Oracle's Cost-Cutting Push and Ellison's Canceled Share Sale Lay Bare the AI Spending Dilemma
Published on 09/18/2026 at 14:40 | Editorial boerse-global.de
Larry Ellison's decision to scrap his 10b5-1 trading plan outright on Saturday — with no shares sold under it and no further sale intentions disclosed — landed as more than a footnote for a company whose stock has shed nearly half its value over twelve months. For Oracle, it was a statement at a moment when the industry is renegotiating whom it should trust.
The move came just days after management instructed division heads to rein in personnel costs ahead of the second fiscal quarter, with cuts in some teams reaching double-digit percentages. The directive, issued before September 1, sits in jarring contrast to the company's headline growth.
Strong Numbers, Heavy Bills
Oracle reported first-quarter revenue of $19.3 billion on Thursday, up 30% year over year. Cloud revenue climbed 62% to $11.6 billion, while infrastructure-as-a-service surged 121% to $7.4 billion. GAAP earnings per share rose 55% to $1.56. The question now is why a company expanding at that clip is simultaneously tightening its belt on staffing.
The answer sits on the balance sheet. Capital expenditures ballooned to $55.7 billion last fiscal year, up from $21.2 billion the year before, dragging free cash flow to negative $23.7 billion. For the current fiscal year, Oracle plans roughly $70 billion in investments and intends to raise an additional $40 billion through debt and equity. Restructuring costs have already climbed, with severance payments rising from $374 million to $1.84 billion.
Against that backdrop, the push to trim payroll before the quarter opened looks less like weakness and more like an attempt to help fund the enormous capital requirements of data-center expansion. Oracle delivered 850 megawatts of additional data-center capacity in the first quarter alone, and its order book backs the strategy: remaining performance obligations jumped by $209 billion year over year to $664 billion.
Should investors sell immediately? Or is it worth buying Oracle?
Two Sides of the Same Story
Cloud infrastructure is now growing at triple-digit rates, and backlogs are piling up to record levels. Yet that same momentum breeds the nervousness that gives Ellison's gesture its weight — growth on this scale devours capital at a pace that traditional valuation models struggle to absorb.
The stock trades at EUR 131.32, nearly flat versus the prior day. Over 30 days it has gained 6.6%, but year-to-date it is down 21%. It sits 53% below its 52-week high of EUR 279.35, reached last September, while holding roughly 31% above its yearly low of EUR 100.76. That spread tells the real story: Oracle has become a test case for whether the market will tolerate such aggressive leverage in exchange for AI infrastructure growth.
Analysts Split, Targets Cut
Wall Street's response has been mixed but tilted in one direction — lower price targets, higher skepticism about capital intensity. BMO Capital Markets trimmed its target from $220 to $195 while keeping an "Outperform" rating. Scotiabank had already cut its target from $241 to $215, also maintaining a positive rating. Russian broker Freedom Broker likewise stuck with its buy recommendation. The pattern is clear: nobody doubts the growth, but everyone is recalculating the cost of capital.
Meanwhile, Oracle CEO Michael D. Sicilia sold shares during the week under an automatic trading plan set up last December — a routine move that looks almost invisible next to Ellison's conspicuous abstention.
A Bet on the Forecast
The outlook for the coming fiscal year calls for at least $90 billion in revenue and adjusted earnings per share of $8.10 — ambitious marks achievable only if cloud demand keeps growing unchecked. Ellison's forgoing of share sales reads as a wager: those who stand to gain most from their own forward guidance don't sell when they believe in it. Whether the market follows that confidence will only become clear once the next capital injections actually flow and the books show whether investment turns into returns.
What the personnel belt-tightening demonstrates is that Oracle does not intend to finance its multibillion-dollar cloud buildout without restraint — it is countering elsewhere.
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