Why Oracle's AI Spending Spree Is Spooking Wall Street

Oracle Corp. (NYSE:ORCL) is facing mounting investor scrutiny just months after a major leadership change, as concerns grow over the company's aggressive push into artificial intelligence infrastructure.

Shares of the software giant have fallen about 32% this quarter, reflecting skepticism around heavy capital commitments tied to AI expansion, CNBC reported Friday. The selloff comes roughly three months after Oracle named Clay Magouyrk and Mike Sicilia as co-CEOs.

AI Spending Pressures Balance Sheet

Investor unease has intensified as Oracle accelerates spending to support large-scale AI demand. In September, OpenAI agreed to spend more than $300 billion with Oracle, raising questions about how quickly the company can build sufficient capacity without straining its balance sheet.

Also Read: Oracle Stock Slips As Company Taps Debt Market For AI Infrastructure Spending: Report

Those concerns deepened after Oracle posted mixed fiscal second-quarter 2026 results. Revenue came in at $16.06 billion, below analyst expectations of $16.21 billion. Free cash flow also disappointed. Adjusted earnings surged 54% year over year to $2.26 per share, topping estimates of $1.64, while total revenue rose 14% on cloud growth.

Despite the earnings beat, several Wall Street firms cut their price forecasts.

Chairman and Chief Technology Officer Larry Ellison said Oracle has sold Ampere and moved to a chip-neutral strategy, committing to work with multiple CPU and GPU suppliers while continuing to source leading GPUs from Nvidia Corp. (NASDAQ:NVDA).

On the earnings call, Chief Financial Officer Doug Kehring outlined plans for $50 billion in capital expenditures in fiscal 2026, well above prior guidance, alongside roughly $248 billion in long-term leases to support cloud expansion.

TikTok Deal Adds Fresh Uncertainty

Oracle's stock also swung as investors digested new details around a potential TikTok partnership. Shares initially jumped on reports that a group led by Oracle, Silver Lake, and MGX would acquire a significant stake in TikTok's U.S. operations.

That optimism faded after a leaked memo showed the new investors would not control key revenue drivers such as advertising or TikTok Shop. TikTok CEO Shou Chew said their role would be limited to a separate unit focused on data security and content moderation.

Additional pressure came after Blue Owl Capital exited a planned $10 billion data center project.

Meanwhile, competition in the AI sector remains fierce. Reports indicate TikTok parent ByteDance plans to invest $23 billion in AI infrastructure in 2026 to compete with U.S. tech giants, further highlighting the capital-intensive nature of the landscape Oracle is navigating.

ORCL Price Action: Oracle shares were up 0.37% at $198.23 at the time of publication on Friday, according to Benzinga Pro data.

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