Oracle is locked into heavy dependence on OpenAI, and that dependence is driving every problem the company is dealing with right now.

The company spent five decades building a huge base of enterprise clients, yet its fate has never been tied to a single customer the way it is today.

That shift happened after Oracle agreed to provide $300 billion in AI-computing services to OpenAI, alongside a list of other large deals OpenAI signed, even though it brings in less than $20 billion a year.

Three months later, every part of Larry El’s business is being judged through that one relationship.

The pressure grew after Google launched Gemini 3 last month. The model outperformed the latest version of ChatGPT, and it forced OpenAI leadership to issue what they called a “code red.”

Because OpenAI is a private company, investors have shown their concern by selling shares of companies most exposed to it. Oracle ended up being one of the biggest casualties. Its stock fell 32% over the last three months leading up to its fiscal second-quarter report.

That performance ranked as the third-worst on the S&P 500 at a time Oracle was nearing a $1 trillion valuation based on expectations that AI demand would double the company’s size.

Oracle absorbs rising costs as capex explodes

Oracle reported 14% revenue growth year over year in its latest quarter, its strongest rate in almost three years. The number still came in a bit below Wall Street expectations.

Oracle also added about $68 billion to its revenue backlog through new deals with Meta and Nvidia, though the company had already mentioned those deals during an October analyst meeting. The actual surprise came from spending. Oracle disclosed a record $12 billion in capital expenditures for the quarter ending in November, well above the $8.4 billion analysts expected.

The company raised its full-year capex forecast from $35 billion to $50 billion, which sent its stock down another 12% in after-hours trading.

A capex bill of that size represents 75% of Oracle’s projected revenue for the year. Over the past five years, the company averaged about 17%.

By comparison, Meta is expected to spend roughly 36% of its revenue on capex this year. The numbers show how much strain Oracle is taking on while trying to supply OpenAI and maintain the rest of its cloud clients.

Oracle carries massive obligations tied to OpenAI

Oracle’s spending is tied to more than data-center growth. OpenAI represents the majority of the company’s $523 billion in remaining performance obligations. These obligations are contracts for revenue that have not yet been recognized.

The total is nearly nine times the size of Oracle’s annual revenue. Cloud rivals like Microsoft, Amazon, and Google sit at far lower ratios. Microsoft, which is OpenAI’s primary computing partner, carries a backlog only about 1.4 times its revenue over the last four quarters.

Oracle’s future growth depends on OpenAI meeting those commitments. But few companies can take on deals at this scale, leaving Oracle with limited paths to diversify. The stability of those obligations also depends on the direction of AI demand and whether competitors like Google or Anthropic keep reducing OpenAI’s lead.

Gil Luria of D.A. Davidson said Oracle needed to use its quarterly report “to address concerns about the tricky balance of borrowing money to build out capacity for OpenAI, with the new understanding there is very low likelihood OpenAI will live up to its obligations.”

Oracle did not provide that clarity. The company burned a little more than $13 billion in cash over the last four quarters and now holds about $88 billion in net debt.

That stands in sharp contrast to rivals with large net-cash positions. Moody’s said last week that “Oracle has the highest exposure to OpenAI and has the weakest credit metrics among investment-grade hyperscalers.”

Oracle said Wednesday that it intends to protect its investment-grade rating as it finances its AI expansion, but investors are showing clear signs of frustration as the financial pressure keeps building.

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