▲ Oracle
Oracle has recorded its worst weekly decline in 25 years, hit by financial burdens from artificial intelligence (AI) data center investments and the delay of OpenAI's initial public offering (IPO).
According to U.S. business news channel CNBC on June 28 (local time), Oracle's stock price closed at 148.53 dollars on June 26, marking an 18.4% plunge compared to the previous week.
The stock shed 33.49 dollars over five trading days, representing the largest weekly drop since August 2001, when the dot-com bubble was bursting.
Since peaking at a market capitalization of 900 billion dollars in September last year, the stock has fallen by more than 55%.
The core issue lies in the company's financing structure.
Capital expenditure (CAPEX) for fiscal year 2026 surged 162% year-on-year to 55.7 billion dollars (approximately 85 trillion won), while free cash flow plummeted to -23.7 billion dollars (approximately 36 trillion won).
Total debt stood at approximately 130 billion dollars (approximately 200 trillion won) as of the end of May.
The company plans to raise an additional 40 billion dollars (approximately 61 trillion won) in the next fiscal year, including a 20 billion dollar new share issuance.
Evercore analysts assessed that "even if demand signals remain strong, the level of financing and leverage, along with the pace of new share issuance, will be the key points of debate for short-term investors."
News of OpenAI's delayed IPO also acted as a negative factor.
The New York Times (NYT) reported that OpenAI is considering postponing its IPO until next year.
Oracle has a 300 billion dollar data center supply contract with OpenAI that runs through 2030.
Unlike Amazon, Microsoft, and Google, some point out that Oracle is at a structural disadvantage in terms of profitability because it lacks a comprehensive service covering all areas of cloud computing.
Adding to these concerns is the fear that AI models could replace Oracle's software. Consequently, the iShares Expanded Tech-Software Sector ETF (IGV) has fallen 16% this year, while Oracle has dropped 24% over the same period.
Citing the adoption of AI, Oracle also reduced its workforce by 21,000 (13%) to 141,000 employees in fiscal year 2026 compared to the previous year.
In the wake of the stock price decline, Oracle co-founder Larry Ellison has fallen behind Larry Page, Sergey Brin, Jeff Bezos, and Michael Dell in the global wealth rankings.
According to financial data firm FactSet, 71% of analysts still maintain a buy rating on Oracle stock.
Oracle intends to proceed as planned with its construction of additional data centers in Michigan, New Mexico, and Texas next year.
(Photo: Yonhap News)
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