Oracle Stock Near Low After AI CapEx Fears

Oracle Corporation shares slid toward a 52‑week low through July 14, 2026, as investors reacted to heavy debt-funded AI data-center spending, a free cash flow shortfall, and a recent S&P downgrade that compressed the company’s market value.

Earnings, Backlog, and Risk Disclosures

On June 10, 2026, Oracle reported fiscal fourth-quarter revenue of $19.2 billion, a 21% increase year over year. GAAP earnings per share (EPS) rose about 21% to $1.45, while non-GAAP EPS increased 24% to $2.11. For fiscal 2026, revenue reached approximately $67.4 billion, up 17%, with net earnings near $17.0 billion and diluted EPS of $5.83 for the trailing 12 months ended May 31.

Oracle closed the year with remaining performance obligations (RPO)—contracted but undelivered work—of $638 billion, a 363% rise year over year and an $85 billion increase in the fourth quarter alone. The company’s annual report expanded risk disclosures on customer concentration and counterparty credit risk in Oracle Cloud Infrastructure, noting some large customers may face nonpayment or nonperformance risks. Analysts highlight that the backlog is roughly 1.5 times Oracle’s market value, underscoring a substantial future revenue pipeline.

Capital Spending, Cash Flow, and Leverage

Oracle accelerated its AI data-center build-out, pushing fiscal 2026 capital expenditures to about $55.7 billion, exceeding earlier targets near $50 billion. This spending created a free cash flow deficit of $23.7 billion despite operating cash flow rising 54% to $32 billion.

Balance-sheet metrics reflected this activity. Total debt ranged from approximately $130 billion to $156 billion, with net debt near $131.15 billion and long-term borrowings above $122 billion. Oracle financed part of the build-out through corporate bonds, issuing about $18 billion in September 2025 and $25 billion in February 2026. S&P Global Ratings downgraded Oracle’s credit rating to BBB‑, citing the scale of AI infrastructure commitments.

Management has indicated plans to raise about $40 billion in additional capital, through debt and equity, during fiscal 2027 to support ongoing AI investments. Analysts emphasize that converting the large backlog into recognized revenue and sustained cash flow will be critical to financing the program and stabilizing credit metrics.

Market Reaction and Legal Challenges

The disclosures and spending profile triggered a broad selloff. Oracle shares fell roughly 27% to 33% in calendar 2026 and more than half from 52‑week highs. Between June 8 and July 8, the stock declined about 33.7%, including a nine-session losing streak. Market capitalization dropped from a peak near $877.1 billion to the mid-$300 billion range, erasing nearly $494 billion in value.

A federal securities-fraud class action is pending in the U.S. District Court for the District of Delaware, covering purchases from June 12 through December 16, 2025. On April 27, 2026, the court appointed Sparinvest S.A. and SEB Funds AB as lead plaintiffs and Kessler Topaz Meltzer & Check LLP as lead counsel. The complaint alleges Oracle misled investors about its AI infrastructure strategy, stating it “would result in massive increases in CapEx without equivalent, near-term growth in revenue” and created risks for the company’s debt, credit rating, and free cash flow.

Separately, Oracle has been designated a Critical Third Party cloud supplier to the U.K. financial sector, placing it under Bank of England oversight with requirements for resilience testing and incident notification. This designation highlights Oracle’s systemic importance in U.K. financial infrastructure and introduces additional compliance obligations.