"Worst performance since 1990"...Oracle (ORCL), 40% of market cap evaporates under debt

▲ Oracle (ORCL), bear market/AI-generated image

Oracle (ORCL) recorded its worst monthly decline since 1990 after announcing a plan to raise $40 billion for AI data centers, causing Wall Street's view on the AI investment frenzy to cool rapidly.

According to FXLeaders, a foreign exchange and stock market specialist media outlet, on July 3 (local time), Oracle lost more than 40% of its market capitalization in a month as investor concerns grew over the burden of AI infrastructure investment. The outlet reported that this decline reflects both the AI bubble fatigue that has spread across enterprise software companies and the burden of large-scale capital expenditures.

Oracle's Q4 FY2026 earnings, announced on June 10, exceeded market expectations with revenues of $19.18 billion and adjusted EPS of $2.11. However, the variable that shook the market more significantly than the strong performance was the announcement of plans to raise approximately $40 billion in new debt and equity financing for the construction of AI data centers in FY2027. Investors reacted immediately to the potential for increased leverage, negative free cash flow, and margin dilution.

The market sentiment has also changed. FXLeaders pointed out that investors are now demanding evidence of actual monetization rather than just AI announcements. Oracle's aggressive capital expenditures fueled concerns that the payback period for AI investments could be longer, spreading valuation pressure across the entire enterprise software sector.

Oracle has laid off approximately 21,000 employees over the past year to restructure its business around cloud and AI infrastructure. With large-scale workforce reductions and capital raising plans highlighted simultaneously, investors are prioritizing cost burdens and cash flow pressures over growth strategies. However, the outlet assessed that Oracle's core business foundation remains solid, and its Q4 earnings also exceeded expectations.

Wall Street's long-term outlook has not completely broken down yet. Major Wall Street institutions maintain structural confidence in the growth potential of Oracle's autonomous database and cloud infrastructure despite short-term stock price adjustments, with a 12-month average price target of $263.86. However, given that expanded AI investment no longer automatically leads to a stock price premium, Oracle's $40 billion gamble has entered a rigorous market testing phase.

[Article Key Summary]

-Oracle recorded its worst monthly performance since 1990, losing more than 40% of its market capitalization in a month amidst the burden of AI infrastructure investment.

-While Q4 FY2026 revenues of $19.18 billion and adjusted EPS of $2.11 exceeded expectations, the $40 billion financing plan shook investor sentiment.

-Wall Street maintains a long-term growth outlook but views AI investment monetization and cash flow pressures as key variables for Oracle's stock price.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*