The gap between Oracle’s cloud ambitions and its balance-sheet constraints has rarely been starker. The stock now trades at roughly €123.20, down about 58 percent from its September 10 peak of €294.85 — a repricing that underscores just how dramatically the market’s enthusiasm for the company’s AI buildout has cooled. Over the past week alone, the shares have shed 9.1 percent.
At the heart of the selloff is a $165 billion artificial intelligence data-center project in New Mexico, codenamed “Jupiter,” that keeps hitting infrastructure snags. The latest setback emerged on August 14, when a regulatory filing from Transwestern Pipeline — a subsidiary of Energy Transfer — disclosed a six-month delay in constructing the Green-Chile gas pipeline that is supposed to power 2.5 gigawatts of fuel cells for the facility. The revised start date now points to February 2027 instead of August 2026. Oracle took to X the same day to insist the project remains on schedule, though the reassurance did little to calm investors, who sent the stock down between 3.7 and 5 percent.
A Contradictory Strategy: Layoffs Amid a Spending Spree
The operational friction comes as Oracle pursues an aggressive cost-cutting campaign that sits awkwardly alongside its capital-intensive expansion. Business Insider reports that the company is preparing another round of job cuts, with some teams facing double-digit percentage reductions. Managers have been asked to identify affected employees before the second fiscal quarter begins on September 1. This follows roughly 21,000 positions already eliminated in fiscal 2026 — a 13 percent reduction in headcount.
The contrast with Oracle’s investment trajectory is stark. According to SEC filings, capital expenditures surged 162 percent last fiscal year to $55.7 billion, while free cash flow sank to negative $23.7 billion. That cash burn has not gone unnoticed by the ratings agencies. In July, S&P Global downgraded Oracle’s credit rating from “BBB” to “BBB-“, citing rising business risks and weakening cash flow tied to the aggressive push into AI cloud infrastructure. The agency noted that cash outflows had exceeded $20 billion over four quarters and could reach $42 billion in the coming year.
Michael Burry, the Scion Asset Management founder known for his prescient bets against the housing market, has also taken a bearish stance. He disclosed shorting Oracle at $144.63 and adding to the position around $152, pointing to the negative free cash flow as the core of the valuation problem.
Should investors sell immediately? Or is it worth buying Oracle?
The Bull Case: A Record Backlog and New Partnerships
Yet the bears are not the only ones with a story to tell. Oracle ended its fourth fiscal quarter with a record $638 billion in remaining performance obligations — a 363 percent increase year over year — driven by binding multi-year contracts from marquee customers including OpenAI, Meta, and xAI. Management has reaffirmed its revenue guidance of $90 billion for the current fiscal year and raised its non-GAAP earnings-per-share forecast to $8.05, an 18 percent improvement.
Recent announcements add substance to the growth narrative. On August 13, Oracle expanded its long-term collaboration with Amazon Web Services to migrate customers onto Oracle AI Database@AWS, now available across 22 AWS regions. A partnership with Quantinuum will integrate the “Helios” quantum computer into Oracle Cloud Infrastructure, and a ten-year, $400 million contract with the U.S. Office of Personnel Management — delivered alongside CACI International — demonstrates continued federal demand. On the security front, the August patch update addressed 925 CVEs, including 154 critical vulnerabilities.
The analyst community remains split but not entirely negative. UBS’s Karl Keirstead trimmed his price target from $285 to $245 on August 6 while maintaining a “Buy” rating, and J.P. Morgan’s Samik Chatterjee reaffirmed his own “Buy” with a $200 target on August 17.
Funding the Ambition
To bridge the gap between its commitments and its cash generation, Oracle plans to raise roughly $40 billion this fiscal year through a combination of debt and equity, including a previously announced $20 billion share issuance. That financing burden — alongside the operational delays and workforce reductions — has created a market that appears genuinely uncertain about the company’s trajectory. With 30-day volatility at 62 percent and an RSI of 48.8, the stock is caught between those who see a generational infrastructure opportunity and those who see a balance sheet stretched to its limits.
The next quarterly results, expected between September 8 and 10, will offer the clearest signal yet on whether Oracle can reconcile its two competing identities: the AI infrastructure pioneer with an unrivaled order book, and the cash-hungry borrower navigating a high-stakes transition.
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