ORCL stock fails to sustain gains again as inflation and AI spending concerns put pressure on Oracle

overview

Oracle shares resumed their slide toward the $180 level as better-than-expected U.S. inflation data and growing concerns about aggressive AI infrastructure spending sparked fresh volatility across technology markets.

Oracle Rally loses momentum

Oracle stock reversed lower this week after failing to maintain momentum above the psychologically important $200 level. Stocks fell about 5% in Tuesday trading as investors reacted to better-than-expected U.S. inflation data and wider declines across growth-oriented tech stocks.

The latest Consumer Price Index report showed that inflation remains high, reinforcing expectations that interest rates may remain high for an extended period of time. Markets are growing concerned that a prolonged period of tight monetary policy could weigh on valuations across high-growth sectors, particularly those heavily tied to the expansion of artificial intelligence infrastructure.

Oracle remains one of the big beneficiaries of rising demand for enterprise AI, but its recent selloff highlights how quickly sentiment can change when valuations soar and macroeconomic uncertainty increases.

Technology sector weakness returns

Oracle’s exit occurred alongside new weaknesses across the broader technology sector.

The Nasdaq fell more than 1%, and semiconductor and AI companies such as Intel Corporation, Qualcomm Incorporated, Micron Technology and Advanced Micro Devices also fell sharply after strong gains in recent weeks.

Investors are becoming increasingly cautious about whether the huge wave of AI-related spending currently sweeping the technology industry can deliver sustainable long-term returns. The market is also beginning to scrutinize execution risk more closely, especially as infrastructure costs continue to rise.

While enthusiasm for AI remains strong, there are growing concerns that expectations are getting ahead of short-term fundamentals.

Oracle expands cloud ambitions

Despite recent market pressures, Oracle continues to aggressively expand its role in enterprise AI and cloud computing.

The company integrates its agent AI system directly into the Fusion Cloud platform. Unlike traditional AI assistants that primarily respond to prompts, Oracle’s new system is designed to autonomously identify operational inefficiencies, make recommendations, and perform tasks across finance, logistics, and supply chain management.

Oracle also continues to expand its global cloud footprint through new data center investments and public cloud deployments, including recent international expansion initiatives.

These moves strengthen the company’s ambitions to become a bigger player in enterprise AI infrastructure, rather than simply offering standalone software tools.

Technical signals reflecting price stability after a decline

From a technical perspective, Oracle’s price movement reinforces fundamental concerns. On the long-term chart, the stock is below the 20-month moving average (gray) of $185, which previously served as support, and could turn into resistance. The 50 SMA (yellow) is holding, but the 20 SMA is also acting as resistance on the upside.

Monthly ORCL Chart – 20 SMA acting as resistance

On shorter time frames, the rebound has consistently failed near resistance levels, forming a clear pattern of lowering the highs, so we can see where this week’s rebound will end. On the daily chart, the 50 SMA (yellow) is acting as a resistance level, rejecting the price and pushing the stock lower, pushing ORCL back below $135. That support zone held again and the rebound pushed ORCL above all MAs, but today the price fell again.

ORCL chart daily – SMA back below 100

Rising costs and execution risks attract attention

However, investors are increasingly focused on the huge financial burden required to support these ambitions.

Oracle is expected to invest heavily in data centers, network systems and high-performance computing infrastructure, with some forecasts suggesting capital spending could reach $50 billion in fiscal 2026.

At the same time, the company implemented layoffs across a portion of its global workforce as management seeks to control costs and maintain profitability during this expansion cycle.

The appointment of Hilary Maxson as Chief Financial Officer further highlights the growing importance of capital allocation and operational discipline as Oracle navigates an increasingly competitive and expensive AI environment.

While Oracle remains well-positioned in enterprise cloud computing and automation, the decline suggests the market is less willing to overlook the rising costs, valuation pressures, and execution risks associated with the next phase of the AI ​​infrastructure race.

Strong earnings cannot maintain momentum

Oracle’s fiscal 2026 third quarter results exceeded expectations, with both revenue and profits exceeding expectations.

Despite this strong performance, the stock struggled to sustain profits. The initial optimism quickly dissipated, and the stock fell below key levels. The recent recovery appears to be driven by broader market sentiment rather than a fundamental shift in investor confidence.

Strong earnings and sales growth

• Earnings per share (EPS): $1.79 vs. $1.70 expected
• Total revenue: $17.19 billion vs. $16.91 billion forecast
• Year-on-year revenue growth: 22%
• Net income: $3.72 billion (up from $2.94 billion in the same period last year)

These results reflect strong demand across Oracle’s cloud services and enterprise software platforms.

Growth momentum continues to accelerate as enterprises scale cloud workloads and AI-driven computing infrastructure.

Cloud business drives growth

• Total cloud revenue: $8.9 billion (includes SaaS and infrastructure)
• Cloud Infrastructure Revenue: $4.9 billion vs. $4.74 billion expected

Main highlights:

• Cloud infrastructure revenue increased 84% year over year, accelerating from 68% growth in the previous quarter.
• Demand is driven by AI workloads, enterprise migrations, and large-scale data processing needs.
• Oracle’s cloud infrastructure platform increasingly competes with leading hyperscalers in high-performance computing and AI training environments.

Huge capital investment in AI infrastructure

• Oracle continues to aggressively expand its data center footprint.

Key numbers:

Capital investment:

• 269% YoY increase in Q1
• reached $8.5 billion during the period.
• Full-year capital spending forecast: $50 billion

This spending reflects Oracle’s strategy to expand its AI infrastructure, cloud capacity, and high-performance data centers globally. The major investment is aimed at supporting growing enterprise demand for AI model training and cloud computing services.

Record backlog signals strong future demand

• Oracle reported a huge backlog of $553 billion.
• Main impact:
• Outstanding balances are more than four times higher than a year ago.
• This reflects long-term enterprise cloud agreements and AI infrastructure agreements.
• The pipeline suggests a solid outlook for multi-year earnings.

Outlook for fiscal year 2027

• Oracle now expects total revenue to be $90 billion.

Outlook for fiscal 2026

• Revenue forecast: $67 billion (unchanged)
• Capital investment plan: $50 billion (no change)

Guidance for Q4 2026

• Total revenue growth: 19% to 21% year over year
• Cloud revenue growth rate: approximately 46%

Scardian Meta

lead analyst

Scardian Meta Lead Analyst. Skardian is a professional Forex trader and market analyst. He has been active in market analysis for the past 11 years. Prior to becoming our Head Analyst, Mr. Skerdian was a trader and market analyst at Saxo Bank’s local branch Accioner. Skardian specializes in model development and practical trading experiments. Scardian holds a master’s degree in finance and investments.