Oracle’s wild stock swing in 2025 has turned the company into a symbol of Wall Street’s biggest debate: is artificial intelligence a once-in-a-generation opportunity or a capital-intensive bubble waiting to deflate?
The year began with optimism. Oracle surged after announcing the massive Stargate joint venture with OpenAI and SoftBank, committing up to $500 billion toward US AI infrastructure. The deal, unveiled at the White House in January, sent Oracle shares soaring and briefly pushed founder Larry Ellison to the top of global wealth rankings.
Momentum continued through midyear earnings as Oracle projected AI-driven cloud revenue reaching $166 billion by 2030. But by autumn, enthusiasm gave way to anxiety.
Debt became the turning point
Oracle issued nearly $26 billion in bonds in 2025, while total debt climbed 40% year over year to $124 billion. At the same time, cash outflows jumped sharply, and the company disclosed $248 billion in future lease commitments, mostly tied to data center expansion, that sit off the balance sheet.
That combination rattled investors.
Credit default swaps tied to Oracle surged to their highest levels since 2009, signaling growing concern about leverage across Big Tech’s AI buildout. Analysts note this trend is not isolated. CDS trading has recently emerged even for firms like Microsoft and Alphabet, reflecting broader unease about AI financing.
“Oracle has become the poster child for fears of an AI bubble,” tech analyst Cory Johnson said.
A major source of investor tension lies in Oracle’s exposure to OpenAI. The ChatGPT developer accounts for more than $300 billion of Oracle’s remaining performance obligations. That revelation triggered a sharp selloff as markets questioned whether OpenAI can realistically meet its aggressive revenue targets amid intensifying competition.
OpenAI’s own costs add to the concern. Infrastructure commitments linked to partners including Nvidia, AMD, and Broadcom could total over $1.4 trillion across eight years, raising doubts about long-term returns.
Execution risk is now front and center
Analysts warn Oracle has limited margin for error. Its free cash flow is tighter than that of larger hyperscalers, and profitability depends on customers monetizing AI faster than history suggests. Any delay in data center deployment or customer revenue could extend the payback period significantly.
Those worries have been compounded by reports of pushed-back data center timelines and a leadership shake-up, with Oracle appointing co-CEOs late in the year.
Still, not everyone is bearish.
Supporters argue Oracle has repeatedly delivered through past technology cycles and can repurpose AI infrastructure if demand shifts. Shares remain up 16% for the year, despite falling more than 40% from their peak.
For investors, Oracle now sits at the center of the AI dilemma: massive opportunity on one side, rising leverage and uncertain demand on the other. How that balance resolves may shape not just Oracle’s future, but sentiment toward the entire AI trade in 2026.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
