Oracle Stock Plummets Amid OpenAI Contract Concerns

Oracle Corporation is experiencing severe stock volatility, with its market capitalization falling below $500 billion after previously approaching $1 trillion. The company's stock price remains down approximately 57% from its peak as investors weigh strong growth against significant financial risks associated with its artificial intelligence transition.

For the fiscal 2026 fourth quarter, Oracle reported a 21% increase in total revenue, while its cloud segment grew by 39% to become the company's largest revenue source. However, the company carries a substantial debt burden of $129.5 billion as of May 31, 2026, following $55.7 billion in capital expenditures to build AI infrastructure. Unlike competitors such as Amazon, Alphabet, and Meta, Oracle relies more heavily on external financing for its AI spending.

Investor anxiety centers on a $638 billion backlog in remaining performance obligations, of which over $300 billion stems from a multiyear deal with OpenAI. Analysts have questioned whether OpenAI can meet a $60 billion annual payment commitment over five years, noting that the AI developer reported a $38.5 billion net loss in 2025. Oracle has denied reports that OpenAI-related data center projects will be delayed, maintaining that delivery will occur on time in 2027.

Oracle is scheduled to report earnings next week. Despite the volatility, Wall Street analysts remain largely optimistic, with 42 buy ratings and expectations of approximately 28% constant-currency revenue growth driven by Oracle Cloud Infrastructure.