Oracle’s stock has plummeted over 40% from its all-time high in September, sparking concerns of an AI bubble. The company’s involvement in major AI projects, like the $500 billion Stargate initiative with OpenAI and Softbank, has raised eyebrows. Oracle’s elevated debt levels and leadership changes have contributed to its recent decline.

Investors are wary of AI valuations and spending, leading to a sell-off in AI-related stocks. Oracle’s stock surged after a strong earnings report in September but declined after CEO Safra Catz’s replacement. Traders are hedging against the AI trade by piling into Oracle’s credit-default swaps.

Consensus capital expenditures for AI hyperscalers have risen to $533 billion, showing the growing investment in AI technology. Oracle is deeply involved in the interconnected web of deals between AI software makers, chip companies, and cloud operators, leading to concerns about self-dealing and artificial demand. Goldman analysts warn of potential risks in the AI ecosystem.

Larry Ellison’s Oracle has become a poster child for the AI bubble, with its stock experiencing significant volatility. The company’s ties to various AI projects and its high debt levels have raised red flags among investors. Oracle’s fortunes are closely tied to the fate of the broader AI complex, making its recent struggles a cause for concern.

Read more at Yahoo Finance: What’s Going on With Oracle? Its Stock Price Has Dropped More Than 40% in Two Months.