Oracle Stock Drop Highlights Uneasy Balance Between AI Boom and Market Stability
- Rahaman Hadisur
- 2 hours ago
- 2 min read
Hadisur Rahman, JadeTimes Staff
H. Rahman is a Jadetimes news reporter covering Business
In a session marked by mixed signals for the AI-driven rally, Oracle Corp faced a dramatic aftershock on Thursday as its stock tumbled nearly 11 percent following a revenue miss that undershot Wall Street expectations. The decline shaved roughly $70 billion from the company’s market value within hours, underscoring the fragility of a market rally increasingly fueled by bets on artificial intelligence and cloud-based growth.
Oracle’s disappointing earnings came on the heels of an announcement that fiscal 2026 capital expenditures would rise to $50 billion, an increase of about $15 billion from September projections. The heavy outlay, Oracle noted, is expected to fund AI-related initiatives and cloud infrastructure, with a significant portion of spending tied to contracts with major players in the AI ecosystem, including Meta Platforms and Nvidia. The company also disclosed a robust backlog of signed customer contracts valued at $523 billion, a data point that suggested strong demand despite the short-term revenue miss.
The reaction in the broader market was swift and scattered. Shares of Nvidia scooted down modestly, while chipmakers Arm Holdings and Intel fell by more than 3 percent. Alphabet, the parent company of Google, decreased by 2.4 percent. Some data center and memory players, including CoreWeave, AMD, and Micron, also moved closer to the red, signaling a cautious stance among investors about AI revenue visibility and the timing of returns.
Oracle’s chief financial officer, Doug Kehring, on a post-earnings call reaffirmed the company’s commitment to maintaining investment-grade debt, an assurance aimed at placating investors concerned about elevated funding needs and the potential ripple effects on credit markets. The emphasis on debt quality appears especially important as CDS spreads for Oracle rose, reflecting perceived risk in the debt market amid heightened expectations for AI-related capital outlays.
Despite Thursday’s pullback, the broader market metrics showed resilience. The S&P 500 was hovering near a record high, and the Nasdaq Composite logged year-to-date gains exceeding 20 percent. Yet the volatility around Oracle’s results has reignited debate about whether the AI investment boom represents a sustainable, long-term growth engine or a speculative bubble susceptible to sharper downturns if earnings fail to materialize as anticipated. Investors and analysts will be watching closely how Oracle and its peers translate ambitious AI investments into tangible, revenue-generating outcomes in the quarters ahead.
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