Oracle shares are on track for their worst quarterly performance since 2001, plunging 30% so far this quarter as newly appointed co-CEOs Clay Magouyrk and Mike Sicilia face mounting investor skepticism over the company’s aggressive AI expansion plans. The decline comes despite a surge in optimism just months earlier, when Oracle announced a landmark agreement with OpenAI to provide cloud infrastructure, leading to a nearly 36% stock jump and a record intraday high of $345.72. Since then, Oracle’s stock has dropped 43%, closing at $197.49, with four trading days left in the quarter. The sharp reversal reflects growing concerns about the company’s ability to execute on a massive capital investment strategy. On its latest earnings call, CFO Doug Kehring revealed plans for $50 billion in capital expenditures by fiscal 2026—43% higher than the previous plan and double the amount from a year earlier. Additionally, Oracle is pursuing $248 billion in leases to rapidly expand cloud capacity, signaling a major push into AI infrastructure. To fund this buildout, Oracle raised $18 billion in a record-setting bond issuance in September. While Kehring pledged to maintain Oracle’s investment-grade debt rating, analysts remain wary. Credit default swaps on Oracle’s debt have risen, indicating increased market concern over its ability to meet obligations without renegotiating its OpenAI deal. Analysts at DA Davidson cautioned that Oracle is already near the edge of investment-grade status and could face a downgrade if it fails to deliver on its promises. The firm issued a “hold” rating, reflecting cautious sentiment. The new leadership team has set an ambitious vision, projecting revenue to grow from $57 billion in fiscal 2025 to $225 billion by 2030, with AI infrastructure as the primary driver. However, this shift toward growth at the expense of profitability is a major concern. Oracle’s gross margin, which stood at 77% in 2021, is expected to fall to about 49% by 2030, with $34 billion in negative free cash flow over the next five years before turning positive in 2029. Investors like Eric Lynch of Suncoast Equity Management are hesitant, citing the long time horizon and heavy reliance on OpenAI, which is burning through cash and has committed to over $1.4 trillion in AI investments. “Will the demand be there?” Lynch asked, underscoring the risk of overexposure to a single client. Despite the concerns, Wells Fargo analyst Michael Turrin initiated coverage with a “buy” rating and a $280 price target, arguing that success with OpenAI could make Oracle a key player in AI infrastructure. He believes the company’s credibility will grow if it delivers on large-scale training clusters, potentially accounting for over one-third of its revenue by 2029. However, Oracle still lags far behind Amazon, Microsoft, and Google in cloud market share. Even top-tier customers like Databricks and Snowflake have not yet made their software available on Oracle’s cloud, with Databricks CEO Ali Ghodsi stating the company will only do so when customers demand it. This lack of ecosystem support remains a major hurdle. For Oracle, the next few years will be a test of whether its bold bet on AI can translate into sustained growth, investor confidence, and a real foothold in the cloud race.