Oracle's capitalization has halved from its 2025 peak. Are investors turning away?

Oracle Corp. shares are down more than 50% from last year's all-time high. Investors, concerned about the huge spending on artificial intelligence and the investment cycle within the AI sector, are selling their shares.

Oracle's market capitalization is down about $463 billion from the record set on September 10. At that time, the company unveiled impressive forecasts for its cloud business, pointing to growing demand for AI. The fall surge lifted Oracle's capitalization to more than $933 billion, making it the tenth most valuable publicly traded U.S. company at the time, Bloomberg recalls.

In trading on Thursday, January 29, Oracle shares were down 6.5% at the moment as part of a general sell-off in the technology sector. For example, Microsoft shares were down 12.5% after a lackluster report, and Nvidia shares were down 2.8%.

The fall in Oracle's stock since peaking in 2025 has been exacerbated by growing investor concerns about AI: Major tech companies continue to commit billions of dollars to building data centers, sometimes with no clear ROI, Bloomberg says. Adding to this are the traffic circle deals between Oracle, loss-making OpenAI, which created ChatGPT, and other companies such as Nvidia, Nebius and AMD. Oracle also recently raised tens of billions of dollars through a bond issue, Bloomberg added.

"Inherent in the fall in the company's stock is some doubt about how much OpenAI is going to spend and where they're getting that money from," Eric Deaton, president and managing director of Wealth Alliance, told Bloomberg. Oracle shares may have gotten too far ahead of fundamentals and now the market is demanding results from the company, the expert added.

Investor Michael Burry, who became the prototype for the main character in the movie "The Downgrade Game," said in mid-January that he bet Oracle stock would fall. "I don't like the way this company is positioned and the investments it's making. It didn't need to do what it's doing, and I don't understand why it's doing it. It's probably ego," Burry said.

Barron's at the end of 2025 named Oracle shares in the list of securities that look overvalued in terms of price-to-earnings ratio (P/E ratio). At the same time, Evercore considered them one of the favorites among software developers along with Microsoft and Snowflake.

Most analysts, however, believe that now it is worth buying shares of Oracle, shows MarketWatch. The stock has 28 Buy ratings and six Overweight ("above market") versus nine Hold and only one Sell. The average target price of $289.17 implies a 67% increase in quotes compared to the last closing price.

This article was AI-translated and verified by a human editor