Oracle’s stock has fallen 40% since Safra Catz announced her exit. Its latest earnings didn’t calm investors.
Earnings miss and a $15 billion jump in spending deepen investor doubts during the company’s leadership transition.
When Oracle revealed in September that Safra Catz would step down as CEO after 11 years, investors were still digesting the surprise of losing one of Silicon Valley’s longest-serving and most unflappable leaders. Three months later, the question of what Oracle becomes without her is no longer theoretical. Since the September 22 announcement, Oracle’s stock has fallen roughly 40% from its all-time high, an erosion in value that now looms over the company just as it attempts one of the most expensive infrastructure expansions in its history.
That slide accelerated on Wednesday after Oracle issued quarterly results and an outlook that fell short of analyst expectations. The company forecast earnings and revenue below Wall Street estimates while revealing that capital spending for fiscal 2026 would rise by an additional $15 billion, on top of the $35 billion it had projected just months earlier. The stock dropped 11.5% in after-hours trading.
The dual pressures of leadership transition and an uncertain AI investment cycle have left investors questioning whether this is a coincidence of timing, or a more fundamental shift in how markets are interpreting Oracle’s future without Catz at the helm.
Catz’s departure landed at a moment when Oracle was nearing a trillion-dollar valuation and had astonished markets with a surge in cloud bookings, buoyed by long-term AI workload deals. Her reputation for disciplined execution and for stabilizing Oracle after years of skepticism lent a degree of predictability that investors valued.
The September announcement that Clay Magouyrk and Mike Sicilia would take over as co-CEOs raised natural questions about continuity. Both executives have deep operational experience inside Oracle, but neither carries Catz’s long public track record of navigating Wall Street’s expectations through multi-year transitions. Catz, who will remain vice chair, had been one of the few constants in Oracle’s executive ranks since 1999, and her tenure was defined by the sweeping pivot to cloud computing and the signing of major contracts with OpenAI, Meta, Nvidia, AMD, TikTok, and Uber.
The company’s stock reaction since then, down 40% from its peak, reflects a market that is no longer pricing in the same level of certainty.
Wednesday’s earnings showed the limits of Oracle’s aggressive push into AI-driven cloud expansion.
The company projected adjusted profit of $1.64 to $1.68 per share for the fiscal third quarter, below analyst expectations of $1.72. Revenue growth of 16% to 18% also undershot forecasts. Oracle’s cloud sales projections, including for AI-related contracts, fell below Wall Street estimates as well.
At the same time, capital expenditures for fiscal 2026 are now expected to be $50 billion, up from the $35 billion discussed in September. The jump raised fresh concerns about how Oracle intends to fund its build-out of hyperscale data centers for OpenAI and other AI customers.
Even a headline profit beat could not offset the disappointment: Oracle’s adjusted second-quarter earnings included a one-time $2.7 billion pretax gain from selling its stake in chip designer Ampere Computing. Without it, both adjusted and unadjusted profit would have been lower.
Oracle executives stressed that new financing models could ease the cost burden, letting customers “bring their own chips,” for example, or working with vendors willing to rent capacity rather than sell it outright. But analysts said the results heightened concerns already present since Catz’s planned exit.
A key metric closely watched by investors, the value of future cloud contracts, came in at $523 billion, below expectations, despite rising from September’s $455 billion.
Larry Ellison said Oracle sold its Ampere shares to remain neutral in its chip strategy and will continue buying Nvidia hardware. The company is building vast data centers for OpenAI, which is pursuing its own custom chip development with Broadcom. For now, however, the spending needed to support those ambitions, and the uncertainty over how quickly they convert to profit, is weighing heavily.
The 40% stock decline since Catz’s exit announcement does not establish causation. But it captures a moment in which Oracle is facing two tests at once: delivering on its promise to be an AI-era infrastructure giant, and convincing investors that a post-Catz leadership team can sustain the momentum she built.
Magouyrk and Sicilia inherit an organization that has expanded its ambitions faster than its profitability. While Catz declared in September that “at this time of strength is the right moment to pass the CEO role to the next generation,” the market appears to be signaling that strength alone isn’t enough. Investors want clarity, and sooner rather than later, on whether Oracle’s AI spending will ultimately justify the scale of its risk.
