Oracle’s Value Halves Amid Doubts Over AI Profitability

Oracle has faced a major loss in market capitalization: the company’s shares have fallen by more than 50% compared to last year. As a result, Oracle’s market value has declined by $463 billion.

Crisis of Confidence

Just a few months ago, enthusiasm around AI and cloud solutions helped Oracle boost its market capitalization to $933 billion, securing its place among the top 10 largest U.S. companies. Today, however, investors have become far more skeptical.

This skepticism is rooted in doubts about the return on investment in AI. Investors are pouring billions into AI infrastructure but lack clarity on when, or if, these investments will begin generating real profits.

Factors Undermining Investor Confidence

Several factors are weakening investor trust in Oracle.

First, the company has taken on massive debt obligations for tens of billions of dollars. Second, credit risks associated with Oracle have risen to their highest levels since 2009. Another blow to confidence came from news that Blue Owl Capital (which previously financed data center projects for Oracle and Meta Platforms Inc.) is not participating in final equity negotiations for a data center project in Michigan.

What Does Oracle’s Decline Mean?

From our perspective, Oracle’s decline signals a shift in how the market views the AI boom. It is becoming clear that investors are moving away from faith in limitless, unproven growth and toward evaluating AI through the lens of financial sustainability.

Where AI investments were once seen primarily as long-term strategic bets, investors are now increasingly asking a simple question: when will real profits appear?

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