Oracle Corporation (NYSE: ORCL) suffered a sharp decline of nearly 10% on Friday, marking its worst single-session performance in months as investor confidence in AI spending wavered.
The immediate trigger was a disappointing forecast from Broadcom, the major AI chipmaker that reported earnings on Wednesday, June 3, beating on both sales and profit but falling short on guidance.
Broadcom’s AI chip sales forecast projected only a tripling in the current quarter, a figure that failed to meet the more aggressive growth Wall Street had anticipated going into the report.
The chipmaker’s revenue guidance for the period landed at approximately $16 billion, well short of the roughly $17.2 billion analysts had expected, sending a chill through AI-linked stocks.
The selloff spread rapidly across broader markets, with the Nasdaq sinking 4.18% by Friday in its worst session since April 2025, while the S&P 500 fell 2.64%.
Oracle dropped harder than the broad market because investors treat the company as a high-risk AI growth bet rather than a stable, predictable software business, making it especially vulnerable to shifts in AI sentiment.
A strong U.S. labor report added further pressure, with the Bureau of Labor Statistics reporting that payrolls rose by 172,000 in May, far above the roughly 80,000 economists had expected.
The stronger-than-expected jobs data raised concerns about persistently higher interest rates, which would make Oracle’s already heavy borrowing more expensive and reduce the present value of its future AI-driven profits.
Oracle’s free cash flow remains deeply negative as the company pours capital into servers and data centers faster than that infrastructure is generating returns, a dynamic that earlier prompted Morgan Stanley to revisit its price target after the stock slid from its 2025 peak.
Not all analysts turned bearish ahead of Oracle’s June 10 earnings report, with Guggenheim analyst John DiFucci maintaining his “buy” rating and a $400 price target, a level that would nearly double the stock from its current trading price.
DiFucci’s optimism rests on OpenAI’s ability to raise $120 billion in a recent funding round, alongside Oracle’s capacity to raise $45 billion or more in debt and equity to fund its data center buildout.
Wedbush analyst Dan Ives recently raised his Oracle price target twice in three weeks, pointing to a contracted backlog that has swelled to roughly $553 billion as evidence of durable long-term demand.
Mizuho also holds a $400 price target on the stock, while RBC takes a more cautious stance with a significantly lower target of $250, reflecting the divided outlook among Wall Street analysts heading into earnings.
