Oracle Stock Slides as AI Spending Surge Raises Cash Flow Concerns

Oracle has lost nearly 30% of its value over the course of the year-to-date, as of 25 February 2026, extinguishing some several billion of the market worth due to massive spending on artificial-intelligence infrastructure. 

The company shares, which were previously valued as one of the important cloud providers, are currently trading around a point that is close to 146 as opposed to January, when the shares were valued at 208 as investors begin to re-evaluate the profitability of the hefty capital investments in data-center use.

The company recently beat EPS estimates ($2.26 vs. $1.64), grew revenue ~14.2% year-over-year, and pays a $0.50 quarterly dividend (~1.4% yield). 

However, the 42 analysts that follow ORCL have given the stock a consensus rating of “Moderate Buy,” and the mean price target of $286.63 represents a premium of 98.7% over current levels.

Turbulent Past

The fall-off repeats the historic trends of Oracle experiencing drastic reductions in the dot-com downturn, a 77% drop in the global economic downturn, and a 41 % drop in the periods of the inflationary surge. 

The past twelve-month revenue increased 11.1% with an operating margin of 31.9 %, but free cash flow declined to negative, an outflow of capital expenditure (20.5 billion) increased threefold in the past year.

Cash Burn Alarm

Unprecedented demand that is locked in through multiyear contracts is directly addressed by Oracle’s aggressive capital plan. 

Approximately eight times the company’s yearly revenue run rate is represented by the $523 billion in remaining performance obligations, which were increased by $68 billion in Q2 alone from agreements with Meta, Nvidia, and other companies.

With cloud infrastructure revenue already increasing by more than 34% in Q2 and expected to surpass 70% in fiscal 2026, this backlog indicates strong future revenue visibility. 

Oracle has greatly increased its capital expenditures to meet these commitments; its fiscal 2026 guidance now calls for spending about $50 billion to install GPUs, activate data centers, and scale capacity. 

Strong Growth Overshadowed by Capital Pressure

In December 2025, Oracle released impressive results for the second quarter of fiscal 2026, which ended in November 2025. The company’s total revenue was around $16.1 billion, up 14% from the previous year. 

With Oracle Cloud Infrastructure (OCI) growing 66% to $4.1 billion, cloud revenue increased 34% to $8.0 billion. Due to significant contracted demand from AI-related partnerships, remaining performance obligations (RPO) increased to $523 billion. 

Shares were volatile despite exceeding projections, and high capital expenditures and financing announcements continued to put pressure on them. However, the lack of revenue guidance adjustment indicates a possible disequilibrium which is further tightened by the off balance sheet lease obligations worth $248 billion that squeeze profit margins.

Outlook: High Stakes Bet

The expansion of AI at Oracle is an issue of dilution; but the anticipated cloud revenues of the company of over $25 billion by FY2026 can justify the investments.

Finally, the future of the company will be to turn the recurring-payment commitment into liquid capital ahead of any credit downgrades; this will take effective practice instead of the gambling spirit in the 2026 AI market.