Oracle Corporation

Case Caption: Barrows v. Oracle Corporation, et al.

Court: United States District Court for the District of Delaware

Case Number: 1:26-cv-00127-JLH

Judge: Honorable Jennifer L. Hall

Plaintiff: SEB Funds AB and Sparinvest S.A.

Defendant: Oracle Corporation, Lawrence J. Ellison, Safra A. Catz, Clayton Magouyrk, Douglas Kehring, and Maria Smith

Class Period: June 11, 2025, beginning at 4:05 PM ET, through December 16, 2025, inclusive

Defendant Oracle Corporation is a global technology company that provides cloud computing, database software, and most recently, artificial intelligence (“AI”) infrastructure in support of AI-powered applications. This securities fraud class action arises out of Oracle’s materially false and misleading statements concerning the Company’s skyrocketing AI-related capital expenditures (“CapEx”) which would, Defendants claimed, rapidly and directly translate into substantial near-term revenue growth.

On July 14, 2026, SEB Funds AB and Sparinvest S.A. (together, “Lead Plaintiff”) filed a 105-page Amended Complaint on behalf of a putative class of investors alleging that Defendants Oracle Corporation, Executive Chairman Lawrence J. Ellison, former Chief Executive Officer Safra A. Catz, current Co-Chief Executive Officer Clayton Magouyrk, current Executive Vice President and Head of Operations Douglas Kehring, and current Executive Vice President and Chief Accounting Officer Maria Smith (together, “Defendants”), violated Sections 10(b) and 20(a) of the Securities Exchange Act.

As alleged in the Complaint, Defendants made multiple false and misleading statements during the Class Period assuring investors that increasing CapEx—particularly investments in AI data center infrastructure—would lead to accelerating revenue growth right away. Defendants also falsely represented to the market that significant Remaining Performance Obligations (“RPO”)—contracted revenues of services yet to be delivered to customers—affirmed that the revenue acceleration was locked in for years to come. At 4:05 PM ET on the first day of the Class Period, Oracle issued a press followed by an earnings call in which Defendants Catz and Ellison announced dramatic increases in revenue growth that were continuing to rapidly materialize due to insatiable demand for AI data centers—the Company’s new primary business focus. Over the next six months, Defendants made further public statements asserting this claim and the Company’s purported present ability to finance its operations and CapEx with available funds.

However, unbeknownst to investors, Defendants’ AI infrastructure build out was beset with myriad substantial headwinds that undermined Oracle’s ability to deliver the accelerating near-term revenues Defendants touted. Consequently, Oracle’s near-term revenue guidance became stagnant, rather than rapidly accelerating following CapEx investments. Furthermore, despite Defendants’ representations to the contrary, Oracle lacked the ability to fund the growing CapEx needed to build out the AI data center infrastructure necessary to deliver on its contractual obligations. This resulted in Oracle’s exposure to substantial, long-term credit risk through debt offerings with bonds of unconventionally long duration.

The truth regarding Oracle’s ability to generate near-term revenue from its swelling CapEx and fund the build out required to deliver contracted revenues incrementally came to light through a series of corrective disclosures between September and December 2025. First, on September 24, 2025, the market learned that Oracle was selling $18 billion in bonds, some of which would not reach maturity for 40 years, terms inconsistent with Oracle’s repeated representations that its AI expansion was sufficiently funded and that its rapidly increasing CapEx would quickly generate accelerating revenues to support it. The following day, analysts from Rothschild initiated coverage of Oracle at a “Sell,” reasoning that the market was “materially overestimate[ing]” Oracle’s future growth and that the Company’s soaring revenue promises were “unlikely to materialize.” In response to this cascading news, the price of Oracle common stock plunged more than $22 over two days. Then, after market close on December 10, 2025, Oracle announced disappointing financial results, missing analysts’ consensus revenue growth estimates, posting a negative free cash flow of $10 billion, and revealing an additional $15 billion in expected capital expenditures without a corresponding increase in revenue guidance. The next day, Oracle announced it had committed to spend $248 billion on lease obligations over the next fifteen to nineteen years, which called into question whether the Company could satisfy its hundreds of billions of dollars in RPO while simultaneously funding enormous off-balance sheet lease commitments and the CapEx required to bring functional data centers online. Finally, on December 17, 2026, the Financial Times reported that Blue Owl Capital—the primary financial backer for Oracle’s largest data center projects—had backed out of a $10 billion deal due to concerns about Oracle’s spending commitments and rising debt levels. These disclosures each caused significant drops in Oracle’s stock price.

Following the filing of the Amended Complaint, Defendants must move to dismiss by September 16, 2026. Plaintiff’s opposition to the motion to dismiss is due November 17, 2026. Defendants have until December 18, 2026, to file a reply in support of the motion to dismiss.