Oracle shares plunge 13% to 4-week low as AI-driven spending plans spook investors

Shares of Oracle Corp crashed 13% on Thursday, 11 June, falling to a four-week low of $175.3 apiece on the New York Stock Exchange as investor sentiment turned cautious after the company provided an update on its capital expenditure plans, which came in higher than Wall Street's estimates.

If the losses persist, the stock will register its biggest one-day drop since January last year, wiping out around $72 billion from the company's market capitalisation of $578.83 billion.

Alongside its fiscal fourth-quarter results, the company announced plans to spend billions of dollars on building large-scale data centres, raising concerns among investors that the heavy investments could pressure profitability as Oracle continues to generate negative free cash flow.

Although Oracle was a late entrant to the cloud computing industry, it quickly recognised the artificial intelligence boom and has been rapidly expanding its data centre footprint, filled with high-end processors for customers such as Meta and OpenAI.

However, Oracle lacks the massive cash flows enjoyed by larger technology giants that have largely funded their AI investments internally. As a result, the company has been burning cash and raising debt at a time when its traditional software business faces growing competition from the very AI tools it aims to support through its cloud infrastructure.

For the fourth quarter ended 31 May, Oracle reported capital expenditure of approximately $16.5 billion, taking its full-year total to $55.7 billion. This exceeded the company's own projection of $50 billion and represented a 162% increase from the same period last year.

The sharp rise in capital spending further widened its free cash flow deficit to $23.7 billion, compared with a deficit of $394 million in fiscal 2025. The company now expects net capital expenditure of around $70 billion in its current fiscal year, which ends in May 2027.

To fund these investments, Oracle plans to raise another $40 billion through debt and equity financing, including a previously announced $20 billion stock issuance.

During the fiscal year ended May, the company raised $43 billion through debt financing and $5 billion through equity offerings, a move that has raised concerns among investors over whether demand for artificial intelligence can justify such large-scale capital commitments.

Oracle shares remain volatile

With today's crash, the stock's month-to-date losses have widened to 21%, erasing most of its May gains of 39%. After remaining under prolonged pressure, the stock regained momentum in March and closed that month, along with the subsequent months, in positive territory.

However, the recent sell-off has pushed the stock back to levels last seen in early May and widened the gap from its record high to nearly 50%. Oracle shares had scaled an all-time high of $345 apiece in September 2025.

The sharp decline has also weighed on the wealth of Oracle founder Larry Ellison. His net worth has fallen from a peak of roughly $296 billion on 2 June to $249.7 billion, according to Forbes' Real-Time Billionaires List. The losses have pushed the world's second-richest person down to fifth place in Forbes' billionaire rankings.

(With inputs from Reuters)

Disclaimer: We advise investors to check with certified experts before making any investment decisions.