Oracle is betting everything on artificial intelligence, but investors clearly hate the price tag. The tech giant saw its shares nosedive by 11% to 12% immediately after its second-quarter earnings call. While the company posted solid revenue growth, the massive costs associated with their new strategy caused Wall Street to panic.
The core issue lies in how much cash Oracle needs to build its future. The company missed its sales and profit estimates, but the capital spending forecast did the real damage. Management revealed they had to adjust their budget significantly halfway through the year. They now plan to spend an additional $15 billion to keep up with infrastructure demands.
Even a healthy 14% rise in quarterly revenue—bringing the total to $16.1 billion—could not distract traders from the shrinking margins. Chairman Larry Ellison tried to explain the necessity of this spending during the call. He insisted that AI technology will undergo huge changes over the next few years, and Oracle must stay agile to capture that value. He believes the current spending will fuel future growth, specifically citing commitments from Meta and Nvidia. The company also highlighted a massive $300 billion five-year agreement with OpenAI as proof that its strategy is working.
However, the operational costs paint a difficult picture. Oracle took a $406 million restructuring charge this quarter. That figure is 387% higher than what they faced at this time last year. The year 2025 has already seen several waves of smaller layoffs at the firm. With a $1.6 billion restructuring plan set for this fiscal year, employees and investors should expect further expenses and potential cuts.
Clay Magouyrk attempted to calm the market by focusing on their global footprint. He reminded investors that Oracle now operates over 211 live and planned regions worldwide, a number he claims beats all cloud competitors. Despite the crash, the stock remains up 18.9% for the year, though it sits far below its mid-September highs. Investors must now decide if Ellison’s expensive gamble is worth the short-term pain.
