Oracle stock (ORCL) experienced a significant decline on Thursday, falling 14% amid investor concerns regarding its substantial investments in artificial intelligence (AI) and a less-than-stellar Q3 earnings report. The company disclosed revenue of $16.06 billion for its fiscal second quarter, reflecting a 14% increase year-over-year, yet this figure fell short of the $16.21 billion that analysts anticipated according to Bloomberg.
Despite the year-over-year revenue growth, it was the announcement of Oracle”s AI spending plan that raised alarms among Wall Street analysts. The tech giant reported capital expenditures of $12 billion for the fiscal second quarter, a considerable jump from approximately $4 billion the previous year and significantly higher than the $8 billion that analysts had predicted.
Moreover, Oracle revised its full-year capital expenditure guidance sharply upwards, increasing it from $35 billion to $50 billion. This escalated spending on AI initiatives has triggered worries about the sustainability of Oracle”s investments, impacting other AI stocks as well. On the same day, companies like Nvidia (NVDA) and AMD also saw minor declines in their stock prices.
Analysts viewed Oracle”s earnings report as a critical moment, potentially serving as either a catalyst for growth or a warning sign for AI-related stocks as 2026 approaches. Concerns were compounded by a growing perception of an AI bubble, particularly in light of financing challenges faced by Oracle and key partners like OpenAI.
Barclays analyst Raimo Lenschow noted earlier in the week that Oracle”s fiscal Q2 earnings would be significant due to the shifting sentiment surrounding the AI infrastructure market, which has become increasingly negative amidst fears of an inflated AI bubble.
The sharp drop in Oracle”s stock marked its largest daily loss since January 2025. Despite this downturn, the shares are still up over 19% year-to-date, although these gains could be at risk as the new year approaches.
