Oracle's AI Gamble: Big Spends, Bigger Problems

Stock Decline

• 45% drop from September peak
• 14% loss this week post-earnings report

Financial Concerns

• $12B spent on capital expenditures last quarter
• $8.25B expected by analysts
• $15B increase in fiscal 2026 spending forecast
• Main revenue streams (cloud services and infrastructure) miss expectations

AI Strategy Roadblocks

• Data center delays for OpenAI from 2027 to 2028
• Labor and material shortages cited
• Project Jupiter: $160B+ data-center complex in New Mexico
• Heavy reliance on OpenAI for AI expansion

Market Reactions

• Bond yields skyrocket, some notes trading like junk
• $121B in bonds issued by top 5 AI hyperscalers this year
• Oracle's total debt: ~$100B
• Debt financing shift for infrastructure

Expert Insights

• Jonathan Koomey: Physical constraints slow AI boom
• Anuj Kapur: Uncertainty reminiscent of dot-com era
• Disconnect between tech speed and manufacturing scale