The Oracle logo, representing the American multinational computer technology company that sells database software and cloud computing products such as enterprise resource planning (ERP), human capital management (HCM), customer relationship management (CRM), and enterprise performance management (EPM), appears on their pavilion during the Mobile World Congress 2025 in Barcelona, Spain, on March 5, 2025. Joan Cros / NurPhoto via Getty Images

As tech companies push the stock market to record highs, fears of an AI bubble continue to simmer on Wall Street, where even a slight earnings miss threatens to upend high-flying stocks.

On Thursday, Oracle was the latest company to experience this first-hand.

Oracle shares closed down nearly 11% on Thursday after the company announced revenue that fell short of Wall Street estimates. That wiped nearly $70 billion off the company`s market value in a matter of hours.

The tech-heavy Nasdaq was the only major index to close lower, due to tremors in the market made by Oracle. The S&P 500 ended the day at a record high, as did the 30-stock Dow Jones Industrial Average.

Oracle also announced Wednesday night that its spending for fiscal 2026 would be $15 billion more than its prior estimate in September. The company`s total capital expenditures for fiscal year 2026 are set to be $50 billion.

Many of those expenses will be driven by contracts with the likes of Meta and Nvidia, Oracle said. The company also said it had a backlog of signed contracts with customers worth $523 billion.

Long known for dull back-office software systems, Oracle this year found a renewed purpose as a provider of cloud computing services for the AI boom.

But Oracle`s share-price drop Thursday had a ripple effect on other top AI stocks for most of the day. Nvidia shares dropped almost 1.5%, while chipmakers Arm Holdings and Intel slid more than 3%. Google owner Alphabet dropped 2.4%.

Datacenter operator CoreWeave and other chipmakers like AMD and Micron also dipped into the red.

As Oracle`s spending rises on the back of AI deals - which some consider "circular" - the company`s credit default swaps have soared.

The swaps, or CDSs, can be a proxy to gauge how risky a company`s bonds or debt are. After Oracle`s earnings report Wednesday, they soared to the highest level since 2009, according to Bloomberg, which cited data from exchange operator ICE.

Oracle`s credit default swaps have become a closely tracked measure among investors and a barometer for the state of the AI industry overall.

On Wednesday night`s call, Oracle`s principal financial officer Doug Kehring said the company is "committed to maintaining our investment-grade debt rating."

"Investment grade" is a rating given to a company`s bonds or credit on a sliding scale. Anything below investment-grade is considered speculative, also often referred to as junk.

Earlier on Thursday, Oracle declined as much as 16.5%, which would have put it on track for its worst one-day performance since 2001.

With the S&P 500 up more than 16% and the Nasdaq Composite up more than 20% for the year, the market broadly remains in good shape.

Still, the nature and size of the AI deals - and their uncertain returns - are leading some to question whether the investment boom portends an upcoming bust.

Part of those valuations come from an increasingly complex, interconnected web of deals as AI companies invest in each other. Oracle, Nvidia, Microsoft, and OpenAI have all announced various investment deals worth tens of billions.

In September, chipmaker Nvidia announced a deal to invest up to $100 billion in OpenAI.

But in December, Nvidia CFO Colette Kress said "we still haven`t completed a definitive agreement, but we`re working with them."

The comments underscored how much distance there is between a splashy investment announcement and a binding contractual obligation.

At the same time as Oracle`s shares decline, so do the fortunes of the company`s majority shareholder, Larry Ellison.

Currently ranked the world`s second richest person by Bloomberg Billionaires, Ellison has a fortune worth more than $280 billion.

Ellison`s son David is currently making a hostile $108 billion bid for Warner Bros. Discovery, trying to upend an agreement Warner Bros. already has to sell its movie studios and HBO to streaming giant Netflix.

David Ellison is backstopping his bid with the family`s fortune, which rests in large part on shares of Oracle.