Oracle Stock Drops as Company Spends Big on AI Technology
The tech company's shares fell 12% after announcing huge spending plans for artificial intelligence data centers.
Oracle is a technology company that makes computer software and provides cloud computing services. The company helps other businesses store their data and run their computer programs online. Oracle has been around for many years, but it's smaller than tech giants like Amazon and Microsoft.
Artificial intelligence, or AI, is a type of computer technology that can think and learn like humans. Companies use AI to create chatbots, recognize images, and solve complex problems. Many businesses want to use AI, so they need powerful computers called data centers to run these programs.
When a company's stock price drops, it means investors think the business might have problems. Stock prices go up when people believe a company will make more money in the future. They go down when people worry about a company's spending or profits.
Cloud computing means storing and using computer programs over the internet instead of on your own computer. Companies like Oracle, Amazon, and Microsoft provide these services to other businesses. It's like renting computer power instead of buying your own computers.
Oracle lacks the large cash flows that have primarily funded the tech giants' outlays, forcing it to burn cash and sell debt instruments.
Comprehension quiz preview
1. How much did Oracle's stock drop on Thursday?
2. How much money does Oracle plan to spend on data centers this year?
3. Which AI company did Oracle sign a deal with?