Tech giant Oracle (ORCL) saw its stock soar in early 2025 as excitement around artificial intelligence (AI) grew. In fact, Ellison became the richest person in the world at one point, as investors were optimistic that AI-related deals could help Oracle’s cloud business reach $166 billion in revenue by 2030. But the hype didn’t last. Concerns quickly surfaced about how tech companies like Oracle are using large amounts of debt to fund their AI expansion.
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More precisely, Oracle issued nearly $26 billion in bonds this year, which caused Oracle’s total debt to jump 40% to $124 billion, while cash outflows surged from $2.7 billion to $10 billion. As a result, the price of its credit default swaps, which is a way to bet on whether a company might default, increased. Analysts also noted that Oracle has $248 billion in future lease payments, mostly for data centers, that don’t yet appear on its balance sheet.
More doubts came when investors realized that OpenAI accounts for over $300 billion of Oracle’s expected future revenue. With OpenAI’s costs expected to eventually hit $1.4 trillion, investors started worrying if it could actually pay Oracle. There’s also uncertainty about when Oracle’s new data centers will start making money, especially as some projects may be delayed until 2028. While the company insists it can shift capacity to other customers if needed, investor confidence has taken a hit.
Is Oracle a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 25 Buys, 10 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $308.87 per share implies 58.6% upside potential.
