On 10 December 2025, the Federal Reserve delivered its third rate cut of the year, lowering the federal funds target range by 25 basis points to 3.50%–3.75%. Chair Jerome Powell’s post-meeting remarks were interpreted by the market as “more dovish than expected,” driving all three major U.S. stock indexes to close higher.
However, tech giant Oracle saw its shares plunge more than 10% in after-hours trading. Its announcement of an additional USD 15 billion in capital expenditures, along with a statement outlining a disruptive new “bring-your-own-chip” model for customers, landed like a depth charge in the middle of the AI boom, triggering deep anxiety and reflection on the sustainability of aggressive investment in the tech sector.
Interpreting Powell’s “Dovish” Tone
The Fed’s monetary policy decision injected a “mild but potent” dose of confidence into markets. In its statement, the FOMC noted that recent data show rising downside risks to employment, and that, given the change in the balance of risks, it had decided to cut rates again.
At the press conference, Powell said that the series of rate cuts since September had brought policy “further toward normalization,” and that the current level of interest rates is “in a good place.” Although there was internal disagreement over this cut (9 votes in favor, 3 against), markets as a whole interpreted it as a gesture of support toward the economic outlook.
Boosted by this, the Dow Jones Industrial Average rose more than 1%, while the S&P 500 and Nasdaq Compositealso finished higher. So in what ways was Powell’s tone even more dovish than expected?
1. Explicitly ruling out further rate hikes
He first gave markets a “reassurance pill” by stressing that “no one’s baseline expectation is for rate hikes” and that current conditions do not support policy tightening. This removed the tail-risk markets were most anxious about.
2. Downplaying the threat of persistent inflation
He attributed inflation currently running above target mainly to a “resurgence in goods inflation driven by tariffs,” repeatedly describing it as a “one-off price increase” that is expected to peak and fade by early 2026. This eased fears that inflation is becoming entrenched and would force the Fed into aggressive tightening.
3. A surprise ‘mini-QE’
The Fed announced that starting 12 December it will purchase USD 40 billion of short-term Treasuries per month to maintain financial system liquidity. Although officials emphasized this is merely a technical operation and notquantitative easing (QE), markets viewed any form of Fed asset purchases as an injection of liquidity — a clearly dovish signal. Both the timing and scale of the purchases exceeded expectations.
4. Expressing deep concern about the labor market
Powell sharply downgraded his assessment of the labor market, noting that if one adjusts for overestimation in the data, job growth since April “may have already turned slightly negative.” He also stressed that there are “significant downside risks” in the labor market. This acknowledgment of weakness went further than many hawks had anticipated.
In summary, this meeting can be characterized as: using a pre-conditioned “hawkish rate cut” to address economic risks, while softening the tightening impact of that decision through dovish language and supporting measures — ruling out rate hikes, emphasizing labor-market risks, and injecting liquidity.
Ultimately, markets came away with the sense that the Fed’s concern over economic slowdown and its willingness to provide support outweighed its hard-line stance on inflation. As a result, the overall signal was “more dovish than expected.”
Oracle’s Earnings Trigger Market Panic, Shares Plunge Over 11% After Hours
Amid generally positive market sentiment, software and cloud-services giant Oracle cast a heavy shadow with the release of its FY2026 Q2 earnings.
Although its cloud infrastructure (IaaS) revenue maintained a robust 68% year-on-year growth, both total revenue and total cloud revenue came in slightly below analyst expectations. What really unsettled Wall Street, however, were two key figures:
Quarterly free cash flow came in at a staggering negative USD 10 billion;
The company sharply raised its full-year capital expenditure guidance, projecting about USD 15 billion more than previously expected, bringing the total to around USD 50 billion.
This implies that, in order to fulfill enormous AI infrastructure contracts signed with customers such as OpenAI, Meta, and Nvidia — with “remaining performance obligations” already surging to USD 523 billion — Oracle is expanding at an unprecedented burn rate.
The market’s violent reaction — an after-hours share price plunge of over 10% — was not just about the sheer size of the spending. The deeper concern is whether this debt-driven expansion model (the company’s interest-bearing debt has reached USD 111.6 billion) is sustainable, and whether there is a clear path for these massive orders to convert into profits.
Against this backdrop of enormous financial pressure and rising skepticism, Oracle CFO Doug Kehring revealed a disruptive plan on the earnings call aimed at easing capital strain.
He explained that, beyond traditional financing channels, Oracle is exploring a “first-of-its-kind” partnership model: allowing customers (such as OpenAI) to bring their own chips — purchased independently — into Oracle data centers for deployment. The company is also in talks with suppliers about the possibility of leasing chips instead of purchasing them outright.
Executives are eager to convince the market that, through these innovative financial arrangements, Oracle can better align capital expenditures with cash inflows, and therefore “doesn’t need to borrow as aggressively as you imagine.”
If this model is rolled out on a large scale, it could signal a major shift in the business logic of cloud infrastructure. It would transfer part of the heavy hardware capex burden from cloud providers to end customers, altering the traditional model where cloud vendors fully purchase and then rent out computing power.
For Oracle, this is a direct response to market concerns about its debt risks and cash-flow strain. Yet it also raises new questions: will this weaken its control over infrastructure and compress margins? And does it suggest that, even in an AI compute “super-cycle,” the enormous capital thresholds are becoming too heavy for even the most aggressive players in the value chain to shoulder alone?
Driven by AI euphoria, Oracle’s share price hit an all-time high of around USD 345 around 10 September 2025. Since then, as doubts over AI capex have grown, the stock has moved into a downtrend. Before this earnings release, it had already fallen about 35% from its peak.
After the report, the stock plunged more than 10% in after-hours trading, at one point touching a low of USD 197.25. This means the share price not only gave back all year-to-date gains, but also fell below levels seen before the previous quarter’s earnings release.
Such a decline suggests that the prevailing pessimism is not a mere minor adjustment, but a forceful rejection of the previous valuation logic.
