Oracle closed at $158.78 on Friday, 54% below its record high of $345.72, set exactly one year before the company's next earnings report on Sept. 10. The stock fell just as far after the dot-com peak in 2000 and took nearly 17 years to recover — but this time the heavy spending behind the decline is Oracle's own, not its customers'.
Oracle has fallen 54% from its record high, closing at $158.78 versus the $345.72 peak it set on Sept. 10 last year. That date falls exactly one year before Oracle's next earnings report, scheduled for this coming Thursday.
The company has been here before. On a monthly closing basis and adjusted for stock splits, Oracle stock peaked at $45.47 in August 2000 and fell 83% to $7.86 by September 2002. It then took until June 2017 — nearly 17 years — to close a month above that 2000 level again.
What made the dot-com recovery so slow
Demand for Oracle's products didn't collapse in the dot-com bust. Revenue actually rose 7% in fiscal 2001, then fell about 12% in fiscal 2002 as customers cut technology spending, the worst single year of the slump. Operating income that year, at about $3.6 billion, was still higher than it had been in fiscal 2000.
The real problem was the starting price. When the stock peaked in August 2000, Oracle traded at more than 100 times its fiscal 2001 earnings per share of $0.44. By the time shares finally crossed that old peak in June 2017, revenue had more than tripled to $37.7 billion and earnings per share had grown about five times to $2.21, leaving the stock trading at about 21 times earnings rather than growing into a new high.
This time, the spending is Oracle's own
Today's decline shares the same theme of heavy spending, but the roles are reversed: in 2000 the spending at risk belonged to Oracle's customers, while now it's Oracle spending on itself as demand stays strong. Fiscal 2026 revenue climbed 17% year over year to $67.4 billion, and cloud infrastructure revenue rose 77% to $18.1 billion. Remaining performance obligations ended the year at $638 billion, up from $138 billion a year earlier. Management confirmed a fiscal 2027 revenue target of about $90 billion, growth of roughly 34%.
That growth carries a cost. Oracle's operations generated a record $32 billion in cash in fiscal 2026, 54% more than the year before, yet capital expenditures jumped 162% to $55.7 billion, pushing free cash flow to negative $23.7 billion.
A cheaper starting point than 2000
Valuation is where the comparison to 2000 breaks down. Shares now carry a price-to-earnings ratio of about 27, and management's fiscal 2027 guidance of $8.05 in non-GAAP earnings per share puts the stock at roughly 20 times forward earnings — nowhere near the triple-digit multiple of 2000. Still, spending nearly $24 billion more in cash than operations brought in last fiscal year carries real risk if AI demand cools.
Source: Fool
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