Oracle shares dropped sharply on Thursday, falling around 6% after hitting an all-time high just the day before. It was a pretty sudden reversal, and it came right on the heels of some sobering news: nearly all of the company’s recent, much-talked-about growth might be tied to just one client—OpenAI.
That’s a tough spot to be in, even for a tech giant.
A Sudden Shift in Sentiment
Just this Tuesday, CEO Safra Catz told investors Oracle had secured “four multi-billion-dollar contracts with three different customers.” The market loved it. Shares jumped 30% in after-hours trading and kept climbing Wednesday, closing at a record high of $328.33.
But the mood shifted fast. News broke that the vast majority of that new business likely came from OpenAI. Analyst Gil Luria, who has a neutral rating on Oracle, put out a note Thursday that really summed up the worry. He said his enthusiasm was “significantly tempered” by the report.
Neither Oracle nor OpenAI commented on the specifics of the deal, a five-year agreement reportedly worth $300 billion. That kind of silence often makes investors nervous. And in this case, it did.
Questions About Growth
Catz had also highlighted that Oracle’s remaining performance obligation ballooned to $455 billion—a 359% increase from last year. It’s a big number, sure. But its meaning changes if most of it hinges on a single partnership.
This isn’t some small one-off deal, either. OpenAI also committed to building 4.5 gigawatts of data center capacity in the U.S., a move that directly supports Oracle’s cloud infrastructure expansion.
Oracle’s own forecasts are banking on cloud infrastructure revenue growing 14 times larger by 2030. That’s a steep climb. And if so much depends on one client, even a minor delay or a change in plans could throw the whole projection off track. It’s a real concentration risk, and the market reacted like it.
A Rising Market That Left Oracle Behind
Interestingly, while Oracle was tanking, the broader market was doing great. Stocks around the world kept hitting new records this week. The MSCI All Country World Index, which tracks over 2,500 companies, notched its fourth straight record high.
In the U.S., the S&P 500 closed Wednesday at another all-time peak. The rally’s been fueled by growing belief that the Federal Reserve will start cutting rates soon. A surprise drop in the producer price index for August—it fell 0.1% when a rise was expected—added to that optimism.
Traders are now pricing in a 92% chance of a rate cut at the Fed’s next meeting. That shift powered risk-on moves across Asian markets too, with indices in Japan, South Korea, and Singapore all breaking records.
But for Oracle, the positive macro mood didn’t matter. Once investors realized how much of its growth story leaned on a single name, many decided it was time to take their money and go.
