New York, Jan 30, 2026, 17:31 EST — After-hours
- Oracle dropped 2.6% by Friday’s close, deepening the recent slump in software shares.
- Oracle America landed an $88.1 million Cloud One task order from the U.S. Air Force.
- Traders are balancing Big Tech’s hefty AI investments against the near-term outlook for cloud growth.
Oracle shares dropped 2.6%, closing at $164.58 Friday, and saw little movement after hours. Investors continued offloading software stocks, even after Oracle landed a new U.S. military cloud contract.
The stock has slipped amid a wider selloff in software shares following earnings and guidance from SAP and ServiceNow, which stoked worries that new AI technologies might cut into demand for subscription-based software, or SaaS, sold on recurring contracts. “The market’s … pricing a worst-case scenario that software is dead because AI is disrupting the space,” said Adam Turnquist, chief technical strategist at LPL Financial. Reuters
The pressure ramped up this week after Big Tech earnings came in, stirring doubts about whether sky-high AI spending will deliver returns anytime soon. “Microsoft disappointed and there are some genuine concerns that AI investments will eat the software companies’ lunches,” said John Praveen, managing director and co-CIO at Paleo Leon. Reuters
On Friday, the U.S. Air Force handed Oracle America Inc. a firm-fixed-price task order worth $88,112,197 under its Cloud One program. The work is slated to continue through Dec. 7, 2028, according to a government announcement.
Oracle is dealing with some operational challenges. The company reported earlier this week that a temporary, weather-induced power outage at one of its data centers disrupted TikTok users in the U.S., according to a statement from spokesperson Michael Egbert, as Reuters noted.
Spending remains in the spotlight. Last month, Oracle signaled it needs to boost investment to keep up with AI-fueled cloud demand. The company missed sales and profit targets set by analysts and now expects capital spending to jump by $15 billion above previous projections, Reuters reported.
A major question is whether contract wins, particularly in government cloud, can make up for any slowdown in commercial cloud demand and convince investors that rising capital spending won’t put prolonged pressure on cash flow. Execution problems and outages risk fueling concerns further when sentiment is already shaky.
Competition poses a clear risk. Enterprise clients can choose among the top cloud providers, and if workloads start moving elsewhere—or if pricing comes under pressure—it could weigh on growth and margin forecasts.
Oracle’s fiscal third-quarter results are due March 9, marking a key moment for investors. Traders will focus on cloud growth updates and the status of remaining performance obligations — that is, contracted revenue still to be recognized — plus any shifts in spending plans.
