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Oracle's disappointing financial performance have wiped more than $70bn from the value of the enterprise software company established by billionaire Larry Ellison, adding to escalating fears of a overheated market in artificial intelligence stocks.

Steep Stock Drop Follows Revenue Miss

Stock in the firm plunged by 11.5% in after-hours trading after it disclosed a disappointing fourteen percent rise in revenues to $16 billion in the latest quarter, as it simultaneously announced plans to ramp up its artificial intelligence investment by about $15 billion.

The enterprise reported disappointing three-month sales for the period ending in November, with revenue growth at its key cloud computing business growing at a more modest rate than forecast, at 34%.

Investor Jitters Over Investment and Leverage

Markets were further let down by a slower than expected 68 percent increase in revenues from its cloud infrastructure unit.

At the same time, the market were unnerved by the company's increased projections for AI investment. It now projects capex to jump by 40% to $fifty billion dollars, with the bulk of the increase allocated for expanding server farms.

This substantial investment strategy is set against a increasing debt pile, with Oracle's long-term debt having increased by 25% over the last twelve months to reach $99.9 billion.

"Frankly, the report was not dramatically bad, but it came to validate fears around substantial AI spending, funded through debt, with an unclear timeline for profitability," commented a market analyst.

Wider Market Repercussions and Industry Risks

Continued exuberance about the promise of AI tech has driven a surge in stock prices in the past year, but there has been a increasing chorus of cautions from regulators and business leaders who say equity prices could correct sharply if investors become disappointed by the development or adoption of AI solutions.

While Oracle has established itself as a key technology provider developing software for large firms worldwide and has more recently found strength in the cloud sector, there are increasing questions about how dependent tech giants are becoming on each other’s financing within the artificial intelligence industry.

Oracle disclosed that its metric of revenue from customer contracts jumped by 440% over the last twelve months. However, market watchers were wary when it emerged that these contracts were propelled by large deals from other tech giants like Meta and Amazon.

"Although these are two solid customers, it will not soothe concerns that the tech sector's AI investments are interdependent, which makes the sector susceptible to a erosion of market faith," commented a market strategist.

"Overall, strong backlog increase was not enough to placate anxiety about AI and the enormous amount of capital expenditure required by companies to construct AI infrastructure."

Broader Sell-Off in Tech Shares

Other AI and tech-related stocks also fell in after-hours trading following the Oracle announcement. Key movers included:

• Nvidia: Share price dropped by 1.3 percent.
• Alphabet (Google): Stock dropped by 0.3%.
• SoftBank: In Japan, the investment firm's shares plunged by 7.7 percent on Thursday.