Oracle's stock falls on a fear one analyst says should be 'almost irrelevant'

By Christine Ji

New rumors of stalled data-center funding have sent Oracle's stock lower, but some experts argue the negative narrative has gotten too harsh

Oracle shares slid Wednesday on reports that Blue Owl will no longer provide funding for its Michigan data center.

Fresh concerns about data-center funding weighed down Oracle's stock on Wednesday, but the selloff is looking overdone to some on Wall Street.

Oracle shares (ORCL) fell 5.4% on Wednesday after the Financial Times reported that Oracle's primary data-center partner, alternative-asset manager Blue Owl Capital (OWL), will not provide funding for its $10 billion Michigan data center.

In a statement, Oracle called the Financial Times report "incorrect" and said that the company is working with development partner Related Digital. "Final negotiations for their equity deal are moving forward on schedule and according to plan," an Oracle spokesperson said.

A Related Digital spokesperson also shared the following statement: "The notion that Blue Owl walked away is unequivocally false. This is an exceptional project that drew significant interest from equity partners. We evaluated all of our options and selected our equity partner of choice for their unparalleled expertise in the space."

The development follows earlier reports this week suggesting that Oracle had pushed back its completion dates for some of the data centers it's building for OpenAI, which Oracle has also denied.

Investors are clearly jittery about the artificial-intelligence trade and Oracle's ability to translate commitments into real revenue sufficient to justify the debt that the company is taking on to fuel its AI ambitions. Oracle shares are down 45% from their closing high achieved in mid-September.

Evercore ISI analyst Kirk Materne believes the fixation on Oracle's data-center timing is "almost irrelevant" to the company's valuation, writing in a Wednesday note that the stock has already collapsed to a level reflecting a worst-case scenario. The stock has more than given back all the gains it once racked up related to an announced $300 billion in new business with OpenAI, so in his view, it doesn't make sense for investors to continue to fixate on the timing of that ramp.

Read on: Why Oracle's stock - and its bonds - can't shake off AI spending fears

Yet the negative sentiment surrounding Oracle continues to deepen. Investors are seeking clarity on how binding the terms of the OpenAI deal are, according to Josh Wein, portfolio manager at Hennessy Funds.

"It's hard to get one's head around when these data centers are going to be built, when they're operational and when they start cash flowing," Wein told MarketWatch. However, he believes fears are overblown, calling Oracle's stock selloff today an "overreaction."

The biggest question hanging over Oracle is how it plans to finance its data-center buildout as its cash flow trends negative. On Oracle's earnings call last week, the company shared that funding requirements would be under $100 billion but didn't provide specifics. Oracle's five-year credit-default spreads have more than doubled since the end of September, meaning that the price of insurance on the company's debt has sharply risen.

It's unclear how or when Oracle will secure its next round of financing, but Materne believes the "washed-out narrative" and a potential psychological reset for investors going into the new year make for an "intriguing risk/reward setup" for Oracle's stock.

Read more: Why Oracle and these 3 unloved software stocks could be the next leg of the AI trade

-Christine Ji

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12-17-25 1916ET