Oracle Stock Dips Amid AI Spending Concerns
On Thursday, Oracle’s stock experienced a notable drop of over 12%. This plunge seems largely tied to rising worries regarding the company’s substantial investments in artificial intelligence, which have impacted co-founder Larry Ellison’s wealth by more than $30 billion.
Shares of the Texas-based tech firm fell from an opening price of $223 to around $194, leading to a staggering loss of $90 billion in market capitalization.
Consequently, Ellison’s net worth dipped to $244 billion from the previous day’s $276 billion, as reported by Forbes.
The decline has shifted Ellison, who holds approximately 40% of Oracle, from second place on the global rich list, now trailing Elon Musk.
By Thursday afternoon, as Ellison was involved in helping his son, Paramount Skydance CEO David Ellison, acquire Warner Bros. Discovery, he slipped to No. 3 on Forbes’ ranking, after Google co-founder Larry Page.
This downturn in Oracle’s shares also had ripple effects across the tech sector, dragging down the stocks of established companies such as Nvidia, AMD, Micron, Broadcom, and Arm.
The Nasdaq saw a drop of 145 points, or 0.6%. In contrast, the broader market drew some investor interest, with the Dow Jones Industrial Average climbing by about 600 points.
Wall Street’s reaction was negative in light of Oracle’s balance sheet, which revealed that the push into AI was being fueled by $100 billion in debt.
Investors expressed significant concern, leading to increased purchases of credit default swaps—essentially insurance against potential default.
CDS prices had risen to a five-year peak, raising alarms about Oracle’s ability to manage its debt.
Earlier this year, Oracle announced a noteworthy deal to provide $300 billion in cloud computing services to OpenAI, known for ChatGPT, which was unexpected given that OpenAI, valued at $500 billion, continues to operate at a loss.
OpenAI hasn’t shared how it plans to finance its ambitious AI initiatives, projected to exceed $1 trillion by 2030.
OpenAI unveiled its latest version of the popular bot, GPT-5.2, which promises enhanced functionalities for various professional tasks such as creating spreadsheets and developing presentations.
Last month, OpenAI declared a “code red,” prompted by the announcement of new models from competitors like Google and Anthropic.
Even with Oracle’s stock decline, some analysts remain optimistic. Dan Ives of Wedbush Securities mentioned that the $523 billion committed by Oracle for future business is a hopeful indicator. He argued that while critics might be quick to panic, he strongly opposes this perspective, viewing the committed figure as a significant positive for Oracle’s AI strategy moving forward.
