Oracle Shares Tumble After Revenue Miss Rekindles AI Bubble Concerns
Oracle’s stock fell sharply on Wednesday, dropping more than 10% in after-hours trading after the tech giant reported quarterly revenue that came in below Wall Street forecasts, adding fresh fuel to investor worries about an overheated AI market.
The company posted revenue of $16.06bn for the quarter ending in November, narrowly missing analysts’ expectations of $16.21bn. Despite the shortfall, Oracle highlighted a 14% overall revenue increase and a striking 68% jump in sales from Oracle Cloud Infrastructure (OCI), its fast-growing AI and cloud division.
OCI’s rapid rise has been driven by demand from major AI companies that rely on Oracle’s compute capacity, helping the firm’s share price hit record levels earlier this year. But Wednesday’s numbers failed to reassure investors who fear the AI boom may be cooling.
Oracle’s high-profile deal with OpenAI, announced in September, drew intense attention. The ChatGPT maker committed to purchasing $300bn worth of computing power from Oracle over five years – a contract so large that it briefly made founder Larry Ellison the world’s richest man. Yet Oracle shares have since fallen roughly 40% from their peak, though they remain more than 30% higher year-to-date.
In a statement, Ellison signalled caution about the pace of technological change, writing that Oracle must “remain agile” as AI rapidly evolves. He also took aim at hardware dependence, declaring a “chip neutrality” approach that would see Oracle buy processors from any supplier — not just Nvidia – to meet customer needs.
The company’s expanding portfolio of AI infrastructure deals has drawn scrutiny from analysts who worry about “circular financing,” where companies indirectly fund demand for their own services. Oracle is also facing questions over the significant debt it has taken on to build new data centres at scale.
“Investors are weighing whether Oracle’s massive OpenAI partnership might mean overexposure to a customer facing profitability questions,” said Jacob Bourne, analyst at Emarketer. He added that the latest earnings miss could heighten concerns about Oracle’s aggressive AI-driven spending.
Others see the reaction as misplaced. Cory Johnson, Chief Market Strategist at Epistrophy Capital Research, said Oracle’s performance remains strong. “This was nothing but a great quarter,” he argued, pointing to accelerating growth and $385bn in signed contracts over the past six months, including agreements with major players such as Meta and Nvidia.
Oracle raised $18bn in a record-setting bond sale in September to support its infrastructure expansion – one of the largest debt offerings in tech history.
The company’s leadership has also drawn attention beyond Silicon Valley. The Ellison family, prominent supporters of U.S. President Donald Trump, recently purchased Paramount and are leading an effort to acquire Warner Bros. Discovery.
For now, Oracle’s latest earnings call suggests the company is betting heavily on an AI-first future – but investors remain uncertain about how much risk accompanies that ambition.
