Shares of Oracle fell by 11% today after disclosing that it spent 45% more than Wall Street expected on AI data centers.
In its earnings report, Oracle said it spent $12 billion last quarter, an increase from $8.5 billion in the prior quarter. Analysts had expected $8.25 billion, according to Bloomberg.
Oracle is now projecting that it would spend $50 billion in the fiscal year on capex, up $15 billion from its forecast in September.
The share slide decreased the net worth of co-founder and Executive Chair Larry Ellison by $25 billion, according to Bloomberg data, making him the third richest person in the world. In September, he briefly became the richest, then fell to second.
Ellison’s net worth decline comes after he has committed to backing Paramount’s $108 billion hostile bid for Warner Bros. Discovery – and unravel Netflix’s acquisition agreement. The Ellison family owns and contols Paramount Skydance, with his son David Ellison as the CEO.
Meanwhile, Oracle also signed a $300 billion compute deal with OpenAI, which is also a partner on the $500 billion Stargate project to build AI data centers. But investors are getting a bit antsy about Oracle’s spending, propelling the cost to insure against the company defaulting on its debt to its highest level in more than two years.
Oracle reported total revenue of $16.1 billion in its fiscal second quarter, up 14%. Earnings, excluding some items, came to $2.26 per share. Oracle had a $2.7 billion pretax gain on the sale of its Ampere Computing stake, which helped boost earnings.