Oracle's AI halo fades, shares close to halving from September highs

Oracle (ORCL. N) rallied as high as $345 after its September earnings report, according to investinglive, briefly catapulting the founder Ellison to the top spot. Ellison positioned Oracle as "the back-end infrastructure provider for the entire AI revolution," with investors feverishly chasing residual performance obligations (RPO), which have become the core of bullish sentiment. But two factors have completely shattered this bubble. One is the revaluation of capital expenditure. The company raised its fiscal year 2026 capital expenditure guidance to $50 billion in its Q2 earnings report. Investors realized that building data centers by issuing tens of billions of dollars in debt is not a "free lunch", and the market expressed concerns about its debt risk. The second is the delay in data center delivery. There are reports that the delivery of Oracle's data center for OpenAI may be delayed until 2028. Previously, Oracle's bullish reasons were based on speed. If the speed advantage no longer exists, its high valuation will lose support. Oracle shares fell another 5% today to $177, a nearly 50% drop from their September high.