Wall Street experienced a broad sell-off on Wednesday,led by declines in major artificial intelligence (AI) stocks following reports of investor hesitancy surrounding oracles data center plans. This downturn adds to a recent trend of investors re-evaluating valuations in the tech sector, especially concerning the monetization of substantial AI investments. The Nasdaq Composite and S&P 500 both closed lower, with Oracle shares specifically impacted by concerns over its debt levels, despite the company’s denials. Market analysts suggest this shift toward value stocks and ongoing uncertainty about Federal Reserve policy could contribute to continued volatility.
Wall Street closed lower on Wednesday as investors continued to pull back from key artificial intelligence (AI) companies, CNBC reported. The decline followed news that a major Oracle investor had reportedly withdrawn from a data center project.
The broad market index S&P 500 fell 1.16%, while the technology-focused Nasdaq Composite dropped 1.81%. The blue-chip Dow Jones Industrial Average lost 0.47%.
Shares of Oracle, which had recently been a high performer, declined 5% after the Financial Times reported that Blue Owl Capital had backed out of a planned $10 billion data center project in Michigan. Sources familiar with the matter cited concerns about Oracle’s debt levels and spending. The company subsequently disputed the report, stating that the project remains on track.
Financing arrangements for data center projects have been under scrutiny from investors in recent weeks. The focus on Oracle comes just a week after the company also refuted a Bloomberg report that it had postponed some OpenAI projects until 2028.
Other AI-related stocks also experienced losses on Wednesday. Chipmaker Broadcom, another company leading the tech sector’s decline, was down 4%. Nvidia shares fell 3%, Advanced Micro Devices lost 5%, and Alphabet, Google’s parent company, decreased by 3%.
“We are definitely seeing a pretty clear rotation from the mega-caps with growth to the mega-caps with value, and what we’re seeing is investors positioning more cautiously for what lies ahead next year,” said Brian Mulberry of Zacks Investment Management. “The real question is: Who is going to be able to monetize these massive investments in artificial intelligence?”
Oracle and Broadcom, along with other companies in the AI sector, have seen significant losses in December, as investors shift toward value-oriented segments like the financial sector. Year-to-date, Oracle and Broadcom shares are down 12% and 18%, respectively.
Mulberry expects the rotation from highly valued companies to “more fairly valued sectors” to continue into 2026. He added that this trend, combined with uncertainty surrounding the Federal Reserve’s monetary policy, could lead to increased market volatility.
“At this point, it’s going to be important to look at specifics to determine when and where the payoff from AI will occur, and things like free cash flow are key. You can manipulate the balance sheet, but you can’t fake free cash flow,” he said. “The biggest driver of returns has become the biggest risk to the market.”
At the close of trading Wednesday, the yield on 10-year U.S. Treasury notes rose to 4.151%, while the yield on 30-year bonds increased to 4.828%.
The dollar index, which measures the strength of the U.S. dollar against a basket of competing currencies, rose 0.26% to 98.406 points.
In commodity markets, futures for the international benchmark crude oil Brent gained 2.63% to $60.47 per barrel, while those for the U.S. benchmark WTI rose 2.64% to $56.73 per barrel.
Gold increased 0.94% to a price of $2,037 per troy ounce.
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