Can the credit bubble be stopped from bursting?

Written by: Nick G. on 20 October 2026

(Above: Larry Ellison at an Exadata 2 launch in 2009.  Creative Commons Attribution 2.0)

Wouldn’t it be nice to be so rich that you could lose $6 billion in a single day, but still remain a billionaire?

According to a report in the Times of India, “Oracle co-founder Larry Ellison saw his fortune shrink by more than $6 billion in a single day as investors continued to dump Oracle shares amid growing concerns over the company’s artificial intelligence investments, rising debt burden and challenges facing key data centre projects.”

More than any other AI company, Oracle is pouring huge investments into AI projects including data centres, but funding this through mega loads of debt.

According to a report last year in the New York Times, Oracle’s debt-to-equity ratio “stood at 500 percent - meaning that it had $5 of debt for every $1 of shareholder equity.” By comparison, it said, Amazon’s was around 50 percent and Alphabet’s was even lower still.

The staggering sums involved, whether investor’s share capital or borrowings from banks, financial institutions or other AI corporates, remain entirely fictitious until future surplus value created by Oracle’s workers is realised as profits from sales of its products and services. 

Oracle’s share prices have plunged by 62 percent from their peak, destroying nearly $550 billion of the company’s fictitious capital. Approximately $875 billion of Oracle’s market capitalisation late last year has been reduced to $387 billion today as the gamblers in the share market casino lose their nerve.

In Australia, we have just seen what was promised to be Australia’s biggest IPO (initial sale of shares to the public) since Telstra collapse when investors failed to cough up $A7 billion for data factory company Firmus. 

News Corporation journalist Heath Parkes-Hupton correctly assessed the significance of the Firmus failure, writing that “The spectacular failure of neocloud start-up Firmus, previously the darling of Australia’s AI scene, has exposed the “cracks” in a trillion-dollar industry largely built on imagination.”

Capitalism is inherently unstable and the tendency for credit bubbles to burst is always present.

As the NYT said, “The A.l. boom has been a global phenomenon; an A.I. collapse would be as well.”

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