Another day, another update that's givinginvestors anxiety about the AI trade.
The US tech sector was under pressure onWednesday as traders took in a report from The Financial Times that said Blue Owl Capital wouldn't back a $10 billion data center the company was planning to
build in Michigan for OpenAI.
Oracle shares led the broader market lower,falling as much as 6% Wednesday. The tech-heavy Nasdaq Composite shed more than 1%.
The latest developments extend a broaderrotation out of the market's most expensive tech stocks and into other parts of the market.
The enthusiasm for AI has dampenedparticularly in the past week, Adam Turnquist, the chief technical strategist at LPL Financial, said on Wednesday.
"Additionally, rotation pressure outof tech has accelerated, with positioning data showing rising demand for smaller-cap and value stocks," Turnquist said of the latest market moves.
The FT's report said that talks betweenOracle and Blue Owl Capital stalled over the planned data center. The private credit firm will not move forward with funding the project due to concerns about Oracle's hefty AI spending and growing debts, sources told the outlet.
Oracle disputed the contents of the FTreport.
"The FT story is incorrect. Ourdevelopment partner, Related Digital, selected the best equity partner from a competitive group of options, which in this instance was not Blue Owl. Final
negotiations for their equity deal are moving forward on schedule and according to plan," Michael Egbert, a spokesperson for Oracle, told Business Insider in an email.
It's been a rough few months for the AItrade, but particularly for Oracle. After impressing investors with an aggressive revenue forecast, the stock has declined steadily in the last two
months as the company stokes more concerns about the large amounts of debt coursing through the AI space. Shares are down 45% from their peak in early September.
Oracle recently triggered another sell-offin tech after reporting lower-than-expected earnings and pledging to increase its capital expenditures more than expected in the coming year.
CoreWeave is the other prominent tech nameto join Oracle recently as a poster child of investors' growing anxieties about the health of the AI trade. Similar to Oracle, CoreWeave has spooked investors with its high debt load and reliance on a handful of customers. As of Wednesday
afternoon, the stock is down 66% from its post-IPO high reached in June.