Oracle, a US-listed tech giant The stock price continued to decline.
On December 17th local time, Oracle (ORCL.US) continued its recent downward trend, closing down 5.41% at $178.45 per share. This sharp drop not only wiped out almost all of Oracle's gains for the year, but analysts also said that the "AI concept halo has faded."
Oracle's stock performance in 2025 was nothing short of a rollercoaster: at the beginning of the year, it became a star stock thanks to the AI concept, rising from $170 to $250, and further surging to an all-time high of $345 after the release of its September earnings report. Founder Larry Ellison even briefly topped the list of the world's richest people. However, as of the close of trading on the 17th, the stock price had fallen by nearly 50% from its September high, almost halving.
According to foreign media analysis, the recent sharp drop in Oracle's stock price is mainly due to the fact that the market has not yet digested the negative earnings news, particularly regarding data centers . The financial crisis has added even more uncertainty.
On December 17, foreign media reported that Blue Owl Capital, Oracle's largest data center partner, has decided to no longer provide funding for its $10 billion data center project in Michigan.
Blue Owl had been in talks with lenders and Oracle about investing in a 1-gigawatt data center in Salin, Michigan, which was planned to provide services for OpenAI. Sources familiar with the matter said the talks stemmed from concerns about Oracle's rising debt levels and its position in artificial intelligence. Due to the enormous expenditures in the field, these plans ultimately failed.
Although Oracle quickly denied the report, the report cited sources familiar with the matter as saying that negotiations had stalled, and the market had strong doubts about the stability of its funding chain for its massive AI infrastructure investment, further pushing down the stock price.
In September of this year, Oracle announced that its remaining performance obligations (RPOs, contracts signed by customers but not yet recognized as revenue) had reached $455 billion. In its latest financial report, this figure exceeded $500 billion. The prevailing view on Wall Street now is that contracts not yet recognized as revenue imply a degree of uncertainty.
The Wall Street Journal bluntly stated that investors are increasingly uneasy about the cyclical nature of many deals in the AI industry and are skeptical of the massive growth in RPOs. They are particularly concerned about OpenAI's ability to fulfill its huge future commitments. Of the massive RPOs, approximately $300 billion comes from OpenAI, but analysts worry that even if Oracle invests heavily in building data centers, it may not necessarily receive that money. "Given that OpenAI is unlikely to deliver on its $300 billion commitment, we believe the best course of action for Oracle is to proactively restructure the contract to deploy capital more responsibly, rather than pretending to have a $523 billion RPO," wrote Jill Luria, an analyst at DA Davidson.
The report mentioned that it's uncertain whether OpenAI can pay the $300 billion. But the question is, how much uncertainty is there? This is precisely the difference between confirming the contract amount as a Resource Interest Rate (RPO).
In terms of performance, Oracle released its second fiscal quarter results for the period ending November 30, 2026, after the US stock market closed on December 10 local time. The company reported revenue of $16.06 billion, a year-on-year increase of 14%, lower than the market expectation of $16.21 billion; net profit was $6.14 billion, a year-on-year increase of 95%; non-GAAP adjusted earnings per share (EPS) was $2.26, higher than the market expectation of $1.64; and the operating profit margin was 42%.
In terms of capital expenditures, Oracle's capital expenditures reached $12 billion in the last fiscal quarter. The company expects full-year capital expenditures for fiscal year 2026 to reach approximately $50 billion, a figure significantly higher than the $35 billion it projected at the end of the first fiscal quarter. In fiscal year 2025, the company's full-year capital expenditures were $21.2 billion.
Oracle has been aggressively investing in infrastructure this year to solidify its position in the AI industry. While this has boosted revenue and order backlog, the company's expanding debt and the potential risks of a slowdown in growth have also heightened investor concerns.
Oracle reportedly issued $18 billion in new debt in September, bringing its total debt to $111 billion in November, up from $89 billion in the same period last year. The company also has $248 billion in lease obligations, primarily for data center hardware and site leases.
Several internationally renowned institutions have announced downward revisions to Oracle's target price, with analysts generally expressing concern about its short-term pressure. Analysts are particularly focused on whether Oracle's massive investment in AI infrastructure can translate into sustainable profit growth. Some institutions believe its remaining performance obligations are growing rapidly and its cloud infrastructure business still has growth potential; however, many more are concerned about high capital expenditures and debt pressure, stating that there is a risk of further short-term pullback.
(Source: The Paper)
