"Oracle ( ) stock ignited investor enthusiasm starting in late April, fueled by Wall Street upgrades and optimism around its AI pivot. Momentum exploded with the June announcement of the massive Stargate project - a $500 billion joint venture with OpenAI and others to build AI data centers. Analysts piled in, projecting explosive cloud growth. The shares surged 85% from April lows, hitting an all-time high around $346 per share on Sept. 10 amid hype for AI infrastructure dominance."
"Even as Oracle deepens its AI immersion with hyperscale cloud offerings, it's missing the relentless tailwinds lifting others making big AI bets. Hype around AI chips and compute demand has propelled Nvidia ( NASDAQ:NVDA ) up 32% year-to-date, while Oracle continues to grapple with skepticism. There are clear reasons why Oracle won't become the next Nvidia."
"Oracle's aggressive AI bet has supercharged its balance sheet risks, turning early excitement into investor jitters. To fund Stargate and take on Amazon (NASDAQ:AMZN), Microsoft ( NASDAQ:MSFT ), and Alphabet ( NASDAQ:GOOG )( NASDAQ:GOOGL ), Oracle issued $18 billion in bonds and secured a $38 billion loan, ballooning total debt to nearly $104 billion. That's up sharply from $90 billion a year ago, with interest payments now eating into roughly 20% of its $3 billion quarterly net income - nearly double its 10% pre-AI surge."
Oracle launched a major AI infrastructure push centered on the Stargate project, a $500 billion joint venture to build AI data centers, sparking strong investor enthusiasm and an 85% rally from April lows to a September high. The rally has since reversed, with shares falling 42% to about $200 and lagging peers. Oracle issued $18 billion in bonds and secured a $38 billion loan, pushing total debt toward $104 billion and increasing interest burden. AI capex is set to consume nearly all operating cash flow after dividends and buybacks in 2025–2026, risking margins if adoption slows.
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