Key Takeaways
- Shares of Oracle plunged as much as 7.6% in premarket sessions Tuesday following a Wall Street Journal report that OpenAI failed to achieve its internal user growth and revenue goals.
- The enterprise software company has secured a $300 billion, five-year cloud infrastructure agreement with OpenAI — representing the lion’s share of its cloud services backlog.
- Market ripple effects included SoftBank declining 9.9% and CoreWeave sliding 7.6% during premarket hours as investor anxiety surrounding OpenAI spread.
- A former hedge fund manager raised alarms that Oracle’s actual debt burden may be significantly higher than reported due to off-balance-sheet financing arrangements.
- Despite the selloff, 34 out of 44 Wall Street analysts continue to recommend Oracle as a Buy, with Wedbush analyst Dan Ives holding firm on his Outperform rating and $225 price objective.
Shares of Oracle (ORCL) tumbled as much as 7.6% during Tuesday’s premarket session after the Wall Street Journal published a report questioning OpenAI’s capacity to fulfill its substantial spending obligations.
According to the report, OpenAI has fallen short of its internal benchmarks for both user acquisition and revenue generation in recent months. The artificial intelligence firm had set an ambitious goal of reaching 1 billion weekly active users by year-end 2025 but failed to achieve that milestone.
Additionally, the company missed several monthly revenue projections earlier this year as intensifying competition in the coding assistance and enterprise AI sectors took its toll.
ChatGPT’s dominance in generative AI web traffic has eroded significantly, declining from 86.7% a year ago to just 64.5% in January 2026. Meanwhile, Gemini’s market share surged from 5.7% to 21.5% during the same timeframe.
Sarah Friar, OpenAI’s Chief Financial Officer, has reportedly expressed internal concerns about the company’s ability to honor future computing infrastructure commitments if revenue expansion doesn’t accelerate.
This development poses a significant challenge for Oracle. The database and cloud infrastructure 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 backlog.
Oracle’s remaining performance obligations have skyrocketed 325% to $553 billion. The company is simultaneously pursuing $50 billion in capital through debt issuance and equity offerings to finance expanded data center infrastructure.
The complication? The majority of revenue from the OpenAI partnership isn’t anticipated to materialize until next year. Oracle is investing heavily upfront while revenue recognition remains deferred.
Questions Surrounding Oracle’s True Debt Exposure
George Noble, a hedge fund veteran with prior experience at Fidelity, voiced particularly sharp criticism. He cautioned that Oracle is employing project financing mechanisms to exclude tens of billions in borrowing from its reported balance sheet.
“So when analysts quote Oracle’s debt load, they’re UNDERSTATING the actual exposure by a meaningful margin,” Noble posted on X.
He further indicated that recent earnings results may be artificially enhanced through accounting maneuvers and expense reductions, cautioning that the overall situation could “end HORRIBLY.”
Oracle’s share price has experienced a substantial correction — currently trading approximately 50% below its 52-week peak reached last September.
The negative sentiment extended to other OpenAI-linked companies. SoftBank, which maintains a 13% stake in OpenAI, declined 9.9% in Tokyo trading. CoreWeave, holding cloud infrastructure agreements with OpenAI valued at up to $22.4 billion, fell 7.6% in premarket trading.
Wall Street Analysts Remain Predominantly Optimistic
Despite the recent volatility, the analyst community hasn’t abandoned Oracle. According to Koyfin data, 34 of 44 analysts maintain Buy ratings or higher on the stock, with consensus price targets suggesting approximately 40% upside potential.
Wedbush analyst Dan Ives reaffirmed his Outperform rating and $225 price target as recently as April 24. He contended that the market is incorrectly interpreting Oracle’s aggressive capital deployment as a vulnerability rather than recognizing it as a strategic long-term infrastructure investment.
Ives highlighted that Oracle has already strengthened its financial position by securing $30 billion through investment-grade bond offerings and preferred equity issuances.
OpenAI, for its part, told the Journal it was “buying as much compute as we can.” The company did not immediately respond to Barron’s request for comment Tuesday morning.
