Fears of an artificial intelligence (AI) bubble were renewed when shares of Oracle took a dive after missing Q2 revenue and earnings projections for fiscal year 2026. This caused a spillover effect into other AI-related names. If the bearish sentiment continues, traders can take advantage with inverse ETFs. Or, if AI mania continues to have legs, traders can use inverse ETFs to juice up their positions.
In the scramble to be amongst the top-notch AI players in big tech, Oracle has invested heavily into the space. Known mostly for its database and enterprise software, Oracle has been scaling operations to shore up its cloud infrastructure offerings. Ideally, that will help it compete with market peers like Amazon and Google. While the push in this direction makes sense, investors are concerned about the amount of debt it’s been taking on. The company raised $18 billion in bond sales to help finance their lofty AI ambitions. It takes money to make money. But will investors have the patience to wait and see if the spending produces tangible results?
“There is something inherently uncomfortable as a credit investor about the transformation of the sort we’re facing that is going to require an enormous amount of capital,” Daniel Sorid, head of U.S. investment grade credit strategy at Citi, said of the Oracle bond sale.
If Oracle’s stock continues to see sell-offs, traders can look to the Direxion Daily ORCL Bear 1X ETFs (ORCS). Traders can take a bearish position in Oracle without borrowing on margin to sell the stock short. If the overall tech sector starts to trend lower, traders can also use the Direxion Daily Technology Bear 3X ETF (TECS ) or the Direxion Daily Technology Top 5 Bear 2X ETF (TTXD). The latter is one of the newer funds in Direxion’s Titans ETF Suite that offers exposure to the top five companies in a specific industry.
Bullish Options for AI Rally
Oracle could merely be an isolated incident, causing a market overreaction. While it may not have the name recognition associated with others in the semiconductor industry like Nvidia, Broadcom is another major player in the AI chip game. Last week, it reported positive earnings in Q4 for the 2025 fiscal year. That could prove that the AI rally is still alive and well. Revenue was up 28% from the previous year with a positive outlook ahead.
“In Q4, record revenue of $18.0 billion grew 28% year-over-year, driven primarily by AI semiconductor revenue increasing 74% year-over-year,” said Hock Tan, president and CEO of Broadcom Inc. "We see the momentum continuing in Q1 and expect AI semiconductor revenue to double year-over-year to $8.2 billion, driven by custom AI accelerators and Ethernet AI switches. We forecast Q1’26 total revenue of $19.1 billion and adjusted EBITDA of 67%."
If Broadcom can maintain its momentum, traders should look at the Direxion Daily AVGO Bull 2X (AVL ). Likewise, bullishness in the entire tech sector is available for traders via the Direxion Daily Technology Bull 3X ETF (TECL ) or the Direxion Daily Technology Top 5 Bull 2X ETF (TTXU).
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