Inside Markets — Rotation

Oracle’s pullback following last week’s analyst meeting could signal market doubt around AI capex ROI or the usual profit taking/de-risking that occurs before a known catalyst (Friday’s CPI report). The post-meeting weakness in ORCL seems like it is expanding to other AI themes and the momentum factor more broadly. If weakness in the momentum factor continues, it will be the fourth rotation out of momentum this calendar year. The first rotation of 2025 that followed the apparent DeepSeek accomplishment in January generated the greatest amount of volatility, while the other two rotations were shallow, de-risking events with easy-to-identify reversals from oversold levels. If the rotation continues, we would expect it will be another buying opportunity.