Story perspectives

Oracle Shares Plunge 19% as AI Spending Sparks Debt Concerns

6/27/2026

Summary

Oracle Stock Plunge

Oracle's stock fell 19% this week, its worst week in 25 years amid AI spending worries.
The company, carrying about $130 billion in debt, saw capital expenditures jump 162% to nearly $56 billion in fiscal 2026, generating negative free cash flow of almost $24 billion.
Management aims to raise $40 billion in fiscal 2027—including a $20 billion share sale—while Larry Ellison’s net worth fell over $45.4 billion this year to just over $202 billion after a 57% stock decline.

Summary

Oracle Slides

Oracle Corporation shares fell 21% this month, leaving the stock about 53% below its 52-week high.
The stock trades at a P/E of 27.9 and a P/S of 7.1, above the S&P 500 averages of 24.4 and 3.3.
Options implied volatility sits at 55, placing Oracle in the 78th percentile of its one-year range.
Analysts say the stock is entering AI’s “second wave,” shifting focus from infrastructure to implementation.

Summary

Oracle Projects Growth

Oracle projected fiscal 2027 revenue of $90 billion and non-GAAP EPS growth of 18%.
Oracle expects first-quarter cloud revenue to rise 58%-64%, indicating rapid cloud expansion.
Oracle said it will not issue new debt in calendar 2026 despite a $130 billion debt load.
Google raised its 2026 capital expenditure to $180-$190 billion after Google Cloud revenue grew 63% in the latest quarter.

History

Historical Context

During the 2001 telecom crash, Cisco Systems saw its stock plunge over 89% as the industry’s $500 billion debt-fueled expansion after the 1996 Telecommunications Act collapsed, leaving investors to recover just over 20% of bonds. Oracle’s 2024 AI-driven spending surge echoes that overextension, warning today’s cloud giants of similar debt and share-price risks.

1 of 4

Oracle Stock Plunge

Oracle's stock fell 19% this week, its worst week in 25 years amid AI spending worries.
The company, carrying about $130 billion in debt, saw capital expenditures jump 162% to nearly $56 billion in fiscal 2026, generating negative free cash flow of almost $24 billion.
Management aims to raise $40 billion in fiscal 2027—including a $20 billion share sale—while Larry Ellison’s net worth fell over $45.4 billion this year to just over $202 billion after a 57% stock decline.

1 / 4