AI shocked one day: Oracle, Broadcom plummet, Fermi almost "cut in half in one day"

The "ghost stories" of AI are becoming reality. Just as the market is still reveling in the grand narrative of AI, a brutal "bloodbath" unfolded on Wall Street on Friday, US East Coast time: cloud giant Oracle and chip leader Broadcom both plummeted, but even more surprising was that internet-famous AI infrastructure company Fermi's stock price was halved at one point, plunging 46%. This is not just a setback for individual companies. Panic spread like wildfire, directly leading to a sharp decline in the semiconductor index, almost wiping out all gains from December, with the Nasdaq plummeting nearly 400 points in a single day. Overnight, investors went from unlimited admiration for AI to deep anxiety about valuation bubbles. At the same time, a frenzy of AI-driven data center construction is sweeping through Texas in the United States, with the scale so large that the power grid cannot bear the burden - the electricity demand for facilities expected to be connected by 2030 exceeds 220GW, more than twice the peak load, with over 70% being data centers. "This absolutely looks, smells, and feels like a bubble," a energy expert bluntly stated, "the numbers are ridiculous... we simply don't have the capacity to build so many facilities, I don't even know if China can do it so quickly." This precisely reveals the market's deepest fear: how long can the massive spending supporting AI computing power continue to soar? Oracle delays data center project, adding fuel to the fire, AI stocks plunge During the early trading session of the US stock market on Friday, media reports claimed that Oracle had postponed the completion date of certain data centers developed for OpenAI from 2027 to 2028. At midday, Oracle denied this news, with a company spokesperson stating via email: "Site selection and delivery schedules are closely coordinated and mutually agreed upon after the agreement with OpenAI is signed. All (data center) locations required to fulfill contractual obligations have not experienced any delays, and it is expected that all milestones will be achieved as planned." On Friday, Oracle's intraday decline widened to over 6%, further intensifying the downturn following an 11% plunge after the previous day's performance announcement, and after denying the media report, the midday decline exceeded 4%, closing down nearly 4.5%, with a cumulative decline of 14.8% in two days after the financial report was released. By the end of Friday's trading session, the stock price had fallen more than 40% from its peak on September 10, erasing gains from the past six months. This news triggered a across-the-board decline in AI-related company stocks. Broadcom maintained a decline of over 10%, closing down 11.4%, while Astera Labs and Coherent Corp. both closed down over 10%. The Philadelphia Semiconductor Index closed down over 5%, marking the largest drop in nearly two months. Nvidia closed down over 3%, and CoreWeave, an AI computing power service provider supported by Nvidia, closed down around 10%. The sell-off even spread to the energy sector, with stocks related to power such as Constellation Energy, Vistra, GE Vernova, and Cummins all declining. Nuclear power giant Constellation fell 7%. The latest news has increased concerns among investors about whether the infrastructure spending supporting AI computing power can maintain its momentum, which has been a major driver of the rise in related company stocks this year. Despite the recent pullback, the Philadelphia Semiconductor Index has still risen by over 40% year-to-date, outperforming the Nasdaq 100 index and the S&P 500 index by approximately 20% and 16% in cumulative gains, respectively. What exactly happened? Media reports on Friday cited insiders as saying that Oracle had postponed the completion date of certain data centers developed for OpenAI from 2027 to 2028. Insiders said that the delay was mainly due to a shortage of labor and materials. This summer, Oracle signed a $300 billion contract with OpenAI to provide the computing power needed to train and run AI models. Despite the delay in the data center construction, the projects in the United States are still ambitious and, once completed, will become one of the largest data centers in the world. Oracle's co-CEO Clay Magouyrk stated on a conference call after the financial report was released on Thursday that the company had "ambitious but achievable capacity delivery goals globally." He said that Oracle's first data center developed for OpenAI in Abilene, Texas, is progressing well, with over 96,000 Nvidia chips delivered. Both Oracle and OpenAI declined to comment on the data center news on Friday. The market's panic is not unfounded, as Oracle's deteriorating financial model is the root cause of the "powder keg." The financial report released after the close on Wednesday triggered a market explosion shortly after opening on Thursday: Oracle's stock price fell nearly 11%, marking the largest single-day decline in nearly 11 months. The financial data reveals a harsh reality: while core cloud revenue growth of 34% fell short of expectations, capital expenditures to support AI expansion soared to $12 billion, far exceeding the expected $8.25 billion. The company also significantly raised its annual capital expenditure guidance by 43% to $50 billion, leading to a deterioration in free cash flow to negative $10 billion and total debt climbing to $106 billion. The market suddenly realized that Oracle's AI narrative had silently changed: from a "high-growth story" to a difficult model of "high investment, high debt, slow return." Just a few months ago, the situation was completely different. Oracle's stock price soared due to signing a massive AI contract, and its founder even briefly became the world's richest person. The reversal in the financial report and stock price signals the end of a frenzy phase. Strong performance by Broadcom, but stock plunges after earnings call The panic did not stop at cloud service providers. Despite strong performance, Broadcom's stock price plunged nearly 12% at one point on Friday, hitting the largest drop in 10 months, following the release of its financial report after the close on Thursday. The report showed fourth-quarter revenue of $18 billion, adjusted earnings per share of $1.95, both exceeding analysts' expectations by nearly 30% and 40% year-over-year, respectively. Broadcom expects first-quarter revenue of about $19.1 billion, exceeding the average analyst expectation of $18.3 billion, with CEO Hock Tan stating that after a 74% year-over-year growth in the fourth quarter, AI semiconductor revenue will further accelerate in the current quarter, doubling to $8.2 billion year-over-year. Broadcom also raised its quarterly dividend by 10% to $0.65 per share. However, Tan's remarks during the earnings call on Thursday unsettled investors. He revealed that Broadcom has a backlog of $73 billion in AI product orders for the next six quarters, but this backlog disappointed some investors. Some media outlets pointed out that investors were disappointed with Broadcom not providing a complete AI revenue guidance for 2026 and not being "excited enough" about the $73 billion order backlog. Overall, Broadcom did not meet investors' high expectations. Tan also warned during the call that Broadcom's overall profit margin is narrowing due to AI product sales. He stated that AI revenue is "a moving target" and "it is difficult to accurately determine the situation in 2026, so I would rather not give you any guidance." Regarding the cooperation with OpenAI, Tan clearly stated that the agreement with OpenAI may not bring much return to Broadcom in 2026. He said, "We expect not much (return) in 2026." Earlier, according to an agreement announced in October of this year, Broadcom will provide up to 10 gigawatts (GW) of data center infrastructure for OpenAI from 2026 to 2029. Tan stated that most of the returns from this deal will be realized in 2027, 2028, and 2029. J.P. Morgan analyst Josh Meyers evaluated Broadcom in a report, saying, "It's surprising to see a call that started with such good numbers and such a good story end in disappointment." Hot data center concept stock Fermi almost "halves in one day" If industry giants are experiencing a "major setback," then the AI concept stocks with the most appealing stories are directly entering a "free fall." On Friday, Fermi, the internet-famous AI energy infrastructure company co-founded by former Trump administration Energy Secretary Rick Perry, saw its stock price plummet by 46% at one point, nearly halving in a single day. The immediate trigger for the steep decline was the company's disclosure that its major client is canceling its lease: its first tenant suddenly withdrew a commitment of about $150 million in construction funding. The funds were originally intended to support the construction of its large AI park in West Texas. Affected by this news, Fermi's stock price underwent a sharp decline during trading hours, although the closing decline narrowed somewhat, the cumulative retreat from its high point since its listing in October has reached 70%. In response to this incident, Fermi's management made great efforts to stabilize the situation in the announcement. The company emphasized that although the tenant declined to provide construction funding, negotiations on lease terms are still ongoing and have not completely broken down. It is worth mentioning that on the first day of its listing in October, CEO Tony Neugebauer of the company boldly declared to the Financial Times that they had secured "one of the most valuable and respected technology companies on Earth" as a customer. This article was reprinted from Wall Street News, GMTEight editor: Chen Wenfang.