Oracle (ORCL) shares have fallen nearly 60% from their September 2025 peak while S3 data show short interest has climbed to a one-year high. At the same time, Oracle's 5-year CDS has continued to widen, suggesting credit investors are increasingly cautious about the company's aggressive AI infrastructure investment and growing leverage.

Short Interest and CDS

• Short interest has nearly doubled over the past year, rising from 20 million shares to nearly 38 million shares, even as Oracle shares have fallen from the Sept ‘25 peak of $325 to $140 today.

• Rather than covering into the decline, short sellers have continued adding exposure, reinforcing increasingly bearish investor positioning.

• Oracle's 5-year CDS has widened from less than 40 bps one year ago to roughly 173 bps today, indicating the credit market is also pricing in materially higher risk than a year ago.

• See ORCL note from December here.

Positioning Evolution

• Active Long Interest notional exposure has steadily declined from as high as $60 billion to less than $35 billion over the past year.

• Meanwhile, Short Interest notional exposure has increased by ~$1B to over $5B, despite Oracle's declining share price, reflecting persistent bearish conviction.

• The Active Long/Short Ratio has compressed, from approximately 13x to 6x, highlighting the shift in investor positioning.

Takeaway

• Oracle's positioning profile has shifted decisively over the past year. Long investors have reduced exposure; short sellers have grown more aggressive; widening credit spreads suggest the bond market shares that same caution. Until investor confidence in Oracle's AI investment strategy improves, positioning is likely to remain defensive.

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