Oracle Shares Plunge as AI Spending Triggers Credit Downgrade

Oracle's stock has fallen more than 50% from its peak, erasing roughly $213 billion from co‑founder Larry Ellison’s net worth. The decline follows S&P Global Ratings' downgrade of Oracle’s long‑term credit rating to BBB‑, just one notch above junk status.

The downgrade reflects concerns over Oracle’s aggressive AI data‑center expansion, with capital expenditures rising to $21 billion in fiscal 2026 and projected to exceed $25 billion in fiscal 2027. The company’s remaining performance obligations stand at a record $638 billion, about half of which is tied to a single customer, OpenAI, highlighting concentration risk. While demand for Oracle Cloud Infrastructure remains strong and the backlog provides revenue visibility, the lower rating could raise borrowing costs and strain the firm's ability to fund its AI growth.

Analysts note that, despite the sell‑off, Oracle’s cloud business continues to grow rapidly and the firm maintains a unique partnership strategy with other major cloud providers, but investors remain wary of the financial sustainability of its AI‑focused spending.