Oracle Stock Plummets 59% Amid AI Debt Concerns

Oracle Corporation saw its stock price decline 59% from its September peak, closing at approximately $142 on August 3, 2026. The downturn follows quarterly reports where high revenue growth and a 363% increase in remaining performance obligations were offset by severe financial instability.

The company is borrowing heavily to fund an AI cloud services expansion, resulting in negative free cash flow and capital expenditures that reached $55.7 billion in the most recent reported quarter. Investors are concerned by a $167 billion debt load and a heavy reliance on OpenAI, which Bank of America estimates accounts for over 50% of the company's backlog.

Credit risks have escalated as S&P Global Ratings downgraded the company to BBB- on July 9, and credit default swap spreads reached a record high on August 4. To stabilize its position, the company has cut 21,000 jobs and is pursuing capital-light partnerships. Despite these struggles, the United States Department of Defense signed a 10-year software contract with the company potentially worth $7 billion.