Oracle (ORCL) has experienced significant market volatility since announcing a $300 billion agreement with OpenAI in September 2025, shedding a substantial $374 billion in market capitalization. This decline contrasts sharply with the performance of equivalent stocks, which have collectively risen by 31.94% over the same period, according to a report by Bryce Elder of The Financial Times.
Oracle’s Market Cap Falls
The initial announcement on September 10, 2025, triggered a surge in Oracle’s stock, climbing nearly 36% – its largest single-day gain since 1992. This spike was fueled by the promise of a massive supercomputing contract with OpenAI, requiring 4.5 gigawatts of power, and increased Oracle’s future contract revenue (Remaining Performance Obligations) to $455 billion, a 359% year-over-year increase.
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However, the positive momentum proved short-lived. By October 7, 2025, shares had already begun a steep decline, falling between 4.36% and over 6% as concerns emerged regarding the profitability of Oracle’s Nvidia-powered AI cloud business. Internal reports indicated that while the Nvidia cloud services generated approximately $900 million in sales during the three months ending August 2025, the gross margin was only 14%, significantly lower than the company’s overall gross margin of around 70% for its traditional software business. Further exacerbating the situation, Oracle’s aggressive investments in AI and cloud infrastructure, financed through increasing debt, totaling $104 billion with plans to raise an additional $38 billion, raised questions about the company’s financial stability.
The downward trend continued into November 2025, with Oracle’s stock declining nearly 30% over the preceding month. This decline was significantly more pronounced than that of its tech rivals, driven by growing market skepticism about the long-term sustainability of AI capital expenditures and fears of an AI bubble. Analysts have questioned the feasibility of OpenAI’s purported $1.4 trillion long-term spending commitments, especially considering the company’s limited disclosed revenue, and have criticized Oracle’s portrayal of its AI-related order backlog.
In an effort to diversify its AI infrastructure capabilities, Oracle announced an expanded partnership with AMD in October 2025 to offer cloud services powered by AMD’s upcoming MI450 artificial intelligence chips. The initial deployment is slated to include 50,000 MI450 processors in Q3 2026, with plans for further expansion in 2027 and beyond. However, this strategic move has so far failed to offset the prevailing negative market sentiment.
Adding another layer to the evolving AI landscape, SoftBank divested its entire $5.83 billion stake in Nvidia in November 2025, redirecting the capital towards investments in OpenAI and related infrastructure, including potential funding for Stargate, a next-generation AI data center initiative co-developed by OpenAI and Oracle.
ORCL Analyst Summary
Bull Case
- Strong initial demand for Oracle’s AI cloud services.
- Expansion of partnerships with AMD diversifies processor capabilities.
- Large OpenAI contract boosts future revenue potential.
Bear Case
- Thin profit margins in Nvidia-powered AI cloud business.
- Increasing debt levels raise concerns about financial stability.
- Market skepticism about sustainability of AI capital expenditures.
Oracle’s ambitious foray into AI infrastructure, while initially celebrated, is now facing headwinds due to profitability concerns, mounting debt, and broader market anxieties surrounding the AI sector. The company’s stock performance in the coming months will likely hinge on its ability to demonstrate sustainable profitability within its AI cloud business and manage its debt burden effectively.
