Oracle Faces Scrutiny Over OpenAI Reliance as Stock Sees Worst Quarter Since 2001

Oracle stock is tracking its most severe quarterly decline since 2001. Shares have fallen over 30% in the last three months.

Analysts cite the company’s heavy reliance on its OpenAI partnership as the primary concern for AI-driven growth. Jefferies analyst Brent Thill described this situation as a "rich uncle" problem.

Thill notes Oracle’s success is linked to the financial health of privately-held OpenAI, whose finances remain non-public.

Market sentiment is shifting from an "AI hype" phase to an "AI show me" phase. Investors now demand tangible revenue to justify massive capital expenditures (CapEx) on AI infrastructure. This scrutiny highlights risks associated with Oracle’s strategy, specifically compressing margins and soaring CapEx.

Although some view Oracle as a leading AI provider with a significant backlog, the dependency on OpenAI remains a major overhang for the stock.