Oracle Stock Tests Support as Nasdaq Gains, Eyes $100 on Soaring Debt and Legal Risks
Oracle Corporation is facing renewed selling pressure as legal scrutiny, rising leverage, and costly AI expansion cloud its early 2026...
Quick overview
- Oracle Corporation's stock has dropped over 55% from its 52-week high due to concerns over its aggressive AI-driven cloud expansion and rising leverage.
- The company plans to raise $45 billion to $50 billion in 2026, raising fears of dilution and financial risk among investors.
- Legal challenges and deteriorating cash flow have further undermined investor confidence, despite solid revenue growth.
- Oracle's ambitious AI strategy faces skepticism as the market demands proof of sustainable shareholder value amidst increasing financial risks.
Live ORCL Chart
[[ORCL-graph]]
Oracle Corporation is facing renewed selling pressure as legal scrutiny, rising leverage, and costly AI expansion cloud its early 2026 rebound.
A Recovery That Failed to Hold
Oracle’s early 2026 recovery has unraveled as investors refocus on mounting risks tied to its aggressive AI-driven cloud expansion. The stock has fallen more than 55% from its 52-week high of $345.72 and recently dropped another 5%, once again testing a key technical support zone. The sharp reversal reflects growing unease over how the company plans to fund its vast infrastructure buildout.
While Oracle continues to report solid top-line growth, the market’s tone has shifted decisively. The narrative is no longer centered on opportunity but on sustainability—particularly the sustainability of debt-financed data center construction in a high-cost funding environment.
Massive Capital Raise Sparks Anxiety
At the center of investor concern is Oracle’s plan to raise between $45 billion and $50 billion in gross proceeds during calendar 2026. The financing—split roughly between debt issuance and equity-linked instruments, alongside common stock sales—is designed to accelerate Oracle Cloud Infrastructure capacity for major AI clients.
Investment banks including Goldman Sachs Group, Inc. and Citigroup Inc. are expected to help execute the transaction. However, the sheer scale of the raise has intensified fears of dilution and balance-sheet strain. In an environment where investors are increasingly sensitive to leverage, Oracle’s willingness to take on tens of billions in new obligations is being viewed less as strategic foresight and more as financial risk.
Technical Signals Reflect Deteriorating Sentiment
From a technical perspective, Oracle’s price action reinforces the fundamental unease. On longer-term charts, the stock has slipped below the 20 monthly moving average (gray) that previously acted as support, increasing the risk of deeper pullbacks first to the April 2025 low of $118 and then to $100 and below but sellers have to push below the 50 monthly SMA (yellow) first. On shorter timeframes, rebounds have consistently failed near resistance levels, forming a clear pattern of lower highs.
ORCL Chart Monthly – Can the 50 SMA Is Under Attack
On the daily chart we saw a rebound off the 200 SMA (purple) in early January but the 50 SMA (yellow) rejected the price and now the 200 SMA has been broken. Noe the 20 daily SM A(gray) is acting as resistance, pushing the highs lower. This structure suggests that sellers remain in control. A sustained break below current support levels would shift attention toward the $100 area now, with further downside risk.
ORCL Chart Daily – The Highs Keep Getting Lower
Heavy Dependence on OpenAI
A major flashpoint remains Oracle’s deepening relationship with OpenAI, Inc.. The reported $300 billion long-term agreement to provide computing capacity has become a lightning rod for skepticism. While the contract promises scale, it also ties Oracle’s capital commitments to a customer widely expected to remain unprofitable for years.
Estimates suggest OpenAI may require more than $200 billion in funding to sustain its growth trajectory. That backdrop has amplified counterparty risk concerns, particularly after Nvidia Corporation reportedly stepped back from a previously discussed large-scale investment in OpenAI.
Investors increasingly question whether Oracle is assuming disproportionate risk to secure long-term contracts whose financial durability remains uncertain.
Legal Challenges Undermine Confidence
Adding to the strain, Oracle faces a proposed bondholder class action in New York state court led by the Ohio Carpenters’ Pension Plan. Plaintiffs allege the company misled investors about the scale of funding required for its AI commitments, particularly following an $18 billion bond issuance announced shortly after the OpenAI agreement.
Regardless of the lawsuit’s eventual outcome, the allegations have reopened debate about disclosure practices. For a company dependent on capital markets access, even the perception of weakened transparency can elevate borrowing costs and deter institutional support.
Cash Flow Deterioration Raises Red Flags
Operational growth has not translated into financial comfort. Quarterly revenue rose 14% year over year, and cloud services revenue expanded more than 30%. Yet free cash flow has deteriorated sharply, sinking beyond negative $13 billion as capital expenditures balloon.
In a market that now prioritizes cash discipline over growth-at-any-cost narratives, this imbalance is difficult to overlook. AI infrastructure is capital-intensive, requiring massive upfront spending on hardware, power, and real estate. The payback timeline remains unclear, and investors are growing impatient.
Dividend Support Offers Limited Cushion
Oracle’s quarterly dividend of $0.50 per share equates to $2.00 annually, with a forward payout ratio below 19%. However, a yield near 1% provides limited downside protection in the face of mounting dilution risk and leverage concerns.
Ambition Meets Market Skepticism
Oracle’s AI strategy is undeniably ambitious, and demand from high-profile clients validates its relevance. Yet the market appears unconvinced that aggressive expansion financed by substantial borrowing and equity issuance will translate into durable shareholder value.
Until free cash flow stabilizes, legal uncertainties subside, and leverage concerns ease, Oracle shares may remain vulnerable. The stock’s drift toward lower support levels suggests that investors now demand proof—not promises—that the AI boom can justify the financial risks being assumed.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save