Oracle stock plunged more than 40% in June, making it the worst performer among six major AI infrastructure tech companies in the same period. Meanwhile, Oracle's fiscal year 2026 (ending May 2026) annual report unusually detailed multiple risk scenarios in data center investments, including cost overruns, customer non-payment or non-renewal, and inability to redeploy remaining assets on acceptable terms.
Annual Report Risk Disclosure: Three Specific Warnings on Cost Overruns, Customer Non-Payment, and Asset Unavailability
According to Oracle's fiscal year 2026 annual report filing, the company detailed specific risk scenarios for data center investments:
Construction Phase Risk: Data center construction cost overruns and delays due to supply chain bottlenecks, government restrictions on data center development, or third-party vendors failing to complete on time.
Customer Credit Risk: Major customers may fail to pay or choose not to renew; the report explicitly states that "some customers may be highly leveraged and bear their own operational and regulatory risks, and even with normal credit review mechanisms, there may still be risks of non-payment and non-performance."
Asset Idle Risk: Once customers are lost, Oracle will be left with a large number of extremely expensive assets, and "may not be able to re-lease, repurpose, or transfer this computing capacity on acceptable terms."
Stargate Agreement: Direct Link Between $300 Billion Contract and OpenAI Payment Risk
According to the Stargate agreement, Oracle is building large data centers across the United States, providing computing power to OpenAI through OCI (Oracle Cloud Infrastructure). The total contract value is as high as $300 billion, making it Oracle's largest single order ever, and also the largest share among the six companies' combined $850 billion in undrawn data center leases.
Oracle's financial report did not directly name OpenAI in its filing, but the warning it disclosed about "customers may be highly leveraged" and bear "their own operational and regulatory risks" directly echoes OpenAI's current financial structure. Market reports have also indicated that Stargate's expansion progress was once affected by disagreements among the three parties over data center control.
Oracle Stock Fell Over 40% in June: Moody's Debt Warning
Oracle's stock fell more than 40% in June 2026, the worst performer among six major AI infrastructure companies (Oracle, Microsoft, Meta, etc.), all six of which fell in June. Moody's warned that Oracle's debt growth has outpaced profit, with leverage approaching four times EBITDA; on-book debt exceeds $100 billion, and free cash flow has turned negative.
In contrast, Microsoft, Meta, and others primarily use their own cash flow to invest in AI infrastructure; Oracle is the only one among the six that has heavily borrowed.
Comparison of Capital Expenditure Scale Among Six Giants: $850 Billion in Undrawn Leases and Oracle's Unusual Borrowing
The six major AI infrastructure tech companies have collectively committed $850 billion in undrawn data center leases; of which Oracle's fiscal year 2026 capital expenditure was $55.7 billion, more than double the previous year's $21.2 billion, and plans to further increase to $90 to $95 billion in fiscal year 2027.
Oracle stated in its annual report that "to grow the OCI business, we must continuously increase computing capacity and invest substantial capital and operating expenses," acknowledging the unavoidable two-way pressure of this large-scale investment—if not invested, they lose market; if heavily invested, they bear uncertainty in recovering costs.
Frequently Asked Questions
Why did Oracle's stock plunge more than 40% in June 2026?
According to market reports, main factors include: Moody's warned that Oracle's debt growth outpaced profit (leverage approaching four times EBITDA), on-book debt exceeded $100 billion and free cash flow turned negative; meanwhile, Oracle's fiscal year 2026 annual report unusually detailed risk scenarios in data center investments, raising market concerns about AI investment returns. All six similar companies' stocks fell in June, with Oracle suffering the largest decline.
What is the scale of Oracle's Stargate agreement and what is the OpenAI payment risk?
According to reports, Oracle is building data centers for OpenAI across the US under the Stargate agreement, with a total contract value of $300 billion, Oracle's largest single order ever. Oracle's financial report filing stated that some customers may be highly leveraged, and even with normal credit review mechanisms, there is still a risk of non-payment; specific contract terms and OpenAI's financial status are subject to official announcements by all parties.
What is Oracle's debt and capital expenditure scale, and how does it differ from other tech giants?
Oracle's fiscal year 2026 capital expenditure was $55.7 billion, with plans to invest $90 to $95 billion in fiscal year 2027; on-book debt exceeds $100 billion, and free cash flow has turned negative. Moody's warned that its leverage is approaching four times EBITDA. In contrast, Microsoft, Meta, and others mainly invest in AI infrastructure through their own cash flow; Oracle is the only one among the six that has heavily borrowed to invest.
