The fallout from Oracle’s disappointing earnings report is shaking the broader AI sector — and the reaction is going global.
In Japan, shares of SoftBank — one of the world’s biggest AI investors — tumbled 7.7%, dragging down the Nikkei 225 index.
Market analyst Shuutarou Yasuda from Tokai Tokyo Intelligence Laboratory summed it up:
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“The Nikkei opened higher to track overnight Wall Street’s rises, but the gains were erased by declines of SoftBank Group.”
He added that Oracle’s weak results have sparked fresh doubts:
“The earnings of Oracle raised concerns if the data centre project, in which SoftBank Group is involved, would proceed as expected.”
Overnight Sentiment Takes a Hit
Risk appetite was already fading in global markets. Mohit Kumar of Jefferies noted that overall sentiment is “subdued after weaker revenue and higher capex requirement from Oracle.”
Oracle Shares Slide as Earnings Raise Big Questions About AI Profitability
Good morning — and welcome to our coverage of the latest moves in business, markets, and the global economy.
Concerns about whether AI can actually deliver the profits investors expect are back in focus today after Oracle’s earnings badly missed Wall Street expectations.
Oracle, which has been investing heavily to power the AI boom, reported:
- Revenue and profit below expectations
- A major jump in spending on AI data centers — an area where it is already borrowing aggressively
- A sharply higher capex outlook for fiscal 2026
Oracle now expects to spend $15 billion more on capex than the $35 billion projected in September — proof of how expensive the AI infrastructure buildout has become, long before major profits materialize.
The company also recorded a one-time $2.7 billion pre-tax gain from selling its stake in Ampere Computing.
Oracle chairman Larry Ellison explained the reasoning:
“Oracle sold Ampere because we no longer think it is strategic for us to continue designing, manufacturing and using our own chips in our cloud datacenters.
We are now committed to a policy of chip neutrality… We need to be prepared and able to deploy whatever chips our customers want to buy. There are going to be a lot of changes in AI technology over the next few years and we must remain agile.”
The Numbers Wall Street Didn’t Want to See
For the quarter:
- Revenue: $16.06 billion (vs. $16.21 billion expected)
- Adjusted Q3 profit forecast: $1.64–$1.68 per share
- Analysts expected $1.72
- Revenue growth outlook: 16%–18%
- Analysts expected 19.4% and revenue of $16.87 billion
Investors reacted instantly. Oracle shares crashed 11.5% in after-hours trading.
Why the Market Is Spooked
Swissquote senior analyst Ipek Ozkardeskaya explained the market’s sharp reaction:
- Oracle is still burning cash — free cash flow was negative $10 billion last quarter
- Capex is exploding to around $50 billion for FY 2026 — far higher than previous forecasts
- The company is funding its AI expansion mostly through debt, and it already carries around $106 billion in total debt
Her takeaway:
“The report wasn’t dramatically bad, but it confirmed concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation.”
That uncertainty was enough to send Oracle shares sharply lower — and to reignite doubts across the AI industry about how long it will take for big investments to turn into big profits.
