Oracle’s turbulent share price performance in 2025 has come to symbolize a broader debate gripping global markets: whether artificial intelligence represents a once-in-a-generation growth opportunity or the early stages of an overheated investment cycle. The sharp rise and subsequent pullback in Oracle stock has placed the company at the center of growing concerns over leverage, execution risk, and the true pace of AI monetization.
AI optimism lifts Oracle shares
Oracle entered 2025 on a wave of optimism after announcing a joint venture with OpenAI and SoftBank, dubbed Stargate, committing up to $500 billion toward US-based AI infrastructure. The deal was unveiled at the White House in January by President Donald Trump alongside executives from the participating firms, including Oracle chairman Larry Ellison, triggering a strong rally in the stock.
Investor enthusiasm was reinforced by Oracle’s quarterly earnings updates in June and September, as the company highlighted AI-driven demand that could push its cloud segment revenue toward $166 billion by 2030. The rally briefly propelled Ellison to the top of global wealth rankings, underscoring the scale of market optimism surrounding Oracle’s AI ambitions.
Debt concerns replace euphoria
Sentiment shifted sharply in the second half of the year as investors began to question how Big Tech is financing massive AI investments. Rising debt issuance across the sector, combined with uncertainty over the timing and scale of AI returns, sparked renewed scrutiny of balance sheets.
Oracle shares have fallen more than 40% from their September peak, although the stock remains up around 15% year to date. Analysts point to a growing market for credit default swaps tied to major technology firms as evidence of mounting credit concerns. S&P Global Market Intelligence analyst Gavan Nolan noted that even the highest-rated technology names are now seeing CDS activity, reflecting rising investor caution.
Oracle has emerged as a focal point of these worries. The company issued nearly $26 billion in bonds during 2025, according to Bloomberg data, while its five-year CDS spreads have widened to their highest levels since 2009. Total debt climbed 40% year-on-year to $124 billion, alongside a sharp increase in cash outflows.
Balance sheet pressure and execution risk
Further unsettling investors was Oracle’s disclosure of $248 billion in additional lease commitments, primarily related to data centers, set to begin between fiscal 2026 and 2028 and not reflected on its balance sheet. Analysts argue this leaves the company with limited room for error.
Morningstar analyst Luke Yang said Oracle’s free cash flow profile is more constrained than that of other hyperscalers, warning that financing options are not unlimited. The key challenge, he added, is how quickly Oracle can generate meaningful cash flows from its expanding data center footprint, particularly as customers themselves are still figuring out how to monetize AI.
OpenAI exposure under scrutiny
Oracle’s partnership with OpenAI has become another pressure point. OpenAI accounts for the majority of Oracle’s remaining performance obligations, estimated at more than $300 billion. When this concentration was disclosed, Oracle shares slid as investors questioned OpenAI’s ability to meet ambitious revenue targets amid intensifying competition from rivals such as Google.
OpenAI’s own cost commitments, estimated to reach $1.4 trillion over the next eight years due to infrastructure deals with firms including Nvidia, AMD, Broadcom, and Oracle, have further amplified investor unease about the sustainability of the AI spending cycle.
Investor skepticism grows
Market participants are increasingly questioning whether AI demand will materialize at the scale projected by technology companies. Hedgeye Risk Management analyst Andrew Freedman said concerns center on whether returns will justify the level of upfront investment required today.
Additional uncertainty has surrounded Oracle’s data center expansion timeline. Media reports have suggested delays to projects linked to OpenAI, though Oracle has denied any setbacks and said alternative financing partners have been secured where needed.
These challenges have emerged alongside a leadership transition, with co-CEOs Clay Magouyrk and Mike Sicilia taking over in late September as longtime chief executive Safra Catz moved to the board.
Despite the skepticism, some long-term investors remain confident. Tech analyst and Oracle investor Cory Johnson said the company’s history of execution supports the bullish case, arguing that Oracle has repeatedly delivered on strategic promises over time. Whether that track record can hold amid the scale and risk of the AI buildout remains one of the market’s defining questions heading into 2026.
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