Oracle among the most shorted large-cap stocks as AI spending and debt weigh on shares

Oracle was identified as one of the most shorted large-cap stocks in North America in February’s latest list published by Hazeltree, a Treasury and liquidity management firm that tracks alternative asset managers. The designation comes as Oracle’s share price has been under pressure, with the stock down about 29% year to date.

Why Oracle is drawing short interest

Shorting a stock typically reflects a bet that the shares will decline. Hazeltree’s analysis places Oracle among the most shorted names, amid concerns that have weighed on the stock since February.

Oracle’s decline has been attributed to a combination of factors, including high valuation, high AI spending and debt, and worries about its reliance on OpenAI. The article also points to geopolitical conflicts as an additional headwind, noting that Oracle has continued to move lower since February.

Performance-wise, Oracle is down 1.3% over the past year, a result that trails the S&P 500’s 25% gain over the same period. The article also states that Oracle did not appear on a list of AI stocks that hedge funds are buying most, based on Motley Fool research.

Latest earnings: strong growth, limited stock reaction

Oracle reported its latest quarterly earnings in early March. The results were described as strong, but the stock response was muted: after a slight uptick, the shares fell again amid a broader tech sell-off and geopolitical pressures.

According to the article, Oracle’s earnings rose 24% year over year, while revenue increased 22%. Cloud computing revenue grew 44%.

Backlog and OpenAI exposure

The article highlights Oracle’s remaining performance obligations (RPO)—a measure of backlog—at $553 billion, up 325% year over year. However, it notes that $300 billion of that total is tied to a deal with OpenAI, which is a key reason investors remain cautious about whether the obligations will fully materialize.

Debt load and financing plans

Alongside the backlog, the article emphasizes Oracle’s leverage. It cites debt of about $162 billion as of the latest quarter and a debt-to-equity ratio of 415%, describing it as high.

Oracle also announced plans to raise another $50 billion in financing this year, while stating it would not issue additional bonds beyond 2026. The article suggests that even with strong revenue momentum, a significant portion of cash flow may be directed toward debt reduction, potentially weighing on earnings.

Valuation and outlook

Balancing the positives and negatives, the article argues that concerns about OpenAI failing to fund its obligations may be overstated. It also points to Oracle’s valuation as a potential support for investors.

Oracle is described as trading at 26 times earnings and 18 times forward earnings. The article further cites a five-year price/earnings-to-growth (PEG) ratio of 0.93, which it says indicates long-term value.

Overall, the article concludes that Oracle should be on investors’ radar as a potential long-term buy, while cautioning that tech stocks remain highly volatile.