Oracle Stock Cratered 28% Last Month. Are the AI Spending Jitters Warranted?

"It's been yet another awful month for shares of the once-hyped AI infrastructure firm Oracle ( NYSE:ORCL), which are down 28% in the past month after a peak-to-trough correction of 40%. With much of the latest AI dip arising from fears of what could go wrong if the heavier AI spenders don't get the return they're hoping for, it's not a mystery to see Oracle stock leading the charge lower."

"Though the future is cloudy for the aggressive AI infrastructure firm, I think it's unfair to ditch the stock just because it's leveraging up to seize a potential generational opportunity. If the AI boom really does lead to some form of superintelligence that sparks the rise of a digital labor force, and with that, a mass displacement of white-collar workers, the smartest move may very well be to be as aggressive as possible."

"Of course, we'll never really know if "flooring it" is the best possible move for Oracle until a few years down the road. If monetization never lives up to expectations, it could be quite the doozy for the firm as the weight of its debt becomes heavier. Just how likely is the bear case, though? It's tough to say. I'd argue that a bull case might be likelier, especially if you're in the belief that OpenAI is the horse to bet on"

Oracle shares plunged 28% in the past month after a peak-to-trough correction of 40%. The drop reflects investor fears that heavy AI spending may fail to deliver expected returns, causing volatility to swing both ways. Oracle has leveraged up to capture what it views as a generational AI opportunity, increasing financial risk if monetization disappoints. If AI breakthroughs lead to broad automation and a digital labor force, aggressive positioning could produce outsized gains. Failure to monetize would heighten debt burdens and validate the bear case, though the probability of either outcome remains uncertain. Concentration of revenue exposure to a leading client such as OpenAI amplifies both potential upside and downside.

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