Oracle, Broadcom Hit by Surprise Decline in AI-Led Rally
Published: 15 Dec 2025
Author: Precedence Research
Two of the most prominent and leading tech giants, Oracle and Broadcom, which are widely known as the ‘AI trade’, a major bet on AI transformation, sent chilling tremors within the market when AI hit the reality check with its unexpected downtime, while highlighting Oracle’s loss of 15% in the week and Broadcom stay backward by showing loss of 11.5% solely on Friday. This sell-off came on a day when risk aversion was put on hold, with the Nasdaq down 1.7% and the S&P 500 falling 1.1%.
However, looking at the whole year of 2025, with just two weeks left until year-end, may leave investors, traders, and analysts surprised by generous bonuses. The market that occasionally makes ups and downs after sharp gains often shows signs of sanity rather than excess. Typically, bubble bursts happen when all the news is misinterpreted and presented to investors and the general public.
For now, the market continues to signal instability, as Friday's decline of more than 1% in the S&P 500 marked the index's 28th drop this year, which is considered a drop for this year. Since 1928, the markets have averaged declines of 29% or more per year. Interest in AI stocks has not yet reached its peak, and the sector's longer-term activities remain striking. Though Oracle's shares are roughly in line with the S&P 500 this year, Broadcom is up about 55% year to date after doubling in both consecutive years of 2023-2024.
Even after Friday's drop, Broadcom continues to show rich earnings on a trade basis compared to leading tech giants like NVIDIA and Google, which are currently dominating the artificial intelligence world. The quarterly forecasts released by Broadcom and Oracle are undervalued but far from disastrous outcomes.
Oracle and Broadcom’s quarterly results and forecasts, released late in the week, were modestly disappointing but hardly catastrophic. Just a quarter or two ago, similar figures could have driven both stocks up, potentially by double digits. This is particularly true for Broadcom, which easily surpassed expectations. Revenue hit $18 billion, exceeding analysts’ estimate of $17.5 billion, while operating profit reached $11.9 billion, above the projected $11.4 billion.