Oracle, Regions Financial & Comerica: Trending tickers

Shares of Oracle (ORCL) close Friday 6% lower after its AI forum event. Regional banks Regions Financial (RF) and Comerica (CMA) stocks fell lower after reporting respective earnings. Yahoo Finance’s Julie Hyman and Josh Lipton weigh in on how net interest income is expected to hit regional banks amid rising deposit rates.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Let's also get a check on shares of Oracle. This is a bit of a head scratcher today. The shares are down.

It held an AI forum event aimed at showcasing the company's products that allow artificial intelligence models to be trained at scale. It seems investors didn't necessarily like what they heard. The shares are down 6%.

Some Wall Street analysts have come to the company's defense saying that it has long term potential. But it might be that key phrase long term-- that is the issue here. Because indeed, the likes of JP Morgan says, the conversion of bookings to revenue will take longer than we think steering more growth into fiscal 2025. And it does feel like we are at the stage in the AI hype cycle where investors want more concrete monetization.

- Show me.

JULIE HYMAN: Right. So maybe--

- That's revenue.

JULIE HYMAN: Yeah.

- Right.

JULIE HYMAN: Exactly. So--

- I mean, to your point, one guy, when it comes to enterprise software, I always make a Beeline for is Kirk Mattern over at Evercore. Smart guy. He's been following Oracle for a long time.

And like you said, Julie, there was this, sort of, rush by the street to defend Oracle. And Kirk says while we are still in the early innings, we believe Oracle is well positioned to capture AI Mindshare at the enterprise level. So you did see analysts coming out to defend Larry Ellison's company here. But at least in today's trade, investors not so convinced.

JULIE HYMAN: No, It doesn't seem so.

- No.

JULIE HYMAN: Not so convinced about regional banks either.

- No. No, let's get to that. Nice transition, by the way. Regional bank stocks under pressure today is more earnings reported before the bell Regents Financial falling to its lowest level since March. It's after adjusted earnings per share missed estimates, and its net interest margins were lower than consensus.

Meanwhile, Comerica had better results, beating on average deposits and EPS, but its current quarter outlook sending the stock into the red. And look at that, I mean, both are down very hard in today's trade. I'm just looking at regions-- region-- regional financial in particular here, for $0.09 a share. That was a miss, Julie.

$1.3 billion in net interest income that was disappointing relative to expectations too. And I think the key here they expect more declines in net interest income to come.

JULIE HYMAN: Yeah. They're saying higher deposit and funding costs, right? People want more return on their investment. So they're putting money in money market funds, for example.

So all of this is costing the regional banks like Regions, another interesting line that caught my attention from Regions report, it continues to take a hit from check fraud. And it's interesting-- I don't know if there's any connection, but it's interesting that we're seeing an uptick in so-called shrink at the retailers, theft at the retailers. At the same time, that we're seeing an uptick in check fraud.

So the company took a one time charge of $53 million tied to check fraud. It's not huge, but it's notable. And it already had an $82 million dollar loss tied to a different check fraud scheme last year. So this is something that has been happening.

On the other hand, over at Comerica, it is victim of some of the same net interest Income Dynamics. For the fourth quarter, it says net interest income is going to fall 5% to 6% quarter over quarter. That's similar to what we heard from Regions as well.

- Yeah. To your point, these regional banks they have to offer these higher interest rates to customers.

JULIE HYMAN: Yeah.

- That eats into what they're earning on lending, that impacts your earnings. It was interesting the CEO of Regions Financial saying here, the industry were facing economic and regulatory uncertainty. He tried to put some optimism here. We're confident he says in our ability to adapt, but at least, today's trade, investors not giving him the benefit of the doubt.

JULIE HYMAN: No, it doesn't seem so.