Oracle wrapped up its worst week on Wall Street in 25 years as the stock plummeted 19% this week, dropping at least 2.6% each of the past five days — the steepest weekly decline since a 20% plunge in August 2001. Concerns continue to mount about the software company's debt load and whether its bet-the-house investment on artificial intelligence will pay off. The company is racing to open data centers alongside cloud giants Amazon, Microsoft and Google, but must raise record amounts of debt to fulfill its AI infrastructure commitment, primarily to OpenAI, creating balance sheet risk while focusing on lower-margin offerings.
Oracle Records $130 Billion Debt and Negative Free Cash Flow
Oracle was sitting on about $130 billion in debt at the end of May, with capital expenditures rising 162% to nearly $56 billion in the fiscal 2026 year. After the company reached a peak market cap of $900 billion in September, the stock has lost about 55% of its value.
Oracle recorded negative free cash flow of almost $24 billion in the latest fiscal year. This month, Oracle said that in fiscal 2027, it plans to raise $40 billion through debt and equity financing, including a $20 billion share sale announced earlier, after $43 billion in debt sales and $5 billion from equity issuance last fiscal year.
"We expect financing/leverage and the pace of equity issuance to remain the central investor debate near term, even as demand signals stay strong," Evercore analysts, who recommend buying the stock, wrote in a note on Wednesday.
Analysts Maintain Buy Ratings Despite Investor Concerns
According to FactSet, 71% of analysts recommend buying the stock, the highest percentage in 15 years. Like Evercore, most firms remain bullish on Oracle's prospects despite investors' growing concerns.
Oracle is facing multiple market headwinds. The iShares Expanded Tech-Software Sector Exchange-Traded Fund (IGV) is down 16% so far in 2026, while Oracle has fallen 24%.
Oracle Discloses 13% Headcount Reduction in Fiscal 2026
In its annual report last week, Oracle disclosed that headcount shrank 13% to 141,000 employees in fiscal 2026, with a notable pullback in sales and marketing.
Larry Ellison, Oracle's co-founder, was absent from the earnings call this month, leaving dual CEOs Clay Magouyrk and Mike Sicilia and recently appointed finance chief Hilary Maxson to answer questions. "Hilary has a tough life," Magouyrk said on the call.
Because of Oracle's retreating stock price, Ellison has been surpassed on the world's list of wealthiest people by Google co-founders Larry Page and Sergey Brin, Amazon founder Jeff Bezos and Michael Dell. Ellison is still worth over $200 billion.
Oracle Plans Data Centers in Michigan, New Mexico and Texas
Oracle is pushing forward with its buildout plans, targeting data centers in Michigan, New Mexico and Texas in 2027.
"As we pursue these opportunities, we'll remain focused on disciplined capital allocation, maintaining a strong balance sheet, and preserving our investment-grade credit rating," Maxson said on the earnings call this month.
FAQ
What caused Oracle's stock to drop 19% this week?
Concerns continue to mount about Oracle's debt load and whether its bet-the-house investment on artificial intelligence will pay off. The company is raising record amounts of debt to fulfill its AI infrastructure commitment, primarily to OpenAI, creating balance sheet risk while focusing on lower-margin offerings.
How much debt does Oracle currently have?
Oracle was sitting on about $130 billion in debt at the end of May. The company recorded negative free cash flow of almost $24 billion in the latest fiscal year and plans to raise $40 billion through debt and equity financing in fiscal 2027.
What percentage of analysts recommend buying Oracle stock?
According to FactSet, 71% of analysts recommend buying the stock, the highest percentage in 15 years, despite investors' growing concerns about the company's financial position.
