Oracle's AI Infrastructure Push Faces Legal Headwinds as Stock Pulls Back From 28% Weekly Rally
03.06.2026 - 15:34:12 | boerse-global.de
Oracle’s breakneck expansion of artificial-intelligence computing capacity has drawn a legal challenge just as the stock retreats from one of its most explosive weekly gains in years. The company delivered roughly 400 megawatts of AI-ready data center power in the latest quarter and expects to surpass that figure in the current one, but a shareholder investigation now threatens to overshadow those operational milestones.
CEO Clay Magouyrk said Oracle is ramping up capacity at a rapid clip to meet customer demand that currently outstrips supply. The company is pursuing multiple projects in parallel, with locations in Abilene, Wisconsin, Mexico and Texas tied to broader Stargate-related initiatives. Oracle Cloud Infrastructure has carved out a niche alongside Amazon Web Services, Microsoft Azure and Google Cloud, winning marquee clients such as OpenAI, Meta and xAI.
On the regulatory front, US law firm Kuehn Law has opened an investigation into Oracle’s management, alleging that executives misled investors about the company’s AI infrastructure strategy. At issue is whether Oracle’s massive capital spending – which could reach around $100 billion by 2027, well above earlier estimates of roughly $71 billion – has been justified by revenue growth. The firm is reaching out to shareholders who bought stock before June 12, 2025, and the probe focuses on potential risks to debt levels, credit ratings and free cash flow.
Should investors sell immediately? Or is it worth buying Oracle?
The stock’s trajectory reflected the tension. After surging nearly 28% in just five trading days and briefly pushing Oracle’s market capitalization above $700 billion, shares gave back 3% to 4% in a single session, slipping to around €205 in European trading. The Nifty-IT index dropped nearly 6% on the same day, compounding selling pressure from profit-taking and macroeconomic jitters. Despite the pullback, the stock remains up roughly 25% on a seven-day view and roughly 23% year to date.
Adding to the narrative, board member Ablo Awo converted 2,114 restricted stock units into Oracle common shares on May 31, 2026 – a routine move tied to equity compensation. To cover tax obligations, Oracle withheld 80 shares at $225.78 per share. Awo also received 1,550 new RSUs that will fully vest after one year.
Not all observers see the current volatility as a red flag. Scotiabank raised its price target on Oracle from $215 to $290, maintaining an “Outperform” rating. Analysts there highlighted Oracle’s role as a critical provider of cloud infrastructure for AI workloads, arguing that short-term swings are already priced in and that the risk-reward profile remains favorable.
The next decisive moment arrives on June 10, when Oracle reports fiscal fourth-quarter 2026 results after the market close. Analysts are looking for earnings per share of $1.96 on revenue of $19.1 billion, within Oracle’s own guidance range of $1.96 to $2.00 per share. How management addresses the capital-spending questions – and whether it can deliver on its promise to exceed 400 megawatts of AI capacity in the current quarter – will determine if the growth story retains its momentum or whether the market begins to second-guess the lofty expectations baked into the share price. Co-founder Larry Ellison, who controls roughly 40% of the company and has a personal fortune estimated at $300 billion, adds a layer of founder-led conviction to the narrative, but the operational proof will come in the numbers.
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