Oracle Corporation Faces Securities Fraud Class Action Lawsuit
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 06 2026
0mins
Should l Buy ORCL?
Source: Businesswire
- Lawsuit Background: A class action lawsuit filed by Glancy Prongay Wolke & Rotter LLP targets investors who purchased Oracle Corporation securities between June 12, 2025, and December 16, 2025, alleging that the company made misleading statements and failed to disclose that its AI infrastructure strategy would lead to significant capital expenditure increases without corresponding revenue growth.
- Stock Price Volatility: On September 25, 2025, Oracle's stock fell 5.6% to $291.33 after analysts warned that future growth was overestimated; on December 10, the stock dropped 10.8% to $198.85 due to disappointing earnings, reflecting a severe loss of investor confidence in the company's outlook.
- Project Delays: On December 12, 2025, Oracle announced delays in the completion of data centers for OpenAI until 2028 due to labor and material shortages, causing a 4.5% drop in stock price to $189.97, which heightened concerns about the company's operational execution.
- Funding Withdrawal: On December 17, 2025, Oracle's primary financial backer, Blue Owl Capital, withdrew its commitment to fund a $10 billion data center project due to concerns over Oracle's spending commitments and rising debt levels, leading to a further 5.4% decline in stock price to $178.46, thereby exacerbating investor losses.
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Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 156.540
Low
180.00
Averages
309.59
High
400.00
Current: 156.540
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Debt and Expansion: To meet AI demand, Oracle is accumulating tens of billions in debt and considering the sale of profitable business units to fund the necessary data center expansion, a strategy that could yield substantial returns in the future if successful.
- Massive Backlog: Oracle's backlog has exploded to over $523 billion, primarily driven by large-scale AI contracts with OpenAI, Meta, and Nvidia, providing robust support for its future growth prospects.
- Risks and Uncertainty: While Oracle's positioning in the AI sector appears promising, the majority of its backlog relies on OpenAI, whose financial situation is concerning, potentially exposing Oracle to significant financial risks that could adversely affect its stock performance.
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- Market Competitive Advantage: OCI is now the fastest-growing major cloud platform, surpassing Amazon Web Services and Microsoft's Azure, suggesting Oracle has secured a favorable position in the competitive cloud landscape, potentially attracting more enterprise clients.
- High-Risk Financial Strategy: To fund the necessary data center buildout, Oracle is taking on tens of billions in debt and considering selling profitable business units, a high-risk financial strategy that could impact the company's financial stability and lead to a significant stock price drop if growth expectations are not met.
- Risk of Dependence on OpenAI: Despite the massive backlog, a significant portion is expected to come from OpenAI, which has financial commitments that far exceed its revenue and is currently operating at a negative net income, raising concerns about the risk-reward profile for Oracle's future prospects.
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- Financial Missteps: Oracle's Q2 fiscal 2026 report, released on December 10, 2025, revealed capital expenditures exceeding analyst expectations by $10 billion and negative free cash flow, leading to a significant stock price drop in subsequent trading days, indicating a deterioration in the company's financial health.
- Market Reaction: Following S&P Global Ratings' warning about the risks associated with Oracle's reliance on AI infrastructure, the stock price fell nearly 2% on September 24, 2025, and dropped an additional 5.5% on September 25 after analysts downgraded their ratings, reflecting a lack of confidence in the company's future growth.
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- Compensation Mechanism: Investors who purchased Oracle common stock may be entitled to compensation without any out-of-pocket fees, highlighting the legal pathway as a protective measure for affected investors.
- Lawsuit Allegations: The lawsuit claims that Oracle made false or misleading statements during the class period, particularly regarding its AI infrastructure strategy leading to significant capital expenditure increases without corresponding revenue growth, which could jeopardize the company's financial stability.
- Legal Counsel Recommendation: Rosen Law Firm advises investors to select qualified counsel with a successful track record, emphasizing the importance of choosing the right legal representation to safeguard investor rights in class action lawsuits.
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- Debt and Expansion: To meet AI demand, Oracle is accumulating tens of billions in debt and considering the sale of profitable business units to fund the necessary data center expansion, a strategy that could yield substantial returns in the future if successful.
- Massive Backlog: Oracle's backlog has exploded to over $523 billion, primarily driven by large-scale AI contracts with OpenAI, Meta, and Nvidia, providing robust support for its future growth prospects.
- Risks and Uncertainty: While Oracle's positioning in the AI sector appears promising, the majority of its backlog relies on OpenAI, whose financial situation is concerning, potentially exposing Oracle to significant financial risks that could adversely affect its stock performance.
See More
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- Cloud Infrastructure Growth: Oracle's Cloud Infrastructure (OCI) revenue has surged by 66% year-over-year, with a backlog exceeding $523 billion driven by massive AI contracts with Meta, Nvidia, and OpenAI, indicating strong growth potential in the cloud computing market.
- Market Competitive Advantage: OCI is now the fastest-growing major cloud platform, surpassing Amazon Web Services and Microsoft's Azure, suggesting Oracle has secured a favorable position in the competitive cloud landscape, potentially attracting more enterprise clients.
- High-Risk Financial Strategy: To fund the necessary data center buildout, Oracle is taking on tens of billions in debt and considering selling profitable business units, a high-risk financial strategy that could impact the company's financial stability and lead to a significant stock price drop if growth expectations are not met.
- Risk of Dependence on OpenAI: Despite the massive backlog, a significant portion is expected to come from OpenAI, which has financial commitments that far exceed its revenue and is currently operating at a negative net income, raising concerns about the risk-reward profile for Oracle's future prospects.
See More
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- Lawsuit Background: Kessler Topaz Meltzer & Check filed a securities fraud class action against Oracle on February 3, 2026, in Delaware, representing investors who purchased shares between June 12 and December 16, 2025, highlighting serious concerns over the company's financial transparency.
- Financial Missteps: Oracle's Q2 fiscal 2026 report, released on December 10, 2025, revealed capital expenditures exceeding analyst expectations by $10 billion and negative free cash flow, leading to a significant stock price drop in subsequent trading days, indicating a deterioration in the company's financial health.
- Market Reaction: Following S&P Global Ratings' warning about the risks associated with Oracle's reliance on AI infrastructure, the stock price fell nearly 2% on September 24, 2025, and dropped an additional 5.5% on September 25 after analysts downgraded their ratings, reflecting a lack of confidence in the company's future growth.
- Investor Alert: Investors must apply to be lead plaintiffs by April 6, 2026, indicating heightened concern over Oracle's financial outlook, which could impact the company's ability to secure funding and maintain market trust.
See More
Oracle Corporation Class Action Lawsuit Announcement
- Class Action Initiation: Rosen Law Firm announces a class action lawsuit against Oracle Corporation (NYSE: ORCL) for stock purchasers between June 12, 2025, and December 16, 2025, indicating potential investor losses during this period.
- Compensation Mechanism: Investors who purchased Oracle common stock may be entitled to compensation without any out-of-pocket fees, highlighting the legal pathway as a protective measure for affected investors.
- Lawsuit Allegations: The lawsuit claims that Oracle made false or misleading statements during the class period, particularly regarding its AI infrastructure strategy leading to significant capital expenditure increases without corresponding revenue growth, which could jeopardize the company's financial stability.
- Legal Counsel Recommendation: Rosen Law Firm advises investors to select qualified counsel with a successful track record, emphasizing the importance of choosing the right legal representation to safeguard investor rights in class action lawsuits.
See More
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Market Volatility: Investors are facing prolonged market volatility, particularly influenced by the U.S. Supreme Court's decision to strike down emergency tariffs, which has led to oscillations between losses and gains in the markets.
Focus on Technology Stocks: The ongoing focus remains on technology stocks, especially those related to artificial intelligence (AI), as investors weigh geopolitical concerns and the implications of military presence in the Middle East.
Earnings Reports and Stock Performance: Companies like NVIDIA and Oracle are set to release earnings reports, with analysts predicting strong performance, while other stocks, such as Qualcomm, have faced skepticism due to recent downturns in the tech sector.
Investment Opportunities: Despite challenges, there are still opportunities for investors in beaten-down sectors, with analysts highlighting potential stocks that could deliver upside surprises amidst a difficult economic environment.
See More
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- Summit Disorganization: The AI Impact Summit in India faced significant disorganization due to heavy traffic and unclear security instructions, complicating media access and reporting efforts, which reflects the organizers' shortcomings in managing large-scale events and could impact future international engagements.
- Bill Gates' Absence: Bill Gates, who was scheduled to deliver a keynote address, did not attend the summit for unspecified reasons, despite earlier confirmations from the Gates Foundation, raising concerns among attendees and potentially affecting public trust in the event's credibility.
- University Controversy: Galgotias University was reportedly expelled from the summit for claiming a showcased robot dog was its own creation, despite it being developed by Chinese firm Unitree, which sparked widespread discussion on social media and could harm the university's reputation and future collaboration opportunities.
- Investment Potential Promotion: Despite the chaos, the Indian government seized the opportunity to promote its potential as an AI hub, aiming to attract $200 billion in AI investments over the next two years, demonstrating India's growing appeal and development prospects in the global tech market.
See More
