Oracle Shares Plunge 15% as $50 Billion AI Spending Spree Spooks Wall Street

The "AI trade" faced a harsh reality check on Thursday as shares of Oracle Corporation suffered their steepest single-day decline in over two decades. The tech giant's stock plummeted roughly 15%, erasing nearly $100 billion in market value, after the company revealed that the cost of building the infrastructure for the artificial intelligence boom is rising far faster than the immediate profits.

The selloff, which dragged down fellow AI heavyweights like Nvidia and Broadcom, was triggered by Oracle’s shock announcement that it will spend billions more than expected to construct data centers for clients like OpenAI and Meta.

The $15 Billion Surprise
In its fiscal second-quarter earnings report released Wednesday night, Oracle stunned analysts by revising its capital expenditure (Capex) forecast upward by a massive margin.

The company now expects to spend nearly $50 billion on capital projects in fiscal 2026—a staggering $15 billion increase from the $35 billion estimate it provided just three months ago in September.

"The bill for the AI revolution is coming due, and it is much higher than anyone anticipated," said Farhan Badami, a market analyst at eToro.

For the quarter alone, Oracle spent $12 billion on Capex, smashing Wall Street’s projection of $8.25 billion. While management argued this spending is necessary to meet "insatiable" demand, investors interpreted the ballooning costs as a warning sign that profit margins will be squeezed for the foreseeable future.

Record Backlog vs. Revenue Reality
The earnings report highlighted a growing disconnect between future promises and current cash flow.

On paper, Oracle’s business looks explosive. The company reported a record-breaking $523 billion in Remaining Performance Obligations (RPO)—effectively a backlog of future contracts—which is up an eye-watering 438% from last year. This surge is driven largely by massive, long-term cloud deals with OpenAI, Meta, and Nvidia.

However, the revenue from these massive contracts is not arriving fast enough to offset the construction costs.

Revenue Miss: Total quarterly revenue came in at $16.1 billion, missing analyst estimates of $16.2 billion.

Cloud Slowdown: While cloud infrastructure revenue grew 68%, it missed the loftier 70%+ growth targets that some bulls had priced in.

Weak Guidance: Oracle forecast third-quarter revenue growth of just 16-18%, falling short of the nearly 20% Wall Street had hoped for.

"Bubble" Fears Reignite
The market reaction was swift and brutal. Oracle’s plunge sent shockwaves through the broader tech sector, reigniting fears of an "AI bubble" where infrastructure spending outpaces actual utility.

Nvidia, a key Oracle partner and supplier, saw its shares dip 3% in sympathy, while other chipmakers like AMD and Micron also traded lower.

"This confirms the market's biggest fear: that Big Tech is trapped in a 'Capex cycle' where they must spend infinite amounts of money just to stay in the race," noted analysts at Bank of America.

While Oracle founder Larry Ellison remains bullish—touting a future where the company powers the world's most advanced intelligence—Wall Street has made it clear that it is no longer willing to write blank checks for AI infrastructure without seeing quicker returns.