META, ORCL, MSFT Stocks Plunge on AI Spending Fears and CPI Uncertainty

A wave of selling hit the market on Thursday, with the SPDR S&P 500 ETF NYSEARCA: SPY closing down 1.66%, its sharpest decline since early October.

The move came just after the government shutdown ended, yet uncertainty only increased. The White House signaled that key October economic reports may be delayed or unavailable, including the CPI release that investors have been waiting for.

That added another layer of uncertainty to a market already grappling with rising inflation concerns and signs of a cooling labor market. Rate-cut expectations shifted quickly as prediction markets moved from almost-certain odds of a December cut to a roughly 50% chance. 

Tech and megacap growth stocks bore the brunt of the selling. A debate over AI capital expenditures has weighed on sentiment for companies like Meta NASDAQ: META, Oracle NYSE: ORCL, and Microsoft NASDAQ: MSFT, as investors question whether the massive spending required today will translate into meaningful returns in the future.

While these concerns have pressured valuations, they have also pushed several leaders into oversold territory, creating the possibility of a tradable bounce or longer-term opportunity depending on an investor’s view of AI’s eventual payoff.

Meta Slides Into Oversold Territory

Meta closed just under $610 on Thursday, marking its weakest finish since May and placing the stock roughly 23% below its September highs.

The RSI dipped to 27, confirming deeply oversold conditions after a multi-week decline.

Meta’s fundamentals remained strong last quarter. The company delivered an EPS of $7.25, comfortably ahead of expectations, while revenue grew 26% year-over-year (YOY) to $51.24 billion, exceeding analyst estimates by a wide margin.

The pressure instead came from Meta’s revised capital expenditure plans. Management raised its 2025 investment outlook to $70 billion to $72 billion. This comes as the company accelerates AI infrastructure build-out and positions itself for what it calls the next wave of intelligence-driven platforms.

Investors reacted defensively to the scale of the spending and the possibility of shorter-term margin compression. For a durable bottom to form, shares would need to stabilize around $600 and then reclaim this week’s highs, signaling a shift in momentum rather than a continuation of the downtrend.

Oracle Approaches 200-Day SMA After Steep Decline

Oracle has been one of the hardest hit, falling more than 37% from its all-time highs reached in September.

The decline has been driven by a mix of AI-related capital expenditure concerns, a greater reliance on debt markets to fund data center expansion, and a perception that returns are uncertain.

The company secured major AI-focused contracts earlier this year, yet investors still reacted negatively after revenue came in just shy of expectations and earnings landed slightly below consensus.

With the stock quickly approaching its 200-day SMA, technical traders may find Oracle particularly interesting. The RSI is now oversold, and the speed of the decline has created conditions for a snapback rally if support holds.

A firming of price around the 200-day could offer a setup for a short-term rebound. However, questions about the pace of earnings growth and the payoff timeline for its AI investments may linger over the intermediate term.

Microsoft Confirms a Double-Top and Pulls Back From Highs

Microsoft has also come under pressure after confirming a clean double-top pattern at the end of last month.

Shares are down roughly 9% from their 52-week high but remain above a key support area near $500. 

Earnings in late October were strong, with EPS of $4.13 topping expectations and revenue up 18% YOY to $77.67 billion.

The issue echoed the broader theme across the group. Microsoft significantly expanded its AI-related capital spending during the quarter as it works to alleviate cloud capacity constraints and meet surging demand. Management signaled that spending would continue to increase, raising concerns about its effect on near-term margins despite robust revenue performance.

The broader question for investors is whether these investments will generate the long-run returns that current valuations assume. If the answer is yes, these sharp pullbacks across prominent tech names could represent compelling long-term entry points.

If confidence in the payoff timeline is weaker, the setups may be better suited to shorter-term bounce trades than to multi-year positions.

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