Oracle’s stock fell more than 12% on Thursday on growing fears about the software giant’s massive AI spending — shaving more than $30 billion off co-founder Larry Ellison’s fortune.
The Texas-based tech company’s stock tumbled to $194 a share from around $223 a share at the start of trading — wiping out $90 billion in market capitalization.
Accordingly, Ellison’s net worth dipped on Thursday to $244 billion — sharply lower than the $276 billion he was worth a day earlier, according to Forbes.
That knocked the 81-year-old tech tycoon, who owns roughly 40% of Oracle shares, out of his No. 2 spot behind Elon Musk on the list of the world’s richest.
As of Thursday afternoon, Ellison — who is helping his son, Paramount Skydance CEO David Ellison, buy Warner Bros. Discovery — had fallen to third place on the Forbes list behind Google co-founder Larry Page.
Oracle’s nosedive triggered a sector-wide selloff in tech that dragged down the stock prices of blue-chip firms including Nvidia, AMD, Micron, Broadcom and Arm.
The Nasdaq, the tech-centric index, fell by 145 points, or 0.6%, though investors warmed to the broader market — pushing the Dow Jones Industrial Average up by around 600 points.
Wall Street reacted negatively to Oracle’s balance sheet which showed that the company’s AI buildout was fueled by $100 billion in debt.
Investors were so concerned about Oracle’s debt burden that they began buying up credit-default swaps — a type of insurance that serves as a hedge against a possible default.
The prices of CDS have risen to their highest in five years — fueling fears that the company may not be able to pay its debts.
Earlier this year, Oracle reached an agreement to sell $300 billion worth of cloud computing services to OpenAI, the maker of ChatGPT.
The eyepopping number was all the more astounding given that OpenAI, which has a valuation of $500 billion, continues to lose money.
OpenAI has yet to provide information as to how it plans to fund its massive AI spending commitments, which exceed $1 trillion by 2030.
The ChatGPT maker on Thursday rolled out its latest iteration of the popular bot. According to OpenAI, GPT-5.2 is the most advanced model yet — offering services for everyday professional use including creating spreadsheets, building presentations, writing code and understanding long context.
Last month, OpenAI declared a “code red” after the tech world hailed the recent unveiling of new models by rivals Google and Anthropic.
Despite Oracle’s dip, it still has adherents who are bullish on stock.
“While the bears will run with this number and yell fire in a crowded theater this morning we strongly disagree with this view” in light of the $523 billion in business that Oracle has committed to but has yet to deliver, according to Dan Ives of WedBush Securities.
“This is the number we are most focused on around the future and health of Oracle’s AI buildout and strategy looking ahead.”
