Key Highlights

● Vertiv, Oracle and Flex soared on AI hardware demand.

● F5, Fortinet and ServiceNow all fell on disappointing outlooks.

● Investors appeared to reward tangible, measurable demand.

● The split suggested scrutiny of software growth prospects.

The AI trade delivered a stark split, as companies building the physical backbone of AI, from power and cooling equipment to memory chips, rallied hard, while several software names tumbled on disappointing outlooks. The divergence suggested investors were rewarding businesses with clear, measurable demand from the data-center buildout.

Vertiv soared after raising its guidance on surging data-center demand, with its CEO saying the industry is in the middle of the largest infrastructure build-out and it is accelerating. Oracle jumped after its investor day, and the chip index rose for a fourth straight session.

Software Stumbled

The picture was very different for software. F5, which provides application security and delivery software, tumbled after its fiscal 2027 revenue growth outlook and a downgrade. Fortinet fell during the regular session and then tumbled further in extended trading after its results.

ServiceNow slid sharply in extended trading after its third-quarter results missed, with fourth-quarter guidance and AI targets underwhelming and an acquisition weighing on results.

Why the Split Occurred

Infrastructure companies are reporting surging orders and raising forecasts, giving investors tangible evidence of AI demand. For software companies, the question is whether AI will boost their sales or disrupt their business models, and outlooks that underwhelm can trigger steep sell-offs.

The backdrop included the Federal Reserve leaving its benchmark rate range unchanged, with two officials favoring a hike, while after the bell Microsoft rose on an Azure beat and Alphabet slid sharply after missing estimates.