Oracle Shares Under Pressure Amid Debt and AI Spending Concerns

Oracle's stock faced significant selling pressure on Friday as investors grappled with the substantial costs of its artificial intelligence expansion and growing questions over transparency in its debt financing. The dual impact of a critical analyst report and a law firm's announcement regarding a potential bondholder investigation weighed heavily on market sentiment.

All eyes are now on Oracle's upcoming financial report for its third fiscal quarter of 2026. The central issue for investors is whether the company can manage its escalating expenditures without undermining profitability. Market participants are seeking clear guidance on capital expenditure levels, the growth trajectory of Oracle Cloud Infrastructure (OCI), and the overarching strategy for funding its ambitious plans. Despite the current share price weakness, a majority of Wall Street analysts maintain "Buy" or "Moderate Buy" ratings on the equity, indicating that confidence in the long-term strategic vision remains.

The scrutiny follows a stark warning from Morgan Stanley. While the investment bank reaffirmed its "Equal-weight" rating, its analysts issued a detailed caution regarding the financial implications of Oracle's aggressive AI infrastructure build-out. Their revised projections forecast significantly higher investments through 2028, with cumulative capital expenditures between fiscal years 2026 and 2028 potentially reaching $275 billion. This figure starkly contrasts with the previous consensus estimate of approximately $189 billion, introducing considerable risk to the company's per-share earnings targets.

Should investors sell immediately? Or is it worth buying Oracle?

Legal Scrutiny and Financing Transparency

Compounding the analyst concerns, the law firm Bronstein, Gewirtz & Grossman announced it is investigating potential claims on behalf of Oracle bond purchasers. The core allegation is that Oracle may have failed to fully disclose the extent of debt required to fund its data center expansion, which is being driven by large AI contracts. These concerns were further amplified by reports of weakening investor demand for bonds linked to Oracle's data center projects.

Strategic TikTok Partnership Offers a Counterbalance

Amid the financial concerns, Oracle secured a significant positive development by being named the "Trusted Technology Partner" for TikTok's newly established U.S. entity. This agreement establishes the short-video platform as a long-term, major client for OCI. For Oracle, this partnership represents a strategic victory that helps justify, at least in part, its multi-billion dollar investments in data center capacity.

In separate but routine business, the company also released its scheduled Critical Patch Update for January 2026 this week, issuing 337 security patches across more than 30 product families.