Wall Street Had a Bad Friday -- and These 2 Tech Stocks Were a Big Reason Why

The stock market moved lower on Friday, closing a bad week for major market benchmarks. Losses for the Nasdaq Composite (^IXIC 2.02%), S&P 500 (^GSPC 1.02%), and Dow Jones Industrial Average (^DJI 0.40%) for the week were extensive as investors continued to worry about high interest rates and economic pressures.

Data source: Yahoo! Finance.

For a long time, investors could count on tech stocks  to carry their weight even when the rest of the market was struggling. However, some companies in the technology industry have seen big challenges in the current market environment. Two key losing stocks on Friday were Oracle (ORCL 2.02%) and Okta (OKTA -0.69%), and the moves in both stocks highlight the risks in betting too much on success in hot areas of the market.

Oracle falls short of AI promise

Shares of Oracle were down 6% on Friday. The software giant has been working hard to take advantage of opportunities in artificial intelligence, but news that it could be facing some difficulties in executing its business strategy weighed on the stock price in the short run.

An Oracle announcement from late Thursday is a good example of the moves that the company has made to embrace AI. Oracle said that its Oracle Cloud Marketplace would offer Nvidia's (NVDA 6.18%) DGX Cloud AI supercomputing platform and AI Enterprise development and deployment software, extending its track record of being among the first to provide its clients with Nvidia's AI products.

Yet analysts on Wall Street aren't sure whether strong demand for AI applications will translate into quick growth for Oracle. One note from Friday suggested that it might be well into next year before Oracle's extensive AI-related backlog of business will translate into actual sales. Moreover, an economic slowdown could mean that cloud-computing spending from Oracle's clients might already have peaked.

Oracle is among the minority of tech stocks that have already eclipsed their all-time highs from 2021, and even today's drop didn't give up all of its gains from the past couple of years. Nevertheless, Oracle needs to keep its AI momentum if it wants to stay among the leaders in the artificial intelligence movement.

Okta suffers the worst nightmare for cybersecurity stocks

Elsewhere, shares of Okta closed down 12%. The provider of identity services for cybersecurity protection had to deal with a breach to its own systems, forcing shareholders to question the efficacy of its defenses.

Okta Chief Security Officer David Bradbury said that the company's security division had identified a breach of its support-case management system. According to a blog post from the executive, adverse actors stole a credential that allowed them to gain access. As a result, the attacker was able to view files that some Okta customers uploaded in relation to customer-support cases that they had filed.

Okta said that it has contacted all customers that were affected by the breach, and the blog post suggested countermeasures to avoid any further damage. Moreover, the company was clear that the case-management system is separate from Okta's primary services, which remain operational and unaffected by the breach.

Nevertheless, confidence is everything for companies in the cybersecurity space. Okta will have to remain vigilant in order to reassure its clients that it can continue to provide the service they count on to protect their sensitive, high-value data.