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Oracle's lackluster latest earnings have wiped in excess of $70bn from the value of the enterprise software giant co-founded by Trump ally Larry Ellison, heightening growing fears of a overheated market in AI-related stocks.

Steep Share Price Fall Comes After Sales Miss

Stock in the firm tumbled by over 11 percent following the announcement after it posted a weaker-than-anticipated 14 percent growth in sales to $16bn in the previous quarter, while simultaneously announced plans to boost its artificial intelligence investment by about $15 billion.

The enterprise posted softer-than-forecast quarterly revenues for the quarter ending in November, with revenue growth at its core cloud computing business expanding at a more modest rate than anticipated, at 34 percent.

Investor Jitters Over Spending and Debt

Investors were further let down by a more moderate 68% growth in revenues from its infrastructure business.

At the same time, investors were alarmed by the company's increased projections for spending on artificial intelligence. It now projects capital expenditure to jump by forty percent to $50 billion, with the lion's share of the additional spending directed toward building cloud infrastructure.

This heavy investment strategy comes amid a growing leverage, with Oracle's corporate debt having surged by 25 percent over the past year to reach $nearly one hundred billion dollars.

"Frankly, the report was not dramatically bad, but it came to confirm concerns around substantial AI spending, funded through debt, with an uncertain timeline for revenue generation," commented a market analyst.

Broader Market Repercussions and Ecosystem Concerns

Continued exuberance about the potential of AI tech has led to a surge in market capitalizations in the past year, but there has been a increasing chorus of warnings from regulators and business leaders who say equity prices could plummet if the market become disappointed by the progress or commercial uptake of AI solutions.

While Oracle has established itself as a key tech player creating enterprise solutions for major corporations worldwide and has more recently grown rapidly in cloud computing, analysts point to growing questions about how dependent companies are growing on circular funding within the AI ecosystem.

Oracle said that its measure of contractual revenue soared by 440% over the last twelve months. However, market watchers were skeptical when it emerged that these contracts were propelled by large deals from other tech giants like Meta and Amazon.

"While these are high-quality customers, it will not placate fears that the tech sector's AI investments are self-referential, which leaves it vulnerable to a loss of investor confidence," commented a market strategist.

"In summary, strong backlog increase was not enough to calm anxiety about AI and the enormous amount of capital expenditure required by companies to construct AI infrastructure."

Broader Sell-Off in AI-Related Shares

Additional technology stocks also slid in after-hours trading following the Oracle announcement. Key performers included:

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