The AI infrastructure trade stagnated through August, with enthusiasm fading even after NVIDIA (NASDAQ:) beat earnings and raised guidance. Investors shifted their focus to weakening economic data and looming , fueling the narrative that the AI boom had run its course. That changed yesterday, when Oracle (NYSE:) reignited the trade with a blockbuster earnings call.
While Oracle missed estimates across the board, its forward guidance stole the spotlight. Oracle’s remaining performance obligation (RPO)—a metric that captures contracted but not yet recognized revenue—surged to $455 billion (+359% YoY) after Oracle signed four multibillion-dollar contracts during the quarter. Management also said several more multibillion-dollar deals are in the pipeline, potentially pushing the backlog above $500 billion in the next few months.
The market reaction was swift. Oracle’s stock price soared as much as +40% intraday, and the rally spilled over into the broader AI infrastructure trade, as shown in the heatmap below. Despite recent doubts, demand for AI-driven cloud infrastructure remains powerful. It remains to be seen how durable this rebound is—but for now, Wall Street is betting the AI story still has legs.
PPI Sends Treasury Yields Lower
Both and came in at –0.1% for August, well below expectations for a +0.3% gain. The downside surprise highlights the easing of producer-level inflation pressures and adds to evidence that pricing power is weakening across the supply chain. Bond yields moved lower in response, with the yield curve flattening slightly as long-end yields fell more than the short-end.
For the Fed, the miss reinforces the case for a rate cut at this month’s meeting. While policymakers have been cautious about declaring victory on inflation, the data show a softening alongside a weaker labor market. However, today’s release will be the more consequential data.
If consumer prices echo August’s softer PPI, the Fed may have more reason to accelerate its easing cycle. For now, futures markets aren’t convinced that will happen soon. The odds of a 50-bps cut at next week’s FOMC meeting increased by less than 1% following the PPI release, to 7.9%. In other words, futures markets remain nearly dead-set on a 25-bps cut next week. 
Tweet of the Day
