S&P Global Ratings cut Oracle’s credit rating to BBB- amid soaring AI infrastructure costs and negative free cash flow.
Oracle’s stock fell to a 52-week low of $121.50 on Friday, down 63% from its peak of $345.72, as its market capitalization shrank to $365 billion. The decline follows S&P Global Ratings’ decision to downgrade Oracle’s credit rating to BBB-, just one notch above junk status.
The downgrade stems from Oracle’s aggressive AI infrastructure spending, which reached $55.7 billion in fiscal 2026, outpacing its $32 billion in operating cash flow. Free cash flow turned negative at $23.7 billion, and S&P projects capital expenditures could rise to $90 billion-$95 billion in fiscal 2027, widening the deficit.
Despite the downgrade, Oracle’s stock trades at 16 times earnings guidance for the current fiscal year, raising questions about whether market fears have overshot fundamentals.