Oracle Shares Plunge as Massive AI Spending Outpaces Cloud Revenue Growth

• Oracle's stock dropped 11% after revealing a significant increase in spending on AI-focused data centers, its biggest single-day decline in nearly a year.
• The company reported capital expenditure of nearly $12 billion for the latest quarter, far exceeding expectations, and projected $50 billion in spending by May 2026 for AI infrastructure expansion.
• Despite strong cloud revenue growth (34% to $7.98 billion), results narrowly missed market estimates, raising investor concerns about the speed of revenue conversion from heavy AI investments.
• The increased outlay led to negative free cash flow of $10 billion and heightened credit risk concerns, reflected in rising debt insurance costs.
• Oracle reassured investors about revenue-generating spending and maintained its forward guidance, expecting 19-22% revenue growth and 40-44% cloud sales growth for the current quarter.

Why It Matters: Oracle's stock slid due to massive AI infrastructure spending, raising investor concerns about short-term profitability.