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On Wednesday, U.S. tech stocks took a hit as Oracle faced a setback when a major supporter withdrew from a data center initiative. This development heightened investor anxiety about the escalating expenses of artificial intelligence ventures and the debt incurred to support them.

The Nasdaq Composite Index, known for its tech focus, dipped by 1.3% in early afternoon trading in New York, with Oracle’s shares sliding by 5%.

This downturn for Oracle occurred after the Financial Times disclosed that Blue Owl Capital, the chief financier for Oracle’s U.S. data center projects, decided against funding a $10 billion data center located in Michigan.

Since reaching their peak in early September, Oracle’s stock has plummeted nearly 50% as the company becomes increasingly entangled in Wall Street’s concerns over the substantial debt being raised to fund AI infrastructure expansion.

The market movements on Wednesday followed a sell-off last week, triggered by disappointing earnings reports from Oracle and chipmaker Broadcom, which fell short of high investor expectations.

Other big tech stocks also fell. Nvidia was down 3.4 per cent, while Alphabet dipped 2.6 per cent. Broadcom was down 5.4 per cent.

“Oracle news is certainly the main factor” in tech stocks’ renewed wobble, said Mike Zigmont, co-head of trading and research at Visdom Investment Group. Blue Owl’s decision to pull out was being seen in the markets as “a sign that they’re not as bullish as [some investors] are” on the AI boom, he added.

The blue-chip S&P 500 index was down 0.8 per cent. Although the Wall Street benchmark has been dragged down by the renewed tech jitters in recent days, it remains not far below its record closing level last week.

Arun Sai, a strategist at Pictet Asset Management, said the moves were probably a result of profit-taking by investors who have made money in AI-linked investments this year.

“Investors are increasingly seeing their AI holdings as a funding source for next year’s trades,” Sai added.