Oracle Shares Crash 65% From Peak: What Triggered the Sharp AI Stock Selloff?

Oracle Corporation (NYSE: ORCL) has lost nearly 65% of its value from its record high, making it one of the biggest reversals among AI-linked technology stocks. While the company continues to report strong cloud growth and record contract wins, investors have shifted their attention from AI optimism to concerns over capital expenditure, rising debt, cash flow pressure, and execution risks.

The stock had surged over the past year on expectations that Oracle would emerge as a major beneficiary of the artificial intelligence boom through its Oracle Cloud Infrastructure (OCI) business. However, as AI investments become increasingly capital-intensive, Wall Street is demanding proof that these massive investments can generate sustainable long-term returns.

Why Oracle Shares Have Fallen 65%

The sharp decline in Oracle shares is not due to weak business performance. Instead, investors are reassessing whether the company can convert its massive AI investments into profitable and sustainable cash flows.

Oracle has significantly expanded its cloud infrastructure to support growing demand for AI model training, inference workloads and enterprise cloud computing. While demand remains strong, the enormous cost of building data centres has become a major concern for investors.

The market is now focusing less on future AI potential and more on free cash flow, debt levels, profitability and return on investment.

Oracle's Cloud Business Continues to Grow

Despite the stock correction, Oracle delivered one of its strongest financial performances in recent years.

The company reported 93% growth in Oracle Cloud Infrastructure (OCI) revenue during its latest quarter, reflecting rising enterprise demand for AI computing capacity. Oracle also disclosed that its Remaining Performance Obligations (RPO) reached $638 billion, representing contracted future revenue that is yet to be recognized.

Oracle Cloud Highlights

Particular	Details
OCI Revenue Growth	93% YoY
Remaining Performance Obligations (RPO)	$638 billion
Key Growth Driver	AI Cloud Infrastructure
Focus Areas	AI Training, AI Inference, Enterprise Cloud

The growing backlog highlights strong demand from enterprises building AI applications and deploying large-scale cloud infrastructure.

Rising AI Spending Raises Investor Concerns

While Oracle's cloud business continues to expand rapidly, investors are increasingly worried about the amount of capital required to support this growth.

The company spent approximately $55.66 billion in capital expenditure during FY26, exceeding its earlier spending target as it accelerated investments in AI data centres, computing infrastructure, networking equipment and advanced chips.

Oracle has also indicated that it expects to raise additional debt in 2027 to support future expansion, increasing concerns over leverage and balance sheet strength.

Key Financial Concerns

Factor	Investor Concern
Capital Expenditure	Higher infrastructure spending
Debt	Additional borrowing planned
Cash Flow	Delayed returns on investments
Execution Risk	Converting backlog into revenue

Investors now want evidence that these investments will generate higher profitability rather than simply stronger revenue growth.

Oracle's AI Strategy Faces Higher Expectations

Oracle has transformed itself from a traditional database software company into a major AI cloud infrastructure provider.

The company is now competing more aggressively with Amazon Web Services (AWS), Microsoft Azure and Google Cloud by offering high-performance cloud computing for artificial intelligence workloads.

This strategy initially attracted strong investor interest, helping Oracle become one of the biggest beneficiaries of the global AI infrastructure boom. However, the market has now become more selective, rewarding companies that can balance growth with profitability.

Customer Concentration and Credit Risks

Another concern weighing on Oracle shares is customer concentration.

Some analysts believe a significant portion of Oracle's future cloud revenue could be linked to large AI customers, particularly OpenAI. While long-term contracts strengthen revenue visibility, investors generally prefer a more diversified customer base to reduce dependence on a handful of clients.

At the same time, concerns around rising infrastructure spending have also affected Oracle's credit outlook, with higher borrowing requirements adding pressure on the company's balance sheet.

AI Stocks Enter a New Phase

Oracle's correction reflects a broader shift across global AI stocks.

Over the past year, investors rewarded companies involved in AI infrastructure almost regardless of valuation. That trend has changed as markets increasingly focus on earnings quality, cash generation, capital efficiency and return on invested capital.

Rather than simply rewarding companies investing heavily in AI, investors now want proof that these investments can deliver meaningful long-term profits.

What Investors Should Watch Next

Going forward, Oracle's performance will depend less on AI demand and more on how efficiently it executes its expansion strategy.

Investors will closely monitor capital expenditure, debt levels, free cash flow generation, OCI revenue growth and the pace at which the company's large backlog converts into recognized revenue.

If Oracle demonstrates stronger profitability while maintaining rapid cloud growth, investor confidence could gradually improve despite recent volatility.

Company Overview

Oracle Corporation is one of the world's largest enterprise software and cloud computing companies, providing database software, enterprise applications, cloud infrastructure and AI-powered technology solutions to businesses worldwide. Through Oracle Cloud Infrastructure (OCI), the company has become a major player in the global AI infrastructure market, competing with leading hyperscale cloud providers.

1. Why have Oracle shares fallen nearly 65%?

Oracle shares have declined as investors worry about rising AI infrastructure spending, higher debt, capital expenditure and execution risks despite strong cloud demand.

2. Is Oracle's cloud business still growing?

Yes. Oracle reported 93% year-on-year growth in Oracle Cloud Infrastructure (OCI) revenue and disclosed $638 billion in contracted future revenue.

3. Why is Oracle spending so much on AI?

The company is investing heavily in AI data centres, cloud infrastructure and computing capacity to meet growing enterprise demand for artificial intelligence services.

4. What are investors concerned about?

The primary concerns include high capital expenditure, increasing debt, customer concentration, free cash flow generation and long-term profitability.

5. Can Oracle recover from the recent correction?

Oracle's future performance will largely depend on its ability to convert strong cloud demand into sustainable earnings while managing capital spending and maintaining a healthy balance sheet.