U.S. artificial intelligence names were in negative territory in premarket trading on Friday, extending losses into their third day.

Oracle was 0.9% lower in premarket trading, paring earlier losses which saw it fall 1.3%. Nvidia shed 0.7%, Micron fell 0.9%, and CoreWeave was down 1.3% at 5:16 a.m. ET.  

Broadcom, which reported a strong quarter on Thursday, was last seen down 5%.

The share price of cloud computing and database software maker Oracle plummeted on Thursday, ending the session around 11% lighter after revenue earnings missed analyst expectations on Wednesday.

It dragged other AI-related names down with it despite a record-breaking rally elsewhere on Wall Street, suggesting investors are rotating out of tech into other parts of the market.

The tech-heavy Nasdaq Composite fell 0.26% on Thursday, despite the Dow Jones Industrial Average and S&P 500 hitting fresh records at the end of the session.

Despite booming demand for Oracle’s artificial intelligence infrastructure, it posted mixed results this week. Revenue came in at $16.06 billion, compared with $16.21 billion expected by analysts, according to data compiled by LSEG.

It followed widespread speculation around the long-term health of the company, with investors cautious about its reliance on debt to execute its AI infrastructure build-out. The broader industry’s circular dealmaking has also raised eyebrows.

“We think recent investor scrutiny on artificial intelligence’s potential and circular GPU deals can be overly punitive to key AI suppliers like Oracle,” said Morningstar Equity Analyst Luke Yang. “Oracle remains a respectable cloud provider that enjoys strong switching costs across its database, application, and infrastructure lineup.”

That said, the firm reduced its fair value estimate for wide-moat Oracle to $286 per share, down from $340. Morningstar’s moat rating refers to its assessment of a company’s durable competitive advantage.

“We lowered our long-term earnings outlook as delivering Oracle’s planned capacity on time now proved to be a harder task. However, we continue to view shares as undervalued,” Yang added.

The S&P 500 and Dow Jones Industrial Average advanced on Thursday, with both hitting fresh closing records. The Russell 2000 index also ended the session at a new high, following the U.S. Federal Reserve’s quarter-point cut on Wednesday.

But if investors analyze Thursday’s individual stock movements, they will see not all is well with the AI play yet. Oracle shares plunged nearly 11%, a day after it reported weak quarterly revenue, higher capital expenditure and long-term lease commitments. Oracle’s slide dragged down AI-related names such as Nvidia and Micron.

In extended trading, Broadcom shares fell 4.5%. The chipmaker beat Wall Street’s expectations for earnings and revenue, but CEO Hock Tan appeared to have failed to address worries that their largest customer, Google, might eventually make more of its chips in-house. Rising memory prices would also pressure margins, while the company’s chip deal with OpenAI might not be binding.

That’s why the tech-heavy Nasdaq Composite fell 0.26% despite other major U.S. indexes hitting records. Putting the two together, that means investors are rotating out of tech into other parts of the market. The S&P 500 financials sector, for instance, closed at a fresh record, buoyed by jumps in Visa and Mastercard.

Even though the AI theme seems to be under scrutiny, other sectors are performing well on the back of a resilient U.S. economy — as signaled by Fed officials on Wednesday — and buoyed by interest-rate cut. So long as nothing throws a spanner in the works, looks like we’re all set for a happy holiday season.

— CNBC’s Kristina Partsinevelos contributed to this report.

New records for U.S. stocks. The S&P 500 and Dow Jones Industrial Average notched fresh highs on Thursday, but the Nasdaq Composite, weighed down by Oracle, underperformed and fell. Asia-Pacific markets advanced Friday, with several major indexes rising at least 1%.

Broadcom’s fourth-quarter results beat expectations. The chipmaker also saw its net income nearly double from a year ago, and revealed that Anthropic is its $10 billion customer. But shares slumped in extended trading.

Disney to invest $1 billion in OpenAI. The media giant will also allow Sora, OpenAI’s video generator, to use its copyrighted characters, under a $1 billion licensing agreement. “We think this is a good investment for the company,” Disney CEO Bob Iger told CNBC.

Reddit launches legal challenge in Australia. The county introduced a ban on social media for teens under 16, which came into effect on Wednesday. Reddit argues that the law is “invalid on the basis of the implied freedom of political communication.”

[PRO] Where will Oracle go from here? Analysts are re-looking their price targets for Oracle stock after the firm released a disappointing and confusing earnings report on Wednesday.

Trump scared Europe with his national security strategy. That’s no bad thing, ex-CIA chief says

White House’s new national security strategy gave Europe a scare last week as it warned the region faced “civilizational erasure” and questioned whether it could remain a geopolitical partner for America.

The strategy was, “in a way, going after the Europeans but, frankly, some of the Europeans needed to be gotten after because I watched as four different presidents tried to exhort the Europeans to do more for their own defense and now that’s actually happening,” David Petraeus, former CIA director and four-star U.S. Army general, told CNBC’s Dan Murphy in Abu Dhabi on Thursday.

— Holly Ellyatt

Reddit, the popular community-focused forum, has launched a legal challenge against Australia’s social media ban for teens under 16, arguing that the newly enacted law is ineffective and goes too far by restricting political discussion online.

In its application to Australia’s High Court, the social news and aggregation platform said the law is “invalid on the basis of the implied freedom of political communication”, saying that it burdens political communication.

Canberra’s ban came into effect on Wednesday and targeted 10 major services, including Alphabet‘s YouTube, Meta’s Instagram, ByteDance’s TikTok, Reddit, Snapchat and Elon Musk’s X. All targeted platforms had agreed to comply with the policy to varying degrees.

Australia’s Prime Minister’s office, Attorney-General’s Department and other social media platforms did not immediately reply to requests for comment.

Under the law, the targeted platforms will have to take “reasonable steps” to prevent underage access, using age–verification methods such as inference from online activity, facial estimation via selfies, uploaded IDs, or linked bank details.

Reddit’s application to the courts seeks to either declare the law invalid or exclude the platform from the provisions of the law.

In a statement to CNBC, Reddit said that while it agrees with the importance of protecting persons under 16, the law could isolate teens “from the ability to engage in age-appropriate community experiences (including political discussions).”

It also said in its application that the law “burdens political communication,” saying “the political views of children inform the electoral choices of many current electors, including their parents and their teachers, as well as others interested in the views of those soon to reach the age of maturity.”

The platform also argued that it should not be subject to the law, saying it operates more as a forum for adults facilitating “knowledge sharing” between users than as a traditional social network, saying that it does not import contact lists or address books.

“Reddit is significantly different from other sites that allow for users to become “friends” with one another, or to post photos about themselves, or to organise events,” the platform said in its application.

Reddit further said in its court filing that most content on its platform is accessible without an account, and pointed out a person under the age of 16 “can be more easily protected from online harm if they have an account, being the very thing that is prohibited.”

“That is because the account can be subject to settings that limit their access to particular kinds of content that may be harmful to them,” it adds.

Despite its objections, Reddit said that the challenge was not an attempt to avoid complying with the law, nor was it an effort to retain young users for business reasons.

“There are more targeted, privacy-preserving measures to protect young people online without resorting to blanket bans,” the platform said.

— CNBC’s Dylan Butts contributed to this story.