NEW YORK, March 30, 2026, 16:08 EDT
Oracle shares dropped Monday, with Wall Street sizing up a new bullish call from Bernstein—which argues the company is flying under the AI radar—even as doubts about the pace of its data center expansion continue to dog cash flow and, by extension, the dividend. The stock slipped around 0.9% to $138.40 in late trading, lingering nearly 60% off its September high. MarketWatch
Oracle stands out as a key gauge of whether the AI infrastructure surge can offset the financial pressure it’s taking on. Once considered a distant competitor to Amazon Web Services and Microsoft Azure, the company has ramped up spending to boost capacity for clients including OpenAI and Meta. Reuters
The timing isn’t great. On Monday, Reuters columnist Jamie McGeever pointed out that higher market rates are slamming Big Tech right as the sector gets ready to shell out over $600 billion on AI this year—a difficult backdrop for a company already tapping debt and equity to fuel growth. Reuters
Oracle laid out its growth story clearly in its March 10 report. The company’s remaining performance obligations shot up 325% year over year to $553 billion, reflecting a hefty pipeline of future revenue. Revenue climbed 22% to $17.2 billion, while cloud infrastructure posted an 84% surge, reaching $4.9 billion. ([Oracle Investor Relations][4])
Free cash flow has swung deep into the red, with Oracle stepping up its investments in servers, networking hardware, and data centers. The company’s board is sticking with a fiscal 2026 capex target of $50 billion. As of the end of February, trailing four-quarter free cash flow came in at negative $24.7 billion. Despite the cash drain, directors signed off on another 50-cent quarterly dividend—a decision that’s drawn fresh debate among market watchers over just how sustainable that payout looks with spending at this pace. ([Oracle Investor Relations][4])
Tension around Oracle has kicked up a larger debate: is this tech giant just the first big name to get tossed by the AI trade unwind, or is it simply a company whose risks now outshine its potential? Opinions have diverged. Some are fixated on the nearly 60% plunge from last year’s peak, while others say the rout has dragged expectations down more than necessary. ([MarketBeat][5])
Bernstein’s Mark Moerdler didn’t budge Monday, sticking with his outperform call and a $319 price target, per MarketWatch. The analyst said Oracle has the chops to become a key AI player, estimating the company would need just $15 billion to $20 billion more in funding through fiscal 2028—and could start generating positive free cash flow by 2030. MarketWatch
Oracle’s leadership is sounding familiar themes. Clay Magouyrk, one of the company’s CEOs, told analysts this month that demand for AI infrastructure “continues to exceed supply.” eMarketer analyst Jacob Bourne, reacting to the most recent quarter, called Oracle the AI trade’s “canary in the coal mine.” Bourne pointed to the results as evidence of solid underlying AI spending. Reuters
The bear thesis here is straightforward. Back in February, Oracle laid out its intention to raise between $45 billion and $50 billion in 2026 via debt and equity. Fast forward to March, and the company had secured $30 billion already—split between investment-grade bonds and mandatory convertible preferreds. Jefferies analysts acknowledged the move gives Oracle some breathing room, but cautioned that free cash flow probably won’t turn positive before fiscal 2029. Oracle Investor Relations
The catch for Oracle: it still needs to show that its backlog translates into real cash, and soon. AJ Bell’s Russ Mould noted earlier this year that the company’s fate is “heavily tied to OpenAI.” Last week, Reuters said Microsoft is set to rent a Texas data center project that had originally been built for Oracle and OpenAI. A source told the outlet that Oracle’s current deals with OpenAI are staying put. But if AI demand cools, yields keep climbing, or those long-term contracts take longer than expected to turn into revenue, margin pressure and financing costs could get worse. Reuters
[4]: https://investor.oracle.com/investor-news/news-details/2026/Oracle-Announces-Fiscal-Year-2026-Third-Quarter-Financial-Results/default.aspx “
Oracle – Oracle Announces Fiscal Year 2026 Third Quarter Financial Results
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[5]: https://www.marketbeat.com/originals/is-oracle-the-first-of-the-ai-bubbles-to-pop/ “
ORCL Stock Down 60% From Highs: Buy the Dip or Avoid?
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