New York, Jan 14, 2026, 16:40 EST — After-hours trading.
Oracle Corp shares slipped Wednesday after bondholders filed a lawsuit accusing the company of hiding its plans for significant new debt tied to an AI expansion. In after-hours trading, Oracle’s stock dropped 4.3% to $193.61.
The lawsuit hits at a sensitive time for AI-tied stocks, with investors scrutinizing data center expenses as much as revenue numbers. Oracle is pushing hard to close the gap with cloud leaders Amazon and Microsoft, a push that demands hefty investments in steel, power, and borrowing.
For equity traders, the takeaway is clear: a legal battle over disclosure could push up financing costs. It also brings back a key question lurking behind Oracle’s AI sales pitch — just how much debt underpins the next wave of capacity.
Bondholders, headed by the Ohio Carpenters’ Pension Plan, filed a proposed class action in Manhattan’s New York state court, according to the complaint. They claim to have purchased $18 billion worth of notes and bonds Oracle issued on Sept. 25, just two weeks after Oracle revealed a $300 billion, five-year deal to provide OpenAI with computing power.
Investors noted Oracle returned to the capital markets about seven weeks later, securing $38 billion in loans to finance two data centers linked to its OpenAI deal. “The bond market’s reaction to Oracle’s additional debt was swift and bracing,” the bondholders said. Yields and spreads—the interest investors require and the extra premium over benchmarks—shifted toward levels typical of lower-rated debt. (MarketScreener)
The suit targets Oracle, Chairman Larry Ellison, former CEO Safra Catz, and Chief Accounting Officer Maria Smith, along with 16 underwriting banks, seeking unspecified damages. Oracle declined to comment, and bondholders’ lawyers did not immediately respond to requests for comment.
Tech shares slipped across the board as the session wound down, pushing the Invesco QQQ Trust, which tracks the Nasdaq 100, down roughly 1%. Oracle’s stock fluctuated between $190.86 and $202.44 on a volume near 22.3 million shares.
Oracle dropped a separate headline earlier Wednesday, revealing a new cloud deal with the UK Ministry of Defence to migrate legacy systems to Oracle Cloud Infrastructure, its public cloud arm. Victoria Cope, the MoD’s commercial director, noted the deal “reflects the MoD’s multi-vendor strategy.” Oracle exec Jason Rees added the move would steer clear of “complicated and costly rewrites.” (Oracle)
Some analysts on the Street are focusing on valuation instead of the lawsuit. Jackson Ader at KeyBanc kept his Overweight rating and $300 price target, arguing Oracle’s cloud segment looks “significantly undervalued” when viewed through a sum-of-the-parts lens. (GuruFocus)
The legal battle unfolds amid a broader AI capacity race that’s only intensifying. OpenAI announced plans to acquire up to 750 megawatts of computing power from chipmaker Cerebras over the next three years. A source close to the deal estimated the contract’s value at over $10 billion. (Reuters)
The downside case isn’t difficult to imagine. If the lawsuit lingers or triggers closer examination of Oracle’s funding strategy, risk premiums could climb on both its bonds and shares—especially if investors begin to expect additional debt.
Following Wednesday’s decline, traders will be looking for company reactions to the complaint and updates on AI-related financing. Oracle’s next key date is its quarterly dividend payout on Jan. 23. According to its investor relations page, third-quarter fiscal 2026 earnings will be released in mid-March. (Q4 CDN)
