Oracle is getting crushed again and is down nearly 50% since September

The reversal in Oracle shares this year is one for the history books.

The company was an AI high-flyer for much of the year in a March to $250 from $170. Then it had a spike for the ages in September after announcing earnings.

If you ever needed a lesson on how quickly the AI narrative can turn against you, look at this chart. We’ve gone from “Larry Ellison is the King of AI” to “Show me the money” in less than a quarter.

That jump to $345 briefly made Larry Ellison the world’s richest man. The narrative was perfect. Ellison was pitching Oracle as the backend for the entire AI revolution. The headline number wasn’t revenue; it was Remaining Performance Obligations.

• The backlog exploded to over $455 billion (and later $523bn).

• The market saw the OpenAI partnership as validation (and the turn against OpenAI lately reverses it)

• Multi-cloud deals with AWS and Google made Oracle look essential and neutral.

Traders didn’t care about margins or capex, hey just saw “OpenAI” and “Backlog” and hit the buy button. There was surely a short-squeeze component and an options-driven frenzy as well.

What killed the vibe? Two things: a capex rethink and delays.

The Earnings Reality Check (Dec 10)
The Q2 earnings report last week was the final nail. Revenue missed but the real killer was guidance as Oracle raised its capital expenditure forecast to $50 billion for FY2026. Over the past two months, investors suddenly remembered that borrowing billions to build data centers isn’t free money. Much of that came from the bond market as Oracle CDS surged.

The narrative further broke on Friday when Bloomberg reported delays in data center delivery for OpenAI, potentially pushing timelines to 2028. The whole bull case was built on speed—that Oracle could build clusters faster than Microsoft. If that advantage goes, so does the valuation.

Now with shares down another 5% today and $177, they’re barely positive on the year and down almost 50% fro the September high. Let’s hope that’s not a sign to come for the AI trade in general but you can’t help but worry about what happens when the market starts asking about where the profits will come from to go along with the massive spending.