Dip-Buyers Step Into Oracle As Market Awaits Broadcom's Read on AI Overbuild Risk

Author: The Arora Report | December 11, 2025 01:49pm

Key Earnings Ahead For AI Trade

Please click here for a chart of Nasdaq futures (NQ_F).

Note the following:

• The chart shows significant selling on Oracle Corp (NYSE:ORCL) earnings.
• The chart shows the momo crowd stepped in to buy the dip.  Why is the momo crowd buying the dip so aggressively?  The answer is to the momo crowd every tiny dip must be bought.
• The VUD indicator shows that in the early trade there is net demand for stocks.  The VUD indicator is the most sensitive measure of net supply and demand in real-time. The orange represents net supply and the green represents net demand.
• Here are the key points from Oracle earnings:
  • Oracle reported earnings of $2.26 vs. $1.64 consensus, but the beat was due to a one-time gain from selling Oracle's stock in Ampere to SoftBank Group Corp – ADR (OTC:SFTBY).
  • Revenue came at $16.06B vs. $16.19B consensus. Revenue rose by 14% year-over-year.
  • The backlog rose to $523B.
  • Capex was $12B vs. $8.4B consensus.
  • Oracle is increasing its full year capex projection from $35B to $50B.
  • The tone on the conference call was highly confident and positive.  On the conference call, the company went out of its way to state the following:
    • Oracle will work towards maintaining its credit rating.
    • Some analysts' estimates that Oracle will have to borrow $100B are too high.
    • Oracle has a tight process in place to control its spending.
• Even though Oracle did an excellent job to alleviate fears on the conference call, it did not work.  Analysts are fixated on two numbers – $12B capex spend in the last quarter and raising the full year capex by $15B.  The drop in Nasdaq futures shown on the chart is a direct result of these two capex numbers from Oracle.
• In our analysis, Oracle has a tremendous opportunity ahead.  Oracle is borrowing aggressively to capture the opportunity.  If Oracle is successful, ORCL stock will go much higher.  ORCL stock in the very long term can move to $516 – $533.  On the other hand, if rumors start flying that Oracle will get a credit downgrade, the stock will continue to fall.  On a credit downgrade, ORCL stock can drop to $150.  As a reference, ORCL stock is trading at $193.68 as of this writing in the premarket.
• Oracle has rekindled fears of AI overbuilding.  It is hitting the stocks of NVIDIA Corp (NASDAQ:NVDA), Advanced Micro Devices Inc (NASDAQ:AMD), CoreWeave Inc (NASDAQ:CRWV), Nebius Group NV (NASDAQ:NBIS), and IREN Ltd (NASDAQ:IREN).
• In our analysis, how ORCL stock moves from here will have a major impact on the entire stock market.  
• Broadcom (AVGO) will report earnings after market hours today.   Broadcom earnings have the potential to extinguish or exasperate AI overbuilding fears.  Broadcom is Alphabet Inc Class A (NASDAQ:GOOGL) partner for TPUs.
• Initial jobless claims came at  236K vs. 191K prior.  Initial jobless claims rose, but continuing claims fell to 1.838M from prior 1.937M.  Together, this set of data does not present any concern right now.
• Prudent investors should note 10-year Treasuries had a yield of 3.65% on September 18, 2024 just before the Fed started this easing cycle with a 50 bps cut.  After 175 bps cuts by the Fed, the 10-year Treasury yield is now at 4.14%.  Here lies the Achilles' heel.  As the Fed has lowered short term interest rates, long term interest rates have risen. 
• In important news, Walt Disney Co (NYSE:DIS) is making a $1B investment in ChatGPT maker OpenAI and will become a major customer of OpenAI.  This is not the greatest news for Google.  Disney is also sending a cease and desist letter to Google.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL).

In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (GLD). The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Silver

The momo crowd is extremely aggressively buying silver.  Silver is hitting a new all time high.  

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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