Oracle's Stock Plummets 19% Amid Debt Concerns and AI Investment Doubts

Oracle just wrapped up its worst week on Wall Street in 25 years as 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 stock plummeted 19% this week, dropping at least 2.6% each of the past five days. It's the steepest weekly drop since a 20% plunge in August 2001, during the depths of the dot-com bust.

The past nine months have been brutal for Oracle investors. After the company reached a peak market cap of $900 billion in September, on budding enthusiasm about Oracle's AI customers, the stock has lost about 55% of its value. The crux of the problem is that for Oracle to fulfill its AI infrastructure commitment, primarily to OpenAI, it's having to raise record amounts of debt, creating balance sheet risk while focusing on lower-margin offerings.

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 2026 fiscal year. It's racing to open data centers alongside cloud giants Amazon , Microsoft and Google , but without being able to sell a full technology stack like its rivals.

Oracle recorded negative free cash flow of almost $24 billion in the latest fiscal year. Earlier 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.

Like Evercore, most firms remain bullish on Oracle's prospects despite investors' growing concerns. According to FactSet, 71% of analysts recommend buying the stock, the highest percentage in 15 years.

Oracle didn't respond to a request for comment.

Oracle is facing multiple market headwinds. In addition to its hefty capital requirements, the company is trading lower from the selloff in software names as investors worry that AI models will replace many of their products' capabilities. The iShares Expanded Tech-Software Sector Exchange-Traded Fund (IGV) is down 16% so far in 2026, while Oracle has fallen 24%.

In its annual report last week, Oracle disclosed that head count 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 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.