Oracle’s stock dives after-hours as earnings renew AI bubble anxieties
Lily Jamali, North America Technology Correspondent, San Francisco
Shares of Oracle fell more than 10% in after-hours trading on Wednesday after the cloud giant reported results that missed Wall Street expectations.
For the quarter ending in November, Oracle posted revenue of $16.06 billion, just shy of the $16.21 billion analysts had anticipated. Overall revenue grew by 14%, with a remarkable 68% jump in Oracle Cloud Infrastructure (OCI) sales, driven by demand for AI-focused infrastructure.
OCI’s performance has been buoyed by major AI developers relying on Oracle’s hardware and software stack. However, investors remained uneasy about whether the AI hype is creating an unsustainable bubble, despite OCI’s strength.
In September, Oracle snagged a highly coveted contract with OpenAI, the creator of ChatGPT, which is projected to buy around $300 billion worth of computing power from Oracle over five years. The announcement briefly propelled Oracle chairman and CTO Larry Ellison into the spotlight as one of the wealthiest individuals on the planet.
Nonetheless, Oracle’s stock has since retreated about 40% from its recent peak, even as it remains up more than 30% on the year.
In a Wednesday statement, Ellison conveyed a measured outlook: AI technology is set to undergo significant evolution in the coming years, and Oracle must stay nimble to adapt.
Ellison also signaled a philosophy of chip neutrality, indicating Oracle would source GPUs from any supplier to serve clients. He noted that while Oracle would continue procuring the latest Nvidia GPUs, the company must be ready to deploy whatever chips customers prefer.
The company’s AI initiatives have sparked discussions about circular financing—where customers finance their own purchases of a vendor’s products and services—across multiple partnerships, including OCI.
Following the earnings release, Emarketer analyst Jacob Bourne cautioned that investors are weighing whether Oracle’s OpenAI collaboration implies heavy exposure to a single high-profile client facing profitability questions, and he highlighted mounting debt tied to data-center expansion.
Other voices, however, argued that the market overreacted. Cory Johnson of Epistrophy Capital Research called the quarter strong, noting 14% revenue growth as a sign of momentum and pointing to new contracts with Meta and Nvidia among Oracle’s latest clients, alongside the OpenAI deal.
Johnson also observed that AI sentiment is currently negative, which has colored perceptions of Oracle’s performance positively or negatively depending on the lens. Separately, Oracle’s debt issuance reached a record $18 billion in September, underscoring the scale of funding behind its data-center expansion.
While proponents view the setback as an overhang on a compelling growth story, critics warn that the OpenAI relationship and aggressive AI spend could heighten investor concern about profitability and leverage.
Additional context involves the Ellison family's recent moves in media, including Paramount and discussions surrounding Warner Bros. Discovery, which contribute to broader conversations about Oracle’s strategic priorities and the tech-wealth landscape.
