Oracle Stock Slides 24% in 2026 Amid AI Investment Concerns

Oracle (NYSE: ORCL) has seen its stock price fall over 24% in 2026 as market concerns mount over its substantial investments in artificial intelligence (AI) infrastructure. The company has announced plans to raise up to $50 billion in debt and equity to fund its AI expansion, raising fears about increased debt levels and potential negative free cash flow in the near term. Despite these concerns, Oracle's financial performance in its fiscal 2026 third quarter shows resilience, with a $553 billion backlog of remaining performance obligations (RPO) and a 44% year-over-year increase in cloud revenue to $8.9 billion. This backlog, which represents contracted work yet to be delivered, has grown 325% compared to the previous year, driven by strong demand for AI infrastructure. Oracle's management has emphasized that its AI capacity expansion is primarily demand-driven, with a significant portion of the new infrastructure already contracted and, in some cases, supported by customer or partner funding. This approach helps mitigate balance sheet risk as the company scales its operations. The company's third-quarter results highlight the strength of its AI-driven growth. Total revenue rose 22% year over year to $17.2 billion, with GAAP earnings per share increasing 24% to $1.27. Cloud infrastructure revenue alone reached $4.9 billion, while cloud applications revenue hit $4.0 billion. Oracle's multi-cloud database business saw an impressive 531% year-over-year growth, reflecting strong enterprise demand for its database solutions across multiple cloud platforms. Oracle's AI infrastructure business is already achieving margins above 30%, while its higher-margin database services operate with gross margins ranging from 60% to 80%. The company is leveraging the 'halo effect' of AI adoption to drive broader demand for its cloud services, including databases and applications. This strategy could enhance revenue visibility and long-term profitability. Strategic partnerships and major deals are further positioning Oracle in the AI infrastructure space. In September 2025, Oracle secured a $300 billion, five-year compute capacity agreement with OpenAI. The company is also involved in the Stargate initiative, a $500 billion project to build approximately 10 gigawatts of data center capacity. These partnerships place Oracle among a select group of firms shaping the global AI infrastructure landscape. While Oracle is streamlining operations by cutting thousands of jobs to focus on AI and cloud investments, this transition may cause short-term disruptions. However, the company believes these changes will ultimately improve profit margins and free cash flow. Oracle is transforming from a traditional enterprise software provider into a full-stack AI infrastructure company. Its ability to execute on its ambitious plans will determine its success in the evolving market. Currently trading at 18.3 times forward earnings, Oracle's stock may present an attractive opportunity for long-term investors if the company can deliver on its backlog and maintain its growth trajectory.