Oracle shares fell 3.1% on Tuesday, extending a five-session slide of more than 14% and leaving the stock around $144.83, as investors weighed renewed concerns about the artificial-intelligence spending cycle, higher borrowing costs and the company’s close ties to OpenAI.
The decline came even as chip stocks rebounded from Monday’s selloff. Pressure has spread from concerns about AI model safety after Anthropic CEO Dario Amodei called for slowing frontier AI development. Analysts including Patrick Walravens of Citizens said investors fear more measured spending by frontier labs and possible AI regulation, which could reduce demand for AI computing power.
Oracle is especially exposed because it has borrowed heavily to finance cloud capacity for OpenAI. At the end of the August quarter, Oracle reported remaining performance obligations of $664 billion and net debt of about $88 billion. DA Davidson analyst Gil Luria said Oracle has the backlog of a hyperscaler but the risk profile of a neocloud: “If AI slows down, at some point that could reduce the demand for AI compute and the most impacted would be neoclouds, especially ones with leverage.”
Rising Treasury yields added to financing pressure, with the 10-year yield near its highest since 2007. Oracle plans to raise $40 billion through debt and equity in fiscal 2027 and posted negative free cash flow of $5.4 billion in the latest quarter. The company also began a fresh round of layoffs, telling employees the redundancies were part of a broader organizational change.
Still, Oracle’s underlying business is growing quickly. It reported fiscal first-quarter non-GAAP EPS of $1.92, up nearly 30% year over year, and is guiding for revenue above $90 billion in fiscal 2027, a 34% increase. Oracle Cloud Infrastructure revenue rose 120% year over year in constant currency. Mizuho reiterated an Outperform rating and a $320 price target, while Wall Street’s consensus price target is about $251.77, implying roughly 79% upside. Barclays, UBS, DA Davidson and Bernstein also maintained positive ratings, though some brokers trimmed targets on margin concerns.
