Oracle CEO Clay Magouyrk speaks at a Q&A session following a tour of the OpenAI data center in Abilene, Texas, on Sept. 23, 2025.

Shelby Tauber | Pool | Reuters

Three months ago Oracle named Clay Magouyrk and Mike Sicilia as its new CEOs. They’re off to a rough start.

Oracle shares have plummeted 30% so far this quarter. With four trading days remaining in the period, the stock is on pace for its sharpest decline since 2001 and the dot-com bust.

Investors have grown skeptical about the database software vendor’s ability to open more server farms for ChatGPT operator OpenAI, which agreed in September to spend more than $300 billion with Oracle.

Earlier this month, Oracle reported weaker-than-expected quarterly revenue and free cash flow. On the earnings call, newly appointed finance leader Doug Kehring called for $50 billion in fiscal 2026 capital expenditures, 43% higher than the plan in September and double the total from a year earlier. Additionally, Oracle is plotting $248 billion in leases to boost cloud capacity, on top of building data centers.

Such growth will require boatloads of debt. In September, Oracle raised $18 billion in a jumbo bond sale, one of the largest debt issuances on record in the tech industry. Kehring committed on the earnings call to keeping Oracle’s investment-grade debt rating. But some skeptical investors are betting otherwise, pushing up the prices of Oracle’s credit default swaps.

“Considering Oracle is already barely hanging on to an investment grade rating, we would be concerned about Oracle’s ability to live up to these obligations without restructuring its OpenAI contract,” analysts at D.A. Davidson wrote in a note to clients on Dec. 12. They have the equivalent of a hold rating on the stock.

Oracle declined to comment.

Magouyrk and Sicilia’s tenure began at a time of historic optimism.

About two weeks before they took the reins from Safra Catz, Oracle reported a 359% revenue backlog tied heavily to OpenAI’s commitment. That deal represented a major endorsement for Oracle, which was left off Gartner’s list of top five cloud infrastructure providers by revenue for 2024.

Following reports about the OpenAI agreement on Sept. 10, Oracle’s stock shot up almost 36%, the third-sharpest rally since the company’s 1986 IPO. The shares reached an intraday record of $345.72.

“We think $340 was terrifying,” said Zachary Lountzis, vice president at Lountzis Asset Management, in an interview. Lountzis held $25 million in Oracle shares as of Sept. 30, according to a filing.

The stock has since lost 43% of its value, closing on Wednesday at $197.49, though it got a bump last Friday after TikTok said it had agreed to sell part of its U.S. business to Oracle and other investors. Oracle has for years delivered cloud services to TikTok.

Not ‘betting against Larry’

Lountzis said his team first bought Oracle shares in 2020, when the stock was below $60. It’s held onto it stake through the recent highs and lows, picking up another roughly 30,000 shares in the first quarter of this year.

“Our philosophy is that we’re OK with short-term overvaluation if the economics of the business have not changed, and that was the case with Oracle,” Lountzis said. “We didn’t feel the economics of the business changed with all the largely positive news that came out. And I think what we’ve seen from $340 down to $180 is actually a very healthy correction.” 

For Lountzis, much of his trust in the company comes down to Larry Ellison, who founded Oracle in 1977 and is now the world’s second-richest person, according to Bloomberg.

“You would have gone bankrupt 40 times betting against Larry over the last 50 years,” Lountzis said. “He sees the future.”

In October, Sicilia, Magouyrk and Kehring laid out a vision for a much faster-growing Oracle, with revenue set to step up to $225 billion in the 2030 fiscal year from $57 billion in fiscal 2025. Most of that growth will come from artificial intelligence infrastructure, with Nvidia’s graphics processing units at the center of it.

But while Magouryk was telling analysts to prepare for “hypergrowth,” such expansion would come at the expense of profitability, because Oracle’s core software business commands much higher margins.

In fiscal 2021, Oracle’s gross margin was 77%. Analysts polled by FactSet see it falling to about 49% in 2030, with about $34 billion in total negative free cash flow over the next five years before that figure turns positive in 2029.

Eric Lynch, managing director at Florida’s Suncoast Equity Management, said it’s hard as an investor to get comfortable with Oracle’s plans.

“Four or five years is a long time,” Lynch said. “That’s just not within our investment discipline.”

Lynch also said he’s worried about such heavy dependance on OpenAI, which is burning cash at a rapid rate and has committed to more than $1.4 trillion in total AI build-outs and investments.

“Will the demand be there from OpenAI?” Lynch said.

Wells Fargo analyst Michael Turrin launched coverage of Oracle earlier this month with the equivalent of a buy rating and a $280 price target. He said the industry’s perception will likely improve if Oracle follows through with OpenAI, which could account for more than one-third of the company’s revenue by 2029, according to Turrin’s estimate.

“They’re kind of shifting away from more of a value-oriented business to a more growth-oriented business,” Turrin said.

A big challenge for Oracle remains picking up market share in cloud infrastructure, where the company badly trails Amazon, Microsoft and Google even though its customer roster includes names like Meta, Uber and Elon Musk’s xAI.

Databricks, which was just valued at $134 billion in a funding round, doesn’t make its popular data processing software available on Oracle’s cloud.

That will happen “when customers start banging on my door, saying, ‘You need to run on Oracle,'” Databricks CEO Ali Ghodsi said in an interview. “Maybe it’s getting there, but we just haven’t heard that.”

Databricks rival Snowflake hasn’t brought its services to Oracle either.

Turrin said that Oracle’s credibility in the market will hinge on the success of its AI build-out.

“Then customers start to look at this and say, wow, this company was trusted to build some of the largest training clusters in the world, and they’re delivering on them,” Turrin said. “We should take a look at that too and figure out what’s happening here.”

WATCH: How the massive power draw of generative AI is overtaxing our grid

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Dario Amodei, co-founder and chief executive officer of Anthropic, at the World Economic Forum in 2025.

Stefan Wermuth | Bloomberg | Getty Images

Artificial intelligence startup Anthropic is doing all it can to keep pace with larger rival OpenAI, which is spending money at a historic pace with backing from Microsoft and Nvidia. Of late, Anthropic has been facing an equally daunting antagonist: the U.S. government.

David Sacks, the venture capitalist serving as President Donald Trump’s AI and crypto czar, has been publicly criticizing Anthropic for what he’s called a campaign by the company to support “the Left’s vision of AI regulation.”

After Anthropic co-founder Jack Clark, AI startup’s head of policy, wrote an essay this week titled “Technological Optimism and Appropriate Fear,” Sacks lashed out against the company on X.

“Anthropic is running a sophisticated regulatory capture strategy based on fear-mongering,” Sacks wrote on Tuesday.

OpenAI, meanwhile, has established itself as a partner to the White House since the very beginning of the second Trump administration. On Jan. 21, the day after the inauguration, Trump announced a joint venture called Stargate with OpenAI, Oracle and Softbank to invest billions of dollars in U.S. AI infrastructure.

Sacks’ criticism of Anthropic hits on the company’s very foundation and its original reason for being. Siblings Dario and Daniela Amodei left OpenAI in late 2020 and started Anthropic with a mission to build safer AI. OpenAI had started as a nonprofit lab in 2015, but was rapidly moving towards commercialization, with hefty funding from Microsoft.

Now they’re the two most highly valued private AI companies in the country, with OpenAI commanding a $500 billion valuation and Anthropic capturing a valuation of $183 billion. OpenAI leads the consumer AI market with its ChatGPT and Sora apps, while Anthropic’s Claude models are particularly popular in the enterprise.

When it comes to regulation, the companies have very different views. OpenAI has lobbied for fewer guardrails, while Anthropic has opposed part of the Trump administration’s effort to limit protections.

Anthropic has repeatedly pushed back against efforts by the federal government to preempt state-level regulation of AI, most notably a Trump-backed provision that would have blocked such rules for 10 years.

That proposal, part of the draft “Big Beautiful Bill,” was ultimately abandoned. Anthropic later endorsed California’s SB 53, which would require transparency and safety disclosures from AI companies, effectively going in the opposite direction from the administration’s approach.

“SB 53’s transparency requirements will have an important impact on frontier AI safety,” Anthropic wrote in a blog post on Sept. 8. “Without it, labs with increasingly powerful models could face growing incentives to dial back their own safety and disclosure programs in order to compete.” 

Anthropic didn’t provide a comment for this story. Sacks didn’t respond to a request for comment.

U.S. President Donald Trump sits next to Crypto czar David Sacks at the White House Crypto Summit at the White House in Washington, D.C., U.S., March 7, 2025.

Evelyn Hockstein | Reuters

For Sacks, the priority in AI is to innovate as fast as possible to make sure the U.S. doesn’t lose to China.

“The U.S. is currently in an AI race, and our chief global competition is China,” Sacks said in an onstage interview at Salesforce’s Dreamforce conference in San Francisco this week. “They’re the only other country that has the talent, the resources, and the technology expertise to basically beat us in AI.”

But Sacks has adamantly denied that he’s trying to take down Anthropic in the process of lifting up U.S. AI.

In a post on X on Thursday, Sacks contested a Bloomberg story that linked his comments to growing federal scrutiny of Anthropic.

“Nothing could be further from the truth,” he wrote. “Just a couple of months ago, the White House approved Anthropic’s Claude app to be offered to all branches of government through the GSA App Store.”

Rather, Sacks claimed that Anthropic has cast itself as a political underdog, positioning its leadership as principled defenders of public safety while pursuing a public campaign that frames any pushback as partisan targeting.

“It has been Anthropic’s government affairs and media strategy to position itself consistently as a foe of the Trump administration,” Sacks said. “But don’t whine to the media that you’re being ‘targeted’ when all we’ve done is articulate a policy disagreement.”

Sacks pointed to several examples of what he sees as adversarial actions. He referenced Dario Amodei’s comparison of Trump to a “feudal warlord” during the 2024 election. Amodei publicly supported Kamala Harris’ campaign for president.

Sacks also referenced op-eds the company ran opposing key parts of the Trump administration’s AI policy agenda, including its proposed moratorium on state-level regulation and elements of its Middle East and chip export strategy. Anthropic also hired senior Biden-era officials to lead its government relations team, Sacks noted.

The AI czar took particular umbrage to Clark’s essay and his warnings about the potentially transformative and destabilizing power of AI.

“My own experience is that as these AI systems get smarter and smarter, they develop more and more complicated goals. When these goals aren’t absolutely aligned with both our preferences and the right context, the AI systems will behave strangely,” Clark wrote. “Another reason for my fear is I can see a path to these systems starting to design their successors, albeit in a very early form.”

Sacks said such “fear-mongering” is holding back innovation.

“It is principally responsible for the state regulatory frenzy that is damaging the startup ecosystem,” Sacks wrote on X.

Anthropic has also stayed away from actions that many other tech companies have taken explicitly to appease Trump.

Leaders from Meta, OpenAI, and Nvidia have courted Trump and his allies, attending White House dinners, committing tens of billions of dollars to U.S. infrastructure projects, and softening their public postures. Amodei wasn’t invited to a recent White House dinner involving numerous industry leaders, the company confirmed to The Information.

Still, Anthropic continues to hold major federal contracts, including a $200 million deal with the Department of Defense and access to federal agencies through the General Services Administration. It also recently formed a national security advisory council to align its work with U.S. interests, and began offering a version of its Claude model to government customers for $1 per year.

But Sacks isn’t the only influential Republican tech investor voicing his critique of the company.

Keith Rabois, whose husband works in the Trump administration, waded into the mix this week.

“If Anthropic actually believed their rhetoric about safety, they can always shut down the company,” Rabois wrote on X. “And lobby then.”

 WATCH: Anthropic’s Mike Krieger on new model release

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Mira Murati, Chief Technology Officer of OpenAI (L) and Dario Amodei,

Getty Images | CNBC

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

Artificial intelligence startups have minted dozens of new billionaires this year, adding to an AI boom that’s quickly becoming the largest wealth creation spree in recent history.

Blockbuster fundraising rounds this year for Anthropic, Safe Superintelligence, OpenAI, Anysphere and other startups have created vast new paper fortunes and propelled valuations to record levels. There are now 498 AI “unicorns,” or private AI companies with valuations of $1 billion or more, with a combined value of $2.7 trillion, according to CB Insights. Fully 100 of them were founded since 2023. There are more than 1,300 AI startups with valuations of over $100 million, the firm said.

Combined with the soaring stock prices of Nvidia, Meta, Microsoft and other publicly traded AI-related firms, along with the infrastructure companies that are building data centers and computing power and the huge payouts for AI engineers, AI is creating personal wealth on a scale that makes the past two tech waves look like warmups.

“Going back over 100 years of data, we have never seen wealth created at this size and speed,” said Andrew McAfee, principal researcher at MIT. “It’s unprecedented.”

A new crop of billionaires is rising with sky-rocketing valuations. In March, Bloomberg estimated that four of the largest private AI companies had created at least 15 billionaires with a combined net worth of $38 billion. More than a dozen unicorns have been crowned since then.

Mira Murati, who left Open AI last September, launched Thinking Machines Lab in February. By July, she raised $2 billion in the largest seed round in history, giving the company a $12 billion valuation, according to reports.

Anthropic AI is in talks to raise $5 billion at a valuation of $170 billion, nearly three times its valuation in March. CEO Dario Amodei and its six other founders are now likely multibillionaires, according to people familiar with the company.

Anysphere was valued at $9.9 billion in a June fundraise and just weeks later was reportedly offered a valuation of $18 billion to $20 billion, likely making its 25-year-old founder and CEO, Michael Truell, a billionaire.

Granted, most of the AI wealth creation is in private companies, making it difficult for equity holders and founders to cash out. Unlike the dot-com boom of the late 1990s, when a flood of companies went public, today’s AI startups can stay private for longer given the constant investment from venture capital funds, sovereign wealth funds, family offices and other tech investors.

At the same time, the rapid growth of secondary markets is allowing equity owners of private companies to sell their shares to other investors and provide liquidity. Structured secondary sales or tender offers are becoming widespread. Many founders can also borrow against their equity.

Open AI is holding talks for a secondary share sale to provide cash to employees. Its proposed valuation of $500 billion follows the company’s fundraise in March that provided a $300 billion valuation.

Dozens of private firms are being acquired or merging, also providing liquidity. After Meta invested $14.3 billion in Scale AI, founder Alexandr Wang joined Meta’s AI team. There have been 73 liquidity events — including mergers and acquisitions, IPOs, reverse mergers or corporate majority stakes — since 2023, according to CB Insights. Following the Meta deal, Scale AI’s co-founder, Lucy Guo, who left the company in 2018, bought a mansion in LA’s Hollywood Hills for around $30 million.

Still, the AI surge is largely centered in the Bay Area, reminiscent of the dot-com era. Last year, Silicon Valley companies raised more than $35 billion in venture funding, according to the Silicon Valley Institute for Regional Studies. San Francisco now has more billionaires than New York, with 82 compared with New York’s 66, according to New World Wealth and Henley & Partners. The Bay Area’s millionaire population has doubled over the past decade, compared with New York’s growth of 45%.

More homes sold above $20 million in San Francisco last year than in any other year in history, according to Sotheby’s International Realty. Rising rents, home prices and demand in the city, attributed in large part to AI, mark a sharp turnaround for a city facing a “doom loop” just a few years ago.

“It’s astonishing how geographically concentrated this AI wave is,” said McAfee, who is also co-director of MIT’s Initiative on the Digital Economy. “The people who know how to found and fund and grow tech companies are there. I’ve heard people say for 25 years ‘This is the end of the Silicon Valley’ or some other place is ‘the new Silicon Valley.’ But Silicon Valley is still Silicon Valley.”

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With time, and initial public offerings, many of today’s private AI fortunes will eventually become more liquid, providing a historic opportunity for wealth management firms. All of the major private banks, wirehouses, independent advisors and boutique firms are cozying up to the AI elite in hopes of winning their business, according to tech advisors.

Like the dot-com millionaires, however, luring the AI wealthy may be challenging for traditional wealth management companies. Simon Krinsky, executive managing director at Pathstone and former managing director at Hall Capital Partners in San Francisco, said most AI wealth is locked up in private companies and therefore can’t be turned into wealth management accounts.

“I would say a much higher percentage of the ultimate wealth being created is illiquid,” he said. “There are ways of getting liquidity, but it’s tiny compared to being employed at Meta or Google” or another megacap publicly traded tech company.

Eventually, those fortunes will become liquid and prized by wealth management firms. Krinsky said the AI wealthy are likely to follow similar client patterns as the newly rich dot-commers of the 1990s. Initially, the dot-commers used their excess liquidity and assets to invest in similar tech companies they knew through their networks, colleagues or shared investors. He said the same is likely true for the AI wealthy.

“Everybody turned around and invested with their friends in the same kind of companies that created their own wealth,” he said.

After discovering the perils of having all their wealth concentrated in one highly volatile and speculative industry, the dot-commers turned to wealth management. And being born disruptors, many turned their capital and skills toward reinventing the wealth management industry in their image. Netscape founder Jim Clark, for instance, helped launch MyCFO, a response to his dislike of bankers and the industry.

Krinksy said today’s AI entrepreneurs are likely to follow the same path, with huge potential for AI to disrupt — if not replace — many of the traditional functions of wealth management.

Ultimately, however, the ultra-wealthy AI founders will discover the need for the traditional, personalized service that only dedicated wealth management teams can provide, whether it’s around taxes, inheritances and estate planning, or philanthropy advice and portfolio construction.

“After people were beaten up or bruised up in the early 2000s, they came around to appreciating some degree of diversification and maybe hiring a professional manager to protect them from themselves,” Krinksy said. “I anticipate a similar trend with the AI group.”

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