To the shock of Wall Street, the key indices had been touching new heights on December 11, 2025, even as there were increasing fears of artificial intelligence bubble in investments.
Both the S&P 500 and the Dow Jones industrial average ended at historic highs, which revealed a move in the preference of non-tech-based stocks towards general market areas. This protest was even though the shares of Oracle fell on hard times after failing to make good financial revelations, which showcased investor fears over wasting money on AI.
Highlights of Market Performance
The Dow Jones Industrial Average, which is a record, shot up by 646.26 or 1.34 percent to an all-time high of 48, 704.01. The S&P 500 also made another record by rising by 0.2% and going beyond its all-time high in October.
Nevertheless, the Nasdaq Composite lagged, pushed down by tech companies, investors switched out AI-related investments to value and cyclical. Such rotation was supported by a less aggressive update on the Federal Reserve policy that relieved the fear of aggressive rate increases and increased trust in the economic stability.
Oracle Raises Artificial Intelligence Concerns
When Oracle announced its intentions to add additional 10.8 billion to its annual expenditures compared to the previously expected amount, the company stock plummeted by 10.8 percent, the biggest decline since the dot-com crash of 2001. The software giant has seen reduced-than-anticipated revenue and operating income, and it could question whether it can sustain the hostile AI infrastructure investments.
Analysts were puzzled by the amount of capital outlay, and it was unclear to analysts whether the returns would be worth the costs in the middle of a heated discussion of an AI bubble. One of the “hyperscalers” is Oracle, which belongs to a cohort of companies that are estimated to allocate more than 400 billion dollars to infrastructure related to AI in 2022 which will reach 500 billion in 2026. This crashed through the industry, and brought down the stocks of Nvidia, Advanced Micro Devices, and Micron Technology by 1.5 to 2.
The Role of the Federal Reserve in the Rally
The recent announcement by the Fed was a significant measure as it indicated the dovish policy that stimulated purchase in non-tech sectors. Inflations were also dampening and employment statistics were unchanging, which gave the central bank an optimistic outlook towards a soft economic landing.
This optimism counterbalanced AI jitters, and it led to financial services and industrials gains as well as consumer stock gains. Gainers on the NYSE had a 2.2 to 1 ratio over depreciators, and new highs are 673.
Anticipated Reactions and Outlook in the Global Market
Asian markets did the same on December 12, whereby shares went up amidst the same AI concerns. Nikkei 225 of Japan fell 0.9 percent because of the losses suffered by SoftBank but European markets indexes spiked upward. In the future, investors are watching future returns on Broadcom and Fed indicators of stimulus in 2026.
Although the documentation indicates resilience, the AI bubble discussion highlights existence of dangers of overestimation of the technology, which would result in corrections in the event spending fails to provide returns. By the end of 2025, the market direction will depend on the level of innovation hype against financial soundness.
