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Oracle's disappointing latest earnings have slashed in excess of $70 billion from the value of the enterprise software company established by billionaire Larry Ellison, adding to growing concerns of a speculative bubble in artificial intelligence stocks.

Significant Share Price Fall Comes After Sales Miss

Stock in the firm tumbled by over 11 percent overnight after it disclosed a lower-than-expected 14 percent increase in revenues to $16bn in the latest quarter, as it simultaneously disclosed plans to boost its artificial intelligence investment by around $fifteen billion dollars.

The enterprise reported weaker-than-expected quarterly revenues for the quarter ending in November, with revenue growth at its key cloud computing business expanding at a more modest rate than forecast, at 34 percent.

Investor Jitters Over Investment and Debt

Markets were also let down by a slower than expected 68 percent growth in income from its infrastructure business.

At the same time, investors were alarmed by the company's elevated forecasts for AI investment. It now expects capex to leap by 40 percent to $50bn, with the vast majority of the additional spending aimed at expanding server farms.

This aggressive spending plan comes amid a increasing debt load, with Oracle's corporate debt having surged by twenty-five percent over the last twelve months to reach $nearly one hundred billion dollars.

"Frankly, the earnings release was not dramatically bad, but it served to validate worries around heavy AI spending, funded through debt, with an unknown timeframe for profitability," noted a market analyst.

Wider Market Repercussions and Ecosystem Concerns

Continued optimism about the promise of AI tech has driven a leap in stock prices in recent months, but there has been a increasing chorus of cautions from policymakers and executives who argue stock market valuations could plummet if investors become let down by the development or commercial uptake of AI technology.

While Oracle has established itself as a key technology provider developing software for major firms worldwide and has more recently grown rapidly in the cloud sector, analysts point to growing questions about how reliant companies are becoming on each other’s financing within the AI ecosystem.

Oracle said that its metric of remaining performance obligations soared by 440% over the last twelve months. However, market watchers were skeptical when it emerged that these commitments were driven by new commitments from major customers like Meta and Amazon.

"Although these are two solid customers, it will not allay concerns that big tech's AI investments are becoming circular, which makes the sector vulnerable to a loss of market faith," observed a market strategist.

"Overall, robust backlog increase was not enough to placate anxiety about AI and the huge amount of investment spending required by companies to construct AI capacity."

Ripple Effect in Tech Stocks

Other technology stocks also slid in extended trading following the Oracle announcement. Key movers included:

• Nvidia: Share price dropped by 1.3 percent.
• Alphabet (Google): Stock fell by 0.3%.
• SoftBank: In Japan, the investment firm's shares plunged by 7.7 percent on Thursday.