Oracle Stock Falls on AI Spending Surge and Rising Debt

Oracle ORCL shares tumbled to a fresh 52-week low near $131 in mid-July 2026, down roughly 28% over the prior month, with the decline continuing past the stock's July 10 ex-dividend date. The slide has persisted even as Oracle's AI-driven order book keeps growing, evidence that investors are now weighing the cost of that growth as much as its scale.

The core concern is balance sheet strain from Oracle's AI infrastructure buildout. Capital spending has run to roughly $55.7 billion, about 83% of revenue, turning what would otherwise be record operating cash flow into a reported free cash flow deficit near $23.7 billion. Total debt has climbed to an estimated $167 billion, with total liabilities up roughly 48%, and S&P reportedly downgraded Oracle's credit rating to BBB- as a result, a shift from the stronger investment-grade footing investors had priced in.

The tension is that Oracle's remaining performance obligations, its contracted but unfulfilled AI backlog, are estimated near $638 billion, with a large share reportedly tied to a multi-year cloud computing contract with OpenAI that does not begin until 2027. That concentration means near-term financing costs are being paid well ahead of the revenue they are meant to fund, a mismatch the market appears to be discounting.

Oracle has leaned on debt and equity markets to bridge the gap, reportedly raising around $43 billion in debt and $5 billion in equity in fiscal 2026, with additional financing this year said to include an at-the-market share program. Investors should watch for further credit rating actions, the pace at which OpenAI and other AI-customer revenue gets recognized, whether free cash flow trends improve as the buildout matures, and whether the quarterly dividend, still intact at $0.50 per share, holds as a signal of near-term balance sheet confidence.

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