A retiree who bought 1,000 shares of Oracle stock at $39 just saw Microsoft slip away

Quick reading

• Microsoft ends AI computing lease deal with Oracle. The stock hit a one-year low of $109.21, then closed up 0.8% at $116.10.

• A retiree’s 1,000 shares, purchased for $39,090 in 2016, are worth $116,100, up from $328,330 at the September 2025 peak.

• Selling 300 shares would reduce Oracle from 12.7% to 8.9% of the portfolio for about $3,465 in federal taxes.

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Oracle (NYSE: ORCL) shareholders received more bad news on Friday. Bloomberg reported that Microsoft was terminating an agreement to lease artificial intelligence computing capacity from Oracle, after refusing to renew the contract. Oracle stock fell to $109.21, down 5.2% from Thursday’s close and its lowest price in more than a year. Then buyers stepped in and the stock ended the day up 0.8% at $116.10.

This rebound doesn’t do much for anyone who has owned Oracle for a while. The stock closed at $328.33 on September 10, 2025. As of Friday’s close, it was 64.6% below that high, 40.7% lower for the year, and 11.2% lower for the week alone.

Take a 66-year-old retiree who purchased 1,000 shares of stock on November 7, 2016, at $39.09 per share, an investment of $39,090. These shares were worth $328,330 at their peak. As of Friday, they were worth $116,100. They also collect $2,700 a month from Social Security and hold another $800,000 in retirement savings, so Oracle now represents 12.7% of a $916,100 portfolio. The question for them is whether this week’s news is a reason to sell.

What Microsoft actually did

The deal dates to 2023. Oracle has agreed to provide Microsoft with server capacity to power a new AI-powered version of the Bing search engine. According to Bloomberg, Microsoft has removed this leased capacity in recent months because older-generation chips in Oracle hardware no longer meet its needs. The full scale of the deal has never been disclosed.

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Oracle has not denied the report. A company spokesperson said demand for its AI cloud infrastructure “remains strong,” including for previous generation chips, and Oracle announced in September that it was renewing contracts for the four-year chips at a 20% premium over the original price.

The report came during an already difficult week for Oracle shareholders:

• Monday November 2: The stock fell 8.8% after Oracle announced plans to raise $20 billion, half through new stock and half through bonds.

• Thursday November 5: it fell another 6.9% as artificial intelligence stocks sold off across the market.

• Friday November 6: it fell as much as 5.2% according to the Microsoft report, then recovered to close up 0.8%.

What the actions of retirees have done

Measured from purchase, the investment still looks good. The 1,000 shares cost $39,090 and are worth $116,100, a gain of $77,010, or 197%. Oracle has also paid $12.85 per share in dividends since this purchase, or $12,850 per 1,000 shares. Today, he pays 50 cents per share each quarter, or $2,000 per year on that position, yielding 1.72% as of Friday.

Measured from the top, the same shares returned $212,230. This is the number that keeps most long-term holders up at night, and it’s not the right number to anchor to. The $328,330 was never in cash. The decision before this retiree concerns the $116,100 that exists today.

The arguments in favor of detention

Oracle’s business continues to grow rapidly. In the most recent quarter, revenue increased 30% to $19.3 billion and cloud infrastructure revenue increased 121% to $7.4 billion. Its book of signed contracts reached $664 billion.

The stock is also much cheaper than it was. At $116.10, Oracle trades at about 18 times last year’s earnings and about 15 times what analysts expect to earn next year. Of the 43 analysts followed, 35 rate it a buy or strong buy, and their average price target is $235.46, about double Friday’s close.

Warren Buffett’s oldest rule applies here. He has been quoting his teacher Benjamin Graham for decades: “The price is what you pay; value is what you get. » A stock that has fallen 65% may be worth more than it was at the peak, if the company behind it is still strong.

The arguments in favor of trimming

Concerns center around how Oracle is financing its growth. The company spent $55.7 billion on equipment and data centers in its 2026 fiscal year, its total debt hit $167 billion, and analysts expect it to burn through more cash than it brings in in its 2028 fiscal year. This week’s $20 billion raise added more inventory and more debt.

The delay is also concentrated. According to S&P, a single AI customer accounts for about half of the $664 billion. Microsoft’s move is modest by comparison, but it shows that customers can and do abandon AI computing offerings that are no longer suitable.

For a retiree, a stock at 12.7% of everything they own is a big bet. An additional 50 percent cut would cost about $58,000, or nearly two years of the $32,400 Social Security pays them.

A middle way

Selling part of the position is a reasonable option for this retiree. If they sell 300 of 1,000 shares at Friday’s price:

• Recipes : $34,830

• Taxable gain: $23,103, since each share costs $39.09

• Federal tax at the rate of 15% in the long term: approximately $3,465

• What remains: 700 shares worth $81,270, or 8.9% of the portfolio, still paying $1,400 per year in dividends

If the shares are in a traditional IRA instead of a taxable account, there is no tax on the sale itself and the reduction costs nothing today.

This preserves most of the upside potential if analysts are right and reduces the damage if this week turns out to be the start of something worse. It also turns part of a paper gain into cash, which is the gain that actually helps pay the bills.

The essentials

Microsoft abandoning a deal with Oracle AI is making headlines, and the stock’s rapid rally Friday shows the market didn’t treat it like a disaster. For a 66-year-old who turned $39,090 into $116,100 over 10 years and collected $12,850 in dividends along the way, the biggest question is how much of his retirement should fall on a single company. Selling 300 shares would reduce Oracle to 8.9% of the portfolio for about $3,465 in taxes, and the remaining 700 shares would continue to pay $1,400 a year.

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If you have saved more than $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money. You want your money to generate sustainable income while you enjoy life.

Now you can learn about the strategies wealthy retirees use to fund their retirement with the Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)

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