Oracle’s relationship with OpenAI has sparked market concerns about its financial health and data center expansion plans. The recent quarterly release showed missed revenue expectations and increased capex outlook, leading to a negative stock reaction. Oracle’s reliance on debt markets to fund capex, totaling $21.2 billion in FY 2025, has raised further worries.

Despite being a tech giant, Oracle has been struggling with financial health issues and customer concentration risks, with an elevated $523 billion Remaining Performance Obligations (RPO) this quarter. The stock’s performance relative to Microsoft and Alphabet has been impacted by concerns about Oracle’s financial stability, not AI trade worries. Oracle’s valuation relative to Microsoft has fluctuated over the past 10 years, currently trading at an 18% discount.

The Tech sector, critical for S&P 500 earnings growth, has seen positive estimate revisions. The Mag 7 group, including mega-cap players like Amazon and Tesla, is expected to show strong earnings growth in 2025 Q4. The group’s earnings outlook is steadily improving, with a significant contribution to S&P 500 earnings and market capitalization.

The ongoing Q4 earnings season for S&P 500 members, including Oracle, has shown positive results with earnings up +32.2% and 83.3% beating EPS estimates. The broader earnings outlook for the S&P 500 index remains positive, with the Tech sector expected to drive growth. Zacks Investment Research highlights key stock picks with potential for significant returns amidst evolving market trends.

Read more at Nasdaq: Breaking Down Oracle, the AI Trade, and the Outlook for Tech Earnings