LIVE MARKETS-What to watch out for from 'the AI Oracle' this week

Adds blog post

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.

WHAT TO WATCH OUT FOR FROM THE 'AI ORACLE' THIS WEEK

Oracle ORCL.N and Broadcom AVGO.O, two mainstays of the AI trade, report after the bell on Wednesday and their results will be closely watched, not just to see if they beat expectations, but what they say about the outlook.

Oracle shares have surged 30% this year on the back of its AI-related business.

But it has also jacked up its borrowing massively to fund its AI foray and its five-year credit default swaps, which offer bondholders a hedge against default, have shot to record highs, reflecting some of that concern.

Pepperstone chief market strategist Chris Weston says Oracle has a reputation for outsized post-earnings volatility. "The average move over the past eight quarterly reports is 8%, skewed by a massive +36% jump in Q1 2026. The options market currently implies a ±9.9% move," he said in a daily note.

"Beyond whether Oracle can beat consensus revenue expectations for Q2 2026 ($16.2B) and Q3 2026 ($16.87B), traders remain laser-focused on the company’s relationship with OpenAI and any updates on its capex intentions and the financing mix tied to its cloud and AI-infrastructure commitments," he said.

Broadcom, meanwhile, is a slightly different story, Weston says. "Having firmly established itself in the Google AI hardware ecosystem, the market has treated AVGO as a premier AI play, with shares up 68% YTD and trading just $13 shy of all-time highs heading into earnings," he said, adding that the options market a ±6.6% move on the day.

Expectations are high and crowding in the stock is intense, but unless there is a genuine shock, Weston says any pullback in the shares will likely be shallow and well-supported.

(Amanda Cooper)

*****

EARLIER LIVE MARKETS POSTS:

NUDGING DOWN CLICK HERE

EUROPE BEFORE THE BELL: WATCH RATE SENSITIVE SECTORS CLICK HERE

FUTURES TRY FOR A FED FAIT ACCOMPLI CLICK HERE