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Shares of Oracle tumbled after its latest quarterly earnings slightly missed expectations, raising fresh concerns about the returns from its aggressive push into artificial intelligence.
Oracle reported $16.1 billion in revenue for the three months ending in November, just below analyst forecasts. While overall revenue grew 14% and its AI-focused cloud services, including Nvidia-powered infrastructure, surged 68%, investors reacted sharply to the minor miss, highlighting the sensitivity of tech stocks in an overheated AI market.
Oracle’s cloud infrastructure supports AI developers and has helped the company secure high-profile deals, including a multi-year partnership with ChatGPT, which briefly elevated chairman Larry Ellison to the top of global wealth rankings. Despite this momentum, Oracle shares have fallen nearly 40% from their peak three months ago, though they remain well above their levels at the start of the year.
Ellison emphasized the need for flexibility in the rapidly evolving AI sector, introducing a “chip neutrality” policy to ensure Oracle can source hardware from multiple providers to meet diverse client needs.
The earnings report also weighed on other AI-related tech stocks, with companies like Advanced Micro Devices (AMD), Meta, Warner Brothers Discovery, and Paramount experiencing declines. Analysts noted that while Oracle’s growth remains robust, questions remain over its large AI partnerships, rising debt from new data centers, and whether the rapid expansion in AI can be sustained.
Some experts argue that tech stocks are priced for perfection, meaning even a small revenue shortfall can trigger sharp sell-offs. Others insist Oracle’s performance is impressive, pointing to accelerating revenue growth and hundreds of billions in new AI-related contracts over the past six months.
Investor attention is further heightened by Oracle’s record-breaking bond issuances and high-profile media acquisitions. The potential influence of Donald Trump on economic and policy decisions adds an additional layer of uncertainty for investors evaluating Oracle’s AI ambitions.
Ultimately, Oracle’s latest earnings highlight the tension between technological promise and market skepticism. While the company continues to expand its AI footprint at a rapid pace, investor caution underscores the challenges of meeting sky-high expectations. Shares remain under pressure, illustrating the ongoing debate over whether the AI boom is sustainable or a bubble on the verge of bursting.
