Oracle reported better-than-expected quarterly earnings on Tuesday, with total revenue up 22% year-over-year in the third quarter, and net income up from $2.94 billion to $3.72 billion in the same period. Oracle stock spiked by 7% in response to the news.

The upbeat earnings news comes in the midst of simmering market anxiety around AI. It’s a tough market for the companies spending big bucks to build out AI infrastructure. Microsoft, Alphabet, and Amazon all saw shares slide last month, despite relatively strong earnings. 

Investors are concerned about the scale of their data center spending. And when it comes to AI spending risk, Oracle is often held up as the poster child. The company has seen its stock drop by more than 50% since a high last September and Bloomberg reported it may be preparing to cut thousands of jobs.

Not that long ago, it seemed investors couldn’t get enough of massive AI investments. But Jacob Bourne, technology analyst at EMarketer, said that feels very 2025 now.

“We’ve exited the pure AI excitement phase, and we’re definitely full into the AI accountability phase,” he said.

Markets want to see signs that these big bets on AI will pay off, and perhaps no Big Tech company has made a riskier bet than Oracle.

“Oracle just has become sort of the canary in the coal mine,” Bourne said.

The company is financing its data center buildout largely with debt. Microsoft, Google, and Amazon may be spending more, but those companies have massive revenues and cash reserves.

Luke Yang, a technology equity analyst at Morningstar, said Oracle is spending more than it makes. It has racked up more than $100 billion in debt and has committed even more.

“They’re already pushing themselves to the limit,” Yang said. “The entire plan is going to be highly risky if the AI-related demand is not as strong as we would expect.”

And Oracle is relying heavily on demand from one big customer — OpenAI. In September they announced a cloud deal worth $300 billion.

Daniel Newman, CEO of Futurum Group, said while OpenAI is still a frontrunner, it’s an unprofitable company with a lot of big-dollar obligations itself.

“It was the halo around your proverbial head that’s now the noose around your neck,” he said. “People think some part of what OpenAI is committed (to) will not come to fruition.”

OpenAI has reportedly pulled out of a major data center project with Oracle in Texas, though Oracle denied the project was in trouble.

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