"THE MARKET IS GENIUS" - Oracle Debt Crisis, AI Hyperscalers Issuing More Debt Than Last 3 Years

 

📊 Market Sector Tracker - Gary Kaltbaum's "Investor's Edge"

Tracking leading/lagging sectors, top stocks, and market positioning

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📅 Tuesday, December 17, 2025

"THE MARKET IS GENIUS" - Oracle Debt Crisis, AI Hyperscalers Issuing More Debt Than Last 3 Years

Market Action

• Mixed: Small bounce but weak internals
• NASDAQ new yearly lows: 225 vs 94 highs (out of 94, "bunch of non-operating companies")
• Semis weak, advanced declines negative

Oracle Crisis Deepens 🚨

Latest Numbers: $248B AI cloud data center lease commitments (up from $150B, up from $99B in August)

But the Market Says:

• Stock: 346→187
• Credit default swaps skyrocketing to levels not seen since 2008
• Free cash flow collapsing
• Bondholders sitting on 9% unrealized loss on $18B debt issued September
• Bonds falling to junk rating

Gary: "If things are so good, why is the stock on from $346 to $187? If things are so good, why are their credit default swaps skyrocketing to levels not seen since 2008?"

AI Debt Bomb 💣

CRITICAL NEW INFO: "AI hyperscalers have issued more debt over the last three months than over the previous three years. And actually a lot more."

Microsoft: "Cut their sales targets for what is known as agentic AI software by up to 50% after struggling to find buyers"

Leading Sectors 🟢

• Big banks, regionals, European/foreign banks still strong
• Retail continuing
• Transports, insurance
• Oil breaking down (good for consumers, bad for oil stocks)

Lagging Sectors/Stocks 📉

OIL - BREAKING DOWN:

• Oil down another $1, now $66
• OIH "tried to break out, failed miserably, rolling over"
• XOP "gone", XLE "gone"
• Gary: "Doubly avoid the oils" (but "very good news at the pump")
• Russia/Ukraine deal leaking = more oil supply = lower prices

AI/TECH STILL GETTING CRUSHED:

• Broadcom: 405→340 on earnings
• Microsoft: "So darn weak", cut AI sales targets 50%
• Supermicro: Down 50%
• CoreWeave: 187→69.5
• Credo, VRT (data centers): Blasted 20%
• ARM Holdings: Crushed
• AMD: Breaking down
• Taiwan Semi: Trading below 50-day
• NVIDIA: "Remains on the ledge" (212→178, -16%)

FERMI (FRMI) - IPO DISASTER:

• October IPO at $21, opened ~$30, hit $37 next day
• At $37: $22.7 BILLION market cap with ZERO sales
• At IPO: $13 billion market cap with zero sales
• Now: $9.69, still "almost $6 billion market cap with no sales"
• Lost first tenant for massive Texas data center
• Gary: "Wall Street hates you, do not forget that... We're ripping on Wall Street"

Gary's Positioning

• Still owns zero tech stocks
• Sold Oracle at $303, made $1 per share
• "Would have never believed that sucker'd be $188"

Gary's Key Points

The 2007-08 Parallel: "Do you remember what happened during that year leading up to 08? The devastation of the financials? We're on this show every day saying the financials are really underperforming. The Dow just went up 1,000 points and the financials didn't even budge... Something is up with the banks and the financials."

"We had no idea what would happen. We didn't know Merrill Lynch and Countrywide and all those companies out of business. We didn't know, but the markets sure did."

"Way in advance, while everybody's saying don't worry. And everybody, everybody is saying don't worry about artificial intelligence. While the market's saying otherwise."

Markets Are Genius: "So instead of listening to people's opinions, who are very often late in the game, and it's proven to be, we have to listen to what the markets tell us. Because markets are genius, not all the time."

"Do you remember when we were the only ones on Wall Street cursing out Jay Powell when he was printing money? And when he stopped printing money... The real free market is taking over, and it's an uh-oh moment."

The Questions Gary Asks: "Why is Microsoft so darn weak? Why did Broadcom just crash from $405 to $340 on their earnings reports? Why is Supermicro down 50%? Why has CoreWeave been blasted from $187 to $69.5?"

On Fermi IPO: "Wall Street hates you, do not forget that. They brought out an initial public offering at a $13 billion market cap. At the initial public offering, you were paying $13 billion for a company with no sales."

On Projections: "The numbers being projected are just obscene."

Job Numbers: "The job numbers came out. They suck. The revisions were even worse than the numbers... you have some sort of a, I don't know if I'd call it a job recession, but job weakness."

Tariffs Impact: "What did we tell you for months here daily on this show? Due to the fact that our companies pay that tariff. Yes, they lied to us. He lied to us. How the hell can they plan or even hire when they don't know what their expenses are going to be?"

Russia/Ukraine: "We're hearing that Russia and Ukraine are going to come up with something... they're leaking... Russia has sanctions against them on their oil. And if they remove all the sanctions, they can sell oil big time again. You put more oil onto the market, that lowers prices."

Ford EV Disaster 🚗

Taking $19.5 BILLION charge:

• "No longer plans to produce select larger electric vehicles where the business case has eroded due to lower than expected demand"
• Going back to gas "because that's what people want"

Gary: "The president Biden and his administration forced these companies into making things that did not have the demand. Guaranteeing massive losses by the companies. Not by Joe Biden. 19.8 billion."

"What a concept. Produce the products that people want in life. Don't produce the products that don't sell so you take a $19 billion write-off."

Marijuana Stocks Rally 🌿

Trump loosening regulations again:

• One index: $26.82 (4 days ago) → $41.22 today
• But still crushed from peaks:
  • That same index: Was $545 in 2019
  • Aurora Cannabis: $1,503 → $5.53
  • Canopy Growth: $592 → $1.83 (97% decline!)

Gary: "Do not forget how they touted you on these marijuana stocks. They were the end-all, be-all."

On Trump policy: "You know our drug prevention president that is shooting up boats that are bringing in drugs. That same president who pardoned the ex-president of Honduras that was found guilty of trafficking 400 tons of cocaine... now wants to make it easier to get weed, get more marijuana."

"I don't care what anybody tells you. Marijuana's not good for you."

"New York City is one big gigantic bond hit. You walk the city and all you do is smell weed."

Gary's Question: "If everybody is able to grow marijuana, how is it possible all these companies are going to do well? And if your Uncle Biff who lives around the corner will sell it to you for cheaper and he has the good stuff... and you don't pay tax with the Uncle Biff, who do you get your marijuana from?"

Key Takeaway

Gary's drawing explicit parallel to 2007-08: The market is showing weakness in the leading sector (AI/tech) while everyone says "don't worry" - just like financials in 2007.

"We didn't know, but the markets sure did."