Oracle Plunges 19% in Worst Week Since 2001 Dot-Com
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- Oracle stock fell 19% this week, dropping at least 2.6% each of the past five sessions, marking the steepest weekly decline since a 20% plunge in August 2001 during the dot-com bust.
- Oracle has lost roughly 55% of its value since peaking at a $900 billion market cap in September, with its AI infrastructure commitment — primarily to OpenAI — driving record debt accumulation.
- Oracle carried about $130 billion in debt at the end of May, with capital expenditures surging 162% to nearly $56 billion in fiscal 2026 and negative free cash flow of approximately $24 billion.
- Oracle plans to raise $40 billion through debt and equity financing in fiscal 2027, following $43 billion in debt sales and $5 billion in equity issuance in the prior fiscal year.
- Evercore analysts, who rate the stock a buy, said financing and the pace of equity issuance will remain the "central investor debate" near term even as demand signals stay strong; 71% of analysts recommend buying, the highest in 15 years.
- Oracle disclosed headcount shrank 13% to 141,000 employees in fiscal 2026, with a notable pullback in sales and marketing, while co-founder Larry Ellison was absent from the earnings call.
- The iShares Expanded Tech-Software Sector ETF (IGV) is down 16% year-to-date and Oracle has fallen 24%, reflecting broader investor fears that AI models will replace traditional software products.
Why it matters: Oracle's roughly $130 billion debt load and 162% surge in capital expenditures underscore the extreme cost of chasing AI infrastructure contracts against AWS, Microsoft, and Google. With negative free cash flow of about $24 billion and another $40 billion raise planned for fiscal 2027, Oracle's investment-grade credit rating and AI demand from OpenAI are now the two hinges on which the stock trades.
