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The tech firm's lackluster financial performance have slashed more than $70 billion from the market capitalization of the enterprise software giant co-founded by billionaire Larry Ellison, heightening growing concerns of a speculative bubble in artificial intelligence stocks.

Steep Share Price Fall Comes After Revenue Miss

Shares in the firm fell sharply by eleven and a half percent in after-hours trading after it disclosed a disappointing 14 percent growth in revenues to $sixteen billion dollars in the previous quarter, while simultaneously announced plans to ramp up its AI spending by around $15bn.

The business recorded disappointing quarterly revenues for the quarter ending in November, with sales at its key cloud services division expanding at a more modest rate than anticipated, at thirty-four percent.

Investor Concerns Over Spending and Debt

Markets were also disappointed by a more moderate 68% increase in income from its infrastructure business.

At the same time, the market were alarmed by the company's raised projections for spending on artificial intelligence. It now projects capex to jump by 40 percent to $50bn, with the vast majority of the additional spending aimed at constructing data centres.

This aggressive spending plan comes amid a growing debt pile, with Oracle's long-term debt having jumped by twenty-five percent over the last twelve months to reach $99.9 billion.

"Frankly, the report was not dramatically bad, but it came to confirm fears around heavy AI spending, financed by debt, with an unknown timeframe for profitability," commented a market analyst.

Broader Market Implications and Industry Concerns

Continued exuberance about the promise of AI technology has led to a sharp rise in market capitalizations in the past year, but there has been a rising number of warnings from regulators and executives who argue stock market valuations could plummet if the market ended up being disappointed by the development or adoption of AI technology.

While Oracle has become an important technology provider creating software for large firms worldwide and has in recent years found strength in the cloud sector, there are increasing concerns about how dependent firms are becoming on circular funding within the AI ecosystem.

Oracle said that its measure of revenue from customer contracts rose by 440 percent over the past year. However, analysts were wary when it was revealed that these commitments were driven by new commitments from major customers like Meta and Amazon.

"Although these are two solid customers, it will not allay fears that big tech's AI investments are self-referential, which makes the sector vulnerable to a loss of investor confidence," observed a market strategist.

"Overall, robust backlog increase was not enough to alleviate fears about AI and the massive amount of capital expenditure required by companies to construct AI capacity."

Broader Sell-Off in Tech Shares

Additional technology stocks also declined in after-hours trading following the Oracle announcement. Key performers included:

• Nvidia: Share price dropped by 1.3%.
• Alphabet (Google): Shares fell by 0.3 percent.
• SoftBank: In Japan, the AI investor shares tumbled by 7.7 percent on Thursday.