January was a rough month for Oracle (ORCL 5.11%) investors. The enterprise software giant saw its stock fall 15.6%, continuing its slide from a less-than-stellar earnings report released the month prior.
Three major factors were at play: a bondholder lawsuit, a wave of analyst downgrades and price cuts, and a macro environment that turned hostile to AI infrastructure spending.
NYSE: ORCL
Key Data Points
Oracle is being sued
On Jan. 14, bondholders filed a class action suit in Manhattan court on behalf of investors who bought $18 billion of debt Oracle issued in September 2025.
They claim Oracle knew it would need to raise significantly more debt to fund its AI data center buildout, and didn't disclose that when it sold the bonds. Sure enough, just seven weeks later, Oracle went back to the capital markets for an additional $38 billion in loans, leading to a spike in yields and a drop in bond prices.
The optics aren't great here. Especially given that concerns over Oracle's rapidly growing debt are the driving force behind the stock's recent struggles.
Image source: Getty Images.
Wall Street slashed price targets
Oracle stock also faced a string of price target cuts and downgrades from analysts across Wall Street.
On Jan. 5, both UBS and RBC Capital cut their price targets -- UBS from $325 to $280, and RBC from $250 to $195. While UBS kept a "Buy" rating on the stock, it noted a real deterioration in investor confidence, particularly around Oracle's exposure to ChatGPT creator, OpenAI. RBC also maintained its rating, a "Sector Perform" -- essentially a hold.
The biggest cut came from Morgan Stanley, which slashed its target from $320 to $213. Analyst Keith Weiss warned that Oracle's AI expansion leaves "little room for error," projecting cumulative capex of $275 billion through the end of its fiscal 2028. At that pace, total debt could exceed $400 billion -- an enormous figure.
Broader market concerns weighed on Oracle stock
Oracle stock was also fighting broader headwinds across tech -- albeit headwinds that it had a hand in shaping. Microsoft reported earnings that sent tech stocks spiraling, despite an earnings beat. Investors balked at another massive jump in capital expenditures -- $37.5 billion this quarter -- most of which went to AI infrastructure. The company is on track to roughly double its capex this year as compared to last year, an already record-setting spend.
Investors are becoming increasingly uneasy about AI capex without seeing meaningful returns.
Is Oracle a buy?
I would stay away from Oracle stock. The company is heavily leveraging its present for a very uncertain future. There is too much risk here for my taste.
