BTC, Nasdaq Futures Drop as Oracle Earnings Revive AI Bubble Fears

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Markets

What to know:

  • Bitcoin slipped below $90,000, as traders, in their infinite wisdom, treated the Fed’s rate cut as a “sell the news” event, erasing any optimism that had been pre-baked into the market.
  • Oracle shares took a dive of 12%, based on earnings and capex guidance, though the credit markets seem more focused on the “repricing of risk” than the sound of the panic button being hit.

The great risk asset conundrum unfolds this Thursday, despite the Fed’s seemingly heroic rate cut. Oracle’s earnings debacle adds fuel to the fire, all while the central bank insists on maintaining its hawkish stance. Oh, what a show we have today!

Bitcoin, the once-mighty cryptocurrency that now seems intent on behaving like a moody teenager, is currently trading near $90,000. This represents a 2.8% drop over the last 24 hours, a significant enough dip to make anyone second-guess their crypto dreams. Meanwhile, the futures for Wall Street’s tech-heavy Nasdaq are down by 0.80%. Not the kind of performance you’d hang your hat on.

Late Wednesday night, Oracle decided to grace the world with its fiscal second-quarter 2026 earnings (Q2 FY26). And surprise, surprise, the total revenue was slightly below consensus. Legacy software revenue is in the dumps, and new license sales are so weak, they might as well be on life support.

This reveals the gaping chasm between the debt-fueled AI infrastructure spending spree and the sad reality of cash flow delays. A perfect reminder of the great AI bubble of 2025. How quaint.

The Financial Times was there, as always, to rub it in, reporting that Oracle’s earnings were overshadowed by a $15 billion surge in planned data centre spending and the disappointing revenue miss. Meanwhile, Oracle’s long-term debt ballooned to a jaw-dropping $99.6 billion-a 25% increase from the previous year. Maybe the “cloud” isn’t so fluffy after all.

Oh, and for those still betting on the cloud, Oracle’s cloud infrastructure revenue came in at $4.1 billion, underwhelming expectations. But don’t worry, they’ll keep expanding their debt to cover it. Debt expansion: the gift that keeps on giving!

The report goes on to say that Morgan Stanley is now predicting Oracle’s net debt could surge to a mind-boggling $290 billion by 2028. So, let’s just call that a “strategic plan,” shall we?

Oracle’s stock didn’t get the memo and fell over 10% in after-market hours. AI stocks took a dive right along with it, and once again, the crypto market was dragged down in the wreckage. No need to panic-this is all part of the master plan, right?

Social media immediately latched onto Oracle’s five-year credit default swaps (CDS), the kind of insurance contract that lets you bet on whether Oracle will default or not. And guess what? It’s now the highest it’s been since 2022. How lovely.

The Special Situations newsletter summed it up with a nice little bit of sarcasm: “Historically, ORCL CDS traded around 20-40 bps, so 117 bps represents a material repricing of risk, but not a distressed profile.” Not distressed, just highly uncomfortable. But, hey, let’s call it “repricing” to sound fancy.

And for those who were getting too excited about the Oracle 5Y CDS graph, it’s a hard pill to swallow: “Oracle 5Y CDS graph looks exciting $ORCL until you run the math and realize that it is only pricing in a 1.93% probability of default per year and a 9% 5-year cumulative probability of default,” the newsletter added. Sweet dreams, Oracle investors.

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2025-12-11 13:53