ORACLE SHAKES WALL STREET WITH A 10% DROP AS DOUBTS GROW OVER ITS AI BET
The session made clear that enthusiasm for technology now coexists with new signs of caution. On Wall Street, a single company once again set the tone for the market.
Wall Street closed higher on Thursday, but the market’s overall gains contrasted sharply with the plunge in Oracle shares, which fell more than 10% after the company reported quarterly results that revived concerns about the sustainability of its aggressive expansion into artificial intelligence (AI) and cloud infrastructure.
Sentiment at the opening was fragile: screens turned red as investors absorbed the scale of Oracle’s capital spending, which reached nearly $12 billion last quarter for AI data centers an increase of $8.5 billion from the previous period. That tension eased as the day progressed. The Dow Jones ended up 1.34%, the S&P 500 added 0.21% and only the Nasdaq slipped 0.25%.
Oracle, however, extended a selloff that has now wiped out more than 40% of its value since September. Its shares, which surpassed $340 three months ago, now trade near $195.85, erasing roughly $250 billion in market capitalization. The decline deepened after the company posted $16.06 billion in revenue for the first quarter of fiscal 2026, slightly below the $16.21 billion analysts expected. Net income fell 7% to $2.9 billion, pressured by rising operating costs and heavy spending on AI and cloud services.
Although adjusted earnings per share came in at $2.26 above expectations the market’s reaction was clear: the company’s growth pace is not strong enough to justify an investment cycle that, according to analysts at BofA Global Research and Piper Sandler, may take time to translate into tangible revenue. Free cash flow was negative by about $10 billion for the quarter, reinforcing investor caution.
Oracle maintains a close strategic partnership with OpenAI, providing a significant portion of the infrastructure used to train and run large-scale models. Remaining performance obligations (RPO) rose to $523 billion, pointing to strong future demand. Still, experts cited by CNBC warn that meaningful monetization of those commitments may take years.
The company’s cloud infrastructure segment grew nearly 68% year-over-year, signaling a decisive shift toward AI-linked services. Its legacy software business, meanwhile, fell about 1%. That expansion requires massive financing: Oracle issued $18 billion in bonds in September and is expected to add between $20 billion and $30 billion in new debt annually over the next three years to build data centers in states such as New Mexico and Wisconsin.
Pressure on Oracle spilled over to other tech names: Nvidia and Broadcom also closed more than 1% lower. “The market is rightly concerned about Oracle, and by extension about AI investment overall, because there are literally trillions of dollars committed,” said Steve Sosnick, chief strategist at Interactive Brokers.
As major tech firms face renewed scrutiny over the near-term profitability of AI, global markets delivered mixed results. In Mexico, the S&P/BMV IPC hit a record high with a 2.05% gain, while in Europe France’s CAC 40 stood out with a 0.79% rise. In commodities, oil prices fell: WTI slipped 1.47% to $57.60 a barrel, and Brent dropped 1.08% to $61.54.