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Oracle's lackluster quarterly results have erased in excess of $70 billion from the market capitalization of the software and data company co-founded by Trump ally Larry Ellison, adding to mounting fears of a speculative bubble in artificial intelligence stocks.

Sharp Share Price Fall Follows Sales Shortfall

Shares in the firm tumbled by over 11 percent overnight after it posted a weaker-than-anticipated 14% growth in sales to $16bn in the previous quarter, while simultaneously revealed plans to ramp up its AI spending by approximately $15 billion.

The enterprise posted disappointing three-month sales for the quarter ending in November, with sales at its key cloud computing division expanding at a slower pace than projected, at 34 percent.

Investor Concerns Over Spending and Debt

Investors were further let down by a slower than expected sixty-eight percent increase in revenues from its cloud infrastructure unit.

Concurrently, investors were alarmed by the company's raised projections for spending on artificial intelligence. It now expects capital expenditure to jump by 40% to $50bn, with the vast majority of the additional spending allocated for building data centres.

This aggressive investment strategy comes amid a ballooning debt load, with Oracle's corporate debt having jumped by 25 percent over the past year to reach $99.9bn.

"Honestly, the earnings release was not dramatically bad, but it came to validate fears around substantial AI spending, financed by debt, with an uncertain timeline for returns," said a senior analyst.

Wider Market Implications and Industry Concerns

Sustained exuberance about the promise of AI technology has driven a sharp rise in stock prices in the past year, but there has been a increasing chorus of warnings from regulators and business leaders who say stock market valuations could tumble if the market become let down by the development or adoption of AI solutions.

While Oracle has become an important tech player creating enterprise solutions for major corporations worldwide and has in recent years grown rapidly in the cloud sector, analysts point to increasing concerns about how dependent firms are becoming on mutual investment within the artificial intelligence industry.

Oracle reported that its metric of remaining performance obligations soared by 440% over the past year. However, analysts were skeptical when it emerged that these contracts were driven by large deals from major customers like Meta and Amazon.

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

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

Ripple Effect in AI-Related Stocks

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

• Nvidia: Stock fell by 1.3%.
• Alphabet (Google): Shares fell by 0.3%.
• SoftBank: In Japan, the AI investor shares fell by 7.7% on Thursday.