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Oracle's AI Cloud Costs Sink Stock Price

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This episode provides a financial overview of Oracle Corporation (ORCL), detailing a sharp drop in its stock price and raising broader concerns about the profitability and investment risks within the Artificial Intelligence (AI) sector. This downturn, which saw the stock plummet by over 13% and the company's value fall by approximately $80 billion, was primarily triggered by Oracle's disappointing cloud revenue growth and its decision to dramatically increase capital expenditure on AI infrastructure to around $50 billion. Analysts, including BofA Securities, lowered Oracle's price target, citing a worrying timing mismatch between massive spending and revenue conversion for its AI cloud services, which are hampered by the high cost of Nvidia chips and are running on significantly lower margins than the traditional software business. The reports emphasize that Oracle’s financial struggles have led to a surge in its debt load and fueled fears of an AI stock bubble affecting the entire hardware supply chain, including companies like Nvidia and AMD.

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