TLDR
- Oracle stock has plunged 55% from its $345.72 all-time high in late 2025, driven by investor concerns over massive AI infrastructure spending
- The company signed a $300 billion deal with OpenAI to build data centers over five years, with 58% of Oracle’s contractual backlog now tied to the ChatGPT maker
- Oracle plans to raise $45-$50 billion in 2026 through debt and equity financing, adding to an already overleveraged balance sheet with $100 billion in existing debt
- OpenAI could burn through $115 billion by 2029 according to reports, raising questions about the sustainability of Oracle’s largest client relationship
- Bernstein cut its Oracle price target from $339 to $313 but maintained an Outperform rating, citing funding uncertainties as a major concern
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Oracle has experienced a brutal selloff, with shares tumbling nearly 55% from their late 2025 peak of $345.72 to current levels around $160. The cloud computing giant’s aggressive push into AI infrastructure has spooked investors worried about mounting debt and overreliance on a single risky client.
Oracle Corporation, ORCL
The catalyst for concern came in September 2025 when Oracle signed a massive $300 billion agreement with OpenAI. Under the five-year deal, Oracle will provide computing power worth 4.5 gigawatts of annual capacity to the ChatGPT creator, starting in 2027 and running through 2032.
While the deal positions Oracle as a critical infrastructure provider for generative AI, it has created worrying concentration risk. A staggering 58% of Oracle’s contractual backlog is now tied to OpenAI, essentially making the company a “publicly traded proxy” for the AI startup’s fortunes, according to the Financial Times.
The problem? OpenAI itself faces an uncertain future. Reports from tech news site The Information suggest the company could burn through $115 billion in cash by 2029. That level of cash burn raises legitimate questions about whether OpenAI can meet its long-term obligations to Oracle.
Oracle isn’t just relying on client spending to fund these ambitious data center projects. The company announced plans in February to raise between $45 billion and $50 billion in 2026 through a mix of debt and equity financing. About half will come from equity issuance, including $20 billion in common shares through an at-the-market program and the rest in mandatory convertible preferred shares.
Debt Pile Reaches $100 Billion
The new capital raise adds to Oracle’s already strained balance sheet. The company reported $100 billion in total debt during its fiscal second quarter, which ended in November. This debt mountain will generate interest expenses that drag on earnings for years to come.
Bernstein analysts adjusted their stance on February 9, trimming their price target from $339 to $313 while maintaining an Outperform rating. The firm estimates Oracle’s planned capital raise should cover funding needs through fiscal year 2028, but uncertainties remain about the company’s ability to generate meaningful returns from these investments.
Adding to investor anxiety, Oracle CEO Clayton Magouyrk sold 10,000 shares at an average price of $155.23, totaling $1.55 million. He still holds 134,030 shares following the transaction.
Market Share Erosion for OpenAI
OpenAI’s competitive position has also weakened. ChatGPT’s market share plummeted from 69.1% in January 2025 to just 45.3% in January 2026. That rapid decline raises questions about whether OpenAI can maintain dominance against rivals like Anthropic and Google’s Gemini.
Oracle also serves other major clients including TikTok, Nvidia, and xAI. However, the heavy concentration in OpenAI means Oracle’s fate is largely tied to one company’s ability to monetize generative AI at scale.
The stock currently trades at a forward price-to-earnings ratio of 20, below the Nasdaq 100 average of 27. But the discount may reflect legitimate concerns about execution risk rather than a buying opportunity.
Oracle reported fiscal second quarter results in November with solid cloud infrastructure revenue growth. The company’s database management and cloud computing products remain industry leaders. But investors are focused on whether the massive capital expenditures will translate into profitable growth or simply pile up as stranded assets on the balance sheet.
Bernstein estimates the $45-$50 billion capital raise will fund Oracle’s AI infrastructure ambitions through fiscal 2028, giving the company roughly two years to prove the strategy works.
