TLDR
- Oracle (ORCL) stock fell 6% Monday, extending a 16.4% decline over the past month.
- A report from The Information raised questions about the Stargate AI joint venture’s structure, claiming it has minimal staff and no direct control over data centers.
- The three Stargate partners — Oracle, OpenAI, and SoftBank — reportedly disagreed over project structure after the January 2025 announcement.
- Oracle and OpenAI struck a separate deal in July to build 4.5 gigawatts of data center capacity across multiple U.S. sites.
- Analysts rate ORCL a Zacks Rank #3 (Hold), with a Value Style Score of D, indicating it trades at a premium to peers.
Meta description: Oracle (ORCL) stock fell over 6% Monday after a report cast doubt on the Stargate AI joint venture’s structure and operations.
Oracle (ORCL) dropped more than 6% on Monday, dragged down by a combination of broad tech sector weakness and a report raising questions about the $500 billion Stargate AI initiative.
The Nasdaq 100 slid 1% during the session, adding pressure across the sector. But Oracle had its own specific headwind to deal with.
The Information published a report over the weekend claiming that the Stargate joint venture — announced in January 2025 with Oracle, OpenAI, and SoftBank as partners — has minimal staff and does not directly control any data centers.
That’s a far cry from the headline numbers that accompanied the original announcement.
The report says that in the weeks after the launch, the three partners clashed over project structure and who would be responsible for what. Those early disagreements appear to have shaped how the initiative evolved.
According to The Information, OpenAI initially tried to build data centers on its own. Lenders pushed back, uncomfortable backing multibillion-dollar projects tied to a business model they viewed as unproven. OpenAI shelved those plans.
Instead, OpenAI moved to strike separate deals with SoftBank and Oracle, bypassing the joint venture structure entirely.
Separate Deals Take Shape
In July, Oracle and OpenAI announced a deal to develop 4.5 gigawatts of data center capacity across multiple U.S. sites. The two companies agreed to share the economic risk, meaning cost overruns or delays would be split between them.
A separate project in Milam County, Texas, involves OpenAI and SoftBank Energy. Under that arrangement, SoftBank develops and owns the facility while OpenAI controls its design and holds the long-term lease. The companies broke ground in October.
The Information also reported that OpenAI’s difficulty securing computing capacity weighed on its finances last year, with gross profit margins coming in below expectations due to last-minute compute purchases.
Where Oracle Stands Now
Oracle’s stock is down 16.4% over the past month, compared to a 1.8% gain for the S&P 500 composite over the same period.
Analysts expect Oracle to post earnings of $1.70 per share for the current quarter, up 15.7% year-over-year. The current fiscal year consensus sits at $7.45 per share, reflecting a 23.6% year-over-year increase.
Revenue estimates are also pointing up. The consensus for the current quarter is $16.89 billion, a 19.5% increase year-over-year. For the full fiscal year, the estimate stands at $66.94 billion.
In its last reported quarter, Oracle posted revenues of $16.06 billion, up 14.2% year-over-year, with EPS of $2.26 compared to $1.47 a year prior.
Despite the earnings growth story, Oracle carries a Zacks Value Style Score of D, meaning it trades at a premium relative to peers. Zacks rates the stock a #3 Hold.
The consensus estimate for the next fiscal year sits at $8.09 per share, implying 8.6% growth from current-year expectations.
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