Oracle's AI Push Drains Cash, Sending Stock 59% Lower Since September
Oracle's shares have slumped 59% from their September peak as its expensive AI cloud build-out fuels negative cash flow, leading analysts to advise against buying the stock in the latter half of 2026.
Oracle's market value has dropped 59% since its September high as its aggressive AI cloud expansion consumes cash faster than competitors like Amazon and Microsoft can turn into profit. Recent quarterly results showed revenue roughly meeting forecasts but highlighted negative free-cash flow ranging from $10 billion to $23.7 billion, a 162% jump in capital expenditures and a fresh $40 billion debt-equity raise. The firm's backlog is dominated by OpenAI, accounting for over 50% of future revenue, raising concerns about customer concentration.
Credit rating agencies have cut Oracle to BBB- and flagged high leverage and long-term data-center lease commitments as risks. Analysts' price targets vary widely, from $240 to $325, with some emphasizing potential upside if capital-light partnership deals and non-AI revenue streams succeed, yet a record-high credit-default swap spread underscores the stock's vulnerability for the second half of 2026.
Why it matters
Investors must weigh Oracle's soaring AI costs against its weakening credit profile and uncertain cash flow.
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