Oracle's AI Spending Spooks Tech Investors

Oracle's shares fell by nearly 12% over concerns about its high AI expenditure and investment returns' unclear timeline. Tech investors worry about an AI bubble amid high valuations and complex investments. Oracle's cloud deals boost its stock, but heavy borrowing for AI infrastructure raises risk concerns.

Oracle faced a sharp decline in share value, plummeting nearly 12% as investors expressed apprehension over its substantial AI spending and the murky timeline for investment returns. Technology peers, including Nvidia, Microsoft, Micron, and CoreWeave, were similarly impacted, with shares falling in early trading.

The debate around an emerging 'AI bubble' intensified among tech investors, who are concerned about inflated valuations, minimal real-world productivity improvements, and complex financial strategies. This unease comes in the wake of Oracle predicting a $15 billion increase in capital expenditures for fiscal 2026, higher than earlier estimates.

Despite these expenditures, Oracle has made strategic moves to enhance its market position, signing significant cloud-computing agreements with firms like OpenAI. However, Oracle's financial leverage through borrowing to establish AI data centers has elevated concern among bondholders and led to cautious investor sentiment.

(With inputs from agencies.)