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Oracle's disappointing quarterly results have slashed in excess of $70bn from the market capitalization of the enterprise software giant co-founded by Trump ally Larry Ellison, heightening growing fears of a speculative bubble in AI-related stocks.

Steep Share Price Fall Comes After Revenue Miss

Shares in the company tumbled by 11.5% following the announcement after it reported a lower-than-expected 14% rise in sales to $16bn in the most recent quarter, while simultaneously announced plans to increase its AI spending by approximately $15bn.

The enterprise posted weaker-than-expected three-month sales for the period ending in November, with revenue growth at its core cloud computing division expanding at a slower pace than anticipated, at 34%.

Market Jitters Over Spending and Debt

Investors were further let down by a more moderate 68% growth in income from its cloud infrastructure unit.

Concurrently, the market were unnerved by the company's elevated projections for spending on artificial intelligence. It now anticipates capital expenditure to surge by 40 percent to $50bn, with the vast majority of the additional spending directed toward expanding cloud infrastructure.

This substantial spending plan comes amid a increasing debt pile, with Oracle's corporate debt having surged by twenty-five percent over the last twelve months to reach $99.9bn.

"Frankly, the earnings release was not catastrophic, but it came to validate fears around heavy AI spending, funded through debt, with an uncertain timeframe for profitability," said a senior analyst.

Broader Market Repercussions and Ecosystem Concerns

Continued exuberance about the potential of AI tech has led to a surge in stock prices in recent months, but there has been a increasing chorus of warnings from policymakers and business leaders who say stock market valuations could correct sharply if investors ended up being let down by the progress or commercial uptake of AI solutions.

While Oracle has become an important technology provider developing software for large corporations worldwide and has in recent years grown rapidly in the cloud sector, analysts point to increasing questions about how reliant tech giants are growing on circular funding within the AI ecosystem.

Oracle reported that its metric of remaining performance obligations soared by 440 percent over the past year. However, market watchers were cautious when it emerged that these commitments were propelled by large deals from major customers like Meta and Amazon.

"While these are high-quality customers, it will not allay concerns that the tech sector's AI investments are interdependent, which makes the sector susceptible to a erosion of market faith," observed a research director.

"Overall, robust contract growth was not enough to placate fears about AI and the huge amount of capital expenditure needed by firms to develop AI infrastructure."

Broader Sell-Off in Tech Stocks

Other technology stocks subsequently fell in extended trading following the Oracle results. Key movers included:

• Nvidia: Stock declined by 1.3 percent.
• Alphabet (Google): Shares dropped by 0.3%.
• SoftBank: In Japan, the investment firm's shares fell by 7.7 percent on Thursday.