Oracle stock has fallen to a 52-week low near $131 following S&P Global Ratings’ downgrade of the company’s long-term credit rating to BBB-, a notch above speculative grade, on July 9, 2026. The downgrade marks a significant setback for the software and cloud computing giant as it grapples with the financial strain of its aggressive artificial intelligence infrastructure expansion.
S&P Global Ratings cited Oracle’s rapidly expanding AI infrastructure business as the primary driver of the downgrade. The rating agency noted that Oracle’s AI buildout is increasing the company’s overall credit risk, reflecting rising capital expenditure (capex) requirements, an uncertain path to profitability, and a rapidly evolving competitive landscape. Most critically, S&P flagged that OpenAI accounts for roughly half of Oracle’s $638 billion in remaining performance obligations (RPO), creating significant concentration risk should the AI leader face financing challenges.
Oracle’s capex guidance has surged well beyond previous expectations. The company guided its capex to reach $90 billion to $95 billion for fiscal 2027, much higher than S&P’s prior forecast of $60 billion. This increase is attributed mostly to rising component costs and new contract wins. As a result, S&P Global Ratings-adjusted leverage is expected to reach the mid-4x area in fiscal 2027, higher than the agency’s BBB downgrade trigger of 4x.
The impact on Oracle’s free cash flow has been severe. S&P now forecasts Oracle’s fiscal 2027 free operating cash flow (FOCF) deficit to widen to nearly $42 billion, significantly worse than the prior forecast of negative $24 billion. This cash burn reflects the upfront investment required to build out data center capacity while customer revenues are realized over multi-year contracts.
Oracle stock has suffered substantial losses in recent months. The shares have declined 28% in the past month and are down 33% in 2026 overall, according to reporting from Yahoo Finance and Alpha Spread. The stock’s slide reflects broader investor concern about the company’s ability to generate returns on its massive AI infrastructure investments while managing its debt load. Despite the downgrade, S&P Global maintained a stable outlook, signaling that the agency does not expect further near-term rating cuts if Oracle executes its financial strategy.
S&P Global noted that Oracle appears committed to maintaining an investment-grade rating. The company completed a $5 billion mandatory convertible preferred stock issuance in February 2026 and plans a $20 billion equity issuance in calendar 2026. S&P expects Oracle will issue additional equity beyond 2026 if needed to preserve its investment-grade status and fund its growth plans. The rating agency projects that Oracle’s FOCF deficit will narrow to around $25 billion in fiscal 2028 as profitability improves, though it acknowledged elevated uncertainty around the unit economics of the AI infrastructure business.
The downgrade reflects a broader reassessment of Oracle’s AI strategy among credit analysts. When S&P assigned Oracle a negative outlook in July 2025, the agency underestimated the scale of investments required to expand the AI business. The company’s cloud infrastructure business, which accounted for 27% of revenues in fiscal 2026, is projected to make up almost 60% of revenues by fiscal 2028—a dramatic shift toward a riskier business model that requires substantial upfront capital investment before returns materialize.
Sources
- S&P Global Ratings — Official downgrade announcement and detailed analysis of Oracle’s credit risk, capex guidance, cash flow forecasts, and leverage expectations
- Yahoo Finance — Oracle stock price decline of 28% in the past month and confirmation of 52-week low near $132
- Alpha Spread — Oracle stock down 33% in 2026
