Oracle’s Bold AI Gamble Triggers Biggest Stock Crash in Decades

A new leadership era and colossal AI bets test investor confidence in Oracle’s future

Oracle is facing turbulent times on Wall Street, with its stock dropping 30% this quarter, the steepest fall since 2001. The company, now under the leadership of joint CEOs Clay Magouyrk and Mike Sicilia, is at the center of investor debates about its risky plan for rapid AI infrastructure expansion.

A huge part of Oracle’s future hinges on its deal with OpenAI, operator of ChatGPT, who has pledged over $300 billion to Oracle for cloud services. Yet, doubts are mounting about Oracle’s ability to deliver enough server capacity, especially after weaker-than-expected revenue and cash flow reported this month. Oracle is preparing to spend $50 billion on new tech and lease $248 billion more for cloud growth, a move set to double its debt load.

The pressure is intense, as this massive growth plan depends on staying investment-grade in debt ratings, a concern shared by skeptical investors and analysts. Some are wary that Oracle’s reliance on OpenAI, itself burning cash fast, could lead to trouble if demand falls short.

Oracle’s legendary founder Larry Ellison remains a symbol of resilience, inspiring loyal investors to stick with the company through ups and downs. But with cloud giants like Amazon, Microsoft, and Google dominating the market and rivals like Snowflake and Databricks hesitant to use Oracle’s services, the company faces a crucial test.

The world is watching to see if Oracle can transform its bold AI vision into real-world success, or if these risks will affect its legacy of innovation.