Oracle is not having a good time off late, even as the tech giant continues to make significant investments in artificial intelligence (AI) to fuel its operations. However, investors does not seem to come in line with Oracle’s AI strategies.
Oracle stock price has fallen nearly 40% since its September high, falling below the key $200 level on Friday.
On Thursday, Oracle stock’s Relative Strength (RS) Rating got a boost to 83, from 80 the day before, an indication of a positive run.
However, investors have been exercising caution in investing on tech stocks focussed on AI, including Nvidia and Oracle. The downfall in Oracle share price started last month amid speculation by some market watchers that an AI bubble may be developing.
During the rout, Oracle stock price fell from an all-time high $345.72 on September 10 to a day’s low of $193.55 per share on Friday during market hours. This is the first time Oracle share price has fallen below the $200 level since its September high.
The stock has fallen below its 20-week simple moving average — a key long-term support level that was maintained during the large part of 2024.
ChatGPT curse showing up for Oracle?
The downfall in Oracle’s stock price started after the company announced its landmark partnership with OpenAI. The company’s bold bet on investment in the ChatGPT maker rattled investors, who showed no mercy in pulling away from Oracle.
Since the announcement, Oracle has lost roughly $360 billion in market value.
The company outlined plans to reach $166 billion in cloud revenue by 2030, but failed to impress investors.
While Oracle’s $300 billion deal with OpenAI saw a steep dive in its market capitalisation and stock value, data shows that benchmarks like Nasdaq Composite, Dow Jones US Software Index and Microsoft remained relatively stable.
According to reports, the sharp downturn in Oracle’s market value is indeed tied to OpenAI. Around 65% of Oracle’s projected additional revenue is linked with just one customer — the ChatGPT maker.
Investors are also concerned about the debt that Oracle has issued to support its infrastructure for OpenAI, effectively making the company a public market proxy for the AI firm’s ambitions.
Oracle is borrowing heavily to build out OpenAI’s data centres, with its total debt now exceeding $100 billion, according to reports.
The company plans to increase its substantial debt to finance artificial intelligence infrastructure, and as lenders seek greater protection on loans to major tech companies, citing concerns over debt-financed AI investments.