Fed Rate Cut Expectations (87% Odds) with Dissenter Risk & Oracle/Broadcom AI Earnings Preview

This analysis is based on a Seeking Alpha report [1] highlighting two interconnected market events unfolding in mid-December 2025: a contentious Federal Open Market Committee (FOMC) meeting and high-stakes earnings from AI-exposed tech leaders Oracle (ORCL) and Broadcom (AVGO).

CME FedWatch data shows an 87% probability of a 25-basis-point (bps) rate cut to 3.50-3.75% [2]. However, the FOMC is unusually divided, with up to 5 members expected to dissent [1]. Dissenters cite concerns over tariff-driven inflation [2], while pro-cut members point to labor market weakness. This division creates policy uncertainty—if the cut occurs with significant dissent, markets may question the Fed’s commitment to future easing. A surprise no-cut decision could trigger sharp selloffs, especially in rate-sensitive sectors, given high market expectations.

ORCL and AVGO, scheduled to report earnings on 12/10 and 12/11 respectively, are central to AI growth narratives. ORCL’s cloud business contributes 85.8% of its revenue, positioning it as a key player in AI infrastructure [0]. AVGO’s semiconductor (58.4%) and infrastructure software (41.6%) segments depend heavily on AI demand [0]. Pre-earnings, both stocks rose (ORCL +1.52%, AVGO +2.42%) on optimism, though high consensus targets (ORCL: +64.3%, AVGO: +11.5%) set a high bar [0].

1. FOMC Division Signals 2026 Policy Uncertainty
   : The unusual number of dissenters reflects conflicting priorities (inflation vs. labor), which could lead to volatile policy signals in 2026 [2]. This uncertainty may impact tech capex (including AI investments) if interest rates remain unstable.
2. AI Sector Validation Test
   : ORCL’s dominant cloud revenue share makes its earnings a critical measure of AI cloud demand, while AVGO’s semiconductor focus tests AI hardware adoption. Strong results could reinforce AI sector momentum, while misses may cool overvaluation concerns [0].
3. Market Sensitivity to Fed Surprises
   : With 87% of the market pricing in a cut [2], any deviation (no cut, hawkish statement) could trigger amplified reactions compared to more balanced expectations.

• Fed Policy Risk
  : A no-cut decision or dissent-heavy statement could cause market selloffs, particularly in rate-sensitive sectors [2].
• Earnings Miss Risk
  : High AI growth expectations for ORCL and AVGO mean even slight misses could lead to sharp stock declines [0].
• Tariff Inflation Risk
  : Dissenters’ concerns over tariff-driven inflation could delay future rate cuts, prolonging policy uncertainty [2].

• Fed Easing Boost
  : A rate cut could reduce borrowing costs, supporting tech capex and AI investment [2].
• AI Sector Tailwinds
  : Strong earnings from ORCL and AVGO could validate AI growth narratives, driving sector-wide gains [0].

• Fed Rate Decision
  : 12/09, 87% odds of 25bps cut, up to 5 dissenters [2].
• Earnings Schedule
  : ORCL (12/10, cloud AI focus), AVGO (12/11, semiconductor/software AI demand) [2].
• Stock Metrics (12/07)
  : ORCL (market cap $610.38B, P/E 49.42x, +1.52% 1-day), AVGO (market cap $1.83T, P/E 97.17x, +2.42% 1-day) [0].
• Key Watchpoints
  : Fed post-meeting statement, ORCL’s AI cloud revenue, AVGO’s semiconductor demand trends.

All information is provided for decision-making context and does not constitute investment advice.