Remember when everyone was throwing money at anything with “AI” in the name? Well, Oracle just became exhibit A for why that party might be winding down.
Here’s what happened: Oracle’s stock took a 6% nosedive Wednesday after reports surfaced that their fancy $10 billion data center deal with OpenAI hit a snag. Apparently, Blue Owl Capital—the private credit firm that was supposed to fund this digital palace—got cold feet about Oracle’s spending habits and growing debt pile.
Oracle, naturally, said “nuh-uh, that’s not what happened.” Their spokesperson basically said Blue Owl wasn’t even their first choice anyway (sure, Oracle, we believe you). But the damage was done—the entire tech sector started bleeding red faster than a horror movie.
The carnage was impressive: Broadcom dropped 5%, Palantir fell 4%, and even the mighty Nvidia couldn’t escape, sliding 3%. It’s like watching dominoes fall, except each domino is worth billions of dollars.
What’s really happening here is that investors are finally asking the uncomfortable question: “Wait, are we actually making money from all this AI stuff, or are we just burning cash to build really expensive computer farms?”
Oracle has become the poster child for AI excess, and not in a good way. After hitting peak hype in September with aggressive revenue forecasts, the stock has crashed 45% from its high. That’s not a correction—that’s a full-blown reality check.
The company recently spooked investors again by missing earnings expectations while simultaneously promising to spend even more money on capital expenditures. It’s like your friend who’s already maxed out their credit cards asking to borrow more money for crypto investments.
Oracle isn’t alone in this AI hangover. CoreWeave, another darling of the AI infrastructure world, has seen its stock plummet 66% from its post-IPO high. Both companies share the same problem: massive debt loads and business models that depend on a handful of big customers continuing to throw money at AI projects.
Adam Turnquist from LPL Financial put it perfectly: there’s been “rotation pressure out of tech” as investors start looking for actual value instead of just AI buzzwords. Translation: people are finally asking to see the receipts.
The broader market reflected this skepticism, with the S&P 500 down 0.83% and the Nasdaq falling over 1%. It’s not panic selling, but it’s definitely a collective “hmm, maybe we should think about this” moment.
Here’s the thing about bubbles—they don’t pop all at once. They deflate slowly, then suddenly. Oracle’s troubles might just be the canary in the coal mine, warning us that the AI gold rush might need to prove it can actually mine some gold.
The lesson? Just because something has AI in the name doesn’t mean it’s automatically worth throwing money at. Sometimes the most revolutionary technology still needs to follow boring old rules like “make more money than you spend.”
Who would’ve thought?