Name: Oracle slides on AI spending, erases over $100B in market value
Uploaded: 2025-12-11T20:51:42.391Z
Duration: 5 min 12 s
Description: Oracle Corp. shares plunged after the company escalated its spending on AI data centers and other equipment, erasing more than $100 billion in market value. The latest earning report and share slide marks a reversal of fortunes for a company that just a few months ago was enjoying a blistering rally and clinching multibillion-dollar data center deals.

Oracle Corp. shares plunged after the company escalated its spending on AI data centers and other equipment, erasing more than $100 billion in market value. The latest earning report and share slide marks a reversal of fortunes for a company that just a few months ago was enjoying a blistering rally and clinching multibillion-dollar data center deals.

Austin

Oracle experienced a significant decline in its stock price, resulting in the loss of over $100 billion in market value. The drop followed investor concerns about the company's slower-than-expected growth, plans to increase capital expenditures by $15 billion, and its large debt burden, which now exceeds $100 billion.

While Oracle has a substantial backlog of over $500 billion in signed contracts, questions remain about whether key customers, such as OpenAI, can fulfill their commitments. The company is employing creative financing strategies to fund its infrastructure expansion and is focused on maintaining its investment-grade credit rating, but risks persist if anticipated growth does not materialize in the coming quarters.

Oracle slides on AI spending, erases over $100B in market value

What are we missing because there's a massive backlog here and that's what investors wanted to see that signals demand. But why are we seeing so much. And look I know you know we're going to talk about credit. But why are we seeing so much concern from investors today. Well it's the holiday season and the market is deciding on who they think is naughty and nice. And clearly we know where Oracle is shaping out right now. And quite frankly I think it's overdone. I think that this whole concept of panic and bubble and financial crisis and CDS concerns really doesn't take into account the bigger picture of where this company is. So what is that. What is the market really worried about right now. So Oracle's growth last night came in a little bit slower than the equity community had had hoped for. I think if this was a Microsoft or an alphabet or an Amazon and they missed cloud growth by 1 or 2 percent you'd see similar moves. So what else is really differentiating Oracle. Well the difference for Oracle is that they've got the most amount of debt out of any non-financial issuer in the high grade corporate market. They've got one hundred billion dollars of debt and they're spending a lot. And quite frankly they're spending even more than the market anticipated. They said last night we're going to spend 15 billion dollars more in capex this fiscal year than what we had guided. So they need to borrow a lot of money. They already have a lot of debt. There's a tremendous amount of hedging that's going on that's pushing CDS wider. And quite frankly it's just a simple story. You know you need to spend money to make money. You have to spend a lot of money up front before you start collecting that cash. And it's just going to take a little bit of a little while for those revenues and cash flows to catch up to the amount of debt that they have. So you say to tell everybody take a chill pill basically. Right. That you think the spending makes sense. And it's just a case of time for it to play to to to pay off. Yeah. So listen I'm a credit guy but you are. Let's look at the stock for credit can tell us so much. Let's start with the stock. The stock is way off the highs. Right. When they announced all all these these contracts going above 400 billion dollars the stock shot up and now we're down more than 40 percent from the highs. But if we just go back to the beginning of the year we're still up by 20 percent. Right. This is a five hundred plus billion dollar market cap company. There's not a reason to panic about that. They've issued a lot of debt. They issued an 18 billion dollar bond deal. There's been discussions about them doing some sort of private deals to fund data centers upwards of 38 billion dollars. That number quite frankly might be a lot higher. That could be 50 or 60 billion dollars. And there's reasons behind that because you can do a lot of this through SPVs do it off balance sheet and protect your ratings. Oracle is very clear last night. They said it without being asked. We are committed to our investment grade ratings. It makes sense. They should be because you don't want to have to have a balance sheet that is 100 plus billion dollars of debt that you have to finance in the junk market. But I think what it means is there's a lot of different triggers for them to pull in order to protect their balance sheet and to eventually get spreads tighter. Now just we just have to recognize that in the very short term the risks probably do outweigh the reward. You have rating agents. How do we know that for sure. Because of the demand and the backlog. Is that what that tells us. Yeah. Well listen they added to their backlog by a significant amount. Now they have well over 500 billion dollars right of signed contracts. We could debate whether or not they're actually ever going to get paid for that. I think the market is doing that. Well is that the concern. Well that is the big concern that open A.I. which might be their biggest customer might not have enough money themselves to pay for what Oracle is building. I think Oracle is starting to try to lay out you know if if they come we'll build it. There's a way there's a way that you don't have to put all the capital up front. Again there's a lot of ways to do this from a financing standpoint. You know a whole rent a chip philosophy where they're not actually buying chips say from NVIDIA. But does the creative financing just maybe potentially Robert just mask. You know there's still a spend. There's still an expectation. So even if you're creative in terms of how you finance aren't you still potentially vulnerable if this doesn't all come to fruition. Well they're not going out longer. They're not using the money and buying Christmas and Hanukkah gifts for their employees. They're they're building assets that are going to generate these revenues and cash flow. It's part of any any business build. You're not seeing these same sort of questions in the credit markets about those other big hyper scale. You're only seeing it for Oracle because they're mid triple B and people are worried they're going to fall to junk. So just 20 seconds. What would concern you. What piece of information would come out from the company that you would say OK now I actually am concerned about this. Well the two concerns would be the rating agencies downgrade to low triple B and keep the outlook negative and give some sort of numbers that might not be achievable. And two is when Oracle comes back in three months or six months and we don't see the type of growth that we're anticipating from their cloud and infrastructure businesses. So every quarter we get a check. You got to check every quarter.

One day after capturing an oil tanker off Venezuela's coast, the U.S. has sanctioned three of Nicolas Maduro's nephews, along with six other oil tankers.

Washington

Trump ramps up pressure on Maduro with new sanctions

The EU has decided to keep the assets of the Russian Central Bank immobilised for the foreseeable future. The ban, which is based on a provision for economic emergencies, pushes back against external attempts to release the €210 billion in assets before Ukraine is compensated.

Moscow

Ukraine Invasion

EU triggers emergency clause to indefinitely immobilise Russian assets

Nobel Peace Prize laureate and Venezuelan opposition leader Maria Corina Machado said she planned to take her award back to Venezuela, but declined to say when she would return to her home country after leaving in great secrecy to receive the honor.

Caracas

Nobel peace laureate Machado vows to take award home to Venezuela

Japanese authorities are assessing damage after a 7.5 magnitude earthquake struck northern Japan, followed by multiple aftershocks. In response, officials have issued a warning about the possibility of a megaquake, defined as a magnitude 8.0 or higher event.

Tokyo

Japan alerts citizens about possible megaquake

A Maryland judge has ordered the Trump administration to immediately release Kilmar Abrego Garcia from ICE custody. Abrego Garcia was wrongfully deported to El Salvador and was later detained for potential deportation to another country.

Judge orders Kilmar Abrego Garcia's immediate release from ICE custody

About 500,000 people are fleeing renewed clashes on the Thailand-Cambodia border. Over a dozen were killed as fighting shatters a US-Malaysia-brokered peace deal amid a decades-old temple land dispute.

Samraong

Half a million flee as Thailand-Cambodia border clashes escalate

The U.S. has seized an oil tanker off the coast of Venezuela, President Donald Trump said on Wednesday, ratcheting up tensions with Caracas.

Trump confirms seizing of Venezuelan oil tanker

The U.S. House has approved a bill to end all Caesar Act sanctions on Syria, sparking cautious optimism in Damascus as the measure moves closer to becoming law.

U.S. House votes to lift Caesar Act sanctions on Syria

Myanmar's military bombs a hospital in western Rakhine state, at least 31 people are killed and dozens injured.

Rakhine

Air strike in Myanmar killed at least 31 people, dozens injured

The U.S. military seized a large oil tanker off the coast of Venezuela. Attorney General Pam Bondi said the ship had been used to violate sanctions on oil from Venezuela and Iran.

U.S. seizes oil tanker off Venezuela coast

The daughter of Venezuelan opposition leader Maria Corina Machado has accepted the Nobel Peace Prize on her mother's behalf in Oslo, Norway. Machado, who lives in hiding in Venezuela, is set to make an address on Thursday.

Oslo

Venezuela's Machado awarded Nobel Peace Prize in absentia

President Volodymyr Zelenskyy is commenting on potential elections in Ukraine under certain conditions. Former U.S. ambassador to Ukraine John Herbst joins CBS News with more on the war against Russia.

Kyiv

Zelenskyy prepared to hold elections after Trump questions motive

A renewed outbreak of fighting between Thailand and Cambodia has derailed a US-brokered peace agreement, with cross-border shelling and air raids forcing more than half a million civilians to flee their homes.

Bangkok

Border dispute between Thailand and Cambodia flares up again

U.S. immigration agents used pepper spray against protesters in Minneapolis on Tuesday as residents blocked the officers’ vehicles and forced them to leave the area.

Minneapolis

Minneapolis protests erupt over ICE operation targeting Somalis

In Australia, millions of kids' social media profiles are going dark, as the country's new social media ban takes effect for anyone under 16. Jo Ling Kent reports.

Canberra

Australia's social media ban takes effect for kids under 16

President Trump, in recent months, has dismissed concerns about affordability, but this evening, in the battleground state of Pennsylvania, he is focusing on the crisis and touting his administration's efforts to lower the cost of living. Nancy Cordes has more.

Pennsylvania

Trump tries to flip the script on affordability

Dozens of protesters blocked a highway near Tel Aviv to demonstrate against moves by the Israeli government to force some ultra-Orthodox Jews into mandatory military service, something they are currently exempt from so they can study the Torah full time.

Tel Aviv-Yafo

Bill over ultra-Orthodox military conscription sparks protests in Israel

President Trump has told Politico that Nicolas Maduro's "days are numbered" in Venezuela. Political strategists Kevin Sheridan and Hyma Moore join with analysis.

Trump says Maduro’s “days are numbered”

The FBI has released a new photo of former Olympian Ryan Wedding, whom the bureau’s director has described as a “modern day iteration of Pablo Escobar.” The ex-skier and snowboarder remains at large as agents continue their search.

FBI releases new photo of alleged drug kingpin Ryan Wedding

Ukraine President Volodymyr Zelenskyy met Pope Leo XIV and Italian Premier Giorgia Meloni in Rome on Tuesday (December 9), meanwhile voicing his refusal to surrender territory to Moscow despite pressure from Washington for territorial concessions.

Rome

Zelenskyy seeks backing from Pope Leo XIV, Italian PM Meloni

A federal judge said Tuesday (December 9) that the Department of Justice can unseal the Ghislaine Maxwell sex trafficking case records. CBS News' Scott MacFarlane has more details.

Judge says DOJ can unseal Ghislaine Maxwell trafficking case records

Prosecutors on Monday (December 8) released new evidence seized from Luigi Mangione on the day of his arrest. He is accused of killing UnitedHealthcare CEO Brian Thompson a year ago and has pleaded not guilty.

Manhattan

New evidence introduced in Luigi Mangione case

The EU antitrust enforcer has opened an investigation into the U.S. tech giant over its use of online content to power its AI services, a move that threatens to ratchet up transatlantic relations.

Brussels

EU Commission opens probe into Google over AI

The U.S. government said the approval, which comes in exchange for a 25% surcharge, would also be available to other chipmakers like Intel and AMD.

Trump gives Nvidia green light to sell H200 chips to China

Ukraine is set to present a revised peace plan to the United States on Tuesday following President Volodymyr Zelenskiy’s talks in London with the leaders of France, Germany, and Britain.

London

Ukraine to share revised peace plan with U.S., Zelenskiy says

The International Criminal Court Tuesday handed down a sentence of 20 years to a Sudanese militia leader for war crimes and crimes against humanity committed during the country's civil war two decades ago.

ICC sentences Sudan militia chief for crimes against humanity

U.S. President Donald Trump on Monday (December 8) unveiled a $12 billion aid package for American farmers, the latest government effort to shore up a key political constituency hurt by the financial fallout from his trade policies.

Trump unveils $12 billion aid package for farmers hit by trade war

Thailand and Cambodia are blaming one another for starting a deadly exchange of fire that killed at least five people and threatens to unravel a U.S.-backed ceasefire between the neighbouring southeast Asian countries.

Surin

Thailand-Cambodia ceasefire could be unravelling

Paramount Skydance made a hostile takeover bid for Warner Bros. Discovery for $108 billion US just days after Netflix announced it made a $72-billion US deal with the legacy studio. It’s a move that even has U.S. President Donald Trump weighing in.

Hollywood

Paramount launches hostile takeover bid for Warner Bros.

President Trump announced Monday he will allow Nvidia to sell its advanced H200 computer chips to "approved customers" in China, but Mr. Trump said the deal does not include Nvidia's more advanced Blackwell system or its soon-to-be-released Rubin system.

Breakdown