That marked Oracle\u2019s steepest single-day drop in months and one of the worst showings among large-cap software stocks.<\/p>\n
The selling did not start with Oracle, though. <\/p>\n
It started two days earlier with the chip designer, Broadcom, picking up speed on a strong jobs report, and then rolled downhill into every company tied closely to the artificial intelligence buildout.<\/p>\n
Oracle sits right in the path of that downhill roll.<\/p>\n
Why Oracle stock dropped nearly 9% in Friday\u2019s chip selloff<\/h2>\n
The trigger was Broadcom (AVG0). <\/p>\n
The major AI chipmaker<\/strong> reported earnings on Wednesday, June 3, and beat on both sales and profit.<\/p>\n However, its forecast told investors that AI chip sales<\/strong> would only triple in the current quarter, which was not up to what many on Wall Street had hoped, The Motley Fool reported.<\/p>\n As if that was not enough, Broadcom\u2019s guidance for the period landed at about $16 billion, short of the roughly $17.2 billion analysts expected. And the fear spread fast.<\/p>\n More Software Stocks:<\/strong><\/p>\n By Friday, the Nasdaq had sunk 4.18%<\/strong>, its worst session since April 2025, while the S&P 500 fell 2.64%, CNN Business reported.<\/p>\n Oracle fell harder than the broad market because investors view Oracle as a risky bet on artificial intelligence<\/strong> (AI) technology rather than a safe, predictable software company. <\/p>\n For this reason, when the AI market gets shaky, Oracle\u2019s stock price drops much faster and further than regular stocks.<\/p>\n Bloomberg / Getty Images<\/p>\n<\/figcaption><\/figure>\n Here is the backstory that turned a sector scare into a near-double-digit drop for Oracle.<\/p>\n Oracle\u2019s future is strongly tied to renting out data center capacity to AI firms, with OpenAI expected to drive a large share of future revenue, and that bet is expensive.<\/p>\n The company carries about $124.7 billion in long-term debt<\/strong> and posted negative free cash flow<\/strong> of roughly $24.7 billion over the trailing 12 months, according to 24\/7 Wall St.<\/p>\n Free cash flow<\/strong> is the cash left after a company pays its bills and capital costs, and Oracle\u2019s is deeply in the red.<\/p>\n The reason for this is capital spending. <\/p>\n Oracle is pouring money into servers and data centers faster than that capacity is generating cash, a strain that earlier prompted Morgan Stanley to revisit its Oracle target after the stock slid from its 2025 peak.<\/p>\n So, when AI demand looks shaky, even slightly, Oracle\u2019s debt-funded spending starts looking risky as well. And that is the scenario that played out on Friday, June 5.<\/p>\n As the AI chip scare heated the market, a strong labor report<\/strong> came along and poured fuel on it.<\/p>\n U.S. payrolls rose by 172,000 in May, far above the roughly 80,000 economists expected, according to the Bureau of Labor Statistics. <\/p>\n Related: Oracle’s cloud pivot remains a high-risk bet<\/strong><\/p>\n Ordinarily, a strong jobs number is good news, but for high-growth tech, it is a threat. <\/p>\n Strong hiring lowers the odds of Federal Reserve rate cuts and raises the odds of a hike, and traders now see roughly a 70% chance of higher rates by end of year, according to Morningstar.<\/p>\n Higher rates make Oracle\u2019s heavy borrowing costlier and make far-off AI profits worth less today. <\/p>\n For a debt-heavy name spending billions on a multiyear buildout, that combination stings.<\/p>\n Not everyone joined the rush for the exits.<\/p>\n Before the worst of the selling, Guggenheim analyst John DiFucci maintained his \u201cbuy\u201d rating and a $400 price target, a level that would nearly double the stock<\/strong> from its current trading level.<\/p>\n His logic<\/strong>: OpenAI\u2019s ability to raise $120 billion in a recent funding round, plus Oracle\u2019s room to raise $45 billion or more in debt and equity, should help assuage investor concerns around the data center build-out, DiFucci said.<\/p>\n He is not alone in the bull camp. <\/p>\n Wedbush\u2019s Dan Ives recently raised his Oracle target twice in three weeks, pointing to a contracted backlog that has swelled to roughly $553 billion. <\/p>\n Mizuho has a $400 target, while RBC\u2019s is much lower at $250.<\/p>\n That wide gap between these analyst targets tells you how split Wall Street is over the chances that Oracle\u2019s spending will pay off.<\/p>\n The next test arrives quickly. <\/p>\n Oracle reports fourth-quarter fiscal 2026 results on Wednesday, June 10, after the close, the company confirmed. <\/p>\n For a stock this jumpy, that report can swing the shares sharply in either direction.<\/p>\n For investors, the read is simple. <\/p>\n Oracle remains a high-risk, high-reward AI play, and Friday showed how fast the risk side can take over.<\/p>\n Anyone buying at current price levels is betting that the backlog converts to cash before the debt becomes a problem, and June 10 is the first hard look at whether it will.<\/p>\n Related: Wedbush resets Oracle stock price target for the rest of 2026<\/strong><\/p>\n #Oracle #suffers #roughest #session #months #ahead #earnings<\/p>\n","protected":false},"excerpt":{"rendered":" Oracle (ORCL) stock just had the kind of day that spooks shareholders. Shares of the database and cloud giant tumbled about 9.6% on Friday, June 5, closing at $213.68 after… <\/p>\n","protected":false},"author":1,"featured_media":6324,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[456,457,94,7985,8754,8755,2133],"class_list":["post-6323","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-ahead","tag-earnings","tag-months","tag-oracle","tag-roughest","tag-session","tag-suffers"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6323"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6323\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/6324"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMDcwMTgy\/oracle_pl_080626.jpg?profile=rss\")
Oracle\u2019s $124 billion debt load and AI cash burn, explained<\/h2>\n
What the jobs report added to Oracle\u2019s bad day<\/h2>\n
Why one analyst still calls Oracle stock a buy<\/h2>\n
What Oracle investors should watch before June 10 earnings<\/h2>\n
Key Oracle signals to watch on June 10<\/h3>\n
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