Oracle Shares Drop 50% Amid Massive AI Infrastructure Spending

Shares of Oracle Corporation have declined approximately 50% over the past year. Investors are expressing concern over the company's aggressive capital expenditure spending, even as the firm reports surging revenue and a significant backlog of work.

The company currently holds $664 billion in remaining performance obligations, which consist primarily of non-cancelable contracts for artificial intelligence data centers. To finance this infrastructure buildout, Oracle has utilized upfront payments, required customers to purchase their own hardware, and sold $20 billion in stock through an at-the-market equity program.

Oracle forecasts capital expenditure between $90 billion and $95 billion for the year, with net cash capex expected to be $70 billion or below. Despite these projections, the company's financial position remains strained. Oracle ended the last quarter with $125.3 billion in debt against $37.1 billion in cash and marketable securities, resulting in a free cash flow outflow of $5.5 billion for the quarter.