What’s going on with Oracle? Its stock price has fallen more than 40% in two months.

Betting big on AI has proven to be a double-edged sword.

Shares of Oracle (ORCL), the nearly 50-year-old software company that has pivoted to artificial intelligence, rose strongly over the summer as investors grew more excited about what could be the next transformative technology. Recently, the company’s stock has given up much of those gains, down more than 40% from its all-time high in September, more than other related games including Meta Platforms (META), Palantir Technologies (PLTR), and Advanced Micro Devices (AMD), whose shares are down at least 20% from their respective peaks. Now investors look to Oracle as the poster child for overuse of artificial intelligence.

Although concerns about AI valuations have lingered for years, investors have recently begun trading stocks related to the topic, weighing the amount companies spend developing the technology against the potential for future revenue.

Oracle has come under increasing scrutiny since it raised $18 billion in new debt last month to finance its infrastructure buildout, bringing its total debt to more than $100 billion. In January, Oracle announced that it would team up with ChatGPT maker OpenAI and Japanese tech giant Softbank on a $500 billion project, called Stargate, to develop AI infrastructure in the United States.

Oracle’s quarterly earnings report in early September beat Wall Street expectations, sending the stock soaring 36% in a single day and briefly making co-founder and CEO Larry Ellison the richest person in the world. However, a few weeks later, the company announced that longtime CEO Safra Catz would be replaced as CEO, and the stock has declined since then.

Meanwhile, traders have begun to leverage Oracle’s credit default swaps as a way to hedge and bet against AI trading, according to a recent story by Bloomberg. Credit default swaps are derivative contracts that act as a form of insurance against the possibility of a borrower defaulting on its debt obligations.

Agreed capital expenditures for AI blue-chip companies, including Amazon ( AMZN ), Google ( GOOGL ), Meta, Microsoft ( MSFT ) and Oracle, have risen to $533 billion now from $467 billion at the start of the third-quarter earnings season, according to Goldman Sachs.

Oracle is also a key part of a web of deals between AI software makers, chip companies and cloud operators, whose carousel deals – which perhaps suggest self-dealing more than representation of organic demand – have raised eyebrows. The Wall Street Journal It stated that a large portion of the huge revenue backlog revealed in its September earnings report was from the OpenAI deal.

“Feedback loops generated by revenue and equity relationships between some of the largest U.S. public companies and smaller AI companies increase the risk that pressure in one part of the AI ​​ecosystem will impact investors across the AI ​​complex,” Goldman analysts led by Ryan Hammond said in a report published earlier this week.