Oracle is sinking: “Instead of calming concerns, the management stutters”

Stock oracle It fell by about 10% in trading on Wall Street, after losing about 12% in late trading yesterday (Wednesday). This is after it missed the analysts’ revenue forecast and reported revenues of $16.06 billion in the third quarter of 2025 – an impressive 14% increase compared to the same quarter last year, but still less than the expectations of $16.21 billion.

However, what deterred investors and led to declines in the Nasdaq and technology and artificial intelligence stocks was not only the loss of revenue, but replica investments in establishing server farms for OpenAI, the debts that keep piling up and the too high exposure to OpenAI, which is far from profitable and seems to be losing its primacy to Google.

Nasdaq opened trading with a decrease of about 1% – even though Oracle is not traded on Nasdaq but on the New York Stock Exchange. stock Nvidia down about 3% at the opening of trading, and in Japan the Softbank share fell by almost 8%.

“Oracle – and not the drop in interest rates – is the main generator of the trends in the last few hours in the capital market, and this is evident in the decline in the Nasdaq, which pulls the entire market down with it, as well as in Japan, where Softbank is traded, which is in the cluster of companies that work with Oracle and OpenAI,” says Anya Giman, manager of the foreign shares department in the trading room of Leader Capital Markets.

What raised investors’ concerns?

First and foremost, Oracle’s cash burn – $10 billion in the last quarter alone – and the increase in the forecast of spending on construction and equipment for server farms (capex) from $35 to $50 billion for its current fiscal year that ends in May 2026, raised the concerns of investors, who do not see how the giant of cloud services and software manages to cover expenses with its current revenue rate.

As you may remember, Oracle needed to raise a particularly large debt and issued a bond of 18 billion dollars last September. “Investors were hoping for a shot of calm to their concerns, but the report and the investors’ conversation that followed only created the opposite effect,” Giman says. and uncertainty. Although the backlog of orders increased, and the company increased the revenue forecast for the next financial year by $4 billion to $89 billion, but the increase in revenues from the cloud division was only 68%, less than the expected 74%, which means that revenues are not increasing at the desired rate to cover the debt and replica investments, and the exposure to OpenAI has not changed.”

A series of revolving financing transactions

Apparently, the effect of the declines in Oracle was supposed to be limited to the “Stargate” cluster, that is, the companies involved in the US network’s government project in server farms – which includes OpenAI as a language model provider, AMD and Nvidia as providers of graphics processors, Softbank as a financier and Oracle as a provider of server farms and AI cloud services. These companies not only work with each other but also depend on each other in a series of revolving financing transactions.

In the profit segment, Oracle actually exceeded expectations, with the profit per share in the third quarter standing at $2.26 – well above the forecast of $1.64 and above the corresponding figure last year which was $1.47.

The backlog of orders also increased, when the commitments of companies such as Meta and Nvidia (and other customers) to purchase server farm and cloud services increased by 440% compared to the corresponding period last year, but the uncertainty regarding OpenAI’s financial strength has not changed: Oracle does indeed predict cloud revenues of 166 billion dollars in fiscal year 2030 (four more fiscal years) – but it is too early to predict what OpenAI’s situation will be – which has pledged to invest a trillion dollars in infrastructure over the next five years on the one hand, but on the other hand is very challenged by Google and new players in the field of AI-based software coding such as Cognition and Curser.