Oracle Stock ORCL Slides 13% in August on AI Costs and Job Cuts, Breaks Support
Oracle shares are currently under a lot of pressure following an incredible gain earlier this year, as concerns about the sustainability...
Quick overview
- Oracle shares have experienced a significant decline after a remarkable 120% rally earlier this year, raising concerns about the sustainability of its growth.
- The stock has fallen below key technical support levels, with increased trading activity and insider selling indicating waning confidence among investors.
- Job cuts in Oracle's cloud division, essential for its growth strategy, coincide with rising expenses related to AI infrastructure, further clouding the company's outlook.
- Despite securing large-scale cloud contracts that could generate substantial future revenue, market skepticism persists due to high costs and recent stock performance.
Live ORCL Chart
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Oracle shares are currently under a lot of pressure following an incredible gain earlier this year, as concerns about the sustainability of the surge are fueled by technical issues and corporate difficulties.
From Relentless Rally to Sharp Pullback
Oracle’s stock (NYSE: ORCL) staged one of the most remarkable runs in 2024, soaring 120% from April lows to $261 by late July. The move was fueled by strong momentum, with the 20-day simple moving average (SMA) acting as consistent support throughout the climb. However, that uptrend has now been decisively broken. In recent weeks, Oracle slipped below the 20-day SMA, which has since turned into resistance, confirming a shift in momentum. The selloff accelerated this week, with the stock dropping beneath $225, erasing much of August’s gains.
According to data from Polygon, trading activity has surged, with $2.08 billion worth of shares exchanged in a single session. Insider transactions tell a similar story of waning confidence: over the last six months, there have been 44 open market trades, of which 42 were sales and only two were purchases.
Technical Breakdown Deepens
The pressure intensified today as Oracle fell further, breaking below the 50-day SMA (yellow). With the short- and medium-term technical trendlines now breached, sellers are eyeing the next potential support zone near $200—a level that also marked Oracle’s 2024 high earlier this year. The shift in momentum suggests that, unless the stock stabilizes, the retracement could deepen as sentiment across equity markets weakens.
Layoffs Cloud Oracle’s AI Expansion
The decline coincides with news of job cuts in Oracle’s cloud division, a unit critical to the company’s long-term growth strategy. Rising expenses tied to artificial intelligence infrastructure have forced Oracle to trim headcount, with sources confirming that staff were informed of layoffs this week. While some cuts were performance-related, the company stressed that hiring remains underway in other areas.
Reports indicate that over 150 jobs were eliminated in the Seattle region, historically an operational hub for Oracle’s cloud business. Following the firm’s relocation to Nashville last year, Tennessee now accounts for the highest number of Oracle job openings, signaling a shift in the company’s workforce footprint.
AI Contracts Offer Growth, but Market Remains Cautious
Despite the selloff, Oracle continues to secure large-scale cloud contracts. CEO Safra Catz recently highlighted that new agreements could generate over $30 billion in annual revenue by fiscal 2028. Among these, a deal with OpenAI has attracted attention. Reports suggest that OpenAI plans to lease significant data center capacity from Oracle to support the Stargate Project, a multibillion-dollar collaboration involving SoftBank, MGX, Oracle, and OpenAI.
The project aims to acquire 4.5 gigawatts of U.S. data center electricity capacity, a scale far exceeding typical consumer demand and driven almost exclusively by the needs of the AI sector. While these contracts underscore Oracle’s role in powering next-generation AI infrastructure, investors remain cautious. The combination of high costs, workforce restructuring, and technical weakness in the stock price has kept confidence subdued despite the long-term revenue potential.
Outlook: Momentum Tested
Oracle’s dramatic turnaround—from a 120% rally to a 13% monthly decline—highlights the volatility surrounding AI-driven stocks. While multibillion-dollar contracts and strategic partnerships signal strong future demand, the market remains skeptical of Oracle’s ability to balance soaring AI infrastructure costs with sustainable earnings growth. Until investors see clearer signs of profitability from these initiatives, the stock may continue to struggle near-term despite its long-term potential.
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