Oracle’s Twin Headwinds: A Founder’s Personal Gamble and a Credit Downgrade Rattle Investors
Published on 07/28/2026 at 19:31 | Redaktion boerse-global.de
Oracle Corp. is facing a crisis of confidence that has little to do with its core software business and everything to do with two towering financial commitments — one personal, one corporate — that are converging at precisely the wrong moment. The stock has been pummeled from both sides, leaving shareholders to weigh the fallout from founder Larry Ellison’s $40.4 billion personal guarantee for a media deal against the company’s own aggressive, debt-fueled expansion into artificial intelligence infrastructure.
Shares of the software giant traded at €106.04 on Tuesday, a modest 0.49% gain that did little to mask the broader carnage. The stock has shed roughly 36% since the start of the year and sits just 5.24% above its 52-week low of €100.76, a level touched only this week. The secondary article reported a sharper daily decline of 4.17% on Tuesday, with the stock hitting that same €100.76 nadir before recovering slightly to €101.12 — a hair’s breadth from another new floor.
Ellison’s Family Bet Turns Into a Market Liability
The pressure on Oracle’s shares stems from an unusual source: the personal financial exposure of its billionaire founder. Ellison has personally guaranteed $40.4 billion of the financing for Paramount Skydance, backing a roughly $110 billion bid for Warner Bros. Discovery that is intended to advance the media ambitions of his son, David. That deal now faces a serious legal challenge from a coalition of 12 U.S. state attorneys general, who have filed a lawsuit to block the merger on antitrust grounds.
The states argue that combining two of Hollywood’s five largest studios would stifle competition in film distribution and cable licensing, ultimately driving up prices and reducing consumer choice. The case is shaping up as the most formidable regulatory test for a major media consolidation in years.
Should investors sell immediately? Or is it worth buying Oracle?
The irony is not lost on market observers: Oracle itself recently secured a $7 billion Pentagon contract, yet the stock barely budged. Investors are fixated not on the company’s operational wins but on the concentrated risk Ellison has taken on personally. His fortune, which peaked at roughly $388 billion in September 2025 — ranking him second only to Elon Musk — has since shrunk to about $175 billion by mid-July, a decline of $213 billion in less than ten months. Much of that wealth is tied to Oracle stock, creating a tightly wound feedback loop between Ellison’s net worth, the company’s share price, and the fate of the Paramount-Warner deal.
The Credit Rating Hits a Nerve
While Ellison’s personal drama dominates headlines, a more structural concern has been building beneath the surface. On July 9, 2026, S&P Global Ratings downgraded Oracle’s credit rating to BBB-, just one notch above junk status. The agency cited weaker-than-expected free cash flow and mounting business risks tied to the company’s massive, concentrated bet on AI data centers.
Oracle’s transformation from a cash-rich software licensor to a capital-intensive infrastructure builder has been breathtaking in scale. The company spent $55.7 billion on capital expenditures in the past fiscal year and has signaled that figure could rise to as much as $95 billion in the current year. This “build it and they will come” strategy has driven Oracle deep into debt markets, even as its record backlog of $638 billion in contracted future revenue — once a source of comfort — has become a source of anxiety. Investors now question not whether Oracle has enough orders, but whether it can afford to fulfill them.
The downgrade is already producing tangible consequences. Regulators in Wisconsin confirmed at the end of July that Oracle must post roughly $7 billion in collateral for a major data center project, as utilities and local governments seek protection against the risk that such facilities become stranded assets if the AI boom cools.
Technical Distress Meets Analyst Optimism
The chart tells a story of exhaustion. The 14-day relative strength index sits at 30.6, technically in oversold territory, yet the stock trades roughly 31% below its 50-day moving average of €145.84. The year-to-date loss approaches 40%, according to the secondary article, and the stock has shed more than half its value over the past twelve months.
Oracle at a turning point? This analysis reveals what investors need to know now.
Yet a remarkable gap has opened between market sentiment and analyst expectations. The average price target stands at €218.17, implying upside of more than 115% from current levels. While bondholders and short-term traders flee from credit risk, many equity analysts appear to believe that Oracle’s massive backlog will eventually translate into a profit surge of historic proportions.
The Path Forward Hinges on Two Uncontrollable Variables
For now, Oracle’s near-term trajectory depends on factors entirely outside its control. The antitrust challenge to the Paramount-Warner merger will determine whether Ellison’s personal guarantee remains a lingering overhang or becomes a full-blown liability. Meanwhile, the company’s ability to navigate a tightening credit environment without losing its investment-grade status altogether will test whether the $638 billion backlog is a fortress or a mirage.
Some market observers advise looking past the family drama and focusing on the fundamental question: Can Oracle’s aggressive AI infrastructure buildout deliver the returns that its earlier valuation assumed? The answer, for now, remains buried in the fine print of credit agreements and court filings — and the stock is paying the price for the uncertainty.
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