Oracle’s $7 Billion Security Deposit Threatens to Deepen a Credit Crisis the Stock Can’t Shake
Published on 07/23/2026 at 18:13 | Redaktion boerse-global.de
The tension inside Oracle has rarely been starker. While its Indian software subsidiary, Oracle Financial Services Software (OFSS), just posted a staggering 120.5 percent profit surge on the back of a 9.35 billion rupee licensing deal, the parent company’s shares are trading within spitting distance of their 52-week low at €105.66. The disconnect tells a story of a business that is operationally sound in its legacy software division but financially stretched to the breaking point by its AI infrastructure ambitions.
The stock has shed 62.36 percent since its September 2025 record high of €280.70, and the slide accelerated on Thursday with a 4.26 percent drop. Over the past twelve months, Oracle has lost 48.60 percent of its value. The market capitalization still stands at roughly €306 billion, but the trajectory has investors questioning whether the company’s massive capital spending on cloud and AI data centers is a bridge to future dominance or a debt-fueled trap.
The $638 Billion Backlog That Can’t Fix the Cash Flow
On paper, Oracle’s demand story is extraordinary. The company holds $638 billion in remaining performance obligations — a 363 percent increase year-over-year. That backlog represents contracts for cloud services and AI infrastructure that have been signed but not yet delivered. Management expects to convert roughly 12 percent of that, or about $77 billion, into revenue in the coming fiscal year.
The problem is that converting those orders into cash requires spending first. Oracle’s capital expenditures have already climbed to $55.7 billion in the current fiscal year, and the company plans net investments of $70 billion in the next. Much of that is flowing into the “Stargate” project, a joint AI data center buildout with OpenAI. The result is a negative free cash flow of $23.7 billion and total debt of approximately $156 billion.
Should investors sell immediately? Or is it worth buying Oracle?
Guggenheim maintains a buy rating, arguing that Oracle’s cost-plus contracts with hyperscaler clients should protect margins on these builds. But the market is skeptical, and the credit rating agencies are even more so.
Wisconsin’s $7 Billion Question
A single data center project in Wisconsin has become a flashpoint. Local energy regulators are demanding that Oracle post a security deposit of over $7 billion for the planned facility. The size of that requirement — for just one site — underscores the regulatory and financial risks embedded in the company’s expansion strategy.
The credit markets have already taken notice. S&P downgraded Oracle to BBB-, just one notch above junk status, citing the debt burden from AI investments. If further downgrades materialize, financing costs will rise, and the already strained balance sheet will come under additional pressure. CLSA recently initiated coverage with a hold rating, reflecting the growing unease about hyperscaler spending across the sector.
The Dilution Trap
Oracle plans to raise an additional $40 billion in the coming fiscal year. Crucially, $20 billion of that is earmarked for an equity program that will place new shares on the market. At current depressed prices, that dilution would hit existing shareholders hard. The stock is trading 33.95 percent below its 200-day moving average of €160.78 and 31.36 percent below the 50-day average of €149.34. Every new share sold at these levels reduces the value of those already held.
The 30-day annualized volatility of 46.56 percent reflects the market’s jitters. The RSI of 29.9 on the primary article’s data — or 32.7 in the secondary source — signals oversold conditions that have historically preceded short-term bounces. But technical indicators alone won’t resolve the fundamental question: Can Oracle convert its $638 billion backlog into cash fast enough to service its debt and avoid further credit damage?
Oracle at a turning point? This analysis reveals what investors need to know now.
What Happens Next
The immediate support level is €105.10, the 52-week low. A close below that would likely trigger algorithmic selling and open the door to single-digit euro prices. Holding that level, combined with growth in the IaaS segment — which accounts for 93 percent of cloud revenue — could set up a recovery toward the 50-day moving average around €150.
Two events will test the thesis. On Friday, July 24, 2026, Avadhut Ketkar officially takes over as CEO of OFSS, the subsidiary whose licensing success shows that Oracle’s core software business remains healthy. The bigger test comes in September 2026, when Oracle reports first-quarter results for the new fiscal year. By then, the market will want evidence that the $638 billion backlog is translating into revenue toward the $90 billion annual target.
Until then, the stock is caught between a bull case built on unmatched demand visibility and a bear case anchored in credit risk, dilution, and a single $7 billion security deposit that could redefine the cost of building AI infrastructure at scale.
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