Oracle Stock Declines Amid OpenAI Partnership Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy ORCL?
Source: Fool
- Stock Decline: As of February 9, Oracle's stock has fallen nearly 19% to $154.56, driven by investor concerns regarding its partnership with OpenAI, which has negatively impacted the company's market capitalization of $452 billion.
- Increasing Debt: Oracle is raising additional debt to expand its AI data centers, which may increase financial pressure in the short term; however, this strategy could drive revenue growth in the long term, particularly as demand for data centers remains strong.
- Analyst Rating Upgrade: DA Davidson upgraded Oracle's rating from 'neutral' to 'buy', suggesting that concerns over the OpenAI partnership are overblown, which reflects a growing confidence in Oracle's future performance.
- TikTok Investment Potential: Oracle now owns 15% of TikTok USA, which could lead to significant future revenue; despite the concentration risk, the long-term growth potential makes it an attractive investment for long-term investors.
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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: 156.480
Low
180.00
Averages
309.59
High
400.00
Current: 156.480
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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- Stable Download Figures: TikTok recorded 870,000 and 800,000 downloads in the two weeks post-announcement, while the new social platform UpScrolled saw a temporary surge followed by a sharp decline, indicating users' continued preference for TikTok over alternatives.
- No Significant Change in User Experience: Despite concerns over content censorship and algorithm adjustments, analysts note that users generally feel the TikTok experience remains unchanged, suggesting that any algorithm modifications have not led to user attrition but may present new opportunities for the platform.
- Potential Risks and Opportunities: Under new ownership, TikTok faces risks of politically biased content moderation, which could lead to dissatisfaction among users and advertisers if not managed properly; however, current user trust appears to have been restored, reflecting the platform's resilience.
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- User Engagement Rebound: Following a brief spike in deletions after the announcement of TikTok's U.S. joint venture, Sensor Tower data indicates that daily active users in the U.S. remain around 95%, demonstrating strong user loyalty despite initial concerns.
- Stable Download Figures: TikTok recorded 870,000 and 800,000 downloads in the two weeks post-announcement, while the new social platform UpScrolled saw a temporary surge followed by a sharp decline, indicating users' continued preference for TikTok over alternatives.
- No Significant Change in User Experience: Despite concerns over content censorship and algorithm adjustments, analysts note that users generally feel the TikTok experience remains unchanged, suggesting that any algorithm modifications have not led to user attrition but may present new opportunities for the platform.
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- Rising Power Demand: The U.S. Department of Energy forecasts a power grid deficit of over 100 GW in the next five years, and Bloom Energy's solid oxide fuel cell technology allows for rapid installations, effectively addressing this demand and enhancing its competitive edge.
- Sustained Profitability: Bloom has achieved record revenue for four consecutive quarters and reported profitability in its latest earnings, with projected revenue exceeding $3 billion in 2026 and a backlog of $20 billion, indicating robust business growth potential.
- Strategic Partnerships: Bloom has formed partnerships with Brookfield Asset Management and Oracle, aiming to increase its generation capacity from 1 GW to 2 GW by the end of 2026, further solidifying its position in the rapidly growing AI infrastructure power market.
See More
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- Lawsuit Announcement: Kessler Topaz Meltzer & Check, LLP filed a securities fraud class action against Oracle on February 3, 2026, in the District of Delaware, concerning stock purchases between June 12 and December 16, 2025, with a deadline for lead plaintiff applications set for April 6, 2026.
- Misleading Statements Risk: The lawsuit alleges that Oracle misled investors by claiming that its capital expenditures on AI infrastructure would lead to rapid revenue growth, while in reality, the significant increase in spending did not correlate with revenue increases, exposing investors to substantial financial risks.
- Stock Price Volatility: Oracle's stock price fell by $5.37 on September 24, 2025, following warnings from S&P Global, and dropped an additional $24.16 on December 11, 2025, after disappointing financial results, indicating severe market concerns regarding its financial health.
- Rising Debt Risks: The cost of protecting Oracle's debt against default reached its highest level since 2009 in December 2025, with analysts noting a mismatch between high capital expenditures and revenue growth, potentially leading to a downgrade in credit ratings and further eroding shareholder confidence.
See More
Oracle Corporation Faces Class Action Lawsuit
- Lawsuit Background: Bronstein, Gewirtz & Grossman LLC has filed a class action lawsuit against Oracle Corporation and certain officers, alleging violations of federal securities laws on behalf of investors who acquired Oracle securities between June 12, 2025, and December 16, 2025, seeking damages.
- Allegations Details: The complaint claims that Oracle failed to disclose that its AI infrastructure strategy would lead to significant increases in capital expenditures without corresponding near-term revenue growth, raising serious financial risks for the company.
- Financial Risks: The substantial increase in spending has raised concerns regarding Oracle's debt, credit rating, free cash flow, and ability to fund projects, potentially jeopardizing its future financial stability.
- Investor Actions: Affected investors have until April 6, 2026, to request lead plaintiff status, with the law firm operating on a contingency fee basis, thereby minimizing litigation costs for investors.
See More
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Market Trends: The software sector has experienced a significant decline, transitioning from a strong performance in 2022 to a bear market in 2023, with many leading companies seeing their stock values drop substantially.
Impact of AI: The rapid advancement of artificial intelligence has raised concerns among investors about the viability of traditional software models, particularly Software-as-a-Service (SaaS), leading to a reevaluation of company valuations.
Investment Opportunities: Despite the downturn, analysts suggest that the current market conditions may present opportunities for investors, particularly in companies that effectively integrate AI into their operations.
Stock Recommendations: Analysts have identified five software stocks that are considered undervalued and recommend them as potential buys, emphasizing the importance of adapting to AI advancements for future success.
See More
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- Significant Stock Decline: Following its Q4 earnings report, Amazon (AMZN) saw its stock drop 23% below all-time highs, trading at a price-to-earnings ratio of 25.8, which is near its lowest valuation in modern history, reflecting investor concerns over future cash flows.
- Capital Expenditure Forecast Sparks Panic: The company forecasts a staggering $200 billion in capital expenditures for 2026, while its operating cash flow for 2025 is only $139.5 billion, up 17%, prompting conservative investors to flee amid fears of potential negative free cash flow.
- Accelerating AWS Business Growth: Despite high spending, AWS's revenue growth rate accelerated from 20% in Q3 to 24% in Q4, indicating strong market demand and suggesting continued growth momentum in the coming years.
- Diversified Customer Base: AWS's diverse customer base mitigates risk; although OpenAI is a client, its future commitment to AWS is only $3.8 billion, a small fraction of Amazon's $244 billion backlog, underscoring Amazon's solid position and long-term growth potential in the cloud computing market.
See More
