Oracle’s stock fell after reports of a setback linked to its artificial intelligence data centre expansion, refocusing investor attention on the company’s rapidly rising debt levels.
The sell-off came despite Oracle securing long-term leases valued at about $150 billion, a move aimed at scaling up its cloud and AI infrastructure to compete more aggressively with rivals such as Microsoft, Amazon and Google. While the leases underscore Oracle’s ambition in the fast-growing AI market, analysts say they also highlight the scale of the financial commitments the company is taking on.
Market concerns centre on execution risk and balance-sheet pressure. Building and operating large-scale AI data centres requires heavy upfront investment in land, energy, advanced chips and cooling infrastructure. Any delays or operational snags could weigh on near-term earnings and strain cash flows, particularly as interest rates remain elevated.
Some investors worry that Oracle’s debt profile could become a constraint if AI-driven revenue growth does not materialise as quickly as expected. Although the company has argued that long-term customer contracts and strong demand for AI services will support returns, the market reaction suggests scepticism about timing and risk.
Still, several analysts maintain a longer-term positive view, noting that Oracle’s aggressive push into AI infrastructure could strengthen its competitive position over the next decade if execution stays on track. For now, however, rising leverage and uncertainty around data centre expansion are dominating investor sentiment.
Woolworths CEO sells over US$2m in shares as backlash over executive pay intensifies
