Oracle Stock Drops by More Than Half Amid AI Concerns

Core Insights - Oracle's shares have declined over 50% from last year's peak, resulting in a loss of approximately $463 billion in market value since reaching a record valuation of $933 billion in September [2][3] Company Performance - The decline in Oracle's stock is attributed to investor concerns regarding the artificial intelligence (AI) market and the company's relationship with OpenAI, particularly fears about AI spending without clear returns [2][3] - Oracle's stock valuation surged due to expectations of high demand for AI, but the market is now questioning the sustainability of these assumptions [4] Legal Issues - Oracle is facing a class action lawsuit from bondholders who allege that the company made misleading statements during an $18 billion debt offering, which was linked to a $300 billion contract with OpenAI [5][6] - The lawsuit claims that Oracle's subsequent request for $38 billion in loans to support data centers led to a drop in bond prices and increased yields, indicating heightened credit risk [6] Industry Context - The situation highlights a broader trend in the tech industry where AI advancements are being financed not only through venture capital but also through significant borrowing, as companies invest heavily in infrastructure to support AI capabilities [7]