Oracle Corporation (ORCL) shares touched $119.89 on Thursday, marking their lowest level in over a year and representing a decline of more than 50% from the 52-week high of $345.72. The stock was trading near $120.24 at the session, down 4.35% on the day. Prices have not been this low since April 2025.

The prolonged sell-off has erased approximately $213 billion from the personal fortune of co-founder Larry Ellison over the past ten months.

The downturn centers on a single overriding concern among investors: Oracle is committing unprecedented capital to AI data center infrastructure, and the market remains uncertain whether the returns will materialize quickly enough to justify the expenditure. Oracle's buildout is part of a broader AI infrastructure race in which the largest technology companies — including Microsoft, Alphabet, Meta, and Amazon — have each announced annual capital expenditures exceeding $50 billion, intensifying competition for data center capacity, power supply, and specialized chips.

Capital expenditures reached $21 billion in fiscal year 2026, a sharp increase from approximately $7 billion the prior year. Management has indicated that spending will exceed $25 billion in fiscal 2027.

Credit Rating Downgrade Compounds Pressure

S&P Global Ratings downgraded Oracle's credit rating to BBB-, placing it just one notch above speculative-grade — or junk — status. At that level, even a modest further deterioration could trigger forced selling by institutional investors whose mandates require investment-grade holdings. The cut is expected to result in higher borrowing costs, adding financial strain to an already aggressive expansion program.

CLSA initiated coverage of Oracle with a Hold rating and a $145 price target, citing concerns about the company's debt-funded AI cloud strategy. The firm estimates that Oracle could require as much as $500 billion in total capital to achieve its 2030 objectives.

Oracle also faces a potential obligation to post more than $7 billion in collateral for a data center project in Wisconsin. The state's power regulator upheld stringent credit requirements designed to shield consumers from rising electricity costs.

Bullish Indicators Persist

Despite the headwinds, Oracle's underlying business performance remains robust. Remaining performance obligations — the company's contracted revenue backlog — climbed to a record $638 billion as of May 31, 2026, the close of fiscal 2026. However, RPO represents signed but not yet recognized revenue; converting that backlog into reported revenue depends on Oracle's ability to bring data center capacity online at the pace its contracts require.

Demand for Oracle Cloud Infrastructure continues to run strong, with the company consistently securing large contracts and expanding its operational capacity.

Oracle has pursued a partnership-oriented strategy rather than competing directly with hyperscale cloud providers such as Amazon Web Services, Microsoft Azure, and Google Cloud. This approach broadens the company's addressable market without engaging in direct confrontation with the dominant platform providers.

Guggenheim reaffirmed its Buy rating on Oracle with a $400 price target, following discussions with company executives regarding the AI infrastructure build-out and data center delivery timelines.

Twenty analysts have revised their earnings estimates upward for the upcoming reporting period.

According to InvestingPro data, Oracle currently trades at a price-to-earnings ratio of 21.18 and a price-to-earnings-to-growth ratio of 0.62. The stock's relative strength index has entered oversold territory.