What’s News in Markets: AI Tales, Oracle Woes, Wendy’s Sizzles

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Hey, listeners, it's Saturday, June 27th. I'm Jack Pitcher for The Wall Street Journal. And this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's get to it. A nasty tech sell-off dragged down the S&P 500 and NASDAQ this week, with chipmakers leading the slide. Both indexes logged five straight days of declines. Doubts over whether the AI boom can sustain its red-hot momentum weighed on investors. It also undermined the broader market, because a handful of tech giants have buoyed much of this year's gains. Global indexes closely tied to AI also got clobbered this week. Overall, the NASDAQ ended 4.6% lower, its biggest weekly loss in over a year, while the S&P 500 lost 2%.

The Dow, which is less exposed to tech stocks, eeked out a 0.6% gain to close out the week. Elsewhere, oil prices dropped 8.7% this week, to end under $70 a barrel for the first time since the Iran War started. That decline helped boost consumer spirits a bit in June, as prices at the pump moderated.

Here's a tale of two AI earnings reports. On Tuesday after the market closed, Cerebras systems shrunk its quarterly loss and almost doubled revenue in its first earnings release as a public company since raising $5.6 billion in its May IPO. But, and this is key, the chip company projected narrower profit margins, prompting a scare. Its shares fell almost 20% on Wednesday. That same day after the close, memory chip maker Micron reported a more than four-fold increase in its revenue for the latest quarter and topped analyst expectations in every metric that investors scrutinize. Micron's operating income in the current quarter is now estimated to surpass the highest full year revenue it has ever reported. And that's thanks to the ongoing memory shortage plaguing the AI industry. Micron shares jumped nearly 16% on Thursday, while other memory makers saw similar gains in their shares. By week's end, Micron stock finished a little changed, while Cerebras shares closed 23% lower.

One of the biggest AI losers this week was Oracle. In its latest annual report released this week, the tech firm reported its headcount shrink by 21,000 jobs, or about 13% from its prior fiscal year. The cuts come as it continues to build out its artificial intelligence infrastructure. The Wall Street Journal previously reported that the cloud computing and database company began reducing its workforce in March. Oracle also logged $1.84 billion in severance and other costs under a restructuring plan still in process that could mean further workforce cuts down the road.

In the filing, the tech company also hinted at risks inherent in an AI-heavy strategy, including the failure to recoup its investments.

While last year Oracle sprung up as an AI darling following deals worth hundreds of billions of dollars, it isn't immune to the overall jitters that investors are feeling lately about their AI bets. This week is Exhibit 1 Oracle ended the week down 19%, making it one of the worst performers in the S&P 500

And Wendy's shares had a wild ride on the meme stock roller coaster this week. Stock jumped on Wednesday after droves of retail traders poured into the struggling fast food chain, using the same playbook they used for GameStop and AMC. Wendy's Bulls defended the restaurant operator on Reddit to spur on a rally. Quote, Our world will not be shaken. Wendy will prosper, one user wrote. We need to save Wendy's before it's too late, another user posted on Reddit's Wall Street Bets Forum to other individual investors. But on Thursday, the rally sputtered, with the stock falling 6.7% while more than 100 million shares changed hands. For reference, the stock's daily volume even exceeded that of Micron after its blockbuster earnings. By Friday, Wendy's stock was still a winner, gaining 15% for the week.

And now you know What's News in Markets this week. You can read about more stocks that moved on the week's news in our live markets coverage on wsj.com. Today's show was produced by Anthony Bansi, with supervising producer Jana Herron. I'm Jack Pitcher. Have a great weekend.

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