Oracle AI reality check knocks global stocks, Fed cut saps dollar

World stocks stalled on Thursday as cloud computing giant Oracle sounded a warning for AI profitability, while bonds were firm and the dollar nursed losses after the US Federal Reserve cut interest rates for a third meeting running.

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Despite the Fed relief, many heavyweight Asian and European markets were left struggling after Oracle reignited jitters over stratospheric tech valuations by missing analysts' sales and profit estimates and flagging a $15 billion AI overspend.

The US firm's shares sank over 11 in after-hours US trading, pushing both Nasdaq futures and Japan's Nikkei down around 18 as SoftBank - a partner with Oracle on the US Stargate data centre project - slumped over 7.58 too.

Europe saw a muted start as well, as a 2.58 drop for Germany's SAP left the region's tech indices facing a third straight day in the red, although the prospect of lower global interest rates meant there were gains elsewhere.

Hargreaves Lansdown analyst Matt Britzman said Oracle has been at the epicentre of the Al spending debate, given it lacks the mammoth cash flows of the likes of Google, Amazon and Microsoft.

"Markets quickly looked past the massive earnings beat, driven by a one-off asset sale, and focused on the rising capex and weak cash flows," Britzman said, adding it fanned broader concern that AI outlays aren't turning profits for firms as quickly as hoped.

Traders were otherwise focusing on the global interest rate outlook after the Fed lowered its benchmark funds rate, as expected, by 25 basis points to 3.58 to 3.758 in a 9-3 split decision.