Oracle Company (NYSE: ORCL) has seen a significant market reaction following its bold move toward artificial intelligence (AI), sending shares down 25% over the past month.
What happened: Oracle’s ambitious entry into the AI sector, fueled by significant borrowing, has caused unease on Wall Street.
The tech giant has pledged to invest hundreds of billions over the next few years in chips and data centers, primarily to bolster the computing capacity of OpenAI, the creator of ChatGPT.
As the Financial Times reports, the scale and speed of Oracle’s strategic shift has left investors wondering, particularly at a time when the spending habits of big tech companies building huge data centers, or hyperscalers, are under scrutiny.
Oracle shares have fallen 25% over the past month, nearly twice the decline of the worst-performing hyperscaler, Meta. This downturn has erased more than $250 billion in market value gains that Oracle had accumulated after announcing its OpenAI deals in September.
Also read: Top analyst says Oracle’s ‘irresponsible’ AI bet differs from Microsoft, Google’s ‘healthy’ demand
Oracle’s late move from software to cloud computing, coupled with its big bet on AI, has caused particular concern.
Why it’s important: Despite the market reaction, Oracle remains confident that the potential benefits will outweigh the risks, highlighting the growing demand for AI, which far exceeds the current supply of computing power.
Oracle’s bold move toward AI represents a significant shift in strategy, and the market reaction underscores the risks associated with such a shift.
However, with the growing demand for AI and the potential rewards on offer, Oracle’s gamble could yet pay off.
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This article Oracle’s AI strategy shakes up the market as stocks plunge 25% originally appeared on Benzinga.com
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