Oracle shares rose by approximately 17% over the 2025 calendar year, outperforming the S&P 500 by nearly one percentage point. The stock experienced a dramatic 40% rally on the day of its September earnings release, driven by a 359% year-over-year jump in remaining performance obligations (RPO) for its cloud business. However, the gains evaporated in the final months, leaving full-year returns at just under 20% as investors grew cautious about sustainability of AI-driven growth.

By the end of Oracle’s November quarter, cloud RPO stood at $523 billion, of which roughly 57% originated from a single AI customer. That concentration has raised concerns over counterparty risk: the client reported operating losses north of $25 billion through the first three quarters of 2025 and has committed over $1 trillion in future spending. Investors worry that any delay or restructuring of those payments could materially impact Oracle’s forward revenue visibility.

Oracle’s gross debt ballooned from $96 billion to nearly $130 billion over 2025 as the company financed its aggressive data center expansion to support AI workloads. Free cash flow swung to a negative $10 billion in the most recent quarter, marking the first quarterly FCF deficit in company history. Management forecasts AI-specific cloud margins of 30% to 40%, below traditional cloud peers, leaving little room for error if revenue ramps slower than anticipated.

Mizuho and Jefferies have each reiterated price targets implying more than 100% upside from current levels, betting on accelerating demand for AI compute and Oracle’s entrenched infrastructure position. Conversely, credit default swap spreads on Oracle debt surged to a 16-year high in December, reflecting growing concern over leverage and customer concentration. Upcoming RPO updates and quarterly results will be pivotal in gauging whether Oracle can sustain its AI-driven growth trajectory.