Why Shares of Oracle Are Getting Crushed This Week
Key Points
Oracle's partner in a $300 billion deal, OpenAI, is projected not to be cash generative until 2030.
The bond markets are growing stressed about the company's future financing needs.
This appears to be an Oracle problem rather than an industry-wide issue.
- 10 stocks we like better than Oracle ›
As of the time of writing, Oracle (NYSE: ORCL) stock is down 19.2% over the last five trading days. The move illustrates growing skepticism over the company's investment in artificial intelligence (AI).
What happened to Oracle
The bond markets are growing concerned with Oracle's ability to finance its AI investments, and not least its $300 billion data center deal with OpenAI. The AI company is committed to renting servers, while Oracle needs to build out the IT infrastructure and lease the data center "shells." As such, its expenditures are focused on GPUs, networking equipment, and power infrastructure, while taking on leases for the land and buildings.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
The rise in Oracle's corporate bond yields and the spike in credit default swap (CDS) spreads (a form of insurance against a bond's default), as discussed previously, are signs of stress in the bond markets.
The market is concerned about Oracle's financing situation, with the Wall Street consensus calling for cash outflows of $23.8 billion, $21 billion, and $14.2 billion, respectively, in its financial years from 2026 to 2028. Moreover, there are question marks surrounding OpenAI's future profitability, with Deutsche Bank forecasting a cumulative cash burn of $143 billion for OpenAI from 2024 to 2029.
Oracle problem not an AI problem?
While it's easy to conclude that these fears could and should spill over to the broader AI market, it's worth noting that a peer like Alphabet (NASDAQ: GOOG), (NASDAQ: GOOGL) is in a different boat for two reasons.
Image source: Getty Images.
First, despite its substantial ramp in capital spending (the market expects its capital spending to increase from $90.5 billion in 2025 to $131 billion in 2027) , it's still expected to generate a cumulative $225 billion in free cash flow from 2025 to 2028.
Second, Alphabet is largely spending to support its own computing power needs, and ultimately its own business. It can adjust its spending in line with its objectives.
As such, the decline in Oracle's shares appears to be more of an Oracle-specific issue than a broader market one.
Should you buy stock in Oracle right now?
Before you buy stock in Oracle, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Oracle wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $511,196!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,047,897!*
Now, it’s worth noting Stock Advisor’s total average return is 951% — a market-crushing outperformance compared to 192% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of December 18, 2025.
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Oracle. The Motley Fool has a disclosure policy.
Recommended Articles
