Oracle (ORCL) Shares Plunge 7% Following OpenAI Growth Shortfall Report

Key Takeaways

• Shares of Oracle tumbled as much as 7.6% during premarket hours Tuesday following a Wall Street Journal report detailing OpenAI’s failure to achieve key revenue and user growth benchmarks.
• The database software giant has secured a massive $300 billion cloud infrastructure agreement spanning five years with OpenAI, representing the lion’s share of its total cloud backlog.
• Market contagion from the OpenAI news extended to SoftBank, which declined 9.9%, and CoreWeave, which slipped 7.6% in early trading.
• A former hedge fund manager from Fidelity raised alarms about Oracle’s true debt exposure, claiming off-balance-sheet financing arrangements mask the real obligations.
• Wall Street remains predominantly optimistic, with 34 out of 44 analysts maintaining Buy ratings or better, including Wedbush analyst Dan Ives who holds a $225 price objective and an Outperform stance.

Shares of Oracle (ORCL) tumbled by as much as 7.6% during Tuesday’s premarket session following a Wall Street Journal exposé that cast doubt on OpenAI’s capacity to fulfill its substantial spending obligations.

Oracle Corporation, ORCL

According to the report, OpenAI has fallen behind on internal benchmarks for both user acquisition and revenue generation in recent months. The artificial intelligence company had set an ambitious goal of reaching 1 billion weekly active users by year-end 2025 but came up short.

The AI startup also failed to meet several monthly revenue projections earlier this year amid intensifying competition in the coding assistant and enterprise AI sectors.

ChatGPT’s dominance in the generative AI web traffic landscape has eroded significantly, falling from 86.7% twelve months ago to just 64.5% by January 2026. Meanwhile, Google’s Gemini surged from a mere 5.7% to 21.5% during the identical timeframe.

Sarah Friar, OpenAI’s Chief Financial Officer, has reportedly expressed internal apprehension regarding the company’s ability to honor future computing infrastructure commitments should revenue expansion remain sluggish.

This development poses a significant challenge for Oracle. The enterprise software powerhouse has inked a $300 billion, five-year contract to provide computational resources to OpenAI — an agreement that constitutes the majority of Oracle’s enormous cloud services backlog.

Oracle’s remaining performance obligations have skyrocketed 325% to reach $553 billion. Simultaneously, the company is pursuing $50 billion in capital through debt and equity instruments to finance expanded data center infrastructure.

The complication? The majority of revenue stemming from the OpenAI partnership isn’t anticipated to materialize until the following fiscal year. Oracle is deploying capital immediately while awaiting returns.

Questions About Oracle’s Actual Debt Burden

George Noble, a hedge fund industry veteran with a background at Fidelity, delivered particularly sharp criticism. He cautioned that Oracle is leveraging project-based financing mechanisms to exclude tens of billions in liabilities from its consolidated balance sheet.

He further indicated that recent financial results may be artificially enhanced through accounting maneuvers and expense reductions, cautioning the overarching investment thesis could “end HORRIBLY.”

Oracle’s equity has already experienced a significant correction — trading approximately 50% below its 52-week peak established last September.

The selloff wasn’t confined to Oracle alone. SoftBank, which maintains a 13% ownership stake in OpenAI, plummeted 9.9% in Tokyo trading. CoreWeave, which has secured cloud infrastructure contracts with OpenAI valued at up to $22.4 billion, declined 7.6% in premarket activity.

Wall Street Maintains Predominantly Positive Outlook

Despite the market volatility, the analyst community hasn’t abandoned Oracle wholesale. Among 44 analysts monitored by Koyfin, 34 maintain Buy recommendations or stronger, with consensus price targets suggesting approximately 40% appreciation potential.

Dan Ives from Wedbush Securities reaffirmed his Outperform rating alongside a $225 price target as recently as April 24. He contended that the market is incorrectly interpreting Oracle’s aggressive capital deployment as vulnerability rather than strategic infrastructure positioning.

Ives noted that Oracle has already fortified its financial foundation by securing $30 billion through investment-grade bond issuances and preferred equity offerings.

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