Track market-moving stories before they get noisy

Oracle is undercutting AWS on price and piling up a backlog that defies expectations, but one of these cloud giants is bleeding cash to get there. The question is whether a discount challenger can actually dethrone the incumbent before its…

Oracle (NYSE:ORCL | ORCL Price Prediction) and Amazon (NASDAQ:AMZN) both closed fresh quarters that reframe the cloud pecking order. Oracle is signing hyperscale AI contracts at a pace that squeezes AWS from below on price. Comparing the two is a debate about who sets AI infrastructure pricing for the next decade.

OCI Sprints. AWS Compounds. Oracle’s Q4 FY2026 showed cloud infrastructure revenue climbing 93% year over year to $5.79 billion, with total remaining performance obligations exploding to $638 billion, up 363%. Of that backlog, $75 billion is tied to bring-your-own-hardware or prepaid GPU deals. Global GPU utilization sits at 97.5%, suggesting demand is real.

Amazon’s Q2 answered with muscle. AWS revenue reached $42.23 billion, up 37%, the fastest growth in 18 quarters, at a 39.4% operating margin. CEO Andy Jassy said AI and Chips each cleared $25 billion annualized run rates, and AWS backlog reached $496 billion.

Discount Hyperscaler Meets the Incumbent Lens Oracle Amazon (AWS) Core Bet Chip-neutral, customer-funded GPUs Custom silicon (Trainium, Graviton) Pricing Angle Lowest-cost infrastructure, outcome-based Graviton 30% to 40% better price performance Capital Load FY26 free cash flow -$23.69B TTM free cash flow -$7.6B Key Vulnerability Debt raise near $40B in FY27 Enterprise price pressure from OCI Oracle’s pitch is that customers can prepay, bring their own GPUs, and access Oracle’s operations layer. Multicloud database revenue jumped 404% in Q4, embedded inside AWS, Google, and Microsoft regions. Amazon’s counter is vertical: Graviton is used by 98% of AWS’s top 1,000 EC2 customers, and Anthropic plus OpenAI have made multi-gigawatt Trainium commitments.

Margin Math Is the Next Referee Watch whether Oracle’s promised high-20s ROIC at the project level shows up as gross margin recovers. Q1 FY27 guidance calls for cloud revenue growth of 58% to 64%. Track whether AWS holds that 39% margin as Oracle’s pricing bleeds into enterprise renewal talks. Amazon’s Q3 operating income guide of $22.5B to $26.5B is the first test.

Why I Lean Toward AWS for Now, With One Eye on Oracle I trust the AWS cash engine more today. Oracle stock is down 27.98% over one year, and the FY27 financing plan of roughly $40 billion in debt and equity gives me pause. Amazon, up 9.69% over one year, funds its buildout from operating cash flow across retail, ads, and AWS. Oracle offers higher-variance turnaround torque if the RPO converts cleanly, while AWS offers scale, silicon, and margin durability.

Contact [email protected] for any questions or corrections.

Oracle stock ORCL rose on Tuesday as a fresh round of bullish analyst commentary put the technology company back in focus ahead of its fiscal first-quarter earnings report, while the launch of OpenAI’s latest artificial intelligence model provided investors with another reason to reassess the company’s growth prospects.

Shares climbed nearly 4% on Tuesday, although Oracle remains down nearly 17% this year and about 32% over the past 12 months.

The stock has faced pressure as investors have grown increasingly concerned about the debt and cash requirements associated with Oracle’s aggressive expansion of AI infrastructure.

However, expectations for accelerating cloud growth, alongside Oracle’s growing relationship with OpenAI, are helping shift attention back toward the potential upside.

OpenAI launched ChatGPT-6 Astra last week, with its latest model receiving strong attention online and raising expectations that the ChatGPT maker could regain ground in the increasingly competitive AI race.

Anthropic and Alphabet’s Google have periodically received stronger reviews for their own AI models in recent years, but Astra’s reception has fuelled hopes that OpenAI can once again establish a technological lead.

That could matter for Oracle because the two companies have a $300 billion cloud supply agreement, with Oracle rapidly expanding its data-center capacity to meet OpenAI’s computing requirements.

"It looks like OpenAI is turning things around, and Astra is ahead of Fable on multiple benchmarks," Morningstar analyst Luke Yang told MarketWatch, referring to rival Anthropic's Fable model.

"This boosts investors' confidence with Oracle's OpenAI backlog," or the dollar amount of commitments yet to be recognized as revenue.

Yang also pointed to Astra’s ability to perform more complex tasks as a potential driver of additional computing demand.

He said the model has the "complete ability to operate a computer," allowing new use cases and products to potentially "complete entire workflows that previous models aren't able to do."

Astra remains available only to a relatively small group of users for now.

But Yang said that if OpenAI can make a "breakthrough on the product front," it could increase demand for computing power and provide further support for Oracle shares.

Wall Street expects Oracle to report revenue of about $19.1 billion, an increase of nearly 28% from a year earlier, alongside earnings of $1.74 per share.

The options market is pricing in a move of roughly 11.2% in either direction following the results, highlighting the unusually high level of uncertainty surrounding the earnings announcement.

Mizuho reiterated its Outperform rating and $320 price target ahead of the results.

The firm expects Oracle to exceed consensus estimates, driven primarily by stronger-than-expected performance from Oracle Cloud Infrastructure.

Mizuho estimates that approximately 1 gigawatt of capacity will come online in the first quarter, compared with around 1.2 gigawatts delivered during the entirety of fiscal 2026.

The firm said another earnings beat would reinforce improving execution and increase confidence in Oracle’s fiscal 2027 guidance.

Oracle's revenue growth of 17.35% over the last 12 months has also supported the bullish case, while analysts are forecasting 34% revenue growth for fiscal 2027.

Mizuho said maintaining fiscal 2027 revenue guidance will be particularly important as investors assess the potential for delays or disruption surrounding Project Jupiter, Oracle’s major data-center buildout.

The firm sees a path for Oracle shares to re-rate as financing concerns ease, visibility into a free-cash-flow inflection improves, and the company’s Oct. 28 Investor Day provides another potential catalyst.

Financing remains a key concernGuggenheim also maintained a Buy rating on Oracle and a $400 price target ahead of the earnings report.

The firm identified Oracle’s planned $20 billion at-the-market equity raise as the biggest concern weighing on the stock since the company’s fourth-quarter results, even exceeding concerns over its reliance on OpenAI.

Oracle did not issue equity during the fourth quarter of fiscal 2026, but Guggenheim said investors will be looking for evidence of meaningful progress this quarter.

The firm said discussions with rating agencies suggest equity would probably need to form part of the remaining $20 billion financing plan to satisfy debt investors.

Guggenheim nevertheless believes Oracle has moved beyond the riskiest phase of its infrastructure expansion and noted that maintaining an investment-grade credit rating remains the CFO’s top priority.

The latest analyst upgrades and reiterations follow already positive commentary from Wall Street.

Bank of America analyst Tal Liani said he sees an attractive risk-reward setup heading into the earnings announcement. He maintained a Buy rating and a $240 price target.

"We favor the risk/reward of Oracle, as we believe Street consensus already captures the challenging balance sheet fundamentals," Liani wrote on Friday, "yet is not fully incorporating the likelihood of revenue growth acceleration related to reaching DC buildout milestones."

Morgan Stanley analyst Sanjit Singh has similarly described Oracle as a "good setup" heading into earnings and expects cloud revenue growth of 63% from a year earlier.

Despite the optimism surrounding OpenAI and Oracle’s cloud expansion, the company’s growing dependence on a handful of major AI customers presents a separate risk.

A substantial portion of Oracle’s increase in remaining performance obligations has come from large AI contracts.

Oracle has also said that prepaid and customer-supplied hardware associated with large AI agreements now totals $75 billion, reducing the amount of capital it needs to raise for the related data-center construction.

That is positive from a financing perspective, but investors are likely to scrutinize how much of Oracle’s future growth depends on a relatively small group of customers, Axel Rudolph, FSTA, Chief Technical Analyst at IG.com, wrote.

"The market will be particularly interested in developments surrounding Oracle's relationship with OpenAI and other major AI customers," Rudolph said.

With the stock still well below its levels of a year ago, Thursday’s results could prove pivotal in deciding whether Oracle can turn renewed AI optimism into a sustained recovery.

Key Takeaways ORCL and ADBE report earnings this week. Investors will be focused on the AI narratives surrounding each. The early stages of the Q3 earnings season get underway this week, with Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) both scheduled to report quarterly results on Thursday, September 10. The releases will be closely watched given the AI-heavy narratives surrounding both, with investor sentiment showing a back-and-forth nature overall in 2026.  

Oracle EarningsAs expected, Oracle’s cloud business will be the main focus, with AI infrastructure demand driving strong growth in recent quarters.

Its latest period reflected a strong cloud showing, with total Cloud revenue climbing 47% YoY to $9.9 billion. Cloud Infrastructure revenue of $5.8 billion grew 93% YoY, while Remaining Performance Obligations (RPO) also reached a massive $638 billion.

Growth expectations remain strong for Oracle heading into the release, with the current Zacks Consensus sales estimate of $19.1 billion reflecting 28.2% YoY growth. Earnings are also expected to grow in the double digits, with the $1.74 Zacks Consensus EPS estimate suggesting roughly 18% YoY growth from the same period last year.

Image Source: Zacks Investment Research

The strong RPO figure provides strong visibility concerning future demand, but the key will be how quickly Oracle can convert that backlog into actual revenue. Continued strength in Cloud Infrastructure would help reinforce the AI growth story, particularly following the sizable 93% growth rate posted last quarter.

The spending required to support that demand remains important as well, affecting recent sentiment massively. Oracle has been pouring capital into AI infrastructure and data center capacity, making continued high growth critical as investors weigh the benefits of its aggressive buildout against the high costs.

Adobe AI MonetizationAdobe has continued to post respectable growth despite heavy pressure on shares from AI-related concerns. Results were solid overall in its latest period, with record revenue of $6.6 billion up 13% YoY.

Total Adobe ARR came in at $27.1 billion, while AI-first ARR more than tripled YoY and surpassed $500 million, suggesting its AI offerings are beginning to make a meaningful contribution. Current Zacks Consensus estimates currently call for $6.7 billion in sales and earnings of $6.08 per share, reflecting 11.8% and 14.5% YoY growth, respectively.

Image Source: Zacks Investment Research

As expected, AI adoption will undoubtedly receive most of the attention. Firefly ARR approached $300 million last quarter, Acrobat AI Assistant ARR nearly tripled, and adoption of Adobe’s agentic capabilities across its enterprise offerings has continued to expand. The biggest question is whether that momentum can increasingly translate into monetization and help ease fears that generative AI will disrupt Adobe’s traditional creative software dominance.

Bottom Line

Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) will both report on Thursday, providing investors with two important reads on the evolving AI landscape.

Oracle’s release will primarily revolve around its red-hot Cloud Infrastructure business and how quickly its massive backlog is translating into revenue. Adobe faces a different test, with investors likely focused on whether growing adoption of Firefly, Acrobat AI Assistant, and its broader AI offerings can increasingly translate into meaningful monetization.

Oracle (ORCL +3.08%) closed at $158.78 on Friday, 54% below its record high of $345.72. The stock set that high on Sept. 10 of last year -- one year to the day before its next earnings report, scheduled for Thursday, Sept. 10.

Shares have been in a hole this deep before. Measured on monthly closing prices, adjusted for stock splits, the stock peaked at $45.47 in August 2000 and fell 83% to $7.86 by September 2002. It didn't close a month above the 2000 level until June 2017, nearly 17 years after the peak.

Before that history scares anyone out of the stock, though, it's worth looking at what made the last recovery so slow. It wasn't the business.

Image source: Getty Images.

The 17-year round tripDaily closing prices tell the same story. The stock's best close of 2000 was $46.31, on Sept. 1 of that year. Shares came within 8 cents of that level in December 2014, faded, and finally closed higher on June 21, 2017. Later that day, Oracle reported its fiscal 2017 results.

And the fall itself was enormous. A stock that drops 83% has to rise nearly 480% just to get back to even.

Today's decline has been shallower, but not by as much as the 54% figure suggests. At its low of $114.50 in late July, the stock was down 67% from its high.

What took so long?To me, the striking part of the dot-com episode is what didn't happen. Demand didn't collapse.

Oracle's revenue rose 7% in fiscal 2001 (the company's fiscal years end May 31), then fell about 12% in fiscal 2002 as customers cut back on technology spending. That was the worst single year. In fact, operating income was higher in fiscal 2002, at about $3.6 billion, than it had been in fiscal 2000.

The problem was the starting price. When the stock peaked in August 2000, Oracle was on its way to earning a split-adjusted $0.44 per share in fiscal 2001, the year then underway. The peak price was more than 100 times those earnings.

However, even a growing business can spend years catching up to a price like that.

By fiscal 2017, revenue had more than tripled from fiscal 2000's $10.2 billion to $37.7 billion, and earnings per share had grown about five times, to $2.21. By the time the stock crossed its old peak in June 2017, it traded at about 21 times earnings.

In other words, the stock didn't so much recover as grow into its old price.

This time, the spending is Oracle's ownThe two declines do share one thing: heavy spending sits at the center of both.

But in 2000, the spending at risk belonged to Oracle's customers, and when they pulled back, revenue dipped. Today the heavy spending is Oracle's own -- and demand is the strong part of the story.

Highlighting that demand, Oracle's fiscal 2026 revenue climbed 17% year over year, to $67.4 billion. Cloud infrastructure revenue did even better, rising 77% to $18.1 billion. Remaining performance obligations (contracted future revenue that hasn't shown up in results yet) ended the year at $638 billion, up from $138 billion a year before. And management expects more, confirming a fiscal 2027 revenue target of about $90 billion, or growth of about 34%.

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Paying for that demand is the hard part. Oracle's operations produced a record $32 billion of cash in fiscal 2026, 54% more than the year before. But capital expenditures jumped 162%, to $55.7 billion, leaving free cash flow at negative $23.7 billion.

The comparison to 2000 breaks down at the valuation, though, and in shareholders' favor. Shares have a price-to-earnings ratio of about 27. Management's fiscal 2027 guidance calls for $8.05 of non-GAAP (adjusted) earnings per share, so buyers today are paying about 20 times those expected earnings. That could prove expensive if the margins on Oracle's artificial intelligence (AI) contracts disappoint, but it's nothing like the triple-digit price-to-earnings multiple of 2000.

Ultimately, the 17-year round trip is arguably a lesson about starting prices more than a warning about Oracle. Still, I wouldn't buy the stock today. A company that spent about $24 billion more cash than its operations brought in last fiscal year carries real risk if AI demand cools.

But for investors who already own the stock, the dot-com comparison seems like a weak reason to sell. The last long wait began at more than 100 times earnings. Today's starting point is nowhere near that.

Oracle
ORCL +3.08% 92

stock is flashing a stunning pre-earnings signal as options traders brace for an 11.2% move following its fiscal first-quarter report on September 10.

At $157.62, the implied swing is about $17.65, creating a post-earnings range near $140 to $175. Options do not predict direction. They show the volatility priced into the event.

Wall Street expects revenue of $19.13 billion, up nearly 28%, and earnings of $1.74 per share. The test is whether Oracle can convert AI demand into profitable growth without another spending surge.

Oracle's $638 billion backlog equals 9.5 times its $67.4 billion fiscal 2026 revenue. Cloud-infrastructure sales jumped 93% last quarter, showing demand. However, backlog is not revenue. Oracle must deploy servers and data centers enough to fulfill contracts, recognize sales and collect cash.

The financing tension is clear. Oracle generated $32 billion in operating cash flow last year, yet AI data-center investments drove free cash flow to negative $23.7 billion. The company plans to raise $40 billion during fiscal 2027, increasing investor focus on leverage, funding costs and capital returns.

OpenAI provides a catalyst and concentration risk. Its GPT-6 Astra release supported Oracle shares because OpenAI signed a $300 billion cloud-rental agreement with Oracle last year. Evidence that deployment is progressing could validate Oracle's buildout, while delays would amplify doubts.

Analysts remain bullish. Morgan Stanley raised the target from $207 to $210, while Bank of America maintained a Buy rating and $240 target. Consensus is Strong Buy, with a $254.68 target implying 60.4% upside. Oracle remains down 19% this year.

For investors, the report turns on three metrics: cloud growth, backlog conversion and the capex-to-cash-flow trajectory. Strong sales with deteriorating cash flow may disappoint. Better execution and cash generation could unlock a rebound. With an 11.2% swing priced, the market is preparing to deliver a verdict.

Oracle Corporation (NYSE:ORCL) shares are in the spotlight Friday, with earnings on deck, recent analyst activity, and Edge Rankings all drawing attention.

Earnings Preview & HistoryOracle is scheduled to report first-quarter fiscal 2027 earnings on September 10 after market close. Analysts estimate EPS of $1.74 along with revenue of $19.14 billion. For the prior quarter, Oracle reported EPS of $2.11, beating the consensus estimate of $1.96. The company also posted revenue of $19.18 billion, beating the consensus estimate of $19.10 billion.

What to Watch: $638B Backlog, Cloud Growth, and Capex StrainInvestors will be closely tracking Oracle’s Remaining Performance Obligations, which reached $638 billion as of May 31, up 363% year-over-year, for signs that the massive backlog is converting into recognized revenue rather than simply growing on paper. Management’s own guidance calls for total revenue growth of 27% to 29% and cloud revenue growth of 58% to 64% for the quarter, following Oracle Cloud Infrastructure growth of 93% last quarter.

Capital expenditure and cash flow commentary will also be in sharp focus, given fiscal 2026 capex reached $55.7 billion and pushed free cash flow to negative $23.7 billion, prompting a $45 billion to $50 billion financing plan — investors will want reassurance that spending is converting into profitable, contracted revenue rather than straining the balance sheet further.

Analyst Consensus & Recent ActionsThe stock carries a Hold rating with an average price forecast of $60.00. Recent analyst moves include:

BTIG: Buy (Maintains Target to $75.00) (Sept. 4) Needham: Hold (Sept. 4) BTIG: Buy (Raises Target to $75.00) (Sept. 2) Benzinga Edge RankingsBelow is the Benzinga Edge scorecard for DocuSign, highlighting its strengths and weaknesses compared to the broader market:

Momentum: Bullish (Score: 77.41) — The stock is showing stronger-than-average trend persistence, consistent with price holding above key moving averages. Value: Neutral (Score: 46.09) — Valuation looks more middle-of-the-pack on this framework, even as the P/E suggests the market is still paying up for execution. Growth: Bullish (Score: 96.57) — The scorecard is flagging growth as a key pillar, which can help explain why buyers stay engaged when the chart is trending. The Verdict: DocuSign’s Benzinga Edge signal reveals a growth-heavy profile with supportive momentum, which tends to reward trend-following as long as key support zones hold. The trade-off is that the setup can be less forgiving on any growth disappointment, especially with valuation still reading as premium.

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Oracle Shares March HigherORCL Price Action: At the time of publication, Oracle shares are trading 1.77% higher at $156.77, according to data from Benzinga Pro.

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Jefferies cut its price target to $290 but kept a Buy rating, betting Oracle's AI cloud growth can offset concerns about heavy spending and rising leverage. Summary

Oracle shares are down 25% this year

Oracle Corp. (ORCL, Financials) has had a rough year, but Jefferies thinks much of the bad news may already be reflected in the stock.

Oracle shares are down about 25% year to date, while concerns around heavy capital spending, financing needs and AI data center execution have weighed on sentiment.

Jefferies analyst Brent Thill still sees opportunity. He reiterated a Buy rating on Oracle ahead of fiscal first-quarter earnings, while lowering his price target to $290 from $320.

Sentiment is close to “peak negative” and much of the downside risk is already priced in, Thill said. The bullish case is largely built around Oracle Cloud Infrastructure. Jefferies expects OCI growth of around 115%, 41% operating margin and 40% growth in remaining performance obligations.

Oracle has also added around $183 billion of incremental RPO since its big AI contract announcement in September 2025. Despite that growth, the stock is still down about 41% from where it stood before the announcement.

The risk is Oracle's balance sheet could remain stretched with net leverage at historical highs of around 4.5 times. It's a simple setup for investors. Oracle needs that growth in its AI infrastructure to come soon enough to justify the spending required to support that growth.

The next test will be first-quarter results, with Wall Street forecasting revenue of $19.13 billion and earnings of $1.74 a share.

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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It wasn't long ago when Oracle (ORCL +3.23%) was approaching a $1 trillion market cap, thanks in large part to optimism about its cloud computing business. However, the stock is down by more than 50% from the all-time high it set almost a year ago, and it currently has a market cap below $500 billion.

This dramatic drop has created a buying opportunity, and if Oracle can continue to ride the tailwinds of the AI megatrend for multiple years, it has a real shot at recovering past that peak and reaching a $1 trillion valuation for the first time.

Image source: Getty Images.

Cloud revenue continues to climb Oracle's cloud segment is the most important part of the business to consider when assessing how far the stock can climb. That segment continues to do well. Oracle reported cloud revenue growth of 47% year over year in its fiscal 2026 fourth quarter. Total revenue for the company was up by 21%.

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The major drag on the stock relates to Oracle's remaining performance obligations. It has $638 billion in its backlog. That's a good number on the surface since Oracle earned $19.2 billion in its fiscal 2026 fourth quarter. The issue is that its contract with OpenAI accounts for more than $300 billion of that $638 billion total.

There is a lot of uncertainty about that contract. First, in December, Bloomberg reported that Oracle was going to delay delivery of the OpenAI-related data center project by a year -- an assertion that Oracle promptly denied. According to Oracle, those data centers will be delivered on time in 2027.

Investors' bigger concern regards OpenAI's ability to pay $60 billion per year for five years to Oracle when it posted a $38.5 billion net loss in 2025. Its $40 billion in annual recurring revenue wouldn't be enough to cover that commitment, even if it operated with 100% net profit margins, and the Oracle contract is far from OpenAI's only expense.

These concerns are valid when it comes to the pipeline, but Oracle is delivering solid results right now, and it still has a lot of other customers with more reliable finances in its remaining performance obligations.

The valuation has dropped considerably Anytime a stock goes through a deep correction, it's a good time to reassess its valuation. Although Oracle previously commanded a P/E ratio in the 50s, it only trades at a 26 P/E ratio right now. Furthermore, its price/earnings-to-growth (PEG) ratio is just 0.86. Any stock with a positive PEG ratio below 1 is generally viewed as being undervalued.

Oracle stock offers a more attractive margin of safety right now than it did a few months ago. Furthermore, if its revenue and net income continue to climb, investors should feel more willing to expand its valuations again and send it back toward its all-time highs.

The artificial intelligence boom isn't anywhere close to being over. Grand View Research projects a 30.6% compound annual growth rate for the artificial intelligence market through 2033. Oracle's cloud platform is poised to ride that wave, which could propel the company to a $1 trillion market cap.

Rising Treasury yields are hitting debt-heavy AI builders where it hurts most, and Oracle's balance sheet puts it squarely in the crosshairs. Here is what the bond market is saying about the cost of building the AI future.

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A global bond selloff that lifted the 10-year Treasury yield to a recent high is landing hardest on balance sheets carrying the heaviest debt-funded AI capital expenditure. Oracle (NYSE:ORCL | ORCL Price Prediction) sits at the front of that queue, and its stock is repricing on the higher cost of the borrowing that funds its buildout.

Oracle stock is down 4% to $142.82 in Tuesday afternoon trading, extending a slide that had already left Oracle stock down 23% year to date through Monday’s close. Meanwhile, Nebius Group (NASDAQ:NBIS) stock is slipping in sympathy, down 3% to $200.45 as another AI infrastructure builder financing its expansion through debt and equity issuance.

The First Trust Cloud Computing ETF (NASDAQ:SKYY) is down 2% to $161.76. Broader tech is holding up better, with the Invesco QQQ Trust (NASDAQ:QQQ) down 0.9% to $710.30. Cloud infrastructure and software are selling harder than large-cap technology overall, and Oracle stock is falling harder than the cloud group it belongs to.

Bond Selloff Reprices the Cost of Building Yields on the 10-year Treasury note rose to 4.78% Tuesday morning. Rising long-term rates directly lift the cost of the borrowing that funds hyperscale data-center construction. Among mega-cap AI infrastructure names, Oracle carries a relatively high leveraged balance sheet, which is why the same rate move produces a bigger price reaction here than in the broader cloud complex.

Oracle’s fiscal 2026 capital expenditure totaled $55.7 billion, up from $21.2 billion the prior year, producing a cash outflow $23.7 billion greater than the business generated. Oracle covered that gap by raising $43 billion in debt markets and a further $5 billion by selling stock. A buildout funded that way reprices directly when the cost of borrowing rises, and this can help to explain why Oracle stock is trading below its 200-day moving average of $170.66.

Where Demand Meets the Funding Cost Co-CEO Clay Magouyrk said on Oracle’s most recent earnings call that customer demand for AI computing capacity has outpaced available supply, citing $553 billion in contracted but unrecognized revenue. Oracle posted 17% revenue growth in fiscal 2026, and its cloud infrastructure segment expanded 77%. That backlog gives Oracle unusual visibility into future revenue, and management has consistently characterized supply as the binding constraint on the business.

Oracle’s total liabilities reached $218.7 billion at fiscal year-end, against shareholder equity of $42.5 billion, with long-term debt alone at $122.3 billion. Higher long rates lift both refinancing costs on that stack and the incremental cost of the next dollar raised, which is the arithmetic doing the work on Oracle’s price today.

The tension in Oracle’s setup is that the demand signal and the funding cost are both real at the same time. A stock already down 23% year to date reflects the discount rate applied to that demand while bookings continue to grow. Nebius carries a related profile, funded through convertible notes, treasury share sales, and a first senior secured debt facility of approximately $775 million, which makes Nebius stock a natural sympathy trade on days when the long end of the curve sells off.

The Economic Times reported that Oracle is eliminating roughly 3,000 positions in India, and Oracle declined to comment on the India reductions. Oracle’s headcount shrank by 21,000 over the fiscal year ending May 31, a 13% decline, to about 141,000, and Oracle recorded $1.8 billion in restructuring charges for the year under its 2026 Restructuring Plan, with total anticipated charges of as much as $2.1 billion. These cuts read as cost discipline consistent with the funding strain, and Oracle stock rose on earlier layoff news, so today’s headlines aren’t a reliable read on the day’s direction.

What to Watch Next Traders can watch for whether the 10-year Treasury yield continues to hover near the 4.8% level, since Oracle stock now trades with tighter sensitivity to long-end rates than to the cloud group as a whole. Investors sizing their exposure to debt-funded AI infrastructure should consider keeping their position sizes modest while the funding backdrop resets.

Nebius offers a lower-scale read on the same theme, and Nebius stock tends to move in the same direction on rate-driven days. Market watchers could look for signs that funding costs stabilize before either name attempts a durable bounce off current levels.

Analyst coverage on Oracle remains constructive on the underlying business, with 8 strong-buy and 29 buy ratings against 6 holds and one sell, and an average analyst target price of $244.12. That gap between price and target is where the funding-cost debate now sits.

Contact [email protected] for any questions or corrections.

The bond market is quietly reshaping how investors should think about NVIDIA and the broader AI trade, and Wall Street strategists are raising alarms that most equity investors are not watching the right risk.

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The biggest risk to the AI trade may increasingly come from the bond market rather than the technology itself.

A CNBC panel on Monday featuring Mike O’Rourke of JonesTrading, Peter Tchir and Jay Woods argued that NVIDIA and other companies funding the enormous AI infrastructure buildout are becoming more exposed to interest rates, credit markets and economic conditions as hundreds of billions of dollars flow into data centers and compute capacity.

Nvidia May Be Turning From a Pure Growth Stock Into a Financing Story JonesTrading’s Mike O’Rourke put NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) at the center of the shift towards a financing company: “Nvidia is repositioning itself, that it wants to finance this AI buildout to the tune of hundreds of billions of dollars. And that’s been a risk, that you are going to take yourself from being this tech, high-growth company to something levered to the economy, interest rates and financial markets.“

When a company finances the demand for its own products, its cash flows co-move with credit spreads and discount rates. NVIDIA’s July-quarter disclosures back up the scale of that pivot: supply obligations tied to memory procurement for Vera Rubin, financing partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR designed to “raise over $500 billion of third-party capital,” and a management concession that “we recognize the scale of this support, and we know some will call this circular financing. We see it differently.”

O’Rourke was careful about the trigger. He said, “If we do wind up with interest rate hikes, which I’m not even sure I’m really there in that camp, that we’re going to get them, it’s going to put pressure on the AI trade. It’s going to deflate multiples.“ The expectation of hikes alone can compress valuations. Former Fed Vice Chair Roger Ferguson’s August 28 call for two rate hikes sharpened that expectation.

The AI Buildout Is Flooding the Bond Market With New Debt Tchir moved the discussion from policy to global capital supply. His claim: “[In] August, we did $100 billion more in corporate credit than we typically do in August. That’s putting pressure globally.“

Layer on long-end Treasury yields under pressure from global sovereign debt issuance for infrastructure and defense, and the long end reprices on lesser supply rather than just in anticipation of what the Fed will do. The Treasury curve on August 28 showed the 10-year at 4.73%, the 20-year at 5.21%, and the 30-year at 5.22%, while the 10Y-2Y spread narrowed to 0.39%.

Tchir discussed how Treasuries seem relatively unappealing today: “I’d rather own some of the compute bonds than Treasuries. And I think the rest of the world doesn’t care as much about Treasuries either.”

Oracle (NYSE:ORCL) guided to raise around $40 billion in debt and equity in fiscal year 2027, with a net cash CapEx outlay of around $70 billion, and CFO Hilary Maxson insisted the company will preserve its “investment-grade credit rating.” Backlog reached $638 billion in RPO. The stock is up 28.12% over the past month at $149.40, though still down 36.51% year-over-year.

Can the Bond Market Finally Spill Into AI Stocks? Woods framed the setup directly: “We’re starting to see some momentum slow. And so what I’m looking forward to is, will the bond market affect the equity market?“

Treasury Secretary Bessent argued in a Monday interview that the U.S. bond market is the most resilient in the world, and Goldman Sachs CEO David Solomon said credit issuance is coming from very large companies with strong cash flow and that he does not see significant risks in the system. Retail is split too: NVDA Reddit sentiment hit a very bullish 81 on Friday before drifting to neutral 58 by Monday morning. To add to that, September is historically the worst month of the year for stocks, which shows the market could be in for some turbulence.

Key Takeaways The AI boom is becoming increasingly capital-intensive, pulling companies like NVIDIA and Oracle deeper into credit markets. That means investors may have to watch Treasury yields, corporate issuance, and financing conditions alongside GPU demand and earnings growth. If the bond market tightens, the AI trade could feel it on both rising financing costs and falling valuation multiples.

Contact [email protected] for any questions or corrections.

Oracle (ORCL - Free Report) ended the recent trading session at $149.12, demonstrating a -1.15% change from the preceding day's closing price. The stock fell short of the S&P 500, which registered a loss of 0.33% for the day. Elsewhere, the Dow saw a downswing of 0.7%, while the tech-heavy Nasdaq depreciated by 0.12%.

Shares of the software maker witnessed a gain of 16.16% over the previous month, beating the performance of the Computer and Technology sector with its gain of 7.52%, and the S&P 500's gain of 3.87%.

Market participants will be closely following the financial results of Oracle in its upcoming release. The company is forecasted to report an EPS of $1.72, showcasing a 17.01% upward movement from the corresponding quarter of the prior year. In the meantime, our current consensus estimate forecasts the revenue to be $19.14 billion, indicating a 28.24% growth compared to the corresponding quarter of the prior year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $8.03 per share and a revenue of $89.8 billion, signifying shifts of +5.24% and +33.32%, respectively, from the last year.

Any recent changes to analyst estimates for Oracle should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.27% higher. Oracle is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, Oracle currently has a Forward P/E ratio of 18.78. This indicates a premium in contrast to its industry's Forward P/E of 18.1.

We can additionally observe that ORCL currently boasts a PEG ratio of 0.76. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As the market closed yesterday, the Computer - Software industry was having an average PEG ratio of 1.65.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 96, placing it within the top 40% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

Citi's software research chief just called Oracle's brutal summer selloff a rare statistical anomaly and went on CNBC to argue the stock belongs in your portfolio. But his own reasoning contains a contradiction that changes everything about the trade.

Oracle (NYSE:ORCL | ORCL Price Prediction) has been the loudest cautionary tale in software this summer, which is exactly why Citi’s Tyler Radke went on CNBC today to argue the selloff has gone too far. Radke, co-head of U.S. software equity research at the bank, opened a positive catalyst watch on Oracle and called the drawdown “a 4 to 5 standard deviation move” driven largely by technical factors.

The stock closed at $148.87 on Wednesday, down 22.88% year to date and 35.71% below its price a year ago. Radke cited Oracle as down over 20% year to date and pacing for its first negative year in four.

His argument rests on three claims: the selling is mechanical, the growth is real, and the valuation is cheap. He describes Oracle as “growing revenue and earnings over 30% over the next few years” and trading at a mid-teens earnings multiple, which lines up with a forward P/E of 18x. The tension in his case is that he blames technical selling while acknowledging Oracle’s credit rating is teetering on the edge of investment grade. Those two things are not independent.

How Bad the Selloff Has Been Oracle traded as high as $341.82 in the past year and as low as $114.50. That is a rare range for a mature megacap software company, following a Q1 FY26 report where the stock jumped 35.95% on the day of earnings.

The Q4 FY2026 report on June 10, 2026, saw shares drop 8.53% on the day and 28.03% over the following 30 days, while the S&P 500 was up modestly over the same period.

Radke thinks that is overdone because the underlying booking data has continued to improve. Oracle finished FY26 with remaining performance obligations of $638 billion, up 363% year over year, and IaaS revenue grew 93% in Q4. Guidance for FY27 was set at $90 billion in revenue and $8.05 in non-GAAP EPS.

Reddit sentiment in early August was dominated by a post about Larry Ellison pledging 346 million Oracle shares as collateral for a loan. That narrative feeds forced selling if the stock keeps sliding.

What ATM Equity Issuance Does to a Share Price Radke told CNBC he wants Oracle to “communicate to investors that they’re done with this at the market equity issuance”. An at-the-market program allows a company to sell new shares directly in the open market at prevailing prices.

That is helpful for the company because it avoids discounting a marketed offering. It is painful for the stock because there is constant latent supply, and any rally can be met by the company itself selling into it.

Oracle disclosed plans to raise approximately $40 billion through debt and equity in fiscal 2027, including a $20 billion at-the-market equity issuance. That program is both a technical drag on the stock and a direct reflection of the fundamentals, because Oracle needs the equity for the AI data center buildout, which has to be powered, cooled, and networked by a whole cast of suppliers we profiled in a free report on the AI infrastructure names that aren’t chipmakers, and which is generating negative $23.7 billion in free cash flow.

When Radke calls the sell-off technical and also worries about the credit rating, that’s the same story told twice. The market is repricing a balance sheet that carries $218.7 billion in total liabilities against a capital plan that continues to grow.

Business Case Underneath the Financing Case Radke’s operating argument is stronger than his technical one. He said Oracle’s “database business is well positioned” and that its applications business is gaining share, growing faster than Salesforce and Workday.

The Q4 numbers back up the direction. Multi-cloud revenue grew 404% year over year, and management said global GPU utilization was 97.5%. Cloud applications revenue was $4.126 billion, up 10%.

Management expects OCI margins to settle in the 30% to 40% range, with a steady-state return on invested capital in the “high 20s”. Those numbers make a mid-teens forward multiple look interesting if you believe them.

The catch is that Radke’s 30%+ revenue and earnings growth figure is his estimate, not a company forecast, and it depends on Oracle continuing to sign multi-billion-dollar contracts without further diluting shareholders. Oracle’s next earnings report is expected on September 8, 2026, though the company has not confirmed the date.

What I Think About the Setup Radke’s most useful observation is that the investor day at the end of October is a real catalyst, because management could signal that new deals carry higher prepayments and do not require incremental financing. If they do, the technical overhang eases.

The problem is that Oracle has to earn that outcome. The $75 billion in bring-your-own-hardware and prepaid contracts disclosed in Q4 is genuinely helpful for capital intensity, but it does not, by itself, resolve the credit question.

At $148.87, the stock is pricing in the risk that another quarter of heavy capex and further equity supply keeps a lid on things through year-end. Radke can be right about the long-term trajectory and still early on the entry.

The setup looks like a legitimate dislocation with a fundamental overhang attached, more complicated than the clean technical story Radke framed it as. Anyone taking his side of the trade is betting that the September earnings report and October investor day give management a chance to change the financing narrative, and that is a real bet with a real timeline attached.

Contact [email protected] for any questions or corrections.

Connor Clark & Lunn Investment Management Ltd. lifted its position in Oracle Corporation (NYSE:ORCL – Free Report) by 147.9% in the 2nd quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 13,097 shares of the enterprise software provider’s stock after acquiring an additional 7,813 shares during the quarter. Connor Clark & Lunn Investment Management Ltd.’s holdings in Oracle were worth $1,919,000 at the end of the most recent reporting period.

Other large investors also recently made changes to their positions in the company. FSA Wealth Management LLC bought a new position in shares of Oracle during the 3rd quarter worth approximately $28,000. Mpwm Advisory Solutions LLC increased its position in shares of Oracle by 76.9% during the third quarter. Mpwm Advisory Solutions LLC now owns 115 shares of the enterprise software provider’s stock valued at $32,000 after acquiring an additional 50 shares during the last quarter. Turning Point Benefit Group Inc. bought a new stake in Oracle during the third quarter worth $35,000. HFM Investment Advisors LLC boosted its position in Oracle by 290.9% in the fourth quarter. HFM Investment Advisors LLC now owns 129 shares of the enterprise software provider’s stock worth $25,000 after purchasing an additional 96 shares during the last quarter. Finally, Basepoint Wealth LLC bought a new position in Oracle in the 4th quarter valued at $26,000. 42.44% of the stock is owned by institutional investors.

Key Oracle News Here are the key news stories impacting Oracle this week:

Positive Sentiment: Citigroup placed Oracle on a 90-day “positive catalyst watch,” arguing that the recent selloff was excessive and that strong AI-cloud demand, a large backlog and upcoming earnings could drive a rebound. The view helped improve sentiment toward the stock. Investors Are Missing Oracle’s AI Boom. Citi Says Buy. Positive Sentiment: Wall Street remains broadly bullish, with one report citing a Strong Buy consensus and substantial potential upside. Other analysts and investors highlighted Oracle’s cloud infrastructure scale, AI exposure and improving growth prospects. Most Active Stocks: Oracle Tops List with 71% Upside Positive Sentiment: Oracle was named a Leader in Gartner’s 2026 Magic Quadrant for Supply Chain Management Suites, reinforcing the competitiveness of its Fusion Cloud SCM products and enterprise-software portfolio. Oracle Named a Leader in the 2026 Gartner Magic Quadrant Neutral Sentiment: Oracle has rallied about 18% over the past month from a deeply depressed level, but commentary questions whether the rebound represents a durable leadership position compared with other cloud stocks. September earnings are viewed as the next major test. Oracle Just Rallied 18% in a Month Negative Sentiment: Investors continue to debate whether Oracle can convert its sizable order book into revenue quickly enough. The company’s roughly $55.7 billion data-center buildout, elevated leverage and reported payroll reductions raise questions about funding, execution and future margins. Oracle Capex Funding and Debt Insider Buying and Selling at Oracle In other news, Vice Chairman Jeffrey Henley sold 400,000 shares of Oracle stock in a transaction on Wednesday, June 24th. The stock was sold at an average price of $159.16, for a total value of $63,664,000.00. Following the completion of the transaction, the insider directly owned 400,000 shares in the company, valued at approximately $63,664,000. The trade was a 50.00% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Company insiders own 40.90% of the company’s stock. Analyst Upgrades and Downgrades A number of equities research analysts have recently commented on the company. Wedbush lowered their target price on Oracle from $275.00 to $240.00 and set an “outperform” rating on the stock in a research note on Thursday, June 11th. Wolfe Research reaffirmed an “outperform” rating and issued a $225.00 price objective on shares of Oracle in a research report on Thursday, June 11th. Mizuho set a $320.00 target price on shares of Oracle in a research report on Wednesday, June 3rd. Oppenheimer raised their price target on shares of Oracle from $235.00 to $275.00 and gave the stock an “outperform” rating in a research note on Monday, June 8th. Finally, Royal Bank Of Canada reiterated a “sector perform” rating and issued a $190.00 price objective on shares of Oracle in a research note on Thursday, June 11th. Two research analysts have rated the stock with a Strong Buy rating, twenty-eight have assigned a Buy rating, eight have assigned a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat.com, Oracle presently has an average rating of “Moderate Buy” and a consensus target price of $263.97.

Read Our Latest Research Report on ORCL

Oracle Stock Performance NYSE ORCL opened at $151.11 on Friday. The company’s 50 day moving average is $140.73 and its 200-day moving average is $160.60. Oracle Corporation has a 12-month low of $114.50 and a 12-month high of $345.72. The company has a quick ratio of 1.12, a current ratio of 1.12 and a debt-to-equity ratio of 3.21. The firm has a market cap of $435.27 billion, a P/E ratio of 25.92, a price-to-earnings-growth ratio of 0.94 and a beta of 1.72.

Oracle (NYSE:ORCL – Get Free Report) last released its quarterly earnings data on Wednesday, June 10th. The enterprise software provider reported $2.11 EPS for the quarter, topping the consensus estimate of $1.96 by $0.15. Oracle had a net margin of 25.37% and a return on equity of 58.62%. The company had revenue of $19.18 billion during the quarter, compared to the consensus estimate of $19.10 billion. During the same period last year, the firm earned $1.70 EPS. Oracle’s revenue for the quarter was up 20.6% on a year-over-year basis. Oracle has set its Q1 2027 guidance at 1.720-1.760 EPS and its FY 2027 guidance at 8.050-8.050 EPS. Sell-side analysts predict that Oracle Corporation will post 6.49 earnings per share for the current year.

Oracle Announces Dividend The business also recently declared a quarterly dividend, which was paid on Friday, July 24th. Stockholders of record on Friday, July 10th were issued a $0.50 dividend. This represents a $2.00 dividend on an annualized basis and a dividend yield of 1.3%. The ex-dividend date of this dividend was Friday, July 10th. Oracle’s dividend payout ratio (DPR) is presently 34.31%.

About Oracle (Free Report)

Oracle Corporation is a multinational technology company that develops and sells database software, cloud engineered systems, enterprise software applications and related services. The company is widely known for its flagship Oracle Database and a portfolio of enterprise-grade software products that support data management, application development, analytics and middleware. Over recent years Oracle has expanded its focus to include cloud infrastructure and cloud applications, positioning itself as a provider of both platform and software-as-a-service solutions for large organizations.

Oracle’s product and service offerings include Oracle Database and the Autonomous Database, Oracle Cloud Infrastructure (OCI), enterprise resource planning (ERP), human capital management (HCM) and supply chain management (SCM) cloud applications (often grouped under Oracle Fusion Cloud Applications), middleware such as WebLogic, and developer technologies including Java and MySQL.

See Also Five stocks we like better than Oracle From SaaS-pocalypse to Perfect Storm: Workday’s AI Growth Story Strengthens These 3 GARP Stocks Show Why Growth and Value Do Not Have to Clash Venture Into High-Volatility Corners of the Market With These 3 ETFs 3 Retail Stocks to Watch After a Big Consumer Earnings Week

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When it comes to cloud stocks, Oracle (ORCL +3.10%) and Amazon (AMZN -0.57%) are among the industry's leaders.

Oracle's surging backlog initially lifted its stock, but the scope of its relationship with OpenAI cast doubt on the security of much of that future expected business. In contrast, Amazon pioneered and continues to lead the cloud industry, though it faces increasing competition from companies building AI-specific cloud environments.

Fortunately, AI is likely here to stay, and Grand View Research forecasts a compound annual growth rate of 40.8% for the generative AI market through 2033. Also, both companies appear well-positioned to benefit from that growth over time.

However, one of these cloud stocks will likely benefit significantly more than the other over the next five years.

Image source: The Motley Fool.

Oracle's current situation Oracle came to the cloud infrastructure race at a relatively late date. Investors previously knew it best for its relational database technology. As that industry changed, Oracle shifted its focus to the cloud to reinvigorate growth, standing out by offering database-native AI supported by ultra-fast GPU networking. That has helped it offer high-performance compute and cloud networking at a lower cost than competitors such as Amazon Web Services (AWS).

This strategy culminated in a $300 billion partnership with OpenAI that it inked last fall. That deal dramatically increased its backlog, and the backlog has continued growing. After rising $85 billion in the most recent quarter, it now stands at $638 billion.

Nonetheless, OpenAI's multibillion-dollar losses and rising competition in the AI space have led industry analysts to question whether OpenAI will be able to fulfill its end of the deal. Additionally, Oracle has had to borrow heavily to add to its infrastructure so that it can monetize its backlog. That took its total debt level to $129.5 billion, up from $92.6 billion one year ago as it funded $55.7 billion in capital expenditures. Also, its free cash flow for its fiscal 2026 (which ended May 31) was negative $23.7 billion, a far greater outflow than its negative $394 million in free cash flow during its fiscal 2025.

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Concerns about those figures may partially explain why the stock has fallen by 56% from its peak. That drop has brought its P/E ratio down to 25, which may entice some investors to buy. However, the stock is unlikely to recover until the company can reassure investors that its massive investments will pay off in the end.

The state of Amazon As a more diverse enterprise, Amazon has some advantages, even as it faces some of the same issues that have investors concerned about Oracle. It benefits from a recession-resistant e-commerce business that supports some fast-growing enterprises like advertising and third-party seller services.

It also holds advantages as the company that pioneered cloud computing and drove its advancement. Thus, it offers a more complete set of tools and, unlike most of its competitors, has developed custom silicon specifically tailored to its cloud and AI infrastructure. Its $496 billion backlog, which is up from $364 billion in the prior quarter, shows that demand for its infrastructure remains high.

Still, much of Amazon's cloud infrastructure may be less well suited for AI workloads. Moreover, it has had financial struggles of its own with its build-out. Its long-term debt is now at $128.9 billion, up from $65.6 billion just six months ago. Additionally, it is planning to lay out $220 billion in capex in 2026 alone. As a result, a company known for a strong cash position has reported negative $7.6 billion in free cash flow over the trailing 12 months.

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Admittedly, investors have been kind to Amazon -- its stock recently hit another new all-time high. Furthermore, its P/E ratio of 21 looks increasingly appealing considering that its earnings multiple routinely exceeded 50 (and often 100) just a few years ago. Nonetheless, given the company's rising debt load, the stock may not be immune to pain if the AI story does not pan out as planned.

When contemplating how these companies are likely to perform over the next five years, it appears investors would probably be better off choosing Amazon.

Assuming the AI industry continues to grow as predicted and the companies derive worthwhile returns from their massive capex investments, both stocks should beat the market. Also, Oracle appears to have an edge with companies needing AI-ready infrastructure.

However, as the market leader in the cloud and e-commerce, Amazon has built a huge client base, making it less dependent on any single large client.

Moreover, if the AI story does not develop as well as expected, the diversity of Amazon's enterprise likely means it would recover faster. Since Amazon investors can buy into that diversity and safety at a slightly lower price-to-earnings ratio, it is likely to keep investors' money safer over the next five years without sacrificing the potential for returns.

The artificial intelligence boom is turning corporate capital spending into a different kind of arms race. The biggest cloud companies aren’t merely adding data centers as demand grows; they’re building infrastructure years ahead of expected usage. 

UBS now estimates hyperscaler capital expenditures could reach about $4.1 trillion from 2026 through 2028. That’s more than three times the $1.292 trillion spent across the previous six years, based on UBS’s hyperscaler spending estimates. For investors, the message is clear: AI is pushing the industry’s long-term spending base into territory that would have looked absurd just a few years ago.

Cloud Revenue Tells The Story UBS estimates Amazon (NASDAQ:AMZN | AMZN Price Prediction), Alphabet (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT) will collectively spend about 102% of their cloud revenue on capital expenditures in 2026.

That doesn’t mean these companies are burning through more cash than they generate. Their businesses are much larger and more diversified than cloud infrastructure alone. Instead, the ratio shows how aggressively cloud revenue is being recycled into AI infrastructure.

UBS expects that ratio to ease to roughly 99% of cloud revenue in 2027 and 94% in 2028. Yet spending keeps rising.

UBS projects total hyperscaler capex at $492 billion in 2025, $1.009 trillion in 2026, $1.447 trillion in 2027, and $1.619 trillion in 2028 — three times more in three years than in the previous six years combined. It shows how the growth rate can slow while the dollar amount continues climbing.

And the composition matters, too. Amazon, Alphabet, Microsoft, and Meta Platforms (NASDAQ:META) account for the largest portions of the buildout, but SpaceX (NASDAQ:SPCX) is making up for lost time, and  Oracle (NYSE:ORCL), neocloud providers, and newer entrants are expanding the spending pool. 

That means the AI infrastructure opportunity is spreading beyond the handful of companies investors typically associate with the boom.

$4.1 Trillion Is A Bigger Bet Than It Looks The cumulative UBS estimates for 2026 through 2028 are staggering:

Company 2026-2028 Capex Alphabet ~$938 billion Meta Platforms ~$683 billion Microsoft ~$672 billion Amazon ~$628 billion SpaceX ~$335 billion Oracle ~$276 billion CoreWeave (NASDAQ:CRWV) ~$130 billion Nebius Group (NASDAQ:NBIS) ~$93 billion Together, those figures illustrate why this isn’t simply another upgrade cycle for servers. New demand is coming from traditional hyperscalers, neocloud providers, and SpaceX, creating additional pools of infrastructure spending.

For chipmakers, networking companies, data-center power suppliers, and infrastructure operators, the spending becomes revenue somewhere in the supply chain.

More importantly, the UBS forecast suggests the spending isn’t peaking when the growth rate peaks. Total hyperscaler capex rises from $1.009 trillion in 2026 to $1.619 trillion in 2028. In other words, the industry could be spending more than $1.6 trillion annually even after the initial acceleration begins to moderate.

That’s what makes this different from a normal technology upgrade. AI could reset the industry’s capital requirements at a permanently higher level.

Tech giants are recycling nearly 100% of their cloud revenue into a $4.1 trillion AI bet. This unprecedented infrastructure buildout is resetting the global spending base forever. The Risk Is Spending Without Returns Granted, $1.619 trillion of annual hyperscaler capex by 2028 creates a formidable hurdle. Companies eventually need AI revenue and cash flow to justify those investments.

That’s where investors should remain selective. A data center doesn’t generate attractive returns merely because it contains expensive GPUs. Capacity has to stay utilized, customers have to pay for it, and AI services have to produce enough revenue to cover depreciation, electricity, financing, and operating costs.

There is also a timing risk. Companies can spend billions today on infrastructure that may take years to reach full utilization. If AI demand grows more slowly than expected, depreciation expenses could rise faster than revenue, pressuring margins and free cash flow.

That said, the scale of the commitment from multiple customers reduces the risk that this is simply one company’s speculative bet. Amazon, Alphabet, Microsoft, Meta, SpaceX, Oracle, and the neoclouds are collectively building an ecosystem around AI compute.

In short, the spending itself isn’t the investment thesis. The investment thesis is that AI demand becomes large enough to keep this infrastructure productive for years.

UBS’s numbers suggest the major cloud platforms are betting heavily that it will. Smart investors don’t have to match their conviction blindly. They should follow the money — and favor companies positioned to monetize the buildout rather than simply finance it.

Key Takeaway The 102% figure is less a warning about reckless spending than a measure of how radically AI is changing the cloud economy. With UBS projecting roughly $4.1 trillion of hyperscaler capex from 2026 through 2028, investors should expect AI infrastructure spending to remain a dominant market theme well beyond the current boom.

The opportunity is strongest where spending translates into recurring revenue, high utilization, and durable free cash flow. In the end, the winners won’t necessarily be the companies spending the most. They’ll be the ones turning that unprecedented spending into the highest returns on capital.

Contact [email protected] for any questions or corrections.

Oracle (NYSE:ORCL | ORCL Price Prediction) currently trades at $142.07, while the Wall Street consensus target is $246.43. That is a wide dislocation for a company with a market cap north of $409 billion, and it did not happen by accident.

Oracle has spent two years converting itself from a legacy database vendor into a hyperscale AI infrastructure operator. Cloud now accounts for 52% of quarterly sales, and cloud infrastructure alone grew 93% in the most recent quarter. Wall Street still likes the pivot. The market is less sure.

Cash Burn and a Customer Rumor Blew a Hole in the Stock Oracle is down 39.6% over the trailing year and 27.1% year to date, crossing the 30% threshold that typically separates a correction from a repricing.

Two forces did the damage. Free cash flow was −$23.686 billion for FY2026, driven by $55.663 billion of capital expenditures. Oracle plans to raise approximately $40 billion in FY2027, including through a $20 billion at-the-market equity program. The AI capex debate has intensified, and Oracle occupies the extreme end of the curve.

Customer concentration is the second worry. A large share of the backlog belongs to a small set of hyperscale AI customers, and recent reporting has questioned whether one of the largest commitments holds at its original scale. The market has priced in some probability that Oracle’s biggest AI contracts get renegotiated or stretched.

Analysts See a Backlog Nobody Else Has The bull case rests on remaining performance obligations of $638 billion, up 363% year over year. Management called it an “unprecedented level of RPO,” providing multi-year visibility, with 12% converting in the next twelve months and 34% across the following two years.

Analyst sentiment is bullish. FY2027 guidance calls for revenue of $90 billion and non-GAAP EPS of $8.05, with a reconfirmed 31% revenue CAGR through fiscal 2030. Recent revisions have skewed toward reiterations.

Analysts are watching four checkpoints:

RPO conversion pace OCI margins (management guides 30% to 40% with steady-state ROIC in the “high 20s”) Gigawatt delivery from Abilene and the newer Texas, New Mexico, Michigan, and Wisconsin sites The next earnings report, expected around September 14 after the close and not yet confirmed by the company The path from here to $246 depends on those catalysts materializing in sequence.

Oracle Fell Alone Among Hyperscalers The peer group did not reprice with Oracle. Microsoft, Amazon, and Alphabet have held up materially better over the same window, and their capital plans do not rely on Oracle’s debt-funded financing profile. Enterprise software peers such as Salesforce and IBM lag far behind Oracle’s growth curve and trade closer to their own consensus targets. Across that competitive set, the largest analyst-implied upside belongs to Oracle. The market has punished a specific balance sheet while leaving the broader AI cloud thesis intact.

Two Targets, One Stock As mentioned, Oracle shares are down 27.1% year to date. The stock rallied 17.1% over the past month, despite giving back 9.1% over the past week. The share price remains well below the $246.43 consensus target.

Our valuation model carries a base case of $207.58 at high confidence, a bear case of $176.22, and a bull case of $349.21. The model runs meaningfully below Wall Street consensus, as analysts weigh the backlog more heavily than a P/E-blended framework does.

Retail sentiment tilts bullish on the week at a score of 72, while the trailing month reads neutral at 41.3.

The Verdict The bull thesis holds if RPO converts on schedule, OCI margins settle inside the guided band, and no headline AI customer walks back its commitment before revenue gets recognized. The path back to a $200 handle runs through the next earnings call. Watch the RPO figure, the cloud infrastructure growth rate relative to the 58% to 64% Q1 FY27 cloud revenue guidance range, and management commentary on customer concentration.

The bear case strengthens if free cash flow does not inflect in FY2027, if the $40 billion capital raise gets absorbed at unfavorable terms, or if reporting on Oracle’s largest AI cloud commitments continues to erode. Total liabilities of $218.703 billion and rising interest expense leave no room for a soft landing on the AI capex bet.

Investors can be cautiously positive. The backlog is documented, and the demand is verifiable. Balance sheets are where value traps hide, though, and Oracle is building the biggest AI-financed one in enterprise software. The next earnings call is the checkpoint that will validate or invalidate the thesis.

Contact [email protected] for any questions or corrections.

New AI capabilities help clinicians document faster, streamline professional fee coding, and surface relevant patient context

, /PRNewswire/ -- Oracle Health today announced new capabilities for Oracle Health Clinical AI Agent, now available in the U.S., that expand AI across clinical documentation, coding, and chart review workflows. The new capabilities automate professional fee coding for ambulatory workflows, enable physicians to dictate directly into clinical documentation, and assist with chart review by surfacing clinically relevant context across the patient record.

Oracle Health Clinical AI Agent's new coding, dictation, and chart review capabilities build on Oracle Health's growing portfolio of AI agents, including recently announced capabilities that automate order creation in clinical workflows. The AI agents work together as a system and use semantic reasoning to understand clinical meaning, share context across workflows, and collaborate in near real time to support intelligent automation while keeping clinicians in control. In nearly two years since its launch, Oracle Health Clinical AI Agent note generation has already saved physicians more than 400,000 hours across health organizations in the U.S.

"Care teams can't afford to spend hours on documentation and administrative tasks," said Seema Verma, executive vice president and general manager, Oracle Health and Life Sciences. "With our expanding portfolio of AI capabilities embedded directly into clinical and revenue cycle workflows, we're helping healthcare organizations operate more efficiently while enabling clinicians to stay focused on delivering high-quality care."

AI helps streamline coding and revenue cycle workflows

Health systems face growing pressure to improve documentation quality and accelerate revenue cycle performance without creating additional work for clinicians and staff. Oracle Health Clinical AI Agent now extends AI-assisted workflows to professional fee coding by analyzing conversations during patient visits and suggesting professional fee charge codes within the orders workflow. Clinicians review and confirm recommendations before submission, supporting faster charge capture while keeping coding decisions in the hands of qualified professionals. The new capability also helps reduce manual review, limits rework caused by inaccuracies or incomplete information, and improves coding consistency across organizations.

AI-powered chart review surfaces relevant patient context

Clinicians often spend valuable time navigating patient records to locate relevant patient information before and during patient encounters. Oracle Health Clinical AI Agent now extends AI-assisted workflows to chart review by surfacing relevant clinical context from across the EHR and summarizing patient information. By bringing together a patient's medical history, lab results, medications, and other key clinical information, the new capability helps care teams prepare more efficiently for patient visits, reduce time spent searching through records, and remain in control of decision-making and documentation.

Quick documentation with clinician-controlled dictation

Clinicians need efficient ways to document patient visits without taking time away from patient interactions. Oracle Health Clinical AI Agent now expands AI-assisted documentation with clinician-controlled dictation, allowing clinicians to dictate directly into any text field while the AI agent transcribes speech in real time for quick review, editing, and finalization. The new capability reduces manual work and enables care teams to efficiently capture clinical information between patient visits or after rounds while details are still fresh. Clinicians remain responsible for reviewing, editing, and signing all documentation.

To learn more about Oracle's full suite of clinical, life sciences, and business applications, join us at the Oracle Health and Life Sciences Summit in Orlando, September 22-24, 2026. Register now.

About Oracle
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit us at www.oracle.com.

Trademarks
Oracle, Java, MySQL, and NetSuite are registered trademarks of Oracle Corporation. NetSuite was the first cloud company—ushering in the new era of cloud computing.

SOURCE Oracle

If you own shares of Oracle (ORCL -0.92%) and watch Chief Technology Officer Larry Ellison collect a $579 million dividend check each quarter, it would be natural for you to wonder if the company can really keep those payouts intact while it's burning through cash to build new AI data centers.

The short answer is that the dividend looks reasonably safe today, but its longer-term viability is now tied directly to how well Oracle's massive AI bet plays out over the next few years.

Larry Ellison, CTO of Oracle. Image source: Oracle Corporation.

Oracle has turned itself into a dividend story. The board has raised the payout for 12 straight years, lifting the annual dividend from $1.70 to $2 a share, and most recently distributed another $0.50 quarterly payment on July 24. For Ellison, that adds up to roughly $2.3 billion a year on a stake of about 1.16 billion shares, which tells you how personally invested he is in keeping the checks coming. For a regular shareholder, the yield is modest at roughly 1.3% to 1.4%, but the payout ratio is in the mid-30% range, and dividend coverage of around 4 times shows the dividend is comfortably supported by accounting earnings.

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Oracle is spending a lot of money on AI The tension comes from the cash side of the story. Oracle is in the middle of one of the most aggressive AI infrastructure build-outs in the tech sector. It spent about $55.7 billion on capital expenditures (capex) in its recently completed fiscal 2026, above its own $50 billion target, and is guiding for roughly $70 billion of net cash outlay in fiscal 2027 plus another $20 billion to $25 billion funded by partners. That spending has already pushed its free cash flow to somewhere around negative $23.7 billion, and management has signaled plans to raise roughly $40 billion to $50 billion by issuing new debt and selling new equity to fund its ongoing build-out. In plain language, Oracle is borrowing heavily to build AI data centers while still sending $2 a share annually to investors.

So is the payout still safe? For now, yes, largely because Oracle's income statement and backlog look strong. Its cloud infrastructure and database revenues are growing quickly, its remaining performance obligations have surged into the hundreds of billions of dollars, and the dividend is small relative to the scale of the business. Meanwhile, Ellison still desires to be compensated in cash for his stake rather than only in paper gains. If you are thinking about the next couple of years, the bigger risks sit with the AI plan itself: execution, customer concentration around OpenAI, and Oracle's ability to manage a much larger debt load.

In that context, the dividend starts to look like a promise Oracle will work hard not to break. Cutting it would send a harsh signal to the market and to Ellison himself. As long as Oracle's AI contracts continue to convert backlog into real cloud revenue and the balance sheet remains manageable, the $2 per share payout should be fine.

Cloud computing has become ground zero for artificial intelligence (AI) development. The large cloud infrastructure companies provide platforms where developers can create their AI apps, which is where the magic happens.

Alphabet (NASDAQ: GOOG) (GOOGL -0.13%) and Oracle (ORCL -3.65%) are the third- and fourth-largest cloud infrastructure companies globally, according to Statista, accounting for 14% and 4% of the market, respectively. They're both enjoying high growth in AI and are well-positioned for the future. But which is the better AI stock to buy now and hold for the next five years?

Alphabet is a leader in artificial intelligence thanks to its widely used large language model (LLM), Gemini. It has an edge in its Google Search-native integration as well as its Android and Chrome integrations, bringing it straight to where users already are.

Image source: Google.

Gemini use continues to increase, and Google has been rapidly releasing new features and upgrades that offer greater value. Some second-quarter highlights included the launch of Gemini 3.6 Flash, which offers better cost efficiency for budget customers, and the rollout of the AI video generator Omni. Since Omni's debut in May, there has been a 40% increase in the number of daily active users creating videos on Gemini. Strong AI-driven engagement led to an 82% year-over-year increase in Google Cloud revenue in the second quarter.

Alphabet has been reporting consistently strong performances in terms of both revenue growth and operating margin.

MetricQ2 2026Q1 2026Q4 2025Q3 2025Revenue growth (YOY)24%22%18%16%Operating margin (YOY)34%36.1%31.6%30.5% Data source: Alphabet quarterly reports. YOY = year over year.

However, the market was not happy to hear that management was boosting its already lofty plans for capital expenditures this year by $15 billion. Previously, the company had guided for capex in the range of $180 billion to $190 billion. But on the Q2 earnings call, Alphabet updated that to a $195 billion to $205 billion range, and warned that it was planning for even higher outlays next year. Alphabet says this kind of spending on AI infrastructure is a necessity if it's going to stay competitive, and says that it will pay off -- eventually.

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In Alphabet's favor, it has several interconnected businesses in markets where it's a leader, starting with Search, where it has a breathtaking 90% market share, and including mobile operating system Android and video streaming platform YouTube.

"Our AI investments are redefining what's possible across every part of our business," said CEO Sundar Pichai on the Q2 earnings call, and considering all of its businesses, there's going to be a lot happening at Alphabet over the next five years. It also doesn't hurt the investment case that Berkshire Hathaway has recently made Alphabet one of its top stock holdings.

The case for Oracle Oracle has been a leader in database storage for years, and it has lately turned to AI, like many other tech companies. It's building out data centers to capitalize on the opportunity, but its stock tanked last year as the market reacted to massive spending that sent its free cash flow into negative territory. The stock is now 53% off its recent high.

So far, Oracle's business has continued to demonstrate momentum despite what you might expect based on its plunging stock price.

MetricQ4 Fiscal 2026Q3 Fiscal 2026Q2 Fiscal 2026Q1 Fiscal 2026Revenue growth (YOY)21%22%14%12%Operating margin (YOY)32%32%29%29% Data source: Oracle quarterly reports. Oracle's fiscal 2026 ended May 31. YOY = year over year.

Oracle's cloud platform works differently from Alphabet's. It has partnerships with all of the large cloud companies so that its user base has many options, and they can toggle between platforms through a unified interface on Oracle's network.

It also has its legacy database business, which is benefiting from changes in AI. Oracle rolled out more than 1,000 AI agents in the second quarter, making its offerings more efficient and valuable.

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Unlike most other large cloud companies, which have the cash to invest in their AI build-outs, Oracle is raising capital to invest in capturing a share of the opportunity. It raised between $45 billion and $50 billion in its fiscal 2026 through a combination of debt issuance and stock sales, and plans to raise another $40 billion in fiscal 2027.

Management isn't worried about the debt, since it has a backlog of funded contract value in its remaining performance obligations (RPO), which will lead to high quarterly revenue growth. In its latest fiscal quarter, RPO increased 363% year over year to $638 billion, and management gave a five-year outlook anticipating a 31% compound annual growth rate.

The verdict For one last comparison, let's take a look at how Alphabet and Oracle stack up across several valuation metrics.

ORCL PE Ratio data by YCharts.

The answer to the question of which of these stocks is more expensive depends on the metric you're looking at, but the differences aren't significant enough to say one is much more expensive than the other, so I would call this comparison a wash.

Both companies are growing at similar rates today, and they both have large opportunities in cloud computing. However, I see Alphabet as having the edge. It's cash-flow positive, and its other businesses are flourishing, providing it with a cushion and a way forward beyond the AI realm. While the platform-agnostic position Oracle occupies thanks to its deals with all the cloud computing leaders is an advantage, the progress Alphabet has made in developing money-generating AI apps is an advantage in its own right, too.

Both companies are seeing tailwinds in AI and cloud development, but Alphabet has more to gain as AI enriches the value of a host of services across its enterprise. Therefore, it should be the better stock to own over the next five years.

A $10,000 investment in Oracle (ORCL -3.65%) made one year ago is worth about $6,300 today, dividends included. The stock closed at $248.28 on Aug. 15, 2025, and it trades at about $154 as of this writing -- a decline of about 38%.

That one number undersells the ride. Within a month of that purchase, the stake was briefly worth almost $14,000. By late July of this year, it had shrunk to about $4,600. I can't think of another company this large that traveled that far in both directions in 12 months.

Here's the path between those two numbers.

Image source: Getty Images.

The pop Last Sept. 9, Oracle reported fiscal 2026 first-quarter results that changed how the market thought about the company. Revenue grew 12%, which was fine.

The number that mattered was remaining performance obligations (RPO), the contracted future revenue the company hasn't yet delivered. RPO hit $455 billion, up 359% year over year, on a handful of multibillion-dollar artificial intelligence (AI) contracts.

The next day, the stock rose 36%, its biggest one-day gain since 1992, adding about $244 billion of market value and touching a record high of $345.72 along the way. At that peak, the $10,000 stake was briefly worth nearly $14,000. Management also laid out a path for cloud infrastructure revenue to grow from $18 billion in fiscal 2026 to a projected $144 billion by fiscal 2030.

And the demand itself held up, for what it's worth. RPO kept climbing all year and ended fiscal 2026 (this past May) at $638 billion, up $85 billion in the final quarter alone. Cloud infrastructure revenue accelerated as the year went on, from 55% year-over-year growth in the fiscal first quarter to 93% by the fiscal fourth quarter, reaching $18.1 billion for the full year. Total revenue rose 17% to $67.4 billion, and earnings per share climbed 34% to $5.83 on a generally accepted accounting principles (GAAP) basis.

Paying for it So the growth showed up. What the market spent the rest of the year weighing was the bill for delivering it.

Oracle spent $55.7 billion on capital expenditures in fiscal 2026, up from $21.2 billion in fiscal 2025. That spending more than doubled in a single year. Operating cash flow of $32.0 billion, up an impressive 54%, couldn't keep pace, and free cash flow came in at negative $23.7 billion.

To cover the gap, the company raised $43 billion in debt and $5 billion in equity during the fiscal year, and it expects to raise about $40 billion more in fiscal 2027, including a $20 billion at-the-market stock issuance (selling new shares directly into the market) that dilutes existing shareholders.

The cost-cutting turned severe, too. Oracle ended fiscal 2026 with about 141,000 full-time employees, roughly 21,000 fewer than a year earlier. Of course, the dividend kept arriving ($0.50 per quarter, or about $80 on the stake over the year), but that barely dents a decline of this size.

Investors repriced the company accordingly. The stock had its worst week since 2001 in late June, and in late July it touched a 52-week low of $114.50 -- down 67% from the September peak. At that price, shares fetched about 14 times the earnings management was guiding for. A $10,000 stake from August 2025 was worth about $4,600 that day.

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Where that leaves it Shares have recovered about 35% from the July low. And the growth is not slowing. Management guided for fiscal 2027 revenue of about $90 billion, up more than 30%, with first-quarter revenue expected to grow 27% to 29%.

However, the price of that growth has changed character entirely. The fiscal 2027 guidance also calls for $8.05 of non-GAAP (adjusted) earnings per share, which puts the stock at about 19 times its own earnings guidance. That's far below the premium the stock commanded last fall, and the multiple looks reasonable only if the guidance is hit while tens of billions of dollars of spending continue.

In short, the market never stopped believing in Oracle's demand. The backlog grew through the entire decline. What changed is the price investors will pay for growth that requires this much capital and this much dilution to deliver.

A year ago, the market valued Oracle like a software company with an exciting backlog. Today it's valued like what it has become -- a capital-intensive builder of AI infrastructure. The lower price arguably fits the harder business.

Oracle (ORCL +1.92%) was one of the most shorted stocks by hedge funds in the first half of 2026, according to the Data Insights Crowding Report.

This meant that a lot of investors were betting that the shares will fall. Only two companies were more heavily shorted, Data Insights found: Charter Communications (NASDAQ: CHTR) and Super Micro Computer (SMCI +4.12%).

It has been a wild 12 months for Oracle stock. It spiked to an all-time high last summer on strong earnings and a growing backlog. As of June, the end of its fiscal year, it had amassed a huge order backlog, with a whopping $638 billion in remaining performance obligations.

Image source: Getty Images.

The backlog was highlighted by a $300 billion deal with OpenAI for cloud computing.

But it also has infrastructure deals with Nvidia (NVDA +0.54%), Microsoft (MSFT +0.90%), AMD (AMD +0.02%), and Meta (META +2.79%), to name just some of the major partnerships.

Oracle stock soared to an all-time closing high of $324 on Sept. 10, 2025. It's now trading at about $153 per share, after losing more than half its value. What happened?

Shorting Oracle A confluence of factors are responsible.

The major factor is the huge capital spending plans to build out data centers and artificial intelligence (AI) infrastructure to fulfill these contracts. Oracle reported $21 billion in capital expenditures (capex) last year and a whopping $55 billion in fiscal 2026. This left Oracle with negative cash flow of $23.7 billion in fiscal 2026.

And in fiscal 2027, the company plans to raise another $40 billion through debt and equity financing to fund its capex.

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Its debt is through the roof at $167 billion and a sky-high 388% debt-to-equity ratio.

Investors also are concerned about OpenAI's finances and whether it can fulfill all its contracts, including those with Oracle. It certainly plays into the growing investor narrative that AI stocks are spending too much on infrastructure in relation to the potential return.

Is Oracle stock a buy now? So, with a series of setbacks, not to mention a high valuation, it is clear to see why investors have been betting on Oracle's stock to drop.

However, after such a steep drop, the share valuation has returned to a reasonable level. Oracle stock has a price-to-earnings (P/E) ratio of 25, a forward P/E of 18, and a low five-year price/earnings-to-growth ratio, or PEG ratio, of 0.85. A PEG of less than 1 indicates that the stock is undervalued relative to its anticipated earnings expectations.

Oracle is poised for a rebound, according to Wall Street analysts. Some 82% of analysts rate the stock as a buy, and the median price target is $241 per share. That would suggest a 57% return during the next 12 months.

But there are a lot of balls in the air for Oracle. There is a lot of money being spent on AI as it continues to rack up debt, which can weigh on earnings because at some point it must be paid down. If you're a long-term investor, there are probably better AI stocks out there that you don't have to worry so much about.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.

Oracle and AWS expand long-term strategic collaboration agreement to accelerate customer migration, with Oracle AI Database@AWS now available in 22 AWS Regions and offering new expanded capabilities

New Oracle Exadata Database Service on Exascale Infrastructure, now generally available, extends Exadata performance and pay-per-use economics to organizations of any size

CJ Olive Young, Kobalt Music Group, and Metropolitan Transport Authority of Barcelona are running business-critical workloads on Oracle AI Database@AWS

, /PRNewswire/ -- Oracle today announced the general availability of Oracle Exadata Database Service on Exascale Infrastructure on Oracle AI Database@AWS, bringing Exadata-class performance and pay-per-use economics to Oracle AI Database workloads of any scale. Oracle and Amazon Web Services (AWS) also signed an expanded, long-term strategic collaboration agreement focused on accelerating customer migration to Oracle AI Database@AWS. Together, these developments build on strong momentum for Oracle AI Database@AWS, which expanded to 22 AWS Regions and added new capabilities that give enterprises a lower-cost path to migrate Oracle databases and integrate them with AWS analytics and AI services.

"Just one year after general availability, Oracle AI Database@AWS has reached global scale, with customers running business-critical workloads, and 22 AWS Regions available across Asia Pacific, Europe, and the Americas," said Nathan Thomas, senior vice president, product management, Oracle. "This momentum demonstrates that enterprises want a simpler, lower-cost path to modernize their most important Oracle workloads within AWS environments. With the global reach and innovative new services we have made available over the last year, we are delivering that path and enabling more and more customers to put AI to work on live business data and build new applications without re-architecting or compromising performance."

"The enterprise adoption over the past year reflects the value customers get when their Oracle AI Database workloads run on Oracle AI Database@AWS," said Ganapathy (G2) Krishnamoorthy, vice president, database services, AWS. "With the full breadth of AWS analytics and AI services, available right where their data lives, customers of any size can modernize applications faster, unlock new insights, and build AI-powered applications on the data that runs their business."

Exadata Performance, Now Within Reach of Any Enterprise
Oracle Exadata Database Service on Exascale Infrastructure allows customers to specify the compute and storage capacity they need, while spreading every database across pooled storage servers for high performance and availability, eliminating the need to provision dedicated database and storage servers. That makes Exadata economics practical for a wider range of workloads, from smaller Oracle databases to deploying in multiple regions for high availability and disaster recovery. It also adds instant thin cloning, so customers can rapidly spin up database copies for development and testing with Exadata performance, without duplicating storage. Learn more here.

This more accessible Exadata foundation also supports a broader range of workloads, including AI. Oracle AI Database brings AI directly to customers' most valuable business data, enabling generative and agentic AI without moving or duplicating data. With Oracle AI Vector Search, customers can find and retrieve relevant information from that data based on meaning and context.

Expanded Collaboration Agreement Accelerates Customer Migration
Under the new long-term strategic collaboration agreement, Oracle and AWS commit to continued investment in Oracle AI Database@AWS and to accelerating customer migration and adoption. For customers, this provides a faster, lower-risk path to run their most important workloads on Oracle AI Database@AWS alongside the AWS AI and analytics services they already use.

Leading Global Enterprises Choose Oracle AI Database@AWS
Enterprises across industries, including highly regulated sectors such as financial services and transportation, are already using Oracle AI Database@AWS to migrate critical workloads and put AI to work on the data that runs their business.

CJ Olive Young, a leading Korean beauty and wellness retailer operating over 1,380 stores, is leveraging Oracle AI Database@AWS to migrate its core workloads to the cloud. As a result, CJ Olive Young can integrate data across Oracle and AWS, accelerate AI adoption, and simplify management and operations. 

"The availability of Oracle AI Database@AWS in South Korea offers an easy migration path to the cloud for our mission-critical Oracle workloads," said Wonho Park, platform engineering team lead, CJ Olive Young. "We expect the seamless integration with AWS's advanced AI and analytics services, such as Amazon Bedrock, to accelerate our AI innovation, reduce time-to-insight, and deliver measurable business outcomes."

Kobalt Music Group, a leading independent music publisher that handles administration for millions of songs, is using Oracle AI Database@AWS to support its digital collection platform in processing online and offline consumption data and distributing royalties to songwriters, publishers, and rights holders. By running Oracle Exadata Database Service on Dedicated Infrastructure in AWS, Kobalt achieves ultra-low latency with its AWS applications, along with the high performance and scalability required to support growing volumes of music transactions and payments.

"Technology plays a critical role in the management of complex digital music rights, ensuring fast and accurate payments, while delivering greater transparency and value to creators," said Nuno Guerreiro, chief technology officer, Kobalt Music Group. "With Oracle AI Database@AWS, we can continue evolving our digital platform on a high-performance foundation that supports our growth and enables us to empower our clients with greater speed and efficiency."

The Metropolitan Transport Authority (ATM) of Barcelona is the public agency responsible for the transportation system of the Barcelona Metropolitan Region. It coordinates, plans, and manages the region's integrated public transportation network, which records 1.2 million annual ticket validations.

"Oracle AI Database@AWS helps us deliver new and improved mobility services while enhancing our operational efficiency," said Manuel Valdés, general manager, Metropolitan Transport Authority (ATM) of Barcelona. "By putting critical mobility data, advanced analytics, and AI to better use, we can make smarter decisions and continually improve the public transportation services people across the Barcelona metropolitan region rely on every day."

Global Partners Give Customers More Choice and Flexibility to Adopt Oracle AI Database@AWS
Global systems integrators are also helping customers adopt Oracle AI Database@AWS, and eligible AWS Partner Network and Oracle Partner Network members can resell Oracle AI Database@AWS through AWS Channel Partner Private Offers. Qualified MSP partners can also provide managed services for Oracle AI Database@AWS on a customer's behalf, offering enterprises a simplified path to adoption. In addition, Oracle Migration Accelerator helps fund migration services and enables customers to offset the cost of migration while partners can scale larger transformation projects.

Deloitte brings together deep industry experience and AI talent across its broader global Oracle and AWS technology practices. Through its strategic relationships with both companies, Deloitte is helping organizations take advantage of Oracle AI Database@AWS to accelerate cloud migrations, optimize operations, and unlock AI-powered insights.

"The growing momentum behind Oracle Database@AWS signals that enterprises are looking to their trusted relationships to help navigate complexity and drive innovation in the cloud," said Kashif Rahamatullah, principal, multi-alliances go-to-market leader, Deloitte Consulting LLP. "Through our deep alliances with Oracle and AWS, we combine our industry domain knowledge with mission-critical Oracle data and AWS AI and analytics to simplify modernization and accelerate business outcomes for our clients."

Drawing on more than 30 years of Oracle experience, Hitachi, Ltd. is adding support for Oracle AI Database@AWS to its "modernization powered by Lumada" initiative.

"Many organizations are looking to migrate their mission-critical core systems to the cloud without compromising performance or reliability, while accelerating their adoption of AI," said Hidetaka Sasaki, president, Managed & Platform Services Division, Hitachi, Ltd. "Through our joint validation with Oracle and AWS, we have confirmed that Oracle AI Database@AWS meets the stringent requirements of mission-critical systems. By working with customers in the financial services sector, Hitachi will continue to help organizations modernize their systems and accelerate AI adoption through our collaboration with Oracle and AWS."

A Year of Expanded Capabilities and Global Reach
Over the past year, Oracle and AWS have delivered capabilities for Oracle AI Database@AWS that help customers simplify deployment, scale efficiently, and connect Oracle AI Database workloads to AWS analytics and AI services. Expanded capabilities include:

Oracle Autonomous AI Database Serverless now generally available: Enables customers to quickly build and run fully managed databases without provisioning or managing infrastructure. Learn more here. Sub-200 microsecond application-to-database latency: Helps customers confidently run latency-sensitive workloads, including OLTP systems, ERP applications, and AI-enabled operational applications, closer to the database. By using AWS High Performance Networking (EC2 placement groups) and updated deployment guidance, Oracle AI Database@AWS delivers application-to-database round-trip latency as low as 165 microseconds. Seamless integration with AWS services: Helps customers unlock new insights and build AI-powered applications by applying AWS AI and analytics services, including Amazon Bedrock, Amazon Quick, and Amazon SageMaker, directly to their Oracle data. Customers can also connect Oracle AI Database workloads to the AWS services they already use, including zero-ETL integration with Amazon Redshift, which eliminates the need to build or manage data pipelines; Oracle-managed backups to Amazon S3; monitoring through Amazon CloudWatch; and building event-driven applications with Amazon EventBridge. Support for Platinum Oracle Maximum Availability Architecture (MAA): Helps customers improve resiliency, accelerate application performance, and reduce manual intervention for mission-critical Oracle AI Database@AWS workloads. Learn more here. Oracle AI Database@AWS now live in 22 AWS Regions: Customers have more deployment options with Oracle AI Database@AWS now available in 22 AWS Regions worldwide. Learn more here. About Oracle
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit oracle.com.

Trademarks
Oracle, Java, MySQL, and NetSuite are registered trademarks of Oracle Corporation. NetSuite was the first cloud company—ushering in the new era of cloud computing.

SOURCE Oracle

Since hitting a 52-week low of $114 last month, Oracle (ORCL -3.69%) stock has rebounded to $147 at the time of writing but is still trading 57% below its previous high. The drop comes even as the company posts strong results and management talks up multiyear demand for its cloud services.

The stock's decline was not related to anything Oracle reported but rather reflected a broader sell-off across artificial intelligence (AI) infrastructure stocks over the last month. This signals more of a buying opportunity than a falling knife, given management's growth guidance.

Image source: The Motley Fool.

Oracle's AI and cloud businesses are booming In Oracle's fiscal fourth quarter 2026 ending in May, total revenue rose nearly 21% year over year to $19.2 billion. Much of that growth is coming from demand for AI tools -- including agentic AI -- within its cloud business. This is reflected in surging demand for cloud infrastructure services, with revenue jumping 93% over the year-ago quarter.

Oracle also has an enormous backlog. Remaining performance obligations surged 363% from the year-ago period to $638 billion. That provides more visibility into future growth: 12% of the backlog is expected to be fulfilled in the next 12 months, with another 34% delivered in the next 13 through 36 months.

Oracle's cloud infrastructure (OCI) business generated $5.8 billion in revenue last quarter, but management sees far more runway ahead. Speaking about the broader AI infrastructure opportunity, CEO Clayton Magouyrk said, "Everything we see shows this market size is trillions of dollars per year."

OCI's momentum suggests it is on a massive growth trajectory, and management says it will be "extremely profitable." The catch is the cost to build the AI infrastructure -- especially data centers -- needed to fulfill such a large backlog.

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A key risk is ballooning debt For fiscal 2027, Oracle's guidance calls for 34% revenue growth in constant currency and adjusted earnings per share of $8.05. That puts the stock at roughly 18 times forward earnings, even as analysts expect profits to grow about 28% annually over the next several years.

But investors are fixated on the price tag of that growth. Oracle expects to spend $70 billion on capital expenditures in fiscal 2027. Even with operating cash flow hitting $32 billion in fiscal 2026 (up 54% year over year), rising capital spending pushed free cash flow into negative territory.

There's balance-sheet risk, too. Oracle ended the fiscal year with $164 billion in total debt, and its debt-to-equity ratio sits around 3.9 -- meaning the company carries far more debt than shareholders' equity.

Oracle's momentum and valuation look appealing, but the stock is essentially a leveraged bet on the AI boom -- not a low-risk investment. If demand for AI cools, shares could fall further.

Still, Oracle is investing to deliver a meaningful share of its contracted backlog, which could translate into much higher revenue and earnings in the coming years. For long-term investors, I think Oracle's growth prospects and valuation make it worth considering. If AI demand remains hot, the stock offers significant upside from here. Investors just need to size their position to account for the risk that demand for Oracle's cloud services starts to slow, pressuring the stock.

Oracle cofounder and chairman Larry Ellison. Justin Sullivan/Getty Images Oracle has drawn up plans for a new round of job cuts to reduce payroll as it racks up billions in debt to fund AI infrastructure, according to people familiar with the plans and an internal document viewed by Business Insider.

The cuts could reach double-digit percentages on some teams, according to the document. The company has requested managers provide lists of affected employees, with the intention of reducing payroll by the time the second quarter begins on Sept. 1, according to one of the people with direct knowledge.

Oracle declined to comment.

This potential round of layoffs follows cuts earlier this year. The company's workforce declined by 21,000, or 13%, in the 2026 fiscal year that ended May 31, including through layoffs, according to a recent filing. Oracle currently has around 141,000 employees, according to the company.

The cuts also highlight the tradeoffs of the AI infrastructure boom. As the company borrows tens of billions of dollars to build data centers and buy chips, it's also looking for savings elsewhere, including its workforce. The cuts underscore how even companies benefiting from surging AI demand are under pressure to balance massive capital spending with Wall Street's profitability expectations.

The company spent $55.7 billion on infrastructure, including new data centers, in its 2026 fiscal year, spending $23.7 billion more in cash than it brought in during the year.

It raised $43 billion through debt during the 2026 fiscal year, $5 billion from stock sales, and expects to raise about another $40 billion through a mix of debt and stock in its current fiscal year.

Oracle cites increased demand as justification for the buildout. Revenue rose 17% in its latest fiscal year, and its cloud infrastructure business grew 77%, as demand for computing power to run AI surged. But that growth requires Oracle to invest heavily in data centers and equipment, marking a shift for a company that built its business on selling database software.

Oracle's stock is down nearly 26% this year. While Wall Street is broadly wary of skyrocketing infrastructure costs across the industry, the stock slide may also reflect fears that AI will replace traditional software tools, which has driven a broad sell-off of software stocks.

On an earnings call earlier in March, Oracle Chairman Larry Ellison downplayed those fears, telling analysts he believes the so-called SaaSpocalypse will be a problem for other companies, but not his.

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Oracle Layoffs Artificial Intelligence More Enterprise Software Cloud Computing Exclusive

Oracle Corp (NYSE:ORCL) stock traded lower by almost 4% on Tuesday as traders fade the latest rebound into overhead resistance levels, even while the broader risk tone stays constructive. The Nasdaq is up 0.06% while the S&P 500 has gained 0.08%, and Technology is higher by 0.31%, leaving ORCL as a clear laggard versus its peer group.

BNP Paribas analyst Stefan Slowinski said Oracle remains well positioned in a supplier-friendly AI infrastructure market, with attractive contract economics and a potential free-cash-flow inflection beginning in fiscal 2029.

BNP Paribas Sees Stronger Oracle Cash Flow PathSlowinski said BNP Paribas came away more positive on Oracle’s path toward a sharp free-cash-flow inflection in fiscal 2029 after speaking with the company’s investor relations team.

The analyst said Oracle continues to expect absolute capital spending to peak in fiscal 2027 or fiscal 2028 before potentially declining materially in fiscal 2029. That shift could help the company move past the most capital-intensive phase of its AI infrastructure buildout.

He said consensus fiscal 2027 operating cash flow of about $46 billion and S&P Global’s $48 billion to $53 billion estimate may be too low.

Slowinski said those estimates imply little underlying operating-cash-flow growth versus fiscal 2026 after adjusting for $20 billion to $25 billion of customer prepayments, even as Oracle adds more than $20 billion in incremental revenue in fiscal 2027 at likely 60% to 70% EBITDA margins.

AI Contract Economics Remain AttractiveThe analyst said Oracle’s cost-plus contracts help preserve targeted gross margins of 30% to 40% despite component inflation.

He also said Oracle’s bring-your-own-hardware contracts could offer better economics than traditional AI infrastructure deals.

Slowinski estimates those contracts could generate gross margins above 50%, require up to 75% less capital spending and produce roughly 70% internal rates of return in a best-case scenario.

Financing Plans Support BuildoutThe analyst said Oracle reiterated plans to raise $40 billion of capital in fiscal 2027, including a previously announced $20 billion equity ATM program and another $20 billion of capital that has not yet been defined as debt, equity or a mix.

He said Oracle’s nearly $90 billion of cumulative financing across fiscal 2026 and fiscal 2027 may be enough to fund the current investment cycle until the business becomes cash generative and self-sustaining from fiscal 2029 onward.

Earnings & Analyst OutlookLooking further out, the next major catalyst for the stock arrives with the September 8, 2026 (estimated) earnings report.

EPS Estimate: $1.67 (Up from $1.47 YoY) Revenue Estimate: $19.13 Billion (Up from $14.93 Billion YoY) Valuation: P/E of 25.9x (Indicates premium valuation relative to peers) Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $258.50 (range: $145.00 to $400.00) across 50 analysts. Recent analyst moves include:

UBS: Buy (Lowers Forecast to $245.00) (August 6) CLSA: Initiated with Hold (Forecast $145.00) (July 20) Bernstein: Outperform (Raises Forecast to $325.00) (June 11) Top ETF Exposure iShares Expanded Tech-Software Sector ETF (BATS:IGV): 5.87% Weight First Trust Dow Jones Internet Index Fund (NYSE:FDN): 4.30% Weight First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV): 5.21% Weight Significance: Because ORCL carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

Price ActionORCL Stock Price Activity: Oracle shares were down 3.65% at $145.57 at the time of publication on Tuesday, according to Benzinga Pro data.

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