Oracle Corporation's shares have extended their decline, now trading near their lowest point of the year at $119.20, after the company announced a new capital raise to fund its artificial intelligence expansion. The stock has dropped more than 52% from its all-time high, and technical analysis points to further weakness as a head-and-shoulders pattern emerges.
Dilution and Debt on the Rise
The company revealed plans to sell approximately $10 billion in new shares and issue $10 billion in senior notes, part of a broader $20 billion capital markets program. This move follows a brief rally last week when Oracle projected $225 billion in revenue for 2024 and outlined a strategy to limit external funding to $20 billion.
Oracle has significantly increased its share count, with outstanding shares rising to 3.02 billion from 2.75 billion a year ago. Simultaneously, total debt has surged to $169 billion from $88 billion in early 2025, reflecting heavy borrowing to finance its AI infrastructure. Analysts expect this borrowing trend to persist in the near term.
OpenAI Exposure and Project Jupiter
A key overhang on Oracle's stock is its reliance on OpenAI, which accounts for a substantial portion of its revenue backlog. OpenAI's revenue growth has slowed amid intensifying competition from rivals like Anthropic and open-weight models such as Kimi and DeepSeek. Moreover, OpenAI has reportedly raised only $11 billion of a targeted $30 billion, with its valuation dropping to $1.25 trillion from a $1.4 trillion goal.
Oracle is also facing operational hurdles with its Project Jupiter data center in New Mexico, where it has issued a force majeure due to power permitting challenges.
Positive Fundamentals Amid the Sell-Off
Despite the bearish sentiment, Oracle's business fundamentals remain solid. First-quarter revenue rose 30% year-over-year to $19.3 billion, with cloud revenue surging 62%. The company has also raised its free cash flow targets, supported by vendor financing and customer prepayments.
Technical Outlook
On the weekly chart, Oracle has fallen from a September high of $345 to the current $119.20, breaking below the 78.6% Fibonacci retracement level. The stock trades below all major moving averages and has formed a head-and-shoulders pattern, with the Ichimoku cloud and Supertrend indicators also signaling bearish momentum.
If the decline continues, sellers may target the $100 support level, with confirmation coming on a break below the key $115.20 threshold.
This article is for informational purposes only and does not constitute financial advice.
