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Oracle Shares Drop to 52‑Week Low as S&P Lowers Rating Near Junk

S&P’s downgrade signals investor worry that Oracle may struggle to fund a planned surge in AI data‑center spending.

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Overview

  • Shares fell to a fresh 52‑week low on July 19 after S&P cut Oracle’s long‑term rating to BBB‑ on July 9.
  • Oracle reported $55.7 billion of capital spending in fiscal 2026 and S&P now projects FY2027 capex of $90–95 billion with a widening free‑cash‑flow shortfall.
  • The company finished fiscal 2026 with nearly $130 billion of borrowings, has issued $5 billion of mandatory convertibles, and plans roughly $20 billion more in equity sales this year.
  • S&P warned that roughly half of Oracle’s $638 billion remaining performance obligations are tied to a single customer, OpenAI, creating concentration risk for future revenue conversion.
  • The squeeze on Oracle’s balance sheet has knocked market value and could force bond and equity sales by investors with strict grade limits, while permitting and build delays could push out revenue from the AI contracts.