Oracle slumps as gloomy forecasts, soaring spending fan AI bubble worries

Core Insights - Oracle shares fell 13% due to massive spending and weak forecasts, raising doubts about the returns on AI investments [1] - The company's fortunes are closely tied to OpenAI, with concerns that competitors like Google are advancing faster [2] - Investors are worried about Oracle's debt levels, leading to increased demand for credit-default swaps as a hedge against default [3] Financial Performance - Oracle has incurred approximately $10 billion in cash burn in the first half of its fiscal year due to AI investments [5] - The company could lose over $90 billion in market value if current losses persist [5] - Larry Ellison's net worth could decrease by more than $30 billion due to Oracle's stock performance [5][6] Market Trends - The tech sector is experiencing a selloff, with other AI-related stocks like Nvidia and AMD also declining between 3.1% and 4.2% [6] - There is growing concern that the AI investment frenzy may resemble a bubble similar to the 1990s dot-com boom [7] - OpenAI's valuation of around $500 billion raises questions as it continues to operate at a loss and has not clarified funding for its $1 trillion AI spending commitments by 2030 [7]