Oracle’s remarkable two-year rally, powered by its growing role in the artificial intelligence revolution, hit a snag on Friday as the company’s stock fell 7%, marking its sharpest single-day drop since January.
The decline came just a day after the enterprise software giant unveiled a bold long-term financial outlook during its AI World conference in Las Vegas, projecting exponential growth in its cloud and AI businesses through 2030.
On Thursday, Oracle executives told analysts that they expect cloud infrastructure revenue to soar from $18 billion in fiscal 2026 to $166 billion in fiscal 2030 — an eightfold increase — as demand for AI computing continues to surge worldwide. The company also forecast total revenue of $225 billion and adjusted earnings of $21 per share in fiscal 2030, representing a compound annual growth rate of more than 31%.
Initially, investors cheered the ambitious vision. Oracle shares rose more than 3% on Thursday, extending a rally that has lifted its market capitalization by over 160% in the past two years. However, sentiment quickly shifted on Friday, as analysts began to question whether the company could realistically sustain such a pace of expansion in a market that has become increasingly crowded and capital-intensive.
“It feels like the stock may take a bit of a breather here as investors digest those numbers and try to get comfort around the achievability of long-term numbers,” said Rishi Jaluria, senior analyst at RBC Capital Markets, in an email to CNBC’s Seema Mody.
Jaluria maintained a “hold” rating on the stock, signaling confidence in Oracle’s fundamentals but caution over its aggressive targets.
The company’s bullish projections come amid a broader AI infrastructure boom that has transformed Oracle into a key player alongside industry titans such as Amazon Web Services, Google Cloud, and Microsoft Azure. In recent quarters, Oracle has rapidly expanded its cloud division, striking major deals with both corporate and government clients seeking to deploy AI workloads.
In July, Oracle secured a five-year deal with OpenAI — valued at more than $300 billion — to supply high-performance computing resources and access to specialized AI chips. The agreement positioned Oracle as a vital back-end provider to one of the most influential players in the AI space. Following its strong earnings report in September, Oracle’s shares recorded their best single-day gain since 1992, after revealing $455 billion in remaining performance obligations — a staggering 359% increase from a year earlier.
At Thursday’s conference, Oracle executives announced a new partnership with Meta Platforms, the parent company of Facebook and Instagram, to provide cloud infrastructure support for AI development. Clay Magouyrk, who was recently appointed one of Oracle’s two CEOs, told analysts that the company secured $65 billion in new cloud infrastructure commitments this quarter alone.
“It was across seven different contracts from four different customers,” he said, emphasizing that none of those contracts involved OpenAI. “I know some people are questioning sometimes, ‘Hey, is it just OpenAI?’ The reality is, we think OpenAI is a great customer, but we have many customers.”
Oracle also said its adjusted gross margins for AI infrastructure were between 30% and 40%, higher than analysts’ earlier expectations. Those margins, the company noted, reflect the profitability potential of AI workloads even after accounting for steep capital expenditures on land, power, and computing equipment.
Yet some analysts remain unconvinced that Oracle can maintain that momentum indefinitely. Karl Keirstead, an analyst at UBS, raised his price target on Oracle to $380 from $360, arguing that the market has not fully priced in the long-term upside from AI. But he also warned that the company’s rapid buildout carries risks.
More cautious voices will look at the concentration of business with OpenAI and various unforeseen go-live bottlenecks that could come with such an aggressive buildout, Keirstead wrote in a note to clients.
Despite the pullback, Oracle remains one of the largest and fastest-growing enterprise software firms in the world. Its shift from traditional database systems to AI-optimized cloud infrastructure has helped it capture a wave of corporate spending on artificial intelligence applications. The company’s AI infrastructure has become increasingly attractive to clients seeking alternatives to Amazon and Microsoft — both of which have faced capacity bottlenecks amid skyrocketing AI demand.
The broader context of Friday’s sell-off suggests that investors are grappling with a delicate balance between enthusiasm and realism. Oracle’s ambitious revenue targets would require consistent double-digit growth over the next five years and significant global expansion of its data center footprint. Analysts say that even if Oracle delivers half of its forecasted gains, it would still represent one of the most successful corporate transformations in modern tech history.
For now, the market remains divided between believers in Oracle’s AI-driven future and those urging caution after the recent rally. The stock closed Friday at $291.31, down sharply from Thursday’s close, but still more than double its price two years ago.
Whether Oracle can sustain its extraordinary growth momentum will depend on how effectively it scales its infrastructure, diversifies its client base beyond marquee partners like OpenAI, and competes in an industry where hyperscale efficiency and innovation are the ultimate differentiators.
