Oracle Shares Drop on Concerns Over AI Profitability and Margins
Oct 7, 2025
Oracle's stock dropped sharply, falling about 5% in one day, after new reports raised concerns about its ability to make money from its artificial intelligence (AI) business.
Several sources noted that Oracle is facing challenges earning profits when renting out Nvidia chips, which are essential for AI-related cloud services. Although Oracle has announced billions of dollars in new cloud contracts, analysts worry that heavy investment in data centers and AI infrastructure may not immediately pay off.
Some investors are optimistic about Oracle's future growth in the AI sector, but others are concerned about increasing debt, shrinking profit margins, and the risks tied to expanding its AI and cloud businesses.
The news affected not only Oracle, but also led to a broader sell-off in technology stocks, pulling down indices like the Nasdaq and S&P 500.
Why did Oracle's stock fall?
Oracle's stock fell after reports suggested it may not be making enough profit from its AI services, especially when renting out Nvidia chips. Concerns about debt and lower profit margins also worried investors.
What is the main risk Oracle is facing?
The main risk is that Oracle is spending a lot of money to expand its cloud and AI services, but it may take time before these investments start to generate strong profits.
How did this news affect other stocks?
Oracle's warning about low AI profit margins contributed to a wider sell-off in technology stocks, which pulled indices like the Nasdaq and S&P 500 lower.
Sources
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