Name: Oracles AI spending surge sparks bubble concerns
Uploaded: 2025-12-11T15:09:23.303Z
Duration: 3 min 47 s
Description: Oracle revived concerns over tech valuations after posting weaker-than-expected revenue for the second quarter and revealing a surge in data center spending. Steve and Julianna discuss.

Oracle revived concerns over tech valuations after posting weaker-than-expected revenue for the second quarter and revealing a surge in data center spending. Steve and Julianna discuss.

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Oracle's shares dropped almost 12% in extended trading following the release of second-quarter results that missed revenue expectations and highlighted a significant increase in AI infrastructure spending. Investors expressed concern over the company's lack of transparency regarding how it plans to finance its capital expenditures, despite a sharp rise in order backlog driven by commitments from major firms like Meta and NVIDIA.

The uncertainty around Oracle's financing strategy contributed to declines in other technology stocks, including NVIDIA and AMD. While Oracle's management indicated it would likely raise less than $100 billion for its AI buildout, the absence of detailed plans fueled broader market unease about tech companies funding expansion through debt, despite Oracle's strong year-to-date performance.

Oracle's AI spending surge sparks bubble concerns

Oracle shares sank, only two there, almost 12% in extended trade after the database software maker posted weaker than expected revenue for the second quarter as it continues to ramp up its spending on AI infrastructure. Investors also are unimpressed amid a lack of clarity on the earnings call over how exactly the company plans to finance its capital expenditure plans. Its order backlog soared though, and that's interesting, isn't it? The order backlog soared 438% to $523 billion, driven by fresh commitments from companies such as Meta and NVIDIA. Shares in NVIDIA and AMD and Corweave all fell in the wake of Oracle's results. Well, the world's largest sovereign wealth fund says it doesn't currently plan to invest in data centers, saying that it's careful with sectors that are volatile. Alexander Knapp, who is the new head of real estate for Norwich Bank Investment Management, said he did not want to take undue risk. NBIB holds companies in its portfolio that do own data centers though, but doesn't have direct stakes in the technology. You're going to come up with all the smart things to say, but I had a good look at Oracle and all I saw was an endorsement of the same story. Vast amount of spending, unproven route to revenue and profitability. Now that's not to say it's not going to happen, but it's the same question that investors keep asking, plus adding in the debt profile as well. When you've got a company that's taking on a lot of debt to build up a lot of capability and a lot of infrastructure, but it hasn't got the clear route to big extra revenues, then it's the same question. Yeah, I think they also knew what the investment community was focused on heading into these results and the fact that they weren't able to offer more transparency is perhaps what's most concerning. It was very obvious what the market was going to care about coming into these results. And I think ultimately, the lack of transparency and how it plans to finance its AI buildout is what's driven the shares lower overnight. And Oracle has become the sort of proxy trade for expressing a bearish view on AI. And essentially, there's still a huge open question as to how they're going to finance this buildout. Will they do it all through debt markets? Will they consider off balance sheet facilities? Will they consider vendor financing? Will they consider an equity raise at some point? And ultimately, we did not get a lot of clarity yesterday in terms of the number itself, in terms of how much they're planning to spend. The company did give a little bit of clarity there, management saying that it is likely to raise less than $100 billion, a number that a lot of analysts have been flagging. One of our colleagues in the US, Sima Modi, has done a lot of work looking at this expectations heading into these results. And she highlighted that point. But ultimately, I think what's dragging down the broader tech sector across the globe right now is if this becomes a broader trend that investors, they're not comfortable with companies that are building out their CapEx using debt. Yeah. And look, let's be brutally honest about this. It's been a hell of a ride for Oracle investors. And actually, you've done really well if you own this stock this year. You've had a dreadful year if you only bought it in September. But if you bought the stock at the start of the year, you're still up 34%. It's still an enormous return. But my goodness, I don't know if you can show the year-to-date team on Oracle shares, but they hit a low year-to-date of $122. And they surged, you can see there, that's September, to $328, give or take. And now they've given back just over a third of that as well. So it is stunningly volatile. But net-net, you've still had a good run. That says 18% today. And of course, that's including the move that we saw after hours yesterday. My 30-odd percent figure is not including that after-hours move.

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Oracle's AI spending surge sparks bubble concerns

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