"Worst performance since 1990"...Oracle (ORCL), 40% of market cap evaporates under debt burden

▲ Oracle (ORCL), bear market/AI-generated image

Wall Street's view on the AI investment frenzy is rapidly cooling as Oracle (ORCL) recorded its worst monthly decline since 1990 after announcing a $40 billion AI data center financing plan.

According to FXLeaders, a specialized foreign exchange and stock market media outlet, on July 3 (local time), Oracle lost more than 40% of its market capitalization in a month due to growing investor concerns surrounding the burden of AI infrastructure investment. The media reported that this decline reflects both the AI bubble fatigue that has spread across enterprise software companies and the burden of large-scale capital expenditures.

Oracle announced its Q4 2026 fiscal year results on June 10, exceeding market expectations with revenue of $19.18 billion and adjusted EPS of $2.11. However, the variable that shook the market more significantly than the strong performance was the announcement of pursuing approximately $40 billion in new debt and equity financing to build AI data centers in fiscal year 2027. Investors immediately reacted to the potential for increased leverage, negative free cash flow, and margin dilution.

The market sentiment has also changed. FXLeaders pointed out that investors are now demanding evidence of actual monetization rather than just AI announcements. Oracle's aggressive capital expenditure fueled concerns that the payback period for AI investments could be longer, spreading valuation pressure across the entire enterprise software sector.

Oracle laid off approximately 21,000 employees over the past year to restructure its business around cloud and AI infrastructure. With large-scale workforce reductions and capital financing plans highlighted simultaneously, investors are prioritizing cost burdens and cash flow pressures over growth strategies. However, the media evaluated that Oracle's core business foundation remains solid, and its Q4 performance also exceeded expectations.

Wall Street's long-term outlook has not completely turned negative yet. Major Wall Street institutions maintain structural confidence in the growth potential of Oracle's autonomous database and cloud infrastructure despite short-term stock price adjustments, with an average 12-month target price of $263.86. However, as increased AI investment no longer automatically leads to a stock price premium, Oracle's $40 billion gamble has come under serious market scrutiny.

[Article Key Summary]

-Oracle recorded its worst monthly performance since 1990, losing over 40% of its market capitalization in a month amid the burden of AI infrastructure investment.

-Q4 2026 fiscal year revenue of $19.18 billion and adjusted EPS of $2.11 exceeded expectations, but the $40 billion financing plan shook investor sentiment.

-While maintaining a long-term growth outlook, Wall Street views AI investment monetization and cash flow pressure as key variables for Oracle's stock price.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*