Oracle's Stock Tumbles as Company Raises AI-Driven Data Center Spending Plan.
In a move aimed at bolstering its artificial intelligence (AI) infrastructure, Oracle has announced an aggressive plan to increase spending on data centers this year by $15 billion, a significant jump from the previous forecast.
Despite the increased spending, shares in the company fell 11% in pre-market trading following disappointing revenues of $16.1 billion for the last quarter, narrowly missing analysts' estimates.
The company's capital expenditure forecast has been raised to $50 billion this fiscal year, up 40 percent from the previously forecasted amount, with a significant portion of that going towards building new data centers.
Oracle's long-term debt increased to $99.9 billion in the quarter, up 25% from last year, and investors are increasingly concerned about the company's reliance on debt financing for its expansion plans.
The company has signed large contracts with Meta and Nvidia, which will drive revenue growth over the next fiscal year. However, concerns remain around the company's ability to pay for these contracts in the years ahead, particularly given OpenAI's massive requirement of $1.4 trillion over the next eight years.
Oracle's rivals in the cloud computing market have seen their stocks rise following strong earnings from their vast cloud units, which has led investors to question Oracle's spending strategy. Despite this, co-CEO Clay Magouyrk defended the company's approach, stating that its cloud contracts would "quickly add revenue and margin" to its infrastructure business.
Oracle's increased spending on data centers comes as it seeks to catch up with larger competitors in the AI space. The company has added an additional 400 MW of capacity in the quarter, which is being built for OpenAI, but concerns remain around the upfront costs associated with this expansion plan.
In a move aimed at bolstering its artificial intelligence (AI) infrastructure, Oracle has announced an aggressive plan to increase spending on data centers this year by $15 billion, a significant jump from the previous forecast.
Despite the increased spending, shares in the company fell 11% in pre-market trading following disappointing revenues of $16.1 billion for the last quarter, narrowly missing analysts' estimates.
The company's capital expenditure forecast has been raised to $50 billion this fiscal year, up 40 percent from the previously forecasted amount, with a significant portion of that going towards building new data centers.
Oracle's long-term debt increased to $99.9 billion in the quarter, up 25% from last year, and investors are increasingly concerned about the company's reliance on debt financing for its expansion plans.
The company has signed large contracts with Meta and Nvidia, which will drive revenue growth over the next fiscal year. However, concerns remain around the company's ability to pay for these contracts in the years ahead, particularly given OpenAI's massive requirement of $1.4 trillion over the next eight years.
Oracle's rivals in the cloud computing market have seen their stocks rise following strong earnings from their vast cloud units, which has led investors to question Oracle's spending strategy. Despite this, co-CEO Clay Magouyrk defended the company's approach, stating that its cloud contracts would "quickly add revenue and margin" to its infrastructure business.
Oracle's increased spending on data centers comes as it seeks to catch up with larger competitors in the AI space. The company has added an additional 400 MW of capacity in the quarter, which is being built for OpenAI, but concerns remain around the upfront costs associated with this expansion plan.
I'm a bit surprised by Oracle's big spend on data centers... they're basically trying to keep up with the AI giants 
. But $50 billion is a huge jump! 
It'll be interesting to see how they balance out their debt 
and make sure these investments pay off in the long run 
. They've got some big contracts lined up, but OpenAI's massive requirement is quite concerning 
... fingers crossed they can pull it off 
. They're gonna have to make some serious cash from those cloud contracts to pay off all this debt 
. And what if OpenAI pulls out? That's a huge chunk of money ($1.4 trillion) they'll need to cover 
. Like, it's so smooth and creamy, you won't even need a spoon! And the best part is, it's only $5 a cup - can't beat that in my book! Anyway, back to Oracle... I mean, I get why they're spending all this cash on AI and data centers, but have you seen those prices for server upgrades lately? Like, whoa! It's crazy how fast tech is advancing 
and keep up with the competition 
. The contracts with Meta and Nvidia are going to bring in some serious revenue 
.
. The $1.4 trillion bill to pay OpenAI over eight years? That's a big ask 
! And with debt rising by 25% from last year, it's understandable that investors are getting nervous 
u would think that signing big contracts with meta & nvidia would be a good thing, right? 
anyway, i guess co-CEO clay magouyrk thinks his plan will work out in the long run 
but still, 11% drop in shares? that's like, crazy 
Oracle's spending on data centers is just a normal part of doing business. I mean, they're trying to keep up with the likes of Meta and Nvidia, so yeah, they need to splurge a bit 
. The thing is, investors need to stop freaking out about the debt and focus on the big picture 
.
and it's scary how much debt they've got accumulating. $99.9 billion is crazy 
And yeah, their spending plan for data centers might be necessary to compete in the AI space 
those numbers are insane!