure contracts for customers, including Nvidia and Meta Platforms Inc. (NASDAQ:META).
Despite reporting a negative free cash flow of $10 billion for the quarter, analysts widely view Oracle’s capital-heavy strategy as essential for competing in the fast-moving AI infrastructure race.
Oracle reported a 66% increase in cloud infrastructure revenue and said it plans to add 64 new cloud regions globally, reinforcing its aim to become a foundational provider in the AI era.
Geopolitical Pressures
The broader chip sector is already navigating heightened geopolitical pressure as the U.S. tightens controls on advanced semiconductor exports to China, a major end market and global manufacturing hub.
Nvidia is rolling out new software to trace where its AI processors are deployed in an effort to prevent illegal transfers into restricted markets. The tracking system will launch for its latest Blackwell chips and later extend to Hopper and Ampere generations.
The initiative follows U.S. Justice Department charges against two Chinese nationals accused of smuggling Nvidia’s H100 and H200 processors into China.
At the same time, Beijing is raising approval requirements for certain Nvidia AI chips as it pushes to reduce reliance on foreign technology and triple domestic AI chip output by 2026.
Price Action: Nvidia shares were down 1.37% at $181.26 during premarket trading on Thursday, according to Benzinga Pro data. Oracle shares were down 12.38% at $195.40.
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