3 Key Risks That Could Pull Oracle Stock Down | Trefis

Oracle (ORCL) has experienced periods of high volatility in the past. The company’s stock has plunged more than 30% twice in less than two months in recent years, causing a significant decline in market capitalization and wiping out massive gains in a single correction. If history is any guide, ORCL stock is not immune to sudden, sharp declines.

Specifically, we see these risks:

1. Customer concentration and dependence on OpenAI
2. Significant increase in capital expenditure and negative free cash flow
3. Pending securities class action lawsuit regarding AI disclosures

Risk 1: Customer concentration and dependence on OpenAI

• Details: High sensitivity to an individual customer’s performance, potential for significant sales and backlog reduction
• Affected segment: Oracle Cloud Infrastructure (OCI)
• Possible schedule: Next 2-3 quarters
• Proof: Inventory fell approximately 5% due to reports of missing OpenAI users…