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Oracle’s Stock Volatility

Oracle shares fell 6% on Thursday, following a record-high close of $328.33 the previous day. The retreat comes after an analyst raised concerns that the company’s massive upcoming growth is heavily reliant on a single client: OpenAI.

Earlier this week, Oracle’s stock surged dramatically, jumping nearly 36% over two days after CEO Safra Catz announced fiscal first-quarter results and projected ambitious growth for the company’s cloud infrastructure business. The stock saw a 30% jump in extended trading following the earnings release.

Growth Projections and Contracts

CEO Safra Catz highlighted that Oracle signed four multi-billion-dollar contracts with three different clients in the latest quarter. The company’s remaining performance obligations, a measure of contracted revenue yet to be recognized, soared to $455 billion — a 359% increase compared to the previous year.

Oracle’s guidance calls for cloud infrastructure revenue to expand 14-fold by 2030, reflecting the company’s broader push to meet growing demand for applications powered by advanced AI models, many of which rely on Nvidia chips.

OpenAI Partnership and Analyst Concerns

The Wall Street Journal reported that OpenAI is expected to pay Oracle $300 billion over five years, following a deal to build 4.5 gigawatts of U.S. data center capacity. While Oracle and OpenAI have declined to comment on the figure, analysts flagged the potential risk of relying so heavily on a single client.

Gil Luria, an analyst maintaining a neutral rating on Oracle, noted that enthusiasm for Oracle’s record backlog is tempered by the concentration of revenue from OpenAI. “Our excitement is significantly tempered by the report that it came almost entirely from OpenAI,” he said in a client note Thursday.

Strategic Implications

The high-profile OpenAI partnership highlights Oracle’s pivotal role in supporting AI-driven infrastructure, yet it underscores the potential vulnerability of depending on one major customer for a substantial portion of growth.

Investors will be closely monitoring Oracle’s execution on these contracts, the diversification of its client base, and whether the company can sustain momentum across its cloud offerings beyond OpenAI.

Oracle’s recent stock volatility illustrates the balance between investor optimism for AI-driven growth and caution over single-client dependency risks, setting the stage for a closely watched period in the company’s market performance.