Oracle's 93% Cloud Revenue Surge Fails to Halt 36% Monthly Stock Rout Amid $95 Billion Capex Blitz
Published on 07/05/2026 at 16:07 | Redaktion boerse-global.de
Oracle delivered a blockbuster fourth quarter, with cloud revenue rocketing 93% higher and total sales hitting $19.2 billion — a 21% year-on-year jump. Yet the company's shares have lost more than half their value since September 2025, shedding 36% in the past 30 days alone. The disconnect between stellar operational metrics and brutal price action has become the defining narrative for this legacy software giant as it bets the bank on artificial intelligence infrastructure.
At Friday's close, the equity eked out a 2.83% gain to €126.30, but the broader picture remains grim. The stock now trades about 21% below its 50-day moving average and 25% under the 200-day line. The 14-day relative strength index sits at 30.4, deep in oversold territory. Since hitting a 52-week high of €280.70 in September 2025, the share price has been cut almost in half. On a year-to-date basis, the loss stands at 37.49%.
The trouble lies not in demand — Oracle's pipeline is stuffed with a record $638 billion in remaining performance obligations — but in the cost of fulfilling those orders. Over half of that staggering backlog stems from a single five-year contract with OpenAI, the AI lab that posted a certified net loss of $38.5 billion in 2025. Oracle itself recently warned in regulatory filings about potential customer defaults, a pointed reminder that big contracts do not guarantee big cash flows.
To keep pace with the explosion in AI computing demand, management plans capital expenditures of roughly $95 billion in fiscal 2027. That figure shatters any historical precedent for the company and forces it to raise additional capital. Reports indicate Oracle must secure another $40 billion in financing, piling onto a balance sheet that already carries more than $100 billion in debt. Rivals like Microsoft can fund their cloud expansions from enormous cash reserves; Oracle is building on credit. The result is an annualized volatility of 71% and a free cash flow that has turned negative.
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The margin squeeze from this infrastructure splurge is already visible. Brute-force spending on new data centres depressed gross margins in the latest quarter, and management's outlook suggests the pain will persist. For fiscal 2027, Oracle projects revenue growth of 34% at constant currency, with the cloud segment expanding between 58% and 64% in the first quarter alone. But as long as capital outlays remain elevated, margins will stay under pressure.
Oracle is trying to pivot toward higher-margin software rather than simply renting out raw compute. In late June 2026, it launched four new Fusion Agentic Applications that embed autonomous AI agents into supply chain and manufacturing workflows. A few days later came Oracle Manager Edge, an AI coaching tool for human resources. These products aim to capture more value from the AI boom, yet they represent a tiny fraction of revenue relative to the infrastructure build-out.
Wall Street remains split. Some houses have trimmed their price targets, citing the heavy investment burden. Others, like KeyBanc and Mizuho, maintain bullish stances, pointing to the $638 billion backlog as evidence of sustained demand. The consensus target of roughly €221 implies significant upside from current levels, but the near-term headwinds are formidable.
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Macroeconomic conditions are not helping. The US economy added only 57,000 jobs in June, a weak reading that keeps interest rates elevated. Capital-intensive enterprises such as Oracle suffer disproportionately in such an environment, and traders are rotating out of AI plays into consumer staples. The €113.86 52-week low looms as a key technical level; a break below could trigger a final capitulation.
All eyes now turn to September 14, 2026, when Oracle reports fiscal first-quarter results. The report will test whether the company can convert its enormous order book into sustainable profit growth — or whether the market's brutal reassessment of Oracle from stable software stalwart to high-risk AI builder is justified. At a market capitalisation of roughly €353 billion, the stakes could hardly be higher.
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