Oracle Shares Plunge 11% in Premarket, Dragging Down Major AI Stocks

The financial markets were rattled on Thursday, 11 December 2025, as Oracle Corporation's stock plummeted by as much as 11.5 per cent in premarket trading.

The sell-off was triggered by the release of the company's Q2 2026 earnings report the previous evening, Wednesday, 10 December 2025, which failed to meet Wall Street's lofty expectations.

The plunge, which occurred in the premarket on the stock exchange, immediately sent shockwaves through the tech-heavy Nasdaq, creating a ripple effect that wiped more than $70 billion off the market value of key companies across the entire artificial intelligence (AI) sector.

The decline was not simply due to a relatively small revenue miss; revenue came in at $16.06 billion, falling marginally short of the $16.21 billion forecast.

Crucially, this slight miss was dwarfed by two major concerns: an underwhelming profit forecast for the current quarter (Q3 2026 adjusted EPS guidance of $1.64 to $1.68 per share was below estimates of $1.72) and the announcement that the company was sharply increasing its capital expenditure (CapEx) for fiscal 2026 by an additional $15 billion, pushing the total expected outlay to $50 billion.

This aggressive spending on AI infrastructure sparked immediate investor anxiety about the company's rising debt levels and the timeline for returns, causing peers such as Nvidia (down 1.6%), Microsoft (down 0.7%), Meta (down 1.16%), and AMD (down 1.73%) to slide in premarket trading.

The 'Perfection' Miss and the CapEx Shock

The market's visceral reaction to Oracle's mixed results underscores the extreme sensitivity of the current AI-fuelled economy, where companies are 'priced for perfection.'

While Oracle managed to beat earnings per share (EPS) estimates (reporting $2.26 adjusted EPS vs. estimates of $1.64), the marginal revenue miss was treated as a major failure.

Growth in its Cloud Infrastructure (OCI) unit, which was reported at 68%, was also slower than anticipated. Investors who had previously propelled the stock to record highs on the promise of its AI cloud contracts were now demanding immediate, flawless execution.

The true for the 11 per cent share collapse, however, was the staggering hike in CapEx guidance. Management stressed that the massive expenditure on building new data centres and securing necessary computing hardware, such as Nvidia chips, was essential to deliver on the backlog of AI contracts, which had surged 438 per cent to a record $523 billion. However, investors alike viewed the debt-funded investment as a troubling 'timing mismatch,' fearing that the costs would bite deeply into margins long before the revenue from these contracts fully materialises.

The Spectre Of The AI Bubble

Oracle's financial presentation has starkly reignited fears that the exuberance surrounding AI is inflating a speculative bubble. The Texas-based tech firm had previously raised a jumbo bond issue to fund its infrastructure expansion, and the decision to further increase its debt-backed spending plans has left investors increasingly nervous. Oracle's long-term debt has surged 25% over the past 12 months, reaching nearly $100 billion.

The market is now focused not just on massive contracts like the multi-billion-dollar deal Oracle struck with OpenAI but on the financial sustainability of the firms involved. The plunge suggested that investor patience is wearing thin; the narrative of 'spending now for growth later' is being challenged by the immediate demand for clear evidence that the immense capital outlay will yield substantial short-term profits.

Ripple Effect Across Tech Ecosystem

The sell-off extended far beyond Oracle's immediate balance sheet, serving as a critical indicator for the entire technology ecosystem. As a primary provider of cloud infrastructure for next-generation AI, Oracle's financial health is closely tied to its major clients and suppliers.

The drag effect was particularly pronounced on chipmaker Nvidia and cloud rivals Microsoft and Meta, all of which rely heavily on the continued, robust spending of companies like Oracle.

In total, the decline in Oracle's shares wiped more than $70 billion off the company's market capitalisation. The shared pain suggests that Wall Street is increasingly treating the AI sector as a single, interdependent entity, making its high valuations subject to systemic risk and amplifying the impact of any single company's financial stumble.