Nvidia stock (NASDAQ: NVDA) tumbled in the pre-market trading on Thursday after Oracle’s disappointing earnings and elevated capex outlook triggered a broader selloff in AI stocks.
Oracle’s earnings miss reignited concerns that the sector’s spectacular spending surge may not deliver profits as quickly as Wall Street hoped.
The company posted second-quarter revenue that missed expectations at $16.06 billion, while guiding capital expenditures of $50 billion for fiscal 2026.
That shock reverberated across the sector, with Nvidia down roughly 1.6% in premarket trading Thursday morning.
Nvidia’s stock move prompted CNBC’s Jim Cramer to invoke an uncomfortable bit of market history that shows investors ignore past cycles at their peril.
He signalled that volatility, not fundamentals, likely drove the latest downturn in Nvidia stock.
History tells you that anything that allows you to hold onto Nvidia, you should embrace.
Why the sell-off hit Nvidia stock?
Oracle’s stumble was the immediate trigger.
The company reported weak cloud sales growth and capital spending that exceeded guidance by a third, alarming investors who worry the company is piling on debt to fund a massive data center.
Oracle’s cloud revenue climbed 34 percent to $8.0 billion but still disappointed analysts betting on faster momentum.
Even worse, Oracle raised its fiscal 2026 capex guidance to $50 billion from $35 billion, forcing executives to field tough questions about how the company would fund such an aggressive expansion.
The move signaled that data center buildout costs are rising faster than expected, a concerning signal for the entire AI supply chain.
Nvidia, which supplies chips to Oracle and competes indirectly through its own infrastructure relationships, bore the brunt of the selling pressure.
Semiconductor peers, including AMD and Broadcom, also stumbled, falling roughly 1.7 and 1.3 percent, respectively, in early trading.
The sell-off reflects deeper investor unease about AI spending sustainability.
Hyperscalers and cloud providers have committed to hundreds of billions in infrastructure spending, but if they face margin pressure or slower revenue ramps, the appetite for continued capex could cool rapidly.
What Jim Cramer’s warning means for investors
Cramer’s intervention carried weight because he acknowledged the legitimate bubble risks while urging discipline over panic.
He pointed to Nvidia’s turbulent history as investors who sold during past corrections ultimately watched the stock soar to new highs.
For traders, the lesson is straightforward: protect your position sizing and respect stop levels when a crowded mega-cap breaks down hard.
For longer-term holders, Cramer suggested staying the course if you own Nvidia for genuine AI exposure, not speculation.
The real test will be whether Oracle’s disappointing quarter is an outlier or a harbinger of slower cloud spending.
Nvidia’s next earnings call is going to be crucial for clues on customer order flow and capex expectations from its biggest clients.
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