Oracle (ORCL) stock touched $119.89 on Thursday, its lowest point in over a year and more than 50% below its 52-week high of $345.72. The drop has erased roughly $213 billion from co-founder Larry Ellison’s personal fortune over the past ten months.
The stock is trading at levels last seen in April 2025.
The sell-off comes down to one core concern: Oracle is spending heavily on AI data centers, and investors aren’t sure the returns will come fast enough. Capital expenditures hit $21 billion in fiscal 2026, up from around $7 billion the year before.
Management has said it expects to spend more than $25 billion in fiscal 2027.
S&P Global Ratings cut Oracle’s credit rating to BBB-, just one notch above junk status. That means higher borrowing costs on top of an already expensive expansion plan.
CLSA initiated coverage with a Hold rating and a $145 price target, citing concerns about Oracle’s debt-funded AI cloud ambitions. The firm estimates Oracle may need up to $500 billion in capital to hit its 2030 goals.
Oracle also faces a possible requirement to provide more than $7 billion in collateral for a data center project in Wisconsin. The state’s power regulator upheld strict credit requirements to protect consumers from rising electricity costs.
Despite the pressure, Oracle’s business hasn’t fallen apart. Remaining performance obligations — essentially its contract backlog — reached a record $638 billion as of May 31, the end of fiscal 2026.
Demand for Oracle Cloud Infrastructure remains strong. The company continues signing large contracts and expanding capacity.
Oracle has also taken a partnership approach rather than going head-to-head with AWS, Azure, and Google Cloud. That strategy expands its addressable market without a direct war with the hyperscalers.
Guggenheim reiterated its Buy rating with a $400 price target following conversations with Oracle executives about the AI infrastructure build-out and data center timelines.
InvestingPro data shows a P/E ratio of 21.18 and a PEG ratio of 0.62, suggesting the stock may be undervalued relative to its growth prospects. The RSI also indicates the stock is in oversold territory.Oracle (ORCL) stock hit a 52-week low of $119.89, falling over 50% from its peak as AI spending and a credit downgrade shake investor confidence.
Twenty analysts have revised their earnings estimates upward for the upcoming period.
Oracle’s stock was down 4.35% on Thursday, trading around $120.24.
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