Oracle stock heads for worst quarter since 2001 amid AI spending doubts

Shares of Oracle (ORCL) are on track for their steepest quarterly decline since 2001 as investors question the company’s artificial intelligence expansion plans under new leadership.

Oracle’s stock is down about 30% for the quarter, with four trading days remaining. The last comparable drop came during the dot-com bust, when the shares fell nearly 34% in the third quarter of 2001.

The slide follows the appointment three months ago of co-CEOs Clay Magouyrk and Mike Sicilia. Their tenure began amid heightened expectations tied to Oracle’s role in building AI infrastructure.

Investor concern centers on Oracle’s ability to expand server capacity for OpenAI, the operator of ChatGPT. OpenAI agreed in September to spend more than $300 billion with Oracle on data center services.

Earlier this month, Oracle reported quarterly revenue and free cash flow that fell short of estimates. On the earnings call, finance chief Doug Kehring outlined plans for $50 billion in fiscal 2026 capital expenditures, up sharply from prior guidance, alongside $248 billion in leases to expand cloud capacity.

Funding those plans will require substantial borrowing. In September, Oracle raised $18 billion through a large bond sale. Kehring said the company aims to maintain its investment-grade credit rating, even as credit default swap prices have risen.

Analysts at D.A. Davidson said they were concerned about Oracle’s ability to meet its obligations without changes to the OpenAI contract. Oracle declined to comment.

Optimism had surged earlier in the fall. About two weeks before the leadership transition from Safra Catz, Oracle disclosed a 359% jump in revenue backlog, driven largely by OpenAI. Following reports of the deal, the stock rose nearly 36% and reached an intraday high of $345.72.

The shares have since fallen about 43%, closing Wednesday at $197.49. They rose briefly last week after TikTok agreed to sell part of its U.S. business to Oracle and other investors.

Some investors remain focused on founder Larry Ellison, who continues to play a central role at the company. Others are watching whether Oracle can deliver on its AI build-out, which relies heavily on hardware from Nvidia.

Analysts surveyed by FactSet expect margins to decline as AI infrastructure grows. The success of those investments is expected to shape Oracle’s standing in a cloud market dominated by rivals such as Amazon, Microsoft and Google.