Shares of Oracle Corporation fell sharply by 12 percent on Thursday amid escalating concerns over the company’s increasing expenditures and mounting debt related to its expansion in artificial intelligence infrastructure. The steep decline wiped approximately $72 billion off Oracle’s market valuation, which stood near $579 billion prior to the drop, marking the largest single-day loss for the stock since January of the previous year.

Oracle, a smaller participant in the cloud computing sector compared to industry leaders, has recently secured substantial data center contracts with OpenAI and Meta Platforms. These deals are part of the company’s strategic effort to strengthen its position against dominant competitors such as Amazon Web Services and Microsoft Azure. However, Oracle’s cash flow remains limited relative to these rivals, which traditionally have used strong revenues from established businesses to fund their significant investments.

To support its expansion in AI and cloud infrastructure, Oracle has resorted to increased cash spending and debt issuance at a time when its core software division faces challenges from the very AI technologies it seeks to underpin. The company has forecasted net capital expenditures of approximately $70 billion for its fiscal year, underscoring the scale of its investment commitments.

Investor apprehension centers on the sustainability of Oracle’s spending spree without the cushion of robust cash flows that technology giants typically leverage. This financial strain contributes to concerns about the company’s ability to manage the risks associated with rapid growth in a highly competitive market for cloud-based AI services.