Key keywords: Oracle stock 25% drop H1 2026, Oracle AI revenue warning, Oracle cloud infrastructure market share, enterprise generative AI adoption, Oracle Q2 2026 earnings call, Larry Ellison AI strategy, generative AI infrastructure spending, Oracle vs AWS AI competition Oracle’s share price closed out the first half of 2026 with a staggering 25% decline, marking the software giant’s worst six-month performance in over a decade, and newly released guidance from its Q2 2026 earnings call points to a stalled AI growth strategy as the core catalyst. For the past two years, Oracle has centered its investor pitch on capturing a larger share of the booming generative AI infrastructure market, with executive chairman Larry Ellison repeatedly claiming the company would outpace Amazon Web Services (AWS) in AI cloud deployments by the end of 2027, targeting 12% of the global AI infrastructure market share by that date. However, the dire warning shared during last week’s earnings call shattered that narrative: Oracle reported that AI infrastructure order growth came in 32% below analyst projections for the quarter, with conversion rates from proof-of-concept (POC) trials to long-term paid contracts dropping to just 19%, down from 41% in the final quarter of 2025. Executives attributed the miss to two key factors: first, a broader cooling in enterprise AI spending, as mid-sized and large corporations pause large-scale AI deployments to assess return on investment for early pilot programs, and second, ongoing supply chain shortages for high-performance H100 and H200 GPUs that have delayed Oracle’s planned AI cluster rollouts by 3 to 6 months for 60% of its signed clients. Prior to the earnings release, Wall Street analysts had set an average 12-month target price of $162 for Oracle stock; that figure has now been revised down to $108 across 17 major investment banks, with 11 firms downgrading the stock from “Buy” to “Hold” or “Sell” in the past three trading days. Hedge funds have already reduced their Oracle holdings by an average of 28% according to recent 13F filings, as investors grow concerned that the company will fall further behind cloud rivals AWS, Microsoft Azure, and Google Cloud, all of which have allocated 2x to 3x more capital to AI infrastructure buildout than Oracle for 2026. The company also revised its full 2026 fiscal year AI revenue target down from $15 billion to between $9 billion and $10 billion, a gap that has erased nearly $75 billion in market capitalization for Oracle in the first half of the year. The ripple effects of the warning have spread across the enterprise tech sector, with fellow business software providers SAP and Salesforce seeing 3% and 4.7% respective dips in their share prices in the same trading window, as investors price in broader slowdown risks for enterprise AI spending.