Oracle founder Larry Ellison
Oracle co-founder Larry Ellison saw his fortune shrink by more than $6 billion in a single day as investors continued to dump Oracle shares amid growing concerns over the company's artificial intelligence investments, rising debt burden and challenges facing key data centre projects.
According to Bloomberg Billionaires Index data cited by Benzinga, Ellison's net worth fell by $6.1 billion on Friday, taking his estimated wealth to $178 billion. Over the past 12 months, the Oracle co-founder has reportedly lost about $194 billion in wealth, making him one of the biggest losers among the world's richest individuals.The decline in Ellison's fortune comes as Oracle stock has emerged as one of the worst-performing large technology companies on Wall Street.
Shares have plunged about 62% from their peak, wiping roughly $550 billion off the company's market value. Oracle's market capitalisation has fallen from approximately $875 billion late last year to around $387 billion.
AI bets and debt concerns weigh on Oracle
Investor concerns have centred on Oracle's aggressive push into artificial intelligence infrastructure and its growing debt obligations. The company has attracted scrutiny over its exposure to OpenAI-related projects, including a reported $300 billion agreement linked to the Stargate initiative.
At the same time, Oracle's total debt has surged to $169 billion from $88 billion early last year, raising concerns about future financing costs.The pressure has also spread to Oracle's bond market performance. Bonds maturing in 2036 are now yielding 7.8%, significantly higher than the year's low of 5.3%, while another $2.75 billion in bonds maturing in 2066 are yielding 8.73%, reflecting investor demands for greater compensation to hold the company's debt.
Infrastructure projects face regulatory hurdles
Oracle is also grappling with challenges surrounding Project Jupiter, its major data centre development in New Mexico. The company has reportedly declared force majeure on the project, citing power supply and gas pipeline constraints. In July, the New Mexico State Land Office rejected the proposed Green Chile pipeline permit, pointing to concerns over water consumption, carbon emissions and limited economic benefits for the state.
The project is also facing separate air-quality permitting issues.
Core business remains resilient
Despite the market's concerns, Oracle's underlying business continues to post strong growth driven by demand for cloud services.In its latest quarterly results, the company reported a 30% increase in revenue to $19.3 billion. Cloud infrastructure revenue surged 121% to $7.4 billion, while cloud applications revenue reached $4.2 billion. Oracle's remaining performance obligations, a key indicator of future revenue, climbed to $664 billion.Analysts expect that momentum to continue. After generating $67 billion in revenue in the previous fiscal year, Oracle is projected to deliver about $90 billion this year and $117 billion next year. Earnings per share are forecast to rise from $7.63 last year to $8.14 this year.