Oracle Shares Attempt Recovery Following Stargate Setback

Oracle's stock attempts recovery as its $500B 'Stargate' AI project stalls and negative cash flow raises investor concerns ahead of quarterly results.

Oracle's stock attempted a rebound on Tuesday, seeking to stabilize after a recent sharp decline. The earlier sell-off was triggered by a report detailing the stalled "Stargate" project, a once-ambitious $500 billion AI data center partnership involving OpenAI and SoftBank. More than a year after its announcement, the initiative appears to have made little concrete progress and is reportedly hampered by staffing shortages.

Quarterly Results Loom as Cash Burn Intensifies

All eyes are now on Oracle's upcoming third-quarter financial results, scheduled for March 9. Investors will scrutinize the company's capital expenditure trajectory and seek any updates on its dealings with OpenAI. The stock, which has lost more than half its value since peaking at $345.72 in September 2025, traded near 127 euros following Tuesday's recovery but remains under significant pressure.

The underlying financial picture presents a challenge. Oracle recently announced plans to raise between $45 and $50 billion in debt and equity during the 2026 calendar year. These funds are earmarked for expanding cloud infrastructure to serve major clients, including AMD, Meta, Nvidia, OpenAI, and xAI. However, the company's free cash flow is negative and, according to Bloomberg analysis, is projected to remain in negative territory until 2030. Last quarter alone saw investments of $12 billion against a negative free cash flow of $10 billion. While Oracle's cloud infrastructure revenue is growing at a robust 68% year-over-year, questions about the ultimate profitability of these massive investments are growing louder.

Partnership Struggles and Revised AI Ambitions

The breakdown of the three-way Stargate collaboration, as reported by The Information, stemmed from fundamental disagreements over responsibilities and organizational structure. Initially, OpenAI attempted to build its own data centers but failed to secure financing; lenders reportedly viewed the AI firm's business model as too uncertain.

This failure led OpenAI back to negotiations with Oracle and SoftBank, but the parties opted for separate bilateral agreements instead of reviving the original consortium framework. In July 2025, Oracle and OpenAI finalized a deal for 4.5 gigawatts of data center capacity across multiple U.S. locations, featuring shared economic risk for potential delays or cost overruns.

Compounding the situation is a significant scaling back of OpenAI's spending plans. The company now anticipates infrastructure investments of roughly $600 billion by 2030, a substantial reduction from the $1.4 trillion previously cited by CEO Sam Altman. As long as the Stargate initiative remains stalled and Oracle's cash flow stays negative, market skepticism is likely to persist.