TLDR
- Oracle stock fell 19% this week — its steepest weekly drop since August 2001
- The stock has shed roughly 55% of its value since peaking near a $900 billion market cap last September
- Capital expenditures surged 162% to nearly $56 billion in fiscal year 2026
- Oracle carried ~$130 billion in debt at end of May, with nearly $24 billion in negative free cash flow
- 71% of analysts still rate ORCL a Buy — the highest level in 15 years
Oracle just closed out its worst week on Wall Street in 25 years. The stock fell 19% across five consecutive sessions, with each day down at least 2.6%. You have to go back to August 2001, the depths of the dot-com crash, to find a worse stretch.
This isn’t a one-week story. Since Oracle hit a peak market cap of roughly $900 billion last September, the stock has lost about 55% of its value.
The driver behind both the long decline and this week’s sharp drop is the same: the cost of Oracle’s AI ambitions.
Oracle has staked a major position in AI infrastructure, primarily through its commitment to OpenAI as part of the Stargate project. Building that out requires an enormous amount of capital — and right now, it’s coming at a steep price.
The Numbers Are Hard to Ignore
By the end of May, Oracle was carrying about $130 billion in debt. Capital expenditures jumped 162% in fiscal year 2026, reaching nearly $56 billion.
Free cash flow came in at almost negative $24 billion for the year.
To keep funding the buildout, Oracle plans to raise another $40 billion in fiscal 2027 through a mix of debt and equity financing. That follows $43 billion in debt sales and $5 billion in equity issuance the year before.
The core tension is straightforward: Oracle is competing with Amazon, Microsoft, and Google to build AI data center infrastructure — but unlike those companies, it can’t sell a full technology stack. That limits its margins on a very expensive bet.
Wall Street Is Still Mostly Bullish
Despite the selloff, analyst sentiment hasn’t cracked. According to FactSet, 71% of analysts covering ORCL have a Buy rating — the highest share in 15 years. The consensus is a Strong Buy, based on 28 Buy ratings, five Holds, and zero Sells over the past three months.
The average price target sits at $263.86, implying more than 77% upside from current levels.
Evercore, which maintains a Buy rating, summed up the situation in a note Wednesday: “We expect financing/leverage and the pace of equity issuance to remain the central investor debate near term, even as demand signals stay strong.”
That gap between analyst conviction and investor behavior is the story heading into next week.
On a personal note, Oracle co-founder Larry Ellison has also slipped on the global wealth rankings this week, falling behind Google’s co-founders, Jeff Bezos, and Michael Dell.
🚨 Our JUNE Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for June, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
