OpenAI Dependency Raises Red Flags
A central issue in the lawsuit is Oracle’s deepening business ties with OpenAI, one of its largest customers for computing power.
Credit analysts warned last year that OpenAI could account for a significant share of Oracle’s future revenue. That concentration risk, the complaint says, makes Oracle vulnerable if OpenAI’s growth slows or if demand for its AI models weakens.
The investor points to warnings that OpenAI’s ability to meet long-term commitments depends on continued momentum in the AI market and ongoing access to outside funding.
Stock Drops Follow Negative Signals
Several events cited in the filing coincided with notable declines in Oracle’s share price.
Analysts questioned whether the market was overestimating the payoff from the company’s AI expansion. Some suggested projected gains might not materialize at the scale promised.
Later earnings results showed slower-than-expected revenue growth, heavier capital spending, and negative free cash flow. Executives projected roughly $50 billion in capital expenditures for the fiscal year, well above earlier guidance.
During an earnings call, management declined to provide clear estimates on how much funding would be required to support the AI buildout. The lack of clarity, according to the complaint, added to investor concerns about future debt or equity raises.
The lawsuit also references disclosures of large long-term lease commitments tied to data centers, which analysts described as unexpectedly high. Additional reports about delays at facilities connected to OpenAI and the withdrawal of financing for a major project further pressured the stock.
