Oracle Stock Plunges 19% in Worst Week Since 2001 on Debt and AI Spending Fears

Oracle’s stock tumbled 19% this week, its steepest weekly decline since a 20% plunge in August 2001, as investors soured on the company’s ballooning debt and aggressive artificial intelligence investments. The selloff erased roughly $70 billion in market value.

The company’s long-term debt stood at approximately $130 billion as of its most recent quarterly filing, a figure that has climbed steadily as Oracle borrows to fund data center construction and AI compute capacity. Capital expenditures hit $14 billion in the fiscal year ending May 2025, much of it directed at building out infrastructure for cloud and AI workloads.

Debt load and Stargate costs spook Wall Street

Oracle is a key partner in the Stargate AI infrastructure project, a multiyear initiative with OpenAI and SoftBank that plans to spend $500 billion on U.S. data centers. Oracle’s portion of that commitment is not fully disclosed, but analysts estimate it could run into the tens of billions. The company has also been building out its own OCI regions to compete with AWS, Microsoft Azure, and Google Cloud.

• Long-term debt: $130 billion, up from $93 billion two years ago.
• Capital expenditures: $14 billion in FY2025, more than double the $6.7 billion spent in FY2023.
• Free cash flow: Fell to $10.1 billion in FY2025 from $12.8 billion the prior year, as cash from operations was diverted to capex.
• Interest expense: $5.3 billion annually, consuming over half of free cash flow.
• Stargate commitment: Oracle has not disclosed its exact share, but the project’s $500 billion total suggests Oracle could be on the hook for $50 billion to $100 billion over 10 years.

AI revenue growth not keeping pace with spending

Oracle’s cloud revenue grew 24% year over year to $23.4 billion in FY2025, but the pace disappointed analysts who expected faster acceleration from AI workloads. CEO Safra Catz said on the most recent earnings call that AI demand was “extraordinary” but added that matching capacity to demand is a “race against time.” The market interpreted that as a signal that near-term margins would remain compressed.

Other cloud rivals face similar capital demands, but Oracle carries a heavier debt burden relative to its cash flow. Microsoft, for example, holds $50 billion in long-term debt against $90 billion in annual free cash flow, a far more comfortable ratio. Oracle’s debt-to-free-cash-flow ratio is roughly 13 to 1, versus Microsoft’s 0.5 to 1.

What comes next: Oracle is expected to provide updated capital allocation plans at its analyst day in September. Investors will be watching for any signals that the company plans to slow its buildout or seek joint venture financing to offload some of the Stargate burden. Several analysts have downgraded Oracle shares over the past week, citing the risk that debt service costs will crowd out shareholder returns for years.