Key Highlights
- Oracle shares declined as much as 7.6% during premarket hours Tuesday following Wall Street Journal revelations that OpenAI underperformed on key metrics.
- The tech giant maintains a massive $300 billion cloud infrastructure agreement with OpenAI spanning five years — representing the lion’s share of its cloud commitments.
- Market contagion saw SoftBank plummet 9.9% while CoreWeave retreated 7.6% in premarket sessions as OpenAI worries rippled across markets.
- An investment veteran raised red flags about Oracle’s actual debt exposure, suggesting off-balance-sheet financing masks the company’s true leverage.
- Despite the selloff, 34 out of 44 Wall Street analysts maintain Buy ratings, with Wedbush analyst Dan Ives standing firm on his $225 price objective.
Oracle (ORCL) shares experienced a sharp decline of up to 7.6% during Tuesday’s premarket session following a Wall Street Journal investigation that questioned OpenAI’s capacity to fulfill its substantial spending commitments.
According to the report, OpenAI has underperformed against internal benchmarks for both user expansion and revenue generation in recent months. The artificial intelligence company had established a goal of achieving 1 billion weekly active users by year-end 2025, a target it failed to reach.
Additionally, the company fell short of several monthly revenue objectives during the early part of this year, as competitive pressures intensified in the coding assistance and enterprise AI sectors.
ChatGPT’s dominance in generative AI web traffic has eroded significantly, falling from 86.7% one year ago to just 64.5% by January 2026. Meanwhile, Gemini’s market presence expanded dramatically from 5.7% to 21.5% during the same timeframe.
Reportedly, OpenAI CFO Sarah Friar has expressed internal apprehension about the company’s ability to honor future computing infrastructure commitments should revenue momentum fail to accelerate.
This development poses a significant challenge for Oracle. The enterprise software and cloud infrastructure leader has committed to a $300 billion, five-year arrangement to provide computational resources to OpenAI — a contract that constitutes the overwhelming majority of Oracle’s substantial cloud backlog.
Oracle’s outstanding performance obligations have skyrocketed 325% to reach $553 billion. The corporation is simultaneously pursuing $50 billion in capital through debt instruments and equity offerings to bankroll new data center infrastructure.
The complication? Revenue streams from the OpenAI partnership aren’t anticipated to materialize substantially until the following year. Oracle faces significant upfront expenditures while awaiting returns.
Scrutiny Over Oracle’s Leverage Position
Former Fidelity hedge fund manager George Noble delivered particularly pointed criticism. He cautioned that Oracle employs project financing mechanisms to exclude tens of billions in borrowed capital from its published balance sheet.
“So when analysts quote Oracle’s debt load, they’re UNDERSTATING the actual exposure by a meaningful margin,” Noble wrote on X.
He additionally suggested recent earnings results may be artificially enhanced through accounting maneuvers and expense reductions, cautioning the overall investment thesis could “end HORRIBLY.”
Oracle’s stock has experienced considerable erosion — trading approximately 50% below its 52-week peak reached last September.
The market turbulence extended beyond Oracle’s boundaries. SoftBank, which maintains a 13% ownership stake in OpenAI, tumbled 9.9% in Tokyo trading. CoreWeave, holding cloud infrastructure contracts with OpenAI valued at up to $22.4 billion, declined 7.6% in premarket activity.
Wall Street Maintains Predominantly Positive Outlook
Notwithstanding the volatility, the broader analyst community hasn’t abandoned Oracle. Among 44 analysts monitored by Koyfin, 34 maintain Buy recommendations or stronger ratings, with consensus price targets suggesting approximately 40% potential appreciation.
Wedbush analyst Dan Ives reaffirmed his Outperform stance and $225 valuation as recently as April 24. He contended that market participants are misinterpreting Oracle’s aggressive capital deployment as vulnerability rather than recognizing it as strategic infrastructure positioning.
Ives highlighted that Oracle has already fortified its financial foundation by securing $30 billion through investment-grade bond issuances and preferred equity.
OpenAI, for its part, told the Journal it was “buying as much compute as we can.” The company did not immediately respond to Barron’s request for comment Tuesday morning.
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