Oracle stock (ORCL) traded slightly higher on Wednesday despite reports that the company had cancelled a $7 billion chip leasing agreement with China’s Tencent following pressure from the Trump administration, the Financial Times reported.

The cancellation highlights the growing challenges for US cloud providers serving Chinese artificial intelligence companies, as Washington increases scrutiny of arrangements that could give Chinese groups access to advanced computing infrastructure.

The development comes as Oracle steps up fundraising to support its AI and cloud expansion.

The company recently announced plans to raise $20 billion through equity and debt offerings to finance its infrastructure investments.

Oracle stock was up 0.95% at the time of writing.

US pressure leads to cancellation of Tencent deal

The five-year contract would have given Tencent access to as many as 100,000 advanced AI chips across data centres in Southeast Asia.

Estimated to be worth $7 billion, the agreement was first reported by the Financial Times in September and would have been Tencent’s largest overseas chip leasing arrangement.

According to the Financial Times report, US officials approached Oracle to raise concerns about the agreement.

Tencent also received visits from senior officials in Guangdong, where the company is based, who encouraged it to support domestic Chinese chip suppliers.

The contract would have allowed Tencent to access advanced processors restricted in China under US export controls and Beijing’s policies.

Chinese technology companies have increasingly turned to overseas data centres to secure computing capacity for training AI models.

The cancellation comes as US authorities increase scrutiny of arrangements that allow Chinese companies to access advanced computing infrastructure outside China.

The Financial Times also reported that Nvidia had told cloud computing clients they must sell at least 51% of their services to non-Chinese companies.

ByteDance and Alibaba remain among the biggest customers of data centres in Southeast Asia, while Tencent has been increasing its infrastructure spending as it develops its AI capabilities.

Oracle is a major supplier to ByteDance in Asia, operating multiple data centres in Malaysia.

It previously hosted US customer data for TikTok before joining a consortium that acquired the social media platform’s US operations late last year.

Oracle faces questions over AI customer exposure

The Tencent agreement was also expected to help Oracle diversify its customer base beyond a relatively small number of large clients.

Its reliance on cloud contracts with OpenAI has been cited by investors as a potential risk.

The cancellation adds uncertainty to Oracle’s efforts to expand its AI infrastructure business, particularly as Chinese companies seek access to computing resources unavailable in their domestic market.

Demand for overseas chip leasing has increased amid tighter export controls restricting the shipment of advanced Nvidia processors to China, including through intermediary locations.

These constraints have contributed to higher prices, longer contract terms and larger upfront payments for data centre leases.

Tencent’s latest Hunyuan models have shown performance improvements, narrowing the gap with leading domestic models such as Alibaba’s Qwen.

Oracle’s $20B fundraising highlights AI spending needs

Investors are also monitoring how Oracle finances its AI infrastructure expansion.

On Monday, the company said it would raise $20 billion through equity and debt offerings to fund its cloud and AI investments.

Oracle priced the sale of 86.2 million shares at $116 each, an 11.2% discount to Friday’s closing price.

The equity offering is expected to raise about $10 billion, with another $10 billion coming from debt offerings maturing between 2029 and 2046.

The fundraising underscores the scale of Oracle’s investment plans as it seeks to more than triple revenue by fiscal 2030.

The company said capital spending would peak in the current fiscal year and the following year, while pledging to raise no more than $20 billion in additional AI financing through fiscal 2030.

Oracle reported first-quarter revenue of $19.35 billion, up 30% and above Wall Street expectations of $19.14 billion.

It secured more than $30 billion in additional AI cloud contracts during the quarter, lifting its remaining performance obligations, or backlog, to $664 billion.

The company also raised its fiscal 2027 adjusted earnings and revenue forecasts while maintaining its projection for $70 billion in full-year capital spending.

The post Oracle stock in green despite reported $7B Tencent chip deal cancellation appeared first on Invezz

Memory stocks, including Micron Technology, SK Hynix and SanDisk, fell on Wednesday as investors reassessed the outlook for artificial intelligence infrastructure spending following a wave of Democratic victories in the US midterm elections.

Micron shares MU declined more than 6.7%, while SK Hynix lost close to 5.4% and SanDisk fell over 8%.

The weakness contrasted with a broad rally across US equity markets, with the S&P 500 rising 1.8%, the Dow Jones Industrial Average gaining more than 2% and the Nasdaq Composite advancing 2.5%.

Some data centre-related stocks came under pressure as Democrats made gains in key markets for infrastructure development, including Texas and Georgia, where opposition to the industry’s rapid expansion has been growing.

Texas election result raises data centre concerns

Investors had largely anticipated a Democratic victory in the House of Representatives and the possibility of the party taking control of the Senate.

However, the Democratic victory in the Texas gubernatorial race emerged as a major concern for technology investors.

Democrat Gina Hinojosa defeated incumbent Republican Governor Greg Abbott after campaigning for an immediate moratorium on new data centres in the state.

Texas is central to the US data centre expansion, accounting for about 27% of planned data centre capacity, according to Wells Fargo.

Dan Ives, partner at Yorkville Ives & Co., said the election results could slow the pace of data centre construction across the country.

“There is no way to sugarcoat that Democrats taking control, especially over the Senate, will create some major hurdles for AI and tech legislation in the Beltway over the next 2 years,” he said in a note on Wednesday.

Ives described the Texas result as the “biggest worry” of the night for technology investors and the AI trade, given that the state could account for around 25%-30% of planned data centre gigawatts and capacity.

Goldman Sachs economists also warned that political changes could affect infrastructure investment.

“Democratic wins at the state and local level are likely to lead to short-term data center moratoria, potentially affecting about 45% of planned US data center capacity expansion,” they said in a note.

A slowdown in data centre construction could eventually temper demand for memory chips, which are essential components in AI servers, potentially easing pricing pressure for manufacturers.

Wednesday’s reaction a valuation “reset”?

StoneX’s Cody Acree told MarketWatch that “the Texas AI buildout remains intact and exceptionally large, even if the political headwinds are shifting toward more uncertainty regarding planned project approval.”

He described Wednesday’s market reaction as a valuation “reset” across the technology sector, rather than a sign that data centre demand or construction plans for 2027 had suddenly weakened.

However, he warned that policy uncertainty could pose a bigger long-term risk if investors begin to believe that regulatory hurdles, project approvals or rising costs could constrain the expansion of AI infrastructure.

“That matters because most chip stocks are valued based on the assumption of several years of nearly uninterrupted growth,” he added.

The decline comes a day after memory stocks gained ground following comments from Apple CEO John Ternus, who described the current memory-pricing environment as “unprecedented”.

Apple warned that rising memory costs would put pressure on gross margins and said the increase was likely to persist beyond the December quarter.

Yardeni Research has also said memory manufacturers are sold out into 2029, reflecting strong demand from AI infrastructure developers and constrained supply.

Chinese competition also remains in focus

The longer-term outlook for memory makers has also faced increasing competition from China’s CXMT.

CXMT is pursuing an alternative chip architecture that Micron has chosen to bypass, highlighting differences in how manufacturers are seeking to increase memory density amid cost and geopolitical constraints.

The Hefei-based company plans to send customers samples of its first server-grade dynamic random-access memory (DRAM) product using the 4F² architecture by the end of this year, according to a summary of its latest earnings briefing released on Saturday.

The development has intensified questions about whether Chinese manufacturers could compete in higher-value server memory, rather than focusing primarily on lower-end products.

Last month, Morningstar equity analyst Jing Jie Yu said CXMT’s announcement had disrupted investor expectations around technology development timelines and heightened concerns about the accelerating pace of lower-cost Chinese technologies that could disrupt leading AI firms.

“If the company can commercialize this technology ahead of its peers, it speaks volumes to China’s DRAM technological competitiveness and raises risks of oversupply longer term given the country’s rapid expansion in DRAM capacity,” he said.

CXMT has not disclosed a timeline for mass production, saying commercial rollout would depend on customer validation and market demand.

In a research note on Wednesday, BofA Securities said the 4F² architecture offered an alternative route to higher memory density without requiring extreme ultraviolet (EUV) lithography tools.

Successful volume manufacturing could strengthen CXMT’s competitiveness, the bank said, while warning that the technology also carried higher costs and execution risks.

For investors, the combination of potential delays to AI infrastructure projects and emerging Chinese competition adds fresh uncertainty to a memory market that has benefited from tight supply and surging demand.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.

The post Micron, SK Hynix, SanDisk stocks fall: why Dems’ Texas win is spooking investors appeared first on Invezz

Block shares XYZ surged in trading on Wednesday after the fintech company reported third-quarter earnings and revenue above analyst expectations and raised its full-year profit outlook.

The Jack Dorsey-led company posted adjusted earnings of $1.13 per share for the quarter ended September 2026, beating estimates of around $1.02 to $1.04 per share.

Revenue reached $6.72 billion, compared with the consensus estimate of $6.58 billion and $6.12 billion a year earlier.

Block shares rose more than 14% in trading, adding to the 6.2% gain in after-hours trading on Tuesday.

Block raises full-year profit guidance

Block raised its full-year adjusted earnings forecast to $4.15 per share and increased its gross profit outlook to $12.63 billion, representing annual growth of 22%.

Its previous gross profit forecast was $11.98 billion.

The company also expects fourth-quarter adjusted earnings of $1.15 per share.

For 2027, Block projected gross profit of $14.52 billion.

The company said the outlook reflected how its investments in artificial intelligence and broader focus on velocity could support sustained growth.

In its earnings update, Block said it was raising its full-year guidance to reflect the momentum across the business.

It also expects gross profit to grow at least 15% in 2027 while continuing to invest in long-term growth.

Third-quarter gross profit increased 22% year over year to $3.24 billion. Net income rose to $566 million from $462 million in the same period last year.

Adjusted operating income climbed 92% to a record $923 million, while the adjusted operating margin expanded by more than 1,000 basis points to 29%.

Cash App and Square deliver growth

Block’s two main business platforms recorded higher gross profit during the quarter.

Cash App gross profit increased 27% year over year to $2.07 billion, while Square, the merchant facing division’s gross profit rose 14%.

Square gross payment volume growth accelerated to 14%, its strongest rate since the first quarter of 2023.

Cash App reached 60 million monthly transacting active users, while consumer lending originations increased 40% to $19 billion.

Block generates revenue through transaction fees across its platforms, including Square, Cash App, and buy now, pay later service Afterpay.

Cash App also allows customers to buy and sell Bitcoin.

The company said it began piloting Buzz, a free, open-source collaboration platform announced in July.

Chief Executive Jack Dorsey said Block expects to generate its first machine intelligence revenue from the product in the fourth quarter.

Bitcoin business and analyst outlook

Block’s Bitcoin-related business recorded weaker gross profit despite an increase in the value of its Bitcoin holdings.

Bitcoin ecosystem gross profit fell 50% year over year to $52 million.

The company attributed the decline to a strategic reduction in fees charged on certain Bitcoin transactions through Cash App.

Cash App generated $4.07 billion in revenue during the quarter, including $1.77 billion from its Bitcoin ecosystem segment.

Block also reported that the value of its Bitcoin holdings increased by $229.7 million during the period.

Analysts maintained different assessments of the stock following the results.

Citizens retained its Market Perform rating and $76 price target, while Raymond James raised its price target to $100 from $97 and maintained an Outperform rating.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.

The post Block stock jumps 14% as earnings beat estimates and full-year outlook rises appeared first on Invezz

Apple shares AAPL rallied on Wednesday, hitting a record high as investors considered whether Democratic victories in the US midterm elections could benefit the iPhone maker by slowing data centre construction and easing pressure on memory chip prices.

The stock rose more than 6% to an all-time high of $354.33.

The rally came as several AI infrastructure-related stocks, including Nvidia, Micron Technology, Intel and Broadcom, fell on concerns that political opposition to data centre construction could disrupt the industry’s expansion plans.

Investors had largely anticipated Democrats would win the House of Representatives and possibly take control of the Senate.

However, the party’s victory in the Texas gubernatorial race emerged as a particular concern for technology companies.

Democrat Gina Hinojosa, who campaigned for an immediate moratorium on new data centres, defeated incumbent Republican Governor Greg Abbott.

Texas accounts for about 27% of planned data centre capacity in the US, according to Wells Fargo.

Goldman Sachs economists warned that the election results could affect infrastructure investment.

“Democratic wins at the state and local level are likely to lead to short-term data center moratoria, potentially affecting about 45% of planned US data center capacity expansion,” they said.

Apple emerges as a defensive bet amid AI concerns

Evercore ISI analyst Amit Daryanani said Apple offered investors an alternative to technology companies whose growth prospects were closely tied to data centre spending.

“Apple offers a different earnings driver through iPhone mix/pricing and services rather than data-center construction; our work points to resilient demand, with gross-margin recovery and price elasticity the key tests. This is THE name to keep working when investors want to get defensive,” Daryanani said.

Apple has increasingly emerged as an unlikely winner whenever investors have become sceptical about the sustainability of the AI spending boom.

Unlike rivals such as Microsoft, Alphabet, Amazon and Meta, Apple has largely avoided the expensive race to build AI data centres.

That strategy was initially viewed as a disadvantage, raising concerns that the company was falling behind in artificial intelligence.

However, its relatively limited exposure to AI infrastructure investment has become an advantage as investors question the returns on massive technology spending.

Apple shares have gained about 30% this year, outperforming Alphabet, which has declined 8%, and Meta, which is down nearly 3%.

Amazon and Microsoft have posted more modest gains of around 18%-19%.

Cooling memory prices could ease margin pressure

Another potential benefit for Apple is the possibility that a slowdown in data centre construction could cool memory chip prices.

Rising prices for dynamic random-access memory (DRAM) and NAND chips have been a significant headwind for the company, increasing the cost of manufacturing its devices.

Daryanani highlighted the possibility that weaker data centre demand could eventually ease the pressure.

“Memory input inflation (DRAM & NAND) has been a sizable headwind for a host of names in our coverage (AAPL for example, talked about 140bps GM headwind in Dec-qtr due to memory, but also PC names). Could a slowdown in DC buildouts actually temper memory demand and, in a way, help companies that have been impacted by the sizable memory inflation (AAPL is the key one but there are many others)?”

Apple’s latest results underscored the challenge.

The company reported revenue of $114.5 billion and earnings per share of $2.10, both beating Wall Street expectations, but investors remained concerned about its margins.

Gross margin for the three months ended September stood at 47.9%, lower than in the previous quarter.

Apple also forecast a margin of 45%-46% for the following quarter, below analysts’ expectations of 47%.

The company attributed the pressure partly to an “unprecedented” increase in memory prices and costs associated with the rollout of its Siri artificial intelligence assistant.

Daryanani had earlier warned that Apple could face a “choppy” gross-margin environment until memory prices stabilise or decline.

Investors are also watching for evidence that the company can monetise its Siri AI investments.

A moderation in memory costs could therefore provide some relief, although the extent of any benefit will depend on how quickly chip prices respond to changes in data centre demand.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.

The post Apple stock hit a new all-time high on Wednesday: what’s fuelling the rally? appeared first on Invezz

Adobe shares ADBE rose on Wednesday despite another downgrade from Wall Street, as investors weighed concerns about the software company’s growth outlook against expectations for its upcoming quarterly results.

The stock gained as much as 3.5% during mid-morning trading before trading 0.96% higher at $248.50.

The advance came after Citi Research analyst Tyler Radke cut his rating on Adobe to Sell from Hold and lowered his price target to $207 from $250.

The downgrade adds to a series of increasingly cautious assessments of Adobe, whose shares have faced pressure this year amid concerns that artificial intelligence tools could make some of its products less relevant.

Citi warns of weaker growth in fiscal 2027

Radke said Adobe faces downside risks to consensus growth estimates entering fiscal 2027, partly because of leadership changes and uncertainty surrounding its creative business strategy.

“Incoming CEO Anil Chakravarthy assumes the role amid key leadership vacancies, including CFO and the head of Digital Media,” Radke said in a Wednesday investor report.

The analyst expects Adobe to provide a weaker fiscal 2027 outlook when it reports its fourth-quarter fiscal 2026 results in early December.

He said a potential strategic reset could weigh on the shares in the near term but give the company an opportunity to rebuild its leadership team and refine its strategy.

Radke also highlighted Adobe’s increased focus on monthly active user growth, which he believes could put pressure on annual recurring revenue in fiscal 2027 and 2028.

The company has been prioritising user acquisition and directing new customers towards lower-average selling price offerings rather than relying on price increases, according to the analyst.

He expects the impact to be most pronounced in Adobe’s core Creative business, amid weaker small and medium-sized business demand and competition from web-based and AI-native tools.

Citi lowered its estimates for net new annual recurring revenue by $470 million for fiscal 2027 and $500 million for fiscal 2028.

The revised estimates stand at $1.5 billion and $1.45 billion, respectively.

Adobe faces a series of Wall Street downgrades

Citi’s move follows similar rating cuts from other major financial institutions in October.

HSBC downgraded Adobe to Hold from Buy and reduced its price target to $267 from $310.

The bank cited pressure on business growth and the possibility that some users could move away from Adobe’s creative software suite.

Wells Fargo also lowered its rating to Underweight from Overweight, an equivalent of Sell, while cutting its price target to $225 from $270.

Analysts led by Michael Turrin pointed to worsening organic growth and execution risks during a major management transition.

They also highlighted a shift away from pricing-led monetisation towards a freemium model, in which users receive basic features for free before potentially becoming paying subscribers.

The concerns reflect broader uncertainty about Adobe’s ability to maintain growth as AI-native competitors and alternative software tools challenge its established products.

Despite the downgrades, the average analyst rating on Adobe remains Hold, according to FactSet.

December earnings could provide the next direction

Investors will get another indication of Adobe’s growth trajectory when the company releases its fourth-quarter fiscal 2026 results on December 9, after the market closes.

Analysts expect adjusted earnings per share of $6.33 on revenue of $6.83 billion.

In the same quarter last year, Adobe reported adjusted earnings per share of $5.50 and revenue of $6.19 billion.

The upcoming report will also give investors an opportunity to assess management’s outlook for fiscal 2027, particularly as the company navigates leadership vacancies, changes to its Creative business strategy and competition from AI-powered tools.

Adobe shares had already declined 16% through Tuesday from their August 31 closing price of $292.79, adding context to Wednesday’s advance.

AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.

The post Adobe stock rises despite Citi downgrade as growth concerns persist appeared first on Invezz