Oracle shares plunged 13% in premarket trading on Thursday, deepening the sell-off that began a day earlier after the tech giant posted earnings that fell short of Wall Street expectations.
The slump came even as demand for the company’s artificial intelligence infrastructure continues to surge. ORCL reported $16.06 billion in quarterly revenue, missing analyst estimates of $16.21 billion, according to LSEG.
The AI Sell-Off Rippled Across Big Tech
Oracle’s rough report sent shockwaves through the broader AI sector.
By premarket hours Thursday:
- Nvidia was down 1.4%
- Micron slipped 1%
- Microsoft dipped 0.4%
- CoreWeave fell 3.9%
- AMD dropped 1.3%
The disappointment extended a recent stretch of market skepticism toward Oracle, which has been under the spotlight since September, when the company raised $18 billion in a massive bond sale—one of the biggest debt issuances in tech history.
It also made headlines around the same time for signing a $300 billion deal with OpenAI, positioning itself as a heavyweight competitor in the race to build AI cloud infrastructure alongside Amazon, Microsoft, and Google.
Investors Question Oracle’s Massive AI Spending Spree
Despite the company’s rapid expansion, investors are increasingly uneasy about the aggressive capital spending and Oracle’s growing debt load.
ORCL has already locked in billions of dollars in construction loans for new data centers in New Mexico and Wisconsin. And according to Citi analyst Tyler Radke, the company is expected to raise $20 billion to $30 billion in debt every year for the next three years.
On the earnings call, Principal Financial Officer Doug Kehring emphasized that ORCL intends to maintain its investment-grade credit rating.
He noted the company can ease borrowing pressures through alternative financing — including customers who bring their own chips for installation and suppliers who lease chips instead of selling them outright.
“These options allow us to match payments with receipts and borrow far less than people assume,” Kehring said.
Oracle’s Cash Flow Turns Deeply Negative
ORCL now expects full-year capital expenditures of about $50 billion, up from $35 billion in September.
For fiscal 2025, capex totaled $21.2 billion.
But what really caught Wall Street’s attention was the company’s free cash flow, which came in at negative $10 billion for the November quarter—far worse than the negative $5.2 billion analysts expected, per StreetAccount.
Free cash flow is a key metric for investors tracking potential risks of an “AI bubble,” since it reflects how easily a company can pay down its debt.
Analysts Say the Panic May Be Overblown
Even with the sharp drop, Wedbush analysts say Oracle’s situation is a “high-class problem,” arguing that the overwhelming AI demand supports the long-term story.
They noted that Oracle’s AI and cloud backlog remains strong, calling any sector-wide sell-off a “clear buying opportunity.”
Despite the Volatility, Oracle Is Still Up This Year
Even after this week’s slide, ORCL shares remain 34% higher year-to-date — a sign that investor optimism around AI hasn’t disappeared, just hit a temporary speed bump.
