Oracle reported its weakest quarterly performance since 2021 in its fiscal third quarter, sending shares down more than 40% from mid-September 2025 highs. Revenue growth slowed to low single digits, and free cash flow turned negative for the period. The reversal wiped out nearly all gains accumulated during the spring and summer rally, when the company was hailed as an AI infrastructure leader alongside peers.

Investors have grown concerned about Oracle’s direct funding of AI data centers. Remaining performance obligations (RPOs) jumped to $455 billion, with roughly $300 billion attributed to a multiyear contract with OpenAI. Meanwhile, OpenAI itself has amassed $1.4 trillion in infrastructure commitments across multiple vendors, raising questions about each partner’s ability to finance build-outs without overleveraging. Credit-default swap spreads on Oracle debt widened materially following the quarter, reflecting mounting leverage anxiety.

Despite the recent slump, 24 of 34 Wall Street analysts maintain buy ratings on Oracle, with an average implied share gain of around 60% over the next 12 months. Mizuho’s Siti Panigrahi has singled out Oracle as a top enterprise-software pick for 2026, assigning a $400 target based on continued AI adoption and the expectation that data-center capacity will remain constrained industry-wide. Even cautious firms highlight the company’s enduring enterprise-software cash flows as a stabilizer.

Unlike Microsoft and Amazon, which largely leverage third-party financing for hyperscale data centers, Oracle has elected to carry most of its AI infrastructure investment on-balance sheet. This approach amplifies earnings volatility and balance-sheet risk if AI spending decelerates. Conversely, it could translate into higher long-term returns if Oracle successfully monetizes its capacity and captures a growing share of enterprise AI deployments.