On Thursday, the Department of Defense awarded Oracle (ORCL -4.27%) a consolidated software agreement covering the entire U.S. military, the Coast Guard, and the intelligence community. The initial award is worth $3.31 billion over five years, and a second five-year option, if exercised, would carry the total to $6.99 billion.
On Friday, the stock fell 4.2%. Shares closed at $114.99 -- 24 cents above the 52-week low of $114.75 they had touched earlier in the same session.
A contract that size usually buys a company at least a good day. This one didn't buy an hour.
And the reason isn't that investors missed the announcement. It's that they have stopped pricing Oracle on the contracts it wins and started pricing it on what winning them costs. I think that shift is the most important thing to understand about this stock right now.
Image source: The Motley Fool.
What the Pentagon actually agreed to The agreement is unusual in scope. Negotiated by the Department of the Navy under the Department of Defense's Enterprise Software Initiative, it is the first direct award covering the department's on-premises Oracle usage. It folds what had been a scatter of separate purchases across the services into a single contract, spanning perpetual and subscription licenses, maintenance, consulting, and software-as-a-service.
The department expects the consolidation to save taxpayers at least $441 million.
Which points at the part that matters for shareholders. Consolidating purchases is not the same as adding them. The Pentagon was already buying this software, and what changed is how it buys it -- fewer contracts, better visibility into the spending, and a smaller bill.
Considering the award against the context of the company, Friday's shrug makes more sense. A $6.99 billion ceiling spread across ten years works out to about $700 million a year. Oracle's fiscal 2026 revenue was $67.4 billion.
So even at the ceiling, the award is worth about 1% of a single year's sales. Of course, a ceiling is the best case and not the plan, so the actual figure is likely smaller.
Further, Oracle spent $55.7 billion on capital expenditures in fiscal 2026. The entire 10-year contract ceiling comes to about an eighth of what the company spent on data centers in twelve months.
What the market is pricing instead It's not surprising that Oracle investors are skittish. Its capital spending figure is up 162% year over year, from about $21 billion in fiscal 2025.
Sure, Oracle's operating cash flow rose to a record $32 billion in fiscal 2026 (the year ended May 31, 2026). But the build-out consumed all of it and then some, leaving free cash flow for the year at negative $23.7 billion.
And the financing bill has followed. S&P Global Ratings cut Oracle's credit rating to BBB- this month, one notch above junk status.
Even more, the company has said it expects to raise about $40 billion through debt and equity this fiscal year, including a share sale of about $20 billion that would dilute existing holders.
But demand has never been the problem here. Fiscal 2026 revenue rose 17% year over year to $67.4 billion, and revenue in the fiscal fourth quarter climbed 21% year over year -- so growth accelerated through the year instead of fading.
Remaining performance obligations, or Oracle's signed contract value that hasn't yet become revenue, finished fiscal 2026 at $638 billion after climbing $85 billion in the fiscal fourth quarter alone. Management has guided for about $90 billion of revenue this fiscal year, growth of about 34%, and for $8.05 in non-GAAP (adjusted) earnings per share.
At $114.99, that puts the stock at about 14 times the earnings management says it will produce this year. Against the 52-week high of $345.72, that same guidance implied more than 40 times. The market has cut what it will pay for Oracle's earnings by roughly two-thirds in a year, while the earnings themselves kept climbing.
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Which is why I'd argue the Pentagon award changed very little. Against $638 billion of backlog, $7 billion of ceiling over a decade barely registers.
What would get me to consider buying Oracle stock isn't a bigger contract. It's the financing.
A company that plans to sell about $20 billion of stock, at $115 a share after those shares traded at $345, is not negotiating from strength. So I'd rather own it once that sale is behind it than in front of it. And if Oracle gets the raise done without another leg down, and capital spending flattens while cloud revenue keeps compounding, then 14 times guided earnings could look like an obvious mistake in hindsight.
Still, there are too many red flags for me to consider buying the stock here.
Oil markets are once again reminding investors how quickly geopolitical risks can ripple through the economy. As the Iran conflict has intensified, crude oil has climbed back to roughly $100 per barrel, up about 35% in just a few weeks. According to AAA, the national average price of gasoline has risen to $4.11 per gallon, crossing the psychologically important $4 threshold that tends to weigh on consumer confidence.
Because transportation, manufacturing, and shipping all depend on petroleum, higher oil prices threaten to rekindle inflation. Yet as disruptive as this energy shock appears, it may prove to be only the opening act.
The Bigger Energy Problem Is Already Here Higher oil prices grab headlines because consumers see them every time they fill up. But electricity is quietly becoming the scarcer resource.
According to a recent Bloomberg report, U.S. data centers are on pace to consume nearly 20% of all electricity generated in the U.S. by 2035, up from approximately 5.9% today. That would represent more than a threefold increase in electricity demand over the next decade.
Unlike gasoline demand, which tends to fluctuate with economic activity, AI data centers require around-the-clock power. Every chatbot query, AI model training run, and cloud computing workload depends on thousands of servers operating continuously.
The result is that utilities are being forced to build generation capacity at a pace not seen in decades, while transmission infrastructure struggles to keep up.
Ironically, this creates a second inflation problem. Oil prices raise transportation costs across the economy. Electricity inflation raises the cost of simply living.
If data centers expand from using 5.9% of America’s electricity to one-fifth of total generation, utilities will need hundreds of billions of dollars in new investment. Unless alternative power sources shoulder much of that burden, consumers could face years of rising utility bills while portions of the grid operate closer to capacity.
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It’s no surprise that communities across the country are beginning to push back against proposed data center developments, citing higher utility costs, water consumption, and grid reliability.
Investors Should Watch The Companies Solving The Bottleneck That said, the outlook isn’t entirely bleak. Many technology companies recognize that relying solely on the existing electrical grid isn’t sustainable. Instead, they’re investing directly in new sources of generation.
Microsoft (NASDAQ:MSFT | MSFT Price Prediction), Amazon (NASDAQ:AMZN), Google, Oracle (NYSE:ORCL), and Meta Platforms (NASDAQ:META) have all announced investments or partnerships involving advanced nuclear power, small modular reactors, geothermal energy, hydrogen fuel cells, or large-scale battery storage. Their goal isn’t simply cleaner energy — it’s securing reliable electricity without overwhelming local utilities.
The AI boom isn’t just creating winners in semiconductors. It’s expanding opportunities across nuclear technology, electrical equipment manufacturers, utilities, hydrogen infrastructure, and grid modernization companies.
Granted, these projects require years to develop, while AI demand continues growing today. That timing mismatch explains why the political backlash against new data centers could intensify before additional generating capacity comes online.
Key Takeaway In short, the Iran conflict may be driving today’s inflation fears, but AI infrastructure could become tomorrow’s larger energy challenge.
Oil prices can retreat as geopolitical tensions ease. Electricity demand from AI data centers is moving in the opposite direction, with Bloomberg projecting they could consume 20% of U.S. power generation by 2035. That trend is already influencing utility rates, sparking opposition to new developments, and forcing the technology industry to invest billions in alternative energy sources.
Ultimately, smart investors should look beyond the daily movements in oil prices. The more durable investment theme may be the companies building the power infrastructure that AI will require over the next decade. If they succeed, they’ll relieve pressure on both consumers and the electric grid. If they don’t, electricity — not gasoline — could become the defining energy story of the AI era.
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Oracle (ORCL -4.21%) has made a big bet. As one of the leading suppliers of AI computing power, the company is paying billions to stay on top.
Oracle plans to spend upwards of $90 billion on AI infrastructure in fiscal year 2027. About $40 billion of those expenses will be funded through new debt and equity. This level of burn has made investors nervous, and there is one big reason why the company's massive investment in AI might not pay off: state legislation.
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Lawmakers across the country are listening to constituents and pushing back hard on the data center boom. Concerns about constraints on power grids and water supply, as well as surging electricity costs, have made their way into legislation that's being passed quickly.
This has resulted in potential tariffs for tech companies in states like Wisconsin, as well as outright moratoriums in New York and Maine. Fifteen states are considering bans on the development of data centers, but more than 40 states are imposing various regulations.
Image source: The Motley Fool.
This is an obstacle Oracle cannot control through cost-cutting measures. State legislation is a real bottleneck for Oracle that could also become quite costly.
Oracle is slashing costs wherever it can and recently announced layoffs of 21,000 employees. It's estimated that the layoffs could free up to $10 billion in cash. However, this is a drop in the bucket compared to what the company plans to spend and how much it stands to lose if data center pushback becomes even more widespread.
Investors might expect Oracle's growth to slow as a result, and the AI capex it's proposing will be more difficult to justify. Oracle's stock has decreased by 35% in 2026 and by 47% over the past 12 months. Until AI-related companies can come to a compromise with states, current investors should be patient through this rocky period. Those on the sidelines should wait and see how the rules and regulations play out over time.
Catie Hogan has positions in Oracle. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.
Six weeks ago, Oracle (ORCL -4.27%) management guided for about $8.05 in non-GAAP (adjusted) earnings per share this fiscal year. As of this writing, the stock trades around $117 -- less than 15 times that figure, after setting a new 52-week low of $114.75 on Friday. A multiple like that is usually reserved for mature software companies whose growth is ending, not for a business that just guided for revenue growth of about 34%.
However, the analysts covering the software and cloud computing giant haven't followed the stock's price all the way down. The average price target on Oracle sits at about $248, more than double the current share price of about $117.
To be clear, an average price target isn't an investment case, and I wouldn't buy any stock because of one. But a gap this wide is worth understanding. Each side of it is pricing a different answer to the same question: Will Oracle's enormous backlog of AI (artificial intelligence) contracts convert into cash before the cost of building for it damages the company?
Image source: The Motley Fool.
What the market has stopped paying for The selling has been relentless. Oracle shares have fallen about 66% from their high of $345.72, and the pressure traces back to spending.
Oracle's capital expenditures reached $55.7 billion in fiscal 2026 (the year ended May 31, 2026), most of it going into data centers for its cloud infrastructure business. Operating cash flow rose 54% to a record $32 billion, and the build-out consumed all of it. Free cash flow for the year came in at a negative $23.7 billion.
The bill has started arriving in other forms, too. S&P Global Ratings cut Oracle's credit rating to BBB- earlier this month, one notch above junk status, citing the cost of the build-out. And Oracle has said it expects to raise $40 billion through debt and equity financing this fiscal year, including a $20 billion share sale that will dilute existing shareholders.
When a company is burning more than $20 billion of cash a year, the market stops valuing its earnings and starts scrutinizing its balance sheet. A forward multiple below 15 says the market is worried about more than the durability of growth -- but also the risks presented by a deteriorating balance sheet.
What the analysts are still counting The other side of the argument is the business itself, which keeps performing. Fiscal 2026 revenue rose 17% year over year to $67.4 billion, and growth roughly doubled over the course of the year, with fiscal fourth-quarter revenue up 21%. Even more striking, Oracle's cloud infrastructure revenue (the business that rents computing capacity to AI customers) grew 77% for the full year and 93% year over year in fiscal Q4, reaching $5.8 billion for the quarter.
Profits kept up, too. Fiscal 2026 earnings per share came in at $5.83 under generally accepted accounting principles (GAAP), up 34%, though one-time gains on the Ampere chip-business sale and Bloom Energy warrants did much of that lifting -- excluding them, adjusted earnings per share rose 13%.
Then there's the backlog. Remaining performance obligations (Oracle's signed contract value that hasn't yet become revenue) finished fiscal 2026 at $638 billion after growing $85 billion in the final quarter. The prepaid and customer-supplied hardware portions of Oracle's large AI contracts now total about $75 billion -- customers paying for their graphics processing units (GPUs) up front or supplying the chips themselves, which moves part of the spending burden onto the customers.
If most of that backlog converts on schedule, the math behind a $248 target isn't hard to follow. Management's forecast calls for about $90 billion of revenue this fiscal year, or growth of about 34%. Growth like that, at less than 15 times guided earnings, is exactly what the covering analysts are pointing at.
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So whose number is closer to the truth? Probably neither, fully. The market is treating guidance backed by signed contracts as if it were speculative. And the analysts are extrapolating a backlog whose single largest customer is itself an unprofitable AI company. It's also worth remembering that a price target costs its publisher nothing.
My own answer is that I don't need to pick a side yet. The stock is arguably cheap against guidance, but the cash burn is enormous, and the next few quarters will show whether free cash flow is finding a floor while the backlog converts into revenue. That evidence, not the distance to a price target, is what could get me to buy.
Until it shows up, I'm staying on the sidelines. And I'd suggest investors who do buy this dip keep the position small. After all, shares have been beaten down for a reason.
@LikeFolio's Landon Swan talks about Oracle (ORCL) and web trends surrounding the company. He points out that web visits for the firm are down 11% year-over-year while the stock has fallen 50% over that same time.
Oracle (ORCL) won a $7 billion contract with the U.S. Department of War. Shares of the cloud giant didn't move much ahead of Friday's open as the stock stalls near 52-week lows.
Oracle stock rose by 2% in the premarket session as the company reached a deal with the US government in a major win for Larry Ellison, a close friend of Donald Trump. Still, it remains near its lowest level since April 2025. It has fallen by 65% from its all-time high.
Oracle, a large database, software, and cloud computing company, has reached a big $7 billion deal with the Pentagon. This deal will see the company provide its software in ten years.
Oracle will provide it with its software in on-premises data centers for the military, intelligence community, and the Coast Guard. The government believes that the deal will help it save over $444 million.
Ellison has cultivated a relationship with President Trump. He contributed $45 million in his campaign and took part in a large data center project in collaboration with OpenAI and Softbank.
Trump also brokered a deal that allowed the company to own TikTok’s US business. It owns a 15% stake in the company, while Silver Lake, MGX, and ByteDance own 15%, 15%, and 19.9%, respectively.
Still, despite the deal, Oracle faces major challenges even as its revenue backlog jumped to over $638 billion. Its revenue jumped by 21% to $19.2 billion, while the earnings-per-share soared by 21% to $1.45. The net revenue jumped to over $4.5 billion.
Analysts expect the business to continue growing, with the average estimate for the last quarter being $19.12 billion. If this is correct, it will represent a 28% increase from the same period last year. Its annual revenue is expected to be $90 billion and $130 billion next year.
Still, the biggest challenge the company faces is its balance sheet as its debt jumps. The company’s short-term debt jumped to over $7.2 billion, while its long-term debt soared to over $122 billion. It also expects that it will raise over $40 billion in a combination of debt and equity.
This soaring debt, and its exposure to OpenAI, explain why the stock has plunged in the past few months.
On the positive side, the company has become highly undervalued. Its forward price-to-earnings ratio has dropped to 14.9, lower than the sector median of 23. Its five-year average was 22.
The company also has a highly positive rule-of-40 multiple. Its forward revenue growth is about 17%, while its net income margin jumped to 45%. This means that the company is prioritizing its growth and margins.
READ MORE: Oracle stock slips on AI spending concerns, why analysts still see upside
ORCL stock chart | Source: TradingView
The weekly chart shows that the ORCL stock has plunged in the past few months. It slumped below the important support level of $136, its lowest level in February and March this year. Moving below that level confirmed that bears are in control.
The stock has dropped below the 50-week Exponential Moving Average (EMA). at the same time, the Relative Strength Index (RSI) has continued falling and is nearing the oversold level.
The RSI suggests that the stock will continue falling as it gets to the oversold level. If this happens, it may drop to the key support level of $100 and then bounce back.
The Pentagon just handed Oracle (NYSE:ORCL | ORCL Price Prediction) a headline win. On July 23, 2026, the U.S. Department of Defense awarded Oracle a nearly $7 billion contract to provide software and services to U.S. military branches, the Coast Guard, and the intelligence community for the next decade. Shares popped over 3% on the news. The question for investors is whether a single deal can offset a crash that has erased more than half the stock’s value in ten months.
The Enterprise Software Agreement, negotiated via the Department of the Navy, consolidates on-premises licensing, maintenance, and consulting across the Pentagon into a single contract with a five-year base period and a five-year option. DoD Chief Information Officer Kirsten Davies said the structure will save taxpayers at least $441 million versus the prior fragmented approach.
The Crash the Contract Is Meant to Cushion The backdrop is brutal. Oracle closed at $120.04 on July 23, 2026, down 46.11% from its September 2, 2025 level of $222.75 and 49.81% lower over the past year. The stock fell 27.06% in the past month alone. CNBC and Forbes have chronicled a 19% single-week decline in late June, Oracle’s worst week since the 2001 dot-com bust.
The pain has been personal for Chairman Larry Ellison. His net worth peaked near $388 billion in September 2025, briefly making him the world’s second-richest person. By July 13, 2026, it had fallen to roughly $175 billion, a decline of about $213 billion in under 10 months, dropping him to No. 8 on the Bloomberg Billionaires Index.
Debt, Capex, and a Credit Warning The selloff traces to Oracle’s AI infrastructure buildout. Capital expenditures reached $55.66 billion in fiscal 2026, driving free cash flow to negative $23.69 billion. Total liabilities stand at $218.70 billion, and management plans to raise ~$40 billion in FY2027 through debt and equity financing, including a $20 billion at-the-market equity issuance program.
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Bond markets are flashing yellow. S&P Global Ratings cut Oracle’s credit rating to BBB-, one step above junk status, and five-year credit default swaps reached a near 18-year high of 2.03 percentage points. Oracle laid off approximately 21,000 employees, about 13% of its staff, and faces a $7 billion collateral requirement for its Wisconsin data center tied to the downgrade.
The Bull Case Still Stands Growth is genuine. Cloud Infrastructure revenue climbed 93% year over year to $5.79 billion in the most recent quarter, and remaining performance obligations expanded to $638 billion, up 363% YoY. Mizuho has reaffirmed its Outperform rating with a $320 price target, and the consensus analyst target sits at $249.24.
Scale Check Set the Pentagon award beside Oracle’s balance sheet and the framing tightens. The $7 billion contract is roughly 3% the size of Oracle’s outstanding debt load and a fraction of a single year’s capex. It is real revenue, spread over as much as a decade, arriving as management prepares to tap markets for tens of billions more. Whether that is a lifeline or a life raft is a judgment the debt figures will ultimately settle.
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Intel (INTC) delivered its strongest revenue growth in over 15 years, with Q2 revenue up 24.8% to $16.1B and EPS of $0.42. Oracle (ORCL) secured a 10-year, nearly $7B contract with the U.S. Department of War for enterprise software services, boosting premarket shares.
SummaryPity Mr. Market. He supposedly wants to buy low and sell high. But he often recoils from and spews hate at stocks that can be bought low — like Oracle.Supposedly, ORCL is doing wrong by spending heavily to build data centers and, horror of horrors, borrowing and selling new equity to do this. In other words...ORCL is acting (gasp) normal. The whole world can’t be “asset lite” services. And building physical assets often means big spending and (double gasp) temporarily negative FCF.Big AI spenders will eventually need to earn returns on their investments. Not all will succeed. But AI, real, productive, AI is about data. Not all big spenders are. But...Data is and always has been ORCL’s forte, especially mission-critical enterprise data. Given its prowess here, I see ORCL as one of the eventual AI winners and its stock as a contrarian value 'Buy.' Vertigo3d/E+ via Getty Images
Buy low, sell high — or so they say.
Sounds wonderful. Let’s all go out and do that very thing.
Actually, though, that takes courage.
First, you have to power your way through a gauntlet of
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in ORCL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Oracle Corp (NYSE:ORCL) shares are rising in extended trading Thursday after the company was awarded a 10-year defense contract.
Oracle stock is gaining positive traction. What’s pushing ORCL stock higher? Oracle Gets $7 Billion Software ContractThe U.S. Defense Department has awarded Oracle a 10-year, $7 billion enterprise software agreement. The deal, negotiated by the Department of the Navy, is the first direct award contract with Oracle covering the department’s on-premises Oracle usage.
The deal consolidates licensing and gives the department better visibility into enterprise usage and spending, which it said will help optimize technology budgets.
“By fundamentally improving how we procure on-premises Oracle capabilities, we are driving at least $441 million in taxpayer savings while rapidly and effectively serving our warfighters,” said Kirsten Davies, chief information officer for the Defense Department.
“This nearly $7 billion agreement with Oracle strengthens our digital ecosystem, supporting our warfighters with secure, scalable technology to dominate current and future missions.”
The agreement is structured as a five-year base period with a five-year option period.
ORCL Shares Rise After HoursORCL Price Action: Oracle shares were up 2.27% in after-hours Thursday, trading at $122.74 at the time of publication, according to Benzinga Pro.
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In the latest close session, Oracle (ORCL - Free Report) was down 4.61% at $120.04. This change lagged the S&P 500's daily loss of 1.21%. On the other hand, the Dow registered a loss of 0.97%, and the technology-centric Nasdaq decreased by 2.15%.
The software maker's stock has dropped by 20.12% in the past month, falling short of the Computer and Technology sector's loss of 4.58% and the S&P 500's gain of 0.42%.
Analysts and investors alike will be keeping a close eye on the performance of Oracle in its upcoming earnings disclosure. The company is predicted to post an EPS of $1.72, indicating a 17.01% growth compared to the equivalent quarter last year. Meanwhile, the latest consensus estimate predicts the revenue to be $19.13 billion, indicating a 28.14% increase compared to the same quarter of the previous year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $8.03 per share and revenue of $89.72 billion, which would represent changes of +5.24% and +33.2%, respectively, from the prior year.
Any recent changes to analyst estimates for Oracle should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.03% increase. Oracle is holding a Zacks Rank of #3 (Hold) right now.
In the context of valuation, Oracle is at present trading with a Forward P/E ratio of 15.66. This represents no noticeable deviation compared to its industry average Forward P/E of 15.66.
Investors should also note that ORCL has a PEG ratio of 0.64 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 1.23 as of yesterday's close.
The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 95, placing it within the top 39% of over 250 industries.
The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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.
The Pentagon announced on Thursday a nearly $7 billion, up-to-10-year agreement with Oracle to consolidate the department's on-premises software licenses into a single contract, the latest move by the Pentagon's technology chief to cut costs by eliminating fragmented purchasing.
The Pentagon on Thursday announced a contract with Oracle worth almost $7 billion over a decade, a big win for the software maker, which has been punished by investors this year. The stock rose about 3% in extended trading.
The contract covers the use of Oracle software in on-premises data centers for branches of the military, the U.S. intelligence community and the Coast Guard, according to a statement. The Central Intelligence Agency was Oracle's first customer.
Kirsten Davies, the Department of Defense's chief information officer, said in the release that the agency is saving at least $441 million for taxpayers "by fundamentally improving how we procure on-premises Oracle capabilities."
Earlier this week, Defense Secretary Pete Hegseth estimated that the war in Iran, which began in February, has cost the U.S. $37.5 billion.
Oracle co-founder Larry Ellison has long been a supporter of President Donald Trump, reportedly contributing $45 million to a nonprofit backing Trump's 2024 presidential campaign.
Ellison was among the first guests to appear in the White House during Trump's second term, announcing plans for Stargate artificial intelligence data centers in the U.S. Trump supported Oracle taking a stake in TikTok's U.S. business, and in May, the Defense Department announced agreements with Oracle and other tech companies around AI deployments in classified networks.
Still, Oracle shares are down 38% this year, as investors have grown concerned that AI could hurt growth prospects for software incumbents. The company is also racking up tens of billions of dollars in debt to build out AI data centers.
Oracle said in June that quarterly software revenue declined 2% from a year earlier, though the company's database software is widely used inside large companies. Cloud revenue climbed 47% as the company rushes to supply AI computing power to OpenAI and other clients.
The ESI contract vehicle streamlines acquisition and standardizes access to Oracle commercial products and services for the DoW
, /PRNewswire/ -- Oracle has been awarded a 10-year Indefinite Delivery/Indefinite Quantity (IDIQ) contract under the U.S. Department of War (DoW) Enterprise Software Initiative (ESI), with a base value of $3.31 billion for the first five years of the agreement and a total value of $6.99 billion if option years are exercised.
The new contract vehicle establishes a centralized framework to simplify procurement across the department. As a result, authorized DoW organizations and contractors can expedite the procurement of Oracle commercial products and services.
The DoW is one of the largest employers in the United States, with more than 3.4 million civilians and military personnel working across dozens of specialized agencies and branches of the armed forces. Given the DoW's scale, securely procuring mission-critical technology is often an arduous and time-consuming process, making standardized contract vehicles like ESI essential.
"For the Department of War, the challenge is not just finding the right technology, it's doing so quickly, compliantly, and at scale, without getting bogged down by complex procurement processes," said Kim Lynch, executive vice president, Government, Defense & Intelligence, Oracle. "ESI is designed to address those challenges by creating a more standardized and efficient path to Oracle cloud and AI technology tuned to support mission-critical scenarios."
Through this ESI contract vehicle, DoW organizations can purchase Oracle commercial offerings, including on-premises software and support, Software-as-a-Service (SaaS) applications, and professional services through task and delivery orders tailored to specific mission and operational requirements. Pricing, deliverables, and performance criteria are defined at the order level, giving organizations flexibility while preserving a streamlined contracting structure.
Oracle has been a supplier to the DoW since the 1990s. As a long-time Oracle customer, the DoW will transition to the ESI contract vehicle in the Summer of 2026. Oracle will provide DoW organizations with dedicated program operations and standardized intake processes throughout the transition to ESI. This support will help route requests efficiently and ensure consistent engagement across Oracle teams.
Looking forward, the DoW is expected to increase its use of standardized procurement processes like ESI, and support evolving mission needs with flexible access to commercial technology.
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.
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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.
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The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Oracle (ORCL - Free Report) Austin, TX-based Oracle Corporation is one of the largest enterprise-grade database, middleware, and application software providers.
ORCL is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.
Additionally, the company could be a top pick for growth investors. ORCL has a Growth Style Score of A, forecasting year-over-year earnings growth of 5.2% for the current fiscal year.
For fiscal 2027, nine analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.04 to $8.03 per share. ORCL boasts an average earnings surprise of +12.9%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, ORCL should be on investors' short list.
Ten months ago, Oracle (ORCL -1.68%) looked unstoppable. The company had become one of Wall Street's biggest AI winners as investors bet its cloud infrastructure business would play a central role in powering AI workloads. The stock surged to record highs, briefly pushing co-founder Larry Ellison's net worth above $400 billion.
Today, the story looks very different. Oracle shares have fallen by more than 50% from their peak, wiping roughly $213 billion from Ellison's personal fortune as the market has begun to question the company's aggressive AI data center spending.
The stock is now sitting at levels it hasn't seen since April 2025. So is this a good buying opportunity?
Why Oracle fell Demand for Oracle Cloud Infrastructure remains strong. The company continues to sign large infrastructure contracts and expand its data center capacity. In fact, its remaining performance obligations reached a record $638 billion as of May 31, the end of its fiscal 2026.
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The problem is that building AI data centers isn't cheap. Oracle dramatically increased capital spending to expand its cloud infrastructure. Capital expenditures topped $21 billion in fiscal 2026, up from about $7 billion a year earlier, and management says it expects to spend more than $25 billion in fiscal 2027. That begs the question: Will those investments generate attractive returns quickly enough to justify these mounting costs?
Those concerns intensified after S&P Global Ratings downgraded Oracle's credit rating to BBB-, just one notch above junk status. That's not a trivial development, because a lower credit rating translates into higher borrowing costs, which will make its already capital-intensive expansion strategy even more expensive. Investors are right to have concerns.
The long-term case remains intact Despite the sell-off, Oracle's underlying business hasn't suddenly broken. The cloud infrastructure unit remains one of the fastest-growing parts of the company, and demand for AI computing capacity continues to outstrip supply across much of the industry.
Image source: Getty Images.
Oracle has also carved out a unique competitive position. Rather than competing directly against Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud, Oracle increasingly partners with them.
That strategy broadens the company's addressable market while reinforcing its dominance in enterprise databases. Oracle's large backlog of signed cloud contracts also provides it with significant revenue visibility over the coming years.
Is it a buy? If you're looking for a stock that will rebound and surge over the next quarter, Oracle may not be your best choice. Investor sentiment regarding the company has clearly deteriorated, and concerns surrounding its AI infrastructure spending aren't likely to disappear overnight.
If you have a long time horizon as an investor, however, this is not a stock to ignore. Oracle is making enormous investments because management believes AI infrastructure demand will continue growing for years. If that thesis proves correct, today's elevated spending could eventually translate into significantly higher cloud revenue and cash flow.
Of course, there's still risk. If enterprise AI adoption slows, Oracle could find itself in possession of billions of dollars of expensive infrastructure that takes longer than expected to generate attractive returns.
That's why I wouldn't call Oracle a screaming bargain. But I also wouldn't dismiss it because of a difficult 10-month stretch. The market has gone from pricing Oracle as though nothing could go wrong to assuming almost everything will. Reality will likely fall somewhere in between.
Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Oracle, and S&P Global. The Motley Fool has a disclosure policy.
Oracle (NYSE:ORCL | ORCL Price Prediction | ORCL Price Prediction) has quietly become one of the most important AI infrastructure companies on the planet, yet the stock chart tells a different story.
Shares closed at $127.05 on Monday, down 34.18% year to date and 47.24% over the past year. Meanwhile, remaining performance obligations exploded to $638 billion, up 363% year over year.
Can Oracle reclaim its 52-week high and push to $400 by 2027?
Why Oracle Shares Are Stuck Despite an AI Backlog Explosion The market has punished Oracle for one reason: cash burn. Capital expenditures ran $55.663 billion on a trailing basis, producing free cash flow of negative $23.686 billion. Add $218.703 billion in total liabilities and plans to raise roughly $40 billion in FY2027, and you can see why investors flinched.
Shares fell 30.81% in the past month alone and are barely off the 52-week low of $120.03. With a beta of 1.712, Oracle amplifies every mood swing about AI capex.
One popular Reddit thread summed it up bluntly: “The market has decided capex is sin.” The concern is valid. Yet the same spending booked the backlog.
Wall Street Sees 96% Upside. Our Model Says 54% The consensus is loud. Eight strong buys, 29 buys, five holds, and one sell yield 86% bullish sentiment and an average analyst target of $249.24. Our model is more measured, pegging a base case of $195.11 with 53.57% upside at 90% confidence, an optimistic case of $350.76, and a conservative floor of $168.99.
Analysts anchored to pre-selloff multiples and have not marked their models to the reality of a mega-cap with 1.7 beta. The base case is right. The bull case needs execution.
The Path to $400 Per Share Reaching $400 from today’s price of $127.05 would require a gain of 214.8%. With forward EPS of $9.30, a price of $400 implies a forward P/E of 43. Our base case of $195.11 already implies 17x, meaning $400 requires 26x of additional multiple expansion.
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Is that achievable? Only if the RPO conversion story becomes undeniable. Oracle Cloud Infrastructure grew 93% YoY in Q4 and the multicloud AI database jumped 404%. CEO Clay Magouyrk noted “AI infrastructure revenue grew 243% year over year” with “demand that exceeds supply.”
Safra Catz projected OCI revenue reaching $144 billion by FY2030. If AI-linked EPS growth (currently 21.9% YoY) compounds and investors treat Oracle like a hyperscaler rather than a legacy database vendor, a 40x multiple on rising forward earnings becomes conceivable.
The primary risk: another leg of capex-driven cash burn that spooks bondholders and forces a dilutive equity raise.
Where Oracle Trades Today vs Its Earnings Power At $127.05 against forward EPS of $9.30, Oracle trades at a 14x forward multiple. That is cheap for a business growing revenue 20.6% YoY with a PEG of 0.714.
Shares sit 27% below the 52-week high of $341.82 and just above the low of $120.03. Over the past decade the stock returned 258.98%. The valuation gap is real. Whether it closes depends on whether the RPO becomes revenue on schedule.
Is $400 Realistic? The bold target: $400, a 214.8% gain from today. For it to work, Oracle must convert a meaningful slice of the $638 billion RPO into recognized revenue on schedule, sustain OCI growth above 60%, and restore free cash flow so the market stops flinching at every capex line.
What derails it: a dilutive equity raise that forces the multiple back into legacy-software territory. We’ve outlined the blueprint for how Oracle could reach $400 in 2027.
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Alamar Capital Management LLC acquired a new stake in Oracle Corporation (NYSE:ORCL – Free Report) during the 1st quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The fund acquired 8,480 shares of the enterprise software provider’s stock, valued at approximately $1,248,000.
Other institutional investors have also recently made changes to their positions in the company. Norges Bank purchased a new position in Oracle in the 4th quarter worth approximately $4,336,031,000. Capital Research Global Investors boosted its stake in Oracle by 29.3% in the 4th quarter. Capital Research Global Investors now owns 30,137,126 shares of the enterprise software provider’s stock worth $5,874,070,000 after purchasing an additional 6,826,299 shares during the period. Vanguard Group Inc. grew its holdings in Oracle by 3.5% during the 4th quarter. Vanguard Group Inc. now owns 174,802,084 shares of the enterprise software provider’s stock valued at $34,070,674,000 after buying an additional 5,841,584 shares in the last quarter. Cardano Risk Management B.V. raised its position in shares of Oracle by 882.3% during the fourth quarter. Cardano Risk Management B.V. now owns 4,991,010 shares of the enterprise software provider’s stock valued at $972,798,000 after buying an additional 4,482,934 shares during the last quarter. Finally, FIL Ltd raised its position in shares of Oracle by 1,605.7% during the fourth quarter. FIL Ltd now owns 3,976,441 shares of the enterprise software provider’s stock valued at $775,048,000 after buying an additional 3,743,314 shares during the last quarter. Hedge funds and other institutional investors own 42.44% of the company’s stock.
Oracle Stock Performance NYSE ORCL opened at $125.86 on Thursday. The company has a market cap of $362.54 billion, a P/E ratio of 21.59, a P/E/G ratio of 0.80 and a beta of 1.72. The company has a debt-to-equity ratio of 3.21, a quick ratio of 1.12 and a current ratio of 1.12. The business’s 50 day moving average price is $173.38 and its 200-day moving average price is $167.78. Oracle Corporation has a fifty-two week low of $120.03 and a fifty-two week high of $345.72.
Oracle (NYSE:ORCL – Get Free Report) last posted its quarterly earnings data on Wednesday, June 10th. The enterprise software provider reported $2.11 earnings per share for the quarter, beating analysts’ consensus estimates of $1.96 by $0.15. Oracle had a net margin of 25.37% and a return on equity of 58.62%. The business had revenue of $19.18 billion for the quarter, compared to analysts’ expectations of $19.10 billion. During the same quarter in the previous year, the business posted $1.70 earnings per share. The business’s revenue was up 20.6% compared to the same quarter last year. 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 6.47 earnings per share for the current year.
Oracle Announces Dividend The company also recently disclosed a quarterly dividend, which will be paid on Friday, July 24th. Investors of record on Friday, July 10th will be paid a $0.50 dividend. The ex-dividend date of this dividend is Friday, July 10th. This represents a $2.00 annualized dividend and a yield of 1.6%. Oracle’s dividend payout ratio is 34.31%.
Analyst Upgrades and Downgrades A number of analysts have issued reports on ORCL shares. KeyCorp reiterated an “overweight” rating on shares of Oracle in a report on Thursday, June 11th. Weiss Ratings lowered Oracle from a “hold (c+)” rating to a “hold (c)” rating in a research report on Monday. Barclays lifted their target price on Oracle from $240.00 to $250.00 and gave the stock an “overweight” rating in a report on Thursday, June 11th. Scotiabank reiterated an “overweight” rating on shares of Oracle in a research report on Thursday, June 11th. Finally, BMO Capital Markets increased their price target on Oracle from $200.00 to $220.00 and gave the company an “outperform” rating 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 given a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average price target of $265.03.
Check Out Our Latest Report on ORCL
Insider Transactions at Oracle In related news, Vice Chairman Jeffrey Henley sold 400,000 shares of Oracle stock in a transaction dated 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 sale, the insider directly owned 400,000 shares in the company, valued at $63,664,000. The trade was a 50.00% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 40.90% of the stock is currently owned by company insiders.
Oracle News Summary Here are the key news stories impacting Oracle this week:
Positive Sentiment: Some analysts remain bullish, arguing Oracle’s massive backlog and cloud growth support long-term upside despite the selloff. Oracle stock is still a buy: Analyst outlines his bull case Positive Sentiment: Mizuho reiterated an outperform/buy view, saying Oracle’s risk/reward looks attractive and that the stock may have become oversold. Mizuho analyst on Oracle stock Neutral Sentiment: Several recent pieces say Oracle may be deeply oversold and could rebound technically if selling pressure eases. Oracle Corp. (ORCL) Price Forecast Negative Sentiment: Reports that Oracle could face a $7 billion collateral bill for its Wisconsin data center have intensified funding and execution worries. Oracle could face $7bn collateral bill for Wisconsin data centre Negative Sentiment: Investors are also worried that AI-related spending is consuming free cash flow across big tech, including Oracle, which could pressure margins and capital returns. Analysis-AI investment boom puts Big Tech’s free cash flow under pressure Oracle Profile (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.
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Oracle (ORCL -0.95%) is spending massive sums to build its AI infrastructure.
*Stock prices used were the afternoon prices of July 19, 2026. The video was published on July 21, 2026.
Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Oracle (NYSE:ORCL | ORCL Price Prediction) shareholders have endured a brutal seven months. From a record high above $341 in October, shares have retraced roughly two-thirds. The one-year total return sits at -49.98%, and last month alone wiped out 33.9% of the equity value. That drawdown signals either a broken thesis or an entry point. I believe it is the latter.
Our 24/7 Wall St. price target lands at $195.52, implying 56.51% upside from Monday’s close. Our model rates Oracle a buy with high conviction.
24/7 Wall St. Price Target Summary Metric Value Current Price $124.92 24/7 Wall St. Price Target $195.52 Upside 56.51% Recommendation BUY Confidence Level 90% The setup is unusual: a mega-cap cloud franchise with $638 billion in remaining performance obligations trading like distressed debt. The market demands a discount for balance-sheet stress, but the discount has gone too far.
How a $341 Stock Became a $125 Stock Oracle is -37.12% year-to-date and -7.72% in the past week, closing recently just above the 52-week low of $120.03. The catalyst set is well-documented: S&P Global downgraded Oracle to BBB-, credit-default swap spreads hit 198.23 basis points, and management confirmed plans to raise roughly $40 billion in FY2027 through debt and equity to fund AI infrastructure. Free cash flow ran to negative $23.69 billion against capex of $55.66 billion.
Operating results tell a different story. Cloud Infrastructure grew 93% year-over-year to $5.79 billion in Q4, the Multicloud AI Database grew 404%, and management raised FY27 non-GAAP EPS guidance to $8.05 on $90 billion in revenue.
A widely upvoted Reddit post captured the paradox: “Azure +39%, AI revenue +123%, 4th st. beat, stock down 30%. The market has decided capex is sin.”
Why Bulls See a Path to $350 Our one-year bull case is $350.82, roughly a triple. The math works if CFO Safra Catz’s OCI ramp lands: $18 billion in FY26, rising to $32B, $73B, $114B, and $144B over the next four years.
At a 20x multiple on $15 in EPS, Oracle clears $300. $75 billion of the RPO backlog uses customer-prepaid or customer-supplied GPUs, which materially eases the capex burden.
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What Could Go Wrong The bear case is credible. CLSA initiated with a Hold and a $145 target, estimating Oracle may need up to $500 billion by 2030 to execute its AI ambitions. Our bear case still lands at $169.27, above the current price, because even a slower ramp leaves Oracle with an enormous contracted backlog.
The real red flag is concentration: heavy exposure to OpenAI, whose profitability is uncertain, plus regulatory pushback on data-center projects in Wisconsin and New Mexico. The negative FCF reflects investment intensity as capex ramps well ahead of the OCI revenue conversion.
How Oracle Compares to Microsoft and Amazon Microsoft (NASDAQ:MSFT) trades at a trailing P/E of 29 with Azure growing 40% and commercial RPO of $627 billion. Oracle’s RPO is $638 billion, larger than Microsoft’s, yet Oracle trades at a forward P/E of 16. That valuation gap is the crux of the buy thesis.
Amazon (NASDAQ:AMZN) trades at a trailing P/E of 35. AWS grew 28% to $37.59 billion in Q1 2026, its fastest pace in 15 quarters, yet Oracle’s IaaS unit grew 93% off a smaller base. Amazon’s $200 billion planned 2026 capex dwarfs Oracle’s, but the market has not punished AMZN. Peer comps make our $195.52 target look conservative.
Company Forward/Trailing P/E Cloud Growth Oracle 16 fwd IaaS +93% Microsoft 29 trailing Azure +40% Amazon 35 trailing AWS +28% The Case for Oracle Near $125 The 24/7 Wall St. price target of $195.52 is a buy call at 90% confidence. Oracle trades at a growth-stock backlog with a value-stock multiple.
The setup looks attractive here for investors who expect the OCI backlog to convert to revenue on schedule. The thesis weakens if credit markets shut off before FY28 free cash flow inflects. Our modeling leans toward the former.
Oracle Price Prediction 2026-2030 Year 24/7 Wall St. Price Target 2026 $195 2027 $240 2028 $295 2029 $360 2030 $425 These projections assume Oracle executes on its $144 billion OCI revenue target by FY2030 and stabilizes credit metrics. Significant upside or downside will hinge on whether the AI infrastructure buildout generates the returns management is underwriting.
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Oracle Corp (NYSE:ORCL) stock traded lower on Wednesday as big-cap tech remains under pressure in a risk-off tape. The Nasdaq is down 0.59% while the S&P 500 has shed 0.16%.
The stock drew scrutiny on CNBC’s "Fast Money" on Tuesday after traders discussed reports that data center cost overruns are weighing on the stock and raising questions about its AI infrastructure strategy.
Cost Overruns Raise DoubtsCredit Risk Draws FocusAmerican businesswoman and television personality Karen Finerman pointed to elevated credit default swap spreads as a sign of growing concern about Oracle’s leverage. She said Oracle may eventually struggle to issue more debt and could consider equity financing, which would add pressure to the stock.
Finerman also warned that another downgrade could make Oracle’s financing more expensive and difficult, especially if the company moves closer to junk-rated status before its next earnings report in September.
OpenAI Exposure Worries TradersAmerican trader, television personality, and professional investor Guy Adami said Oracle’s outlook depends heavily on OpenAI’s ability to meet its revenue forecasts. He said Oracle could face significant risks if OpenAI underperforms because Larry Ellison, Oracle’s chief technology officer, has heavily invested in that partnership.
During his “Fast Money” appearance, Adami added that credit default swap pricing suggests deeper concerns around Oracle than the stock’s decline alone reflects.
Technical Support Offers One Bright SpotSteve Grasso, CEO of Grasso Global Inc, focused on Oracle’s chart setup. He said the stock is trading near a level that has acted as support over the past two to three years, though he stopped short of recommending investors buy it.
Technical AnalysisFrom a trend perspective, Oracle remains in a bearish structure: the stock is trading 7.6% below its 20-day SMA, 26.8% below its 50-day SMA, and 32.4% below its 200-day SMA. The 20-day SMA sitting below the 50-day SMA reinforces that recent price action is still tilted lower, and the death cross that formed in January keeps the longer-term trend filter negative.
Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $260.04. Recent analyst moves include:
CLSA: Initiated with Hold (Target $145.00) (July 20) Bernstein: Outperform (Raises Target to $325.00) (June 11) RBC Capital: Sector Perform (Maintains Target $190.00) (June 11) Top ETF ExposureSignificance: 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 0.44% at $126.50 at the time of publication on Wednesday, according to Benzinga Pro data.
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Artificial intelligence has become the biggest spending race the technology sector has ever seen. Microsoft (NASDAQ:MSFT | MSFT Price Prediction), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), and Oracle (NASDAQ:ORCL) are committing hundreds of billions of dollars to new data centers, networking equipment, and power infrastructure as they compete for AI leadership. Investors have largely embraced those investments because revenue continues to grow alongside demand for AI services.
Yet a recent investigation by Nikkei shows much of the financial commitment behind that expansion isn’t sitting where most investors expect to find it. As four of those five companies prepare to report quarterly earnings over the next week, shareholders may be evaluating balance sheets that reveal less than half of the financial picture.
The Debt You Won’t Find on the Balance Sheet The numbers reported each quarter remain accurate. They’re also incomplete without reading the footnotes.
According to Nikkei’s review of SEC filings, the five technology giants have accumulated roughly $1.65 trillion in future lease and purchase obligations tied primarily to AI infrastructure. These commitments are perfectly legal under U.S. accounting rules because they represent future contractual obligations rather than traditional borrowings. Still, they don’t receive the same attention as reported debt.
The differences are striking:
Company Reported Debt Est. Off-Balance Sheet Debt Meta Platforms $140 billion ~$420 billion Oracle ~$100 billion ~$273 billion Microsoft ~$100 billion ~$350 billion Amazon ~$180 billion ~$350 billion Alphabet ~$30 billion ~$250 billion Meta’s obligations are roughly three times its reported debt. Oracle’s off-balance-sheet commitments have expanded about 30-fold in just four years as it races to build AI capacity.
None of this violates accounting standards. The concern is whether investors focusing only on reported debt are underestimating the financial commitments already made.
AI Optimism Makes the Numbers Look Comfortable Many of these contracts finance data centers through long-term leases, project financing, and private credit rather than traditional corporate borrowing. That structure spreads financing across developers, insurers, and institutional lenders while allowing technology companies to avoid loading every obligation directly onto today’s balance sheet.
Ironically, that can make leverage appear lower precisely when spending is reaching record levels.
This matters because Meta, Microsoft, Alphabet, and Amazon all report earnings within days. Their reported debt ratios may appear manageable, while hundreds of billions of dollars in future payment obligations remain buried in the notes accompanying their SEC filings.
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That doesn’t mean investors should panic. These companies also generate enormous cash flows. Microsoft produced nearly $100 billion in operating cash flow over the past year, while Alphabet, Meta, and Amazon each generated tens of billions of dollars that help support these long-term commitments.
The bigger issue is transparency rather than solvency.
The Risk Depends on AI Demand Staying Strong The accounting changes only when those facilities begin operating. At that point, lease obligations move onto financial statements, depreciation begins, and any underutilized facilities can become impairment charges if demand falls below expectations. In other words, today’s hidden commitments become tomorrow’s reported assets and liabilities.
If AI adoption continues expanding at its current pace, those investments could generate attractive returns and justify every dollar committed. Granted, that’s exactly what management teams are betting on.
If enterprise AI spending disappoints, however, some data centers may never earn the returns originally projected. Any write-downs would ultimately affect shareholders, while lenders, insurers, and private-credit investors that financed the construction would also absorb losses.
Key Takeaway In short, the headline isn’t that Big Tech has discovered a way to hide debt illegally — it hasn’t. These off-balance-sheet commitments are disclosed in SEC filings and comply with accounting rules. The real takeaway is that investors who rely only on headline debt figures are missing a large portion of the AI spending story.
As earnings season unfolds, reported debt will probably look comfortable. The $1.65 trillion of contractual commitments likely won’t dominate earnings headlines. Smart investors should look beyond the income statement and balance sheet into the footnotes. That’s where the full scale of Big Tech’s AI bet — and the risks that come with it — is waiting to be found.
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Cena za ochranu proti defaultu dluhu velkých technologických firem rychle roste. Pětileté CDS spready, které určují cenu pojištění proti nesplácení dluhu, se v případě hyperscalerů vyšplhaly na 75 bazických bodů, což je nejvyšší úroveň za posledních sedm let.
Významný podíl na růstu ceny zajištění má zejména Oracle. Pětiletý CDS spread firmy překonal hranici 200 bazických bodů a dostal se nad dosavadní vrchol z konce roku 2008. Výrazně vyšší cenu za zajištění dluhu Oraclu požadovali investoři také v období kolem roku 2022.
— The Kobeissi Letter (@KobeissiLetter) July 16, 2026 Samotný růst CDS spreadů přitom neznamená blížící se katastrofu. Naznačuje spíše vyšší opatrnost investorů a zaceňování případného negativního scénáře. Vyšší poptávka po zajištění dluhu následně automaticky žene jeho cenu vzhůru.
Svůj podíl na růstu ceny zajištění má pravděpodobně i čínská firma Kimi AI a její open-source model K3, který v posledních testech porazil americkou konkurenci včetně OpenAI a Anthropicu. Mezi investory se tak znovu rozšířily obavy ohledně toho, zda jsou obří investice do rozvoje umělé inteligence opodstatněné, nebo zda jde o závod v utrácení bez jednoznačného vítěze.
Oracle patří mezi firmy s nejagresivnější investiční strategií a ve značné míře sází na OpenAI a plnění nasmlouvaných kontraktů. Rostoucí nejistota ohledně návratnosti investic se proto rychle promítla do dluhopisů společnosti, které oslabovaly napříč celou výnosovou křivkou.
Oracle jako největší emitent dluhu v koši firem zahrnutých do indexu US High Grade Corporate Bond Ex-Financials podle některých analytiků slouží jako barometr nervozity na trhu dluhopisů spojených s AI. Analytička Morgan Stanley Lindsay Tyler upozorňuje, že investoři by nyní měli bedlivě sledovat kreditní ratingy jednotlivých firem.
V případě Oraclu například agentura S&P snížila rating na BBB-, tedy pouze jeden stupeň nad spekulativním pásmem. Moody's aktuálně drží hodnocení Baa2. Pro srovnání, Alphabet má na stupnici Moody's rating Aa2, Amazon A1, Nvidia Aa1 a SpaceX Baa1.
Z pohledu investora může být zajímavý také ukazatel GSUCHS30 spravovaný investiční bankou Goldman Sachs, který sleduje g-spread (rozdíl mezi výnosy státních a daných korporátních dluhopisů) dluhu technologických firem ze skupiny „ultra-large-cap“, nesoucích většinu nákladů spojených s rozvojem AI infrastruktury. Historie indexu je poměrně krátká, přesto vykazuje rozšíření spreadu, což naznačuje vyšší požadovanou kompenzaci ze strany věřitelů.
Hnacím motorem nervozity je růst zadlužení hyperscalerů. Vysoké investice do AI infrastruktury již firmy nedokážou plně financovat z provozního cash flow, a musí tak emitovat nový dluh nebo vydávat další akcie.
Amazon, Alphabet, Nvidia, Meta, Oracle a SpaceX během letoška vydaly dluhopisy již za 182 miliard dolarů, což představuje meziroční nárůst o 1300 %. Celkově emise hyperscalerů letos tvoří přibližně 15 % objemu všech korporátních dluhopisů.
Klíčovou otázkou tak zůstává, jak dlouho bude současný trend pokračovat. S dalšími emisemi bude růst citlivost dluhopisového i akciového trhu na negativní zprávy týkající se návratnosti investic. Zatím však platí, že poptávka po expozici na AI zůstává vysoká a firmy nemají problémy upisovat nový dluh ani emitovat další akcie.
ORCL daily chart shows key dynamic resistance near the 10-day and 20-day moving averages. Source: TradingView Could a Capitulation Low Attract Buyers? If the bearish correction extends below the April 2025 low of $118.86, it could move toward a long-term uptrend line that is a little lower. If reached today it would be near $114.82. That would produce an undercut of the April 2025 swing low, flushing out stops on long positions and possibly creating an opening to attract buyers.
Such a move could create a potential capitulation low, particularly if price quickly recovers back above the $118.86 support level. Since there is the potential for a decline to the trendline and therefore an undercut of a key support level, that could create the environment to attract buyers. However, this scenario is not needed for a rally to unfold before a new corrective low is established.
Successive Resistance Levels Hold the Key Initial upside resistance is near the falling 10-day moving average at $131.64. If that near-term dynamic resistance zone can be reclaimed, then ORCL may trigger a minor bullish reversal of structure before the lower swing high of $133.90. That level is closely followed by potential resistance near the 20-day moving average, now near $140.13 and falling.
A daily close above that average is needed to signal that an upside recovery may continue. However, a bullish reversal signal above the lower swing high of $149.07 will provide a more definitive bullish reversal for the declining structure. Therefore, while the successful test of long-term support near $118.86 offers an early reason for bulls to remain alert, ORCL still needs to reclaim successive resistance levels to confirm that a more durable recovery is underway.
Oracle faces strong cloud demand and a $638B backlog, but heavy debt and lease commitments cloud the outlook. I rate ORCL.PR.D a Buy, as its nearly 8% yield and conversion terms offer superior risk-adjusted returns versus common shares in flat or moderately bullish scenarios. ORCL.PR.D provides income and downside protection, outperforming common unless ORCL rises over 42% to $179+ by January 2029.
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Oracle (ORCL - Free Report) .
Oracle currently has an average brokerage recommendation (ABR) of 1.51, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 45 brokerage firms. An ABR of 1.51 approximates between Strong Buy and Buy.
Of the 45 recommendations that derive the current ABR, 34 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 75.6% and 2.2% of all recommendations.
Brokerage Recommendation Trends for ORCL
Check price target & stock forecast for Oracle here>>>
The ABR suggests buying Oracle, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Should You Invest in ORCL?Looking at the earnings estimate revisions for Oracle, the Zacks Consensus Estimate for the current year has increased 0.2% over the past month to $8.03.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Oracle. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Oracle may serve as a useful guide for investors.
Oracle (ORCL - Free Report) has been on a downward spiral lately with significant selling pressure. After declining 30.7% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.
We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements.
RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30.
Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and easily check if a stock's price is reaching a point of reversal.
So, by this measure, if a stock has gotten too far below its fair value just because of unwarranted selling pressure, investors may start looking for entry opportunities in the stock for benefiting from the inevitable rebound.
However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision.
Why ORCL Could Bounce Back Before LongThe heavy selling of ORCL shares appears to be in the process of exhausting itself, as indicated by its RSI reading of 26.69. So, the trend for the stock could reverse soon for reaching the old equilibrium of supply and demand.
The RSI value is not the only factor that indicates a potential turnaround for the stock in the near term. On the fundamental side, there has been strong agreement among the sell-side analysts covering the stock in raising earnings estimates for the current year. Over the last 30 days, the consensus EPS estimate for ORCL has increased 0.2%. And an upward trend in earnings estimate revisions usually translates into price appreciation in the near term.
Moreover, ORCL currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises. This is a more conclusive indication of the stock's potential turnaround in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Oracle (ORCL +3.35%) shares have been on a wild ride so far this year. Investors have been left wondering whether it's worth holding on to the tech giant's shares, or if they should avoid the volatile stock altogether.
Oracle is spending a lot of money right now as it builds out more AI infrastructure, which has spooked some shareholders, leading to an Oracle stock sell-off that's left its share price down 37% year to date.
That drop could represent a good buying opportunity. Here's why.
Image source: Oracle.
Oracle's stock fell hard after it revealed $70 billion in spending Oracle is doing what nearly every other major tech company is doing right now -- accelerating its spending on artificial intelligence data centers. But shareholders weren't happy when management said capital expenditures (capex) could reach as high as $70 billion in fiscal 2027, and they really aren't happy with how Oracle plans to raise the money.
Management said on the fourth-quarter earnings call that it would raise $40 billion through debt and equity financing, $20 billion of which comes from a share sale that it had already announced.
The problem is that Oracle already raised $43 billion in debt in fiscal 2026, which means the company is continually funding its capex spending by raising large amounts of debt. It's not uncommon for tech companies to take on debt, but it's coming at a time when investors are increasingly skeptical that AI spending will eventually pay off.
Adding to investor skepticism is that Oracle is transitioning away from a higher-margin software business toward capital-intensive AI infrastructure, and management said margins will be a "step down" in the near term as a result.
Today's Change
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Is it worth picking up some shares of Oracle right now? Given Oracle's rising debt, it's not surprising that investors freaked out. But it might be a mistake to overlook Oracle stock right now.
First, consider that the company had $638 billion in remaining performance obligations (RPO) -- binding contracts that represent a revenue backlog -- at the end of fiscal 2026, an increase of 363% from the previous year. Management says this large amount of RPO gives "exceptional visibility into our future revenue growth" and said on the Q4 earnings call that 12% of current RPO -- nearly $77 billion -- will be realized as revenue in fiscal 2027.Management also expects another 34% to be realized over the next 13 to 36 months.
Oracle's earnings are expected to recover, too, with management guidance of $90 billion in sales and adjusted non-GAAP earnings per share of $8.05 in fiscal 2027, representing increases of 34% and 18%, respectively, from 2026.
What's more, Oracle shares look cheap right now. The stock has a price-to-earnings (P/E) ratio of just 21, compared to the tech sector average P/E ratio of 34.
It's understandable why investors are concerned about Oracle's debt and equity raises. Still, if the company's data center plans pan out as expected, it could put the company in a much better position for growth. If you're willing to ride out some of the risks, it might be worth buying some Oracle stock right now.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Oracle (ORCL - Free Report) Austin, TX-based Oracle Corporation is one of the largest enterprise-grade database, middleware, and application software providers.
ORCL is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 15.11; value investors should take notice.
Nine analysts revised their earnings estimate higher in the last 60 days for fiscal 2027, while the Zacks Consensus Estimate has increased $0.04 to $8.03 per share. ORCL also boasts an average earnings surprise of +12.9%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, ORCL should be on investors' short list.
Key Takeaways Oracle's credit rating was cut as AI investment drove higher debt and negative free cash flow.ORCL reported a $638B backlog, up 363% year over year, and guided for $90B fiscal 2027 revenues.Oracle's AI spending mirrors cash flow pressure seen at Microsoft and Amazon despite stronger ratings. Credit rating agencies have grown increasingly cautious on Oracle (ORCL - Free Report) as the company's aggressive artificial intelligence buildout strains its balance sheet. S&P Global Ratings downgraded Oracle's long-term issuer credit rating one notch to BBB- from BBB earlier this month, along with a short-term rating cut from A-2 to A-3, while maintaining a stable outlook. The move leaves Oracle just one step above speculative-grade status. Moody's Ratings, meanwhile, holds a negative outlook on the company, signaling that a further downgrade remains possible over the medium term. These agency actions coincided with Oracle's five-year credit default swap spread climbing to roughly 2.03 percentage points, its highest level in nearly 18 years, as bond investors demanded greater compensation and existing Oracle debt sold off amid doubts over whether the AI investments will pay off.
The rating cuts followed Oracle's fourth-quarter and full fiscal 2026 results, released in June, which showed record demand alongside deepening cash strain. Total revenues for the quarter reached $19.2 billion, up 21% year over year, with cloud revenues climbing 47% to $9.9 billion; cloud infrastructure revenues alone surged 93%. Remaining performance obligations, Oracle's forward demand backlog, ended the quarter at $638 billion, up 363% from a year earlier and $85 billion higher sequentially. For the full year, revenues reached $67.4 billion and non-GAAP earnings per share rose 27% to $7.63. Yet free cash flow was negative $23.7 billion for fiscal 2026, as capital spending on data centers outpaced operating cash generation.
To fund this expansion, Oracle raised $43 billion in debt and $5 billion in equity during fiscal 2026 and plans roughly $40 billion more in fiscal 2027, including a previously announced $20 billion equity issuance, while stating it does not intend to issue additional bonds this calendar year. Management points to the backlog as evidence that spending tracks committed contracts, guiding to $90 billion in fiscal 2027 revenues, leaving the pace of backlog conversion as the key variable investors are watching against rising leverage.
Microsoft & Amazon Show Similar AI-Driven Cash PressureUnlike Oracle, Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) still hold top-tier investment-grade ratings, though both show comparable strain from AI spending. Microsoft's free cash flow fell to $15.8 billion in its most recent quarter, down from $20.3 billion a year earlier, as capital expenditure rose sharply. Amazon's free cash flow was further squeezed to $1.2 billion as capital spending climbed 77% year over year and long-term debt reached $119.1 billion. Neither Microsoft nor Amazon has faced a rating downgrade so far, but the leverage build-up at both companies shows that AI infrastructure costs are pressuring balance sheets industry-wide, not just at Oracle.
ORCL’s Price Performance, Valuation & EstimatesShares of Oracle have lost 31.9% in the past six-month period, underperforming the Zacks Computer and Technology sector’s appreciation of 15.8%.
ORCL’s 6-Month Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ORCL stock is currently trading at a discount with a trailing 12-month Price/Earnings ratio of 14.44x, which is lower than the Zacks Computer - Software industry average of 19.4x. Oracle carries a Value Score of B.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2027 earnings is pegged at $8.03, which suggests 5.24% growth year over year.
ORCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Balefire LLC reduced its position in Oracle Corporation (NYSE:ORCL – Free Report) by 68.0% in the 1st quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 5,104 shares of the enterprise software provider’s stock after selling 10,839 shares during the quarter. Balefire LLC’s holdings in Oracle were worth $751,000 as of its most recent SEC filing.
Several other large investors have also recently added to or reduced their stakes in the business. Brighton Jones LLC increased its position in shares of Oracle by 189.3% during the fourth quarter. Brighton Jones LLC now owns 153,580 shares of the enterprise software provider’s stock worth $25,593,000 after acquiring an additional 100,494 shares during the period. Revolve Wealth Partners LLC raised its position in shares of Oracle by 8.1% during the 4th quarter. Revolve Wealth Partners LLC now owns 5,418 shares of the enterprise software provider’s stock worth $903,000 after acquiring an additional 404 shares in the last quarter. Sivia Capital Partners LLC lifted its position in shares of Oracle by 21.5% during the 2nd quarter. Sivia Capital Partners LLC now owns 4,348 shares of the enterprise software provider’s stock worth $951,000 after buying an additional 768 shares during the last quarter. United Bank lifted its position in Oracle by 6.8% in the second quarter. United Bank now owns 15,038 shares of the enterprise software provider’s stock valued at $3,288,000 after acquiring an additional 963 shares during the last quarter. Finally, Schnieders Capital Management LLC. lifted its holdings in shares of Oracle by 19.2% in the 2nd quarter. Schnieders Capital Management LLC. now owns 52,856 shares of the enterprise software provider’s stock valued at $11,556,000 after purchasing an additional 8,530 shares during the last quarter. 42.44% of the stock is owned by hedge funds and other institutional investors.
Insider Activity In other news, Vice Chairman Jeffrey Henley sold 400,000 shares of the stock in a transaction that occurred on Wednesday, June 24th. The shares were sold at an average price of $159.16, for a total value of $63,664,000.00. Following the sale, the insider directly owned 400,000 shares in the company, valued at $63,664,000. This represents a 50.00% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 40.90% of the stock is owned by company insiders.
Analyst Ratings Changes Several research analysts have commented on ORCL shares. BMO Capital Markets lifted their price target on Oracle from $200.00 to $220.00 and gave the stock an “outperform” rating in a research report on Thursday, June 11th. TD Cowen raised their target price on shares of Oracle from $250.00 to $300.00 and gave the stock a “buy” rating in a research report on Monday, June 8th. UBS Group lifted their target price on shares of Oracle from $250.00 to $285.00 and gave the company a “buy” rating in a report on Tuesday, June 2nd. Weiss Ratings upgraded shares of Oracle from a “hold (c)” rating to a “hold (c+)” rating in a research report on Friday, May 29th. Finally, Guggenheim reiterated a “buy” rating and set a $400.00 price target on shares of Oracle in a research note on Thursday, June 11th. Two 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 assigned a Sell rating to the company. Based on data from MarketBeat.com, Oracle currently has an average rating of “Moderate Buy” and a consensus target price of $265.03.
View Our Latest Research Report on Oracle
Oracle News Summary Here are the key news stories impacting Oracle this week:
Negative Sentiment: CLSA initiated coverage on Oracle with a Hold rating and a $145 price target, warning that the company’s AI cloud expansion could require hundreds of billions of dollars in investment and may be difficult to fund without significant borrowing. Article title Negative Sentiment: Multiple reports say Oracle is falling on concerns about rising debt, massive AI infrastructure capex, and potential credit risk linked to large AI customers such as OpenAI, reinforcing fears that the company’s growth strategy could pressure profitability and balance-sheet flexibility. Article title Negative Sentiment: Investors are also reacting to Oracle’s recent credit downgrade toward junk territory and the broader selloff in the stock, which has highlighted execution risk despite the company’s large backlog and AI demand narrative. Article title Neutral Sentiment: Oracle also announced a partnership with IMSA Labs and launched an Oracle Cloud Innovation Studio, showing continued efforts to expand its AI and cloud ecosystem, though this news is not strong enough to offset the current sentiment drag. Article title Oracle Price Performance Oracle stock opened at $121.38 on Tuesday. The company has a market cap of $349.63 billion, a P/E ratio of 20.82, a price-to-earnings-growth ratio of 0.79 and a beta of 1.72. Oracle Corporation has a one year low of $120.03 and a one year high of $345.72. The business has a fifty day moving average of $175.85 and a two-hundred day moving average of $168.74. The company has a debt-to-equity ratio of 3.21, a quick ratio of 1.12 and a current ratio of 1.12.
Oracle (NYSE:ORCL – Get Free Report) last issued its earnings results on Wednesday, June 10th. The enterprise software provider reported $2.11 earnings per share for the quarter, topping the consensus estimate of $1.96 by $0.15. The company had revenue of $19.18 billion for the quarter, compared to analyst estimates of $19.10 billion. Oracle had a net margin of 25.37% and a return on equity of 58.62%. The firm’s revenue for the quarter was up 20.6% compared to the same quarter last year. During the same period in the prior year, the business posted $1.70 earnings per share. Oracle has set its Q1 2027 guidance at 1.720-1.760 EPS and its FY 2027 guidance at 8.050-8.050 EPS. As a group, analysts predict that Oracle Corporation will post 6.47 earnings per share for the current fiscal year.
Oracle Announces Dividend The firm also recently disclosed a quarterly dividend, which will be paid on Friday, July 24th. Investors of record on Friday, July 10th will be given a $0.50 dividend. The ex-dividend date is Friday, July 10th. This represents a $2.00 annualized dividend and a dividend yield of 1.6%. Oracle’s payout ratio is currently 34.31%.
Oracle Company Profile (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.
Featured Articles Five stocks we like better than Oracle The Ugliest Stocks in the Market Just Got a Very Expensive Vote of Confidence Is Domino’s Stock Serving Up a Buying Opportunity? A $1T Black Hole: SpaceX Eyes Pentagon AI to Break Free Why Gold Miners Could Be the Market’s Biggest Comeback Story Want to see what other hedge funds are holding ORCL? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Oracle Corporation (NYSE:ORCL – Free Report).
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The past few weeks have seen the bond market start asking a question the stock market has mostly been happy to ignore: Who can actually afford the AI buildout?
On July 9, S&P Global Ratings gave its answer for one of the biggest spenders. It cut Oracle Corp.'s NYSE: ORCL long-term credit rating to BBB-, the lowest rung of investment grade and just one notch above junk.
The stock has since fallen to around $125, down nearly 30% over the past month and nearly 50% over the past year.
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Oracle Corporation (ORCL) Price Chart for Tuesday, July, 21, 2026
What makes the downgrade worth more than a passing glance is what it reveals about the wider group. Every major AI spender is pouring money into building out their supply capabilities, but they're all doing it from different financial positions, and the gap between them is widening fast.
The Downgrade Isn't Really About Oracle's BusinessOracle Today
$124.98 +3.60 (+2.97%)
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52-Week Range$120.03▼
$345.72Dividend Yield1.60%
P/E Ratio21.51
Price Target$265.03
S&P's reasoning for the Oracle downgrade was blunt.
The agency admitted it had underestimated the scale of investment required for Oracle's AI ambitions, and now expects the company's free operating cash flow deficit to widen to roughly $42 billion in fiscal 2027, nearly double its earlier forecast.
The other red flag was customer concentration. S&P estimates that around half of Oracle's $638 billion in remaining performance obligations is tied to OpenAI alone, and it described that single relationship as a key credit risk.
The concern is understandable—Oracle has taken on long-term commitments on facilities and equipment to serve OpenAI's demand, so even if the latter's payments were to slow, Oracle's obligations would still need to be paid in full.
Where Each Spender Actually SitsSo what does that mean for Oracle's peers? Well, if you put the four biggest AI spenders side by side, then the divide becomes obvious.
The top two are Microsoft Corp. NASDAQ: MSFT, which carries an AAA rating, and Alphabet Inc. NASDAQ: GOOGL, which carries an AA+ rating. Next up is Amazon.com Inc. NASDAQ: AMZN, still at the higher end of the scale at AA, while Oracle sits alone down at BBB-.
The uncomfortable answer to the question, though, is that none of them can fully fund this from existing cash generation anymore. All four have seen their free cash flow compressed dramatically by the scale of the spending, and all four have been active issuers in the bond market to help cover the gap. What separates them isn't whether they borrow, but how heavily they're leaning on it, and how much of the repayment depends on revenue that hasn't arrived yet.
The Headroom GapMicrosoft and Alphabet started this cycle with the strongest balance sheets and the most cushion, which is why they still sit near the top of the ratings scale despite spending heavily. Amazon is only just holding on to its positive free cash flow. Still, its accelerating AWS growth is giving investors a reason to stay cautiously bullish on the spending for now.
Oracle is the only one, so far, that seems to have run out of room, and its move into negative free cash flow is a bright red flag. The leverage numbers underscore the point: Oracle sits several times above Amazon on debt-to-equity and nearly 20 times above Alphabet, which is actually running a net cash position.
More importantly, it has no rating cushion left, whereas its peers have several notches to go before their own credit standing comes under real pressure.
Why the Funding Gap MattersOverall MarketRank™100th Percentile
Analyst RatingModerate Buy
Upside/Downside118.3% Upside
Short Interest LevelHealthy
Dividend StrengthModerate
News Sentiment0.51 Insider TradingSelling Shares
Proj. Earnings Growth35.70%
See Full Analysis
This distinction appears in three places that directly impact shareholders. The first is increased interest expense. Oracle's higher risk profile means that every additional dollar of debt costs more than it would for its better-rated peers, which will hurt its profitability.
The second is a lower likelihood of buybacks. Companies generating strong free cash flow, like Alphabet, can keep buying back their shares while continuing to invest in growth, whereas negative free cash flow will make it far more difficult for Oracle to do the same.
The third is what happens if demand for AI cools. A company funding most of its capital expenditure from operations can simply spend less and wait. A company funding itself predominantly with debt still owes the money it's borrowed, regardless of whether the expected revenue arrives, and its valuation becomes far harder to defend when investors start to doubt it will.
So Who Can Actually Afford It?Line the four up against the question, and a clear order emerges. Microsoft and Alphabet are best positioned to fund this from what the business itself generates, with the strongest balance sheets, the lowest leverage, and, in Alphabet's case, more cash than debt.
Amazon sits in the middle. It's spending more than anyone, and its cash generation is stretched thin as a result. Still, the accelerating growth at AWS suggests the money is meeting existing demand rather than demand it's hoping to create.
Oracle is the outlier on both halves of the question. It's leaning hardest on borrowing and on revenue that hasn't arrived yet, with a backlog that has to convert and a single customer accounting for around half of it. That combination is why it's the only one of the four with no rating cushion left.
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Andra AP fonden increased its position in shares of Oracle Corporation (NYSE:ORCL – Free Report) by 85.3% during the first quarter, according to the company in its most recent 13F filing with the SEC. The firm owned 224,586 shares of the enterprise software provider’s stock after buying an additional 103,374 shares during the quarter. Andra AP fonden’s holdings in Oracle were worth $33,039,000 at the end of the most recent quarter.
Several other institutional investors and hedge funds have also added to or reduced their stakes in the company. HFM Investment Advisors LLC grew its holdings in shares of Oracle by 290.9% during the fourth quarter. HFM Investment Advisors LLC now owns 129 shares of the enterprise software provider’s stock valued at $25,000 after buying an additional 96 shares during the last quarter. Basepoint Wealth LLC acquired a new stake in shares of Oracle in the 4th quarter worth about $26,000. FSA Wealth Management LLC bought a new position in Oracle in the 3rd quarter valued at about $28,000. Osbon Capital Management LLC acquired a new position in Oracle during the 4th quarter valued at about $28,000. Finally, Joseph Group Capital Management acquired a new position in Oracle during the 4th quarter valued at about $29,000. Institutional investors own 42.44% of the company’s stock.
Oracle News Roundup Here are the key news stories impacting Oracle this week:
Negative Sentiment: CLSA initiated coverage on Oracle with a Hold rating and a $145 price target, warning that the company’s AI cloud expansion could require hundreds of billions of dollars in investment and may be difficult to fund without significant borrowing. Article title Negative Sentiment: Multiple reports say Oracle is falling on concerns about rising debt, massive AI infrastructure capex, and potential credit risk linked to large AI customers such as OpenAI, reinforcing fears that the company’s growth strategy could pressure profitability and balance-sheet flexibility. Article title Negative Sentiment: Investors are also reacting to Oracle’s recent credit downgrade toward junk territory and the broader selloff in the stock, which has highlighted execution risk despite the company’s large backlog and AI demand narrative. Article title Neutral Sentiment: Oracle also announced a partnership with IMSA Labs and launched an Oracle Cloud Innovation Studio, showing continued efforts to expand its AI and cloud ecosystem, though this news is not strong enough to offset the current sentiment drag. Article title Insider Activity In related news, Vice Chairman Jeffrey Henley sold 400,000 shares of Oracle stock in a transaction that occurred on Wednesday, June 24th. The shares were sold at an average price of $159.16, for a total value of $63,664,000.00. Following the sale, the insider owned 400,000 shares of the company’s stock, valued at approximately $63,664,000. The trade was a 50.00% decrease in their position. The transaction was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. 40.90% of the stock is currently owned by insiders.
Wall Street Analyst Weigh In Several analysts have recently commented on ORCL shares. TD Cowen increased their price objective on Oracle from $250.00 to $300.00 and gave the stock a “buy” rating in a research note on Monday, June 8th. Oppenheimer upped their price target on Oracle from $235.00 to $275.00 and gave the stock an “outperform” rating in a report on Monday, June 8th. Barclays increased their price target on Oracle from $240.00 to $250.00 and gave the company an “overweight” rating in a research report on Thursday, June 11th. Moffett Nathanson set a $325.00 price objective on Oracle in a research note on Thursday, June 11th. Finally, Weiss Ratings raised shares of Oracle from a “hold (c)” rating to a “hold (c+)” rating in a report on Friday, May 29th. Two investment 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 assigned a Sell rating to the company. According to data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and a consensus target price of $265.03.
Read Our Latest Stock Analysis on Oracle
Oracle Stock Performance Shares of Oracle stock opened at $121.38 on Tuesday. The business’s fifty day simple moving average is $175.85 and its 200 day simple moving average is $168.74. The company has a current ratio of 1.12, a quick ratio of 1.12 and a debt-to-equity ratio of 3.21. Oracle Corporation has a 12 month low of $120.03 and a 12 month high of $345.72. The firm has a market capitalization of $349.63 billion, a P/E ratio of 20.82, a price-to-earnings-growth ratio of 0.79 and a beta of 1.72.
Oracle (NYSE:ORCL – Get Free Report) last announced its earnings results on Wednesday, June 10th. The enterprise software provider reported $2.11 earnings per share (EPS) for the quarter, beating the consensus estimate of $1.96 by $0.15. The firm had revenue of $19.18 billion during the quarter, compared to analyst estimates of $19.10 billion. Oracle had a return on equity of 58.62% and a net margin of 25.37%.The business’s revenue was up 20.6% compared to the same quarter last year. During the same period last year, the firm posted $1.70 EPS. Oracle has set its Q1 2027 guidance at 1.720-1.760 EPS and its FY 2027 guidance at 8.050-8.050 EPS. As a group, analysts anticipate that Oracle Corporation will post 6.47 EPS for the current year.
Oracle Dividend Announcement The business also recently announced a quarterly dividend, which will be paid on Friday, July 24th. Stockholders of record on Friday, July 10th will be given a dividend of $0.50 per share. This represents a $2.00 dividend on an annualized basis and a dividend yield of 1.6%. The ex-dividend date of this dividend is Friday, July 10th. Oracle’s dividend payout ratio is currently 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.
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Two crises are converging on a single family fortune at the worst possible moment.
On July 20, 2026, U.S. District Judge Araceli Martinez-Olguin issued a 14-day temporary restraining order blocking Paramount Skydance from closing its $110 billion acquisition of Warner Bros. Discovery (NASDAQ:WBD | WBD Price Prediction). It is the first real legal obstacle the deal has hit, even after the Department of Justice signed off in June. A hearing on a preliminary injunction, which could delay the transaction for months, is set for August 3, 2026.
For the Ellison family, the freeze lands at a moment of acute financial fragility. The deal is the centerpiece of David Ellison’s ambition to build a media empire, and his father, Oracle (NYSE:ORCL) founder Larry Ellison, is personally underwriting a huge slice of it, at the exact moment his own wealth is evaporating.
The Legal Fight, and Why States Are Suing On July 13, a coalition of 12 Democratic state attorneys general, led by California Attorney General Rob Bonta, sued to stop the deal, arguing it violates Section 7 of the Clayton Antitrust Act. Combining two of Hollywood’s five remaining major studios would hand the merged company roughly 27% of wide-release theatrical distribution, 30% of anticipated blockbuster films, and 27% of the basic cable bundle.
“The unlawful merger of these two entertainment behemoths would lead to higher prices, lower quality, and less content for film and television, harming movie theaters, basic cable distributors, and ultimately, audiences on every sofa and movie theater seat in the U.S.,” Bonta said.
Paramount counters that the suit “distorts settled antitrust law and is based on a misrepresentation of competition in the entertainment industry today,”, pointing to the streaming era’s crowded field of competitors. The August 3 hearing will test which reading the court finds persuasive.
A $213 Billion Wealth Collapse According to Bloomberg Billionaires Index data cited in reporting, Larry Ellison’s net worth peaked near $388 billion in September 2025, when Oracle traded at $345.72 a share, making him only the second person ever, after Elon Musk, to cross $400 billion at his height. By mid-July 2026, that fortune had fallen to roughly $175 billion, a decline of about $213 billion in under 10 months, dropping him from No. 2 to No. 8 on the index.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Oracle didn't make the cut. Grab the names FREE today.
Why Oracle Fell Oracle closed at $121.38 on July 20, down about 34% over the past month and roughly 50% over the past year. The drawdown stands at more than 55% since that September 2025 peak.
The collapse stems from Oracle’s aggressive AI bet. Capital expenditures exploded to $55.66 billion in fiscal 2026, blowing past the company’s own $50 billion guidance, and flipped free cash flow to negative $23.7 billion. Much of that spending is tied to AI infrastructure commitments linked heavily to OpenAI, whose own IPO has slipped to 2027. The Q4 FY2026 8-K shows Remaining Performance Obligations of $638 billion, up 363% YoY, most of it locked into contracts that will not translate to cash for years.
The Personal Guarantee at the Center The two crises fuse here. The Ellison Family Trust guarantees $45.7 billion in equity financing for the Warner Bros. Discovery deal, with Larry Ellison personally on the hook for $40.4 billion of that. The backing is roughly 1.16 billion Oracle shares, now worth about half what they were when he made the pledge. Forbes has questioned whether Ellison holds enough liquid cash to honor the guarantee without selling Oracle stock or borrowing against it.
If the deal ultimately fails, Paramount would owe a $7 billion regulatory termination fee, on top of the $2.8 billion breakup fee it already paid Netflix (NASDAQ:NFLX). A ticking fee of $0.25 per share per quarter begins accruing after September 30, 2026, if closing continues to slip.
Hollywood’s Resistance The deal has drawn opposition beyond the courtroom. In April 2026, more than 5,000 industry professionals, including Sofia Coppola, Kevin Bacon, Jane Fonda, and Robert De Niro, signed an open letter opposing the merger, citing concerns about consolidation’s effect on creative work.
Compounding Risk Both threats hit the same transaction at once. The restraining order jeopardizes the deal’s legal path to closing. The Oracle collapse weakens the financial backstop propping it up. A guarantee pledged against Oracle shares looked far more comfortable when those shares were worth double, and the deal looked far more certain before a federal judge pressed pause. The injunction hearing is set for August 3, and Oracle’s stock continues to trade well off its highs.
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Zámořské trhy v poslední čtvrtině obchodního dne reflektovaly eskalační vyjádření prezidenta Trumpa i Íránských představitelů a z mírně kladných čísel briskně přetočily do záporu. Nevydržela tak dobrá nálada z úvodu seance a široký index S&P 500 klesá potřetí v řadě.
Index Dow Jones -0,59 % na 51839,26 b.
S&P 500 -0,19 % na 7443,28 b.
Nasdaq Composite -0,05 % na 25508,07 b.
Index S&P 500 -0,19 % na 7443,28 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Komunikační služby +0,7 % Zdravotní péče -1,2 % Energie +0,5 % Základní materiály -0,9 % Informační technologie +0,1 % Průmysl -0,8 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Global Payments (GPN) +5,9 % Carvana (CVNA) -4,8 % Lumentum Holdings (LITE) +4,5 % Honeywell Aerospace (HONA) -4,3 % Teradyne (TER) +3,5 % Oracle Corp (ORCL) -4,0 % Axon Enterprise (AXON) +3,4 % KKR (KKR) -3,9 % Marvell Technology (MRVL) +3,3 % United Parcel Service (UPS) -3,9 %
Martin Varecha
Fio banka, a.s.
Prohlášení
Oracle ORCL shares fell more than 3.5% on Monday after CLSA initiated coverage with a Hold rating, warning that the software company could require as much as $500 billion in capital to support its artificial intelligence cloud expansion through 2030.
The brokerage said Oracle's internal cash generation would be sufficient to fund only around one-fifth of that investment, reinforcing investor concerns over the company's debt-funded AI infrastructure strategy.
The decline came despite gains in the broader market, with the S&P 500 and Nasdaq both trading higher during the session.
Oracle stock fell to its 52-week low of $120.03 and extended a 62% decline from its record high of $345.72.
CLSA initiated coverage on Oracle with a Hold rating and a $145 price target, highlighting the scale of investment required for the company's AI ambitions.
According to the brokerage, Oracle may need up to $500 billion in capital by 2030 to build out its AI cloud infrastructure.
The firm's analysis suggested internally generated cash would cover only about 20% of that amount, leaving Oracle reliant on debt and other external financing sources.
The report added to existing investor concerns over Oracle's aggressive spending plans at a time when free cash flow has already turned deeply negative.
The company has significantly increased capital expenditures as it expands its AI infrastructure.
For the fiscal year ended May 31, Oracle spent $55.7 billion on capital expenditures, compared with $21.2 billion a year earlier.
Long-term liabilities also increased to $176.9 billion from $114.7 billion in the prior fiscal year.
Oracle has said it plans to raise another $40 billion during the current fiscal year through a combination of debt and equity financing to continue funding AI-related investments.
Investor sentiment was further weighed down after famed investor Michael Burry clarified over the weekend that he had covered only half of his Oracle short position.
Some reports had suggested Burry had exited the trade entirely, but he confirmed that he continues to hold a meaningful bearish position through January 2027 put options with strike prices in the low-to-mid $100 range.
Separately, Oracle suffered another setback after New Mexico regulators rejected for a second time the natural gas pipeline permit required to power Project Jupiter, the company's large AI data center campus being developed with OpenAI.
Regulators cited environmental concerns and insufficient benefits to the state, adding uncertainty over both the project's timeline and costs.
Taken together, the CLSA initiation, Burry's continued short exposure, and the regulatory setback reinforced investor concerns about Oracle's execution risks and financial commitments.
AI investment remains key long-term debateDespite recent pressure on the shares, Oracle continues to report strong operating performance.
Its latest quarterly results showed solid revenue and earnings growth, although investors remain focused on whether the company's heavy AI spending will ultimately generate sufficient returns.
One area receiving particular attention is Oracle's relationship with OpenAI.
The company signed a $300 billion cloud agreement with OpenAI last year, but some investors remain cautious given increasing competition in artificial intelligence and ongoing questions surrounding OpenAI's long-term profitability.
Some market observers believe much of the negative outlook may already be reflected in Oracle's valuation.
The stock currently trades at a forward price-to-earnings multiple below 16, compared with approximately 22 for the broader S&P 500.
Oracle shares are also trading around levels last seen three years ago.
It wasn't that long ago that Oracle (ORCL 3.05%) was a top tech stock benefiting from the hype around artificial intelligence (AI). But that excitement has quickly turned to concern about elevated spending on AI, high debt levels, and perhaps too much dependence on OpenAI. The result: a stock that's now lost roughly half its value in the past 12 months.
Oracle, however, remains a big name in the tech sector, and it still has plenty of growth opportunities stemming from AI. With it now down over 60% from its highs, is now a good time to buy the stock?
Image source: Getty Images.
Oracle's big risk is that its investments won't pay off When Oracle reported its latest earnings numbers last month, the business showed strong growth on both its top and bottom lines. But the bigger issue for investors is what lies ahead for the business, and whether all the spending on AI will prove worth it, especially given that one of its key customers is OpenAI, whose future doesn't look all that solid these days as it struggles with profitability and growing competition.
For the fiscal year ending May 31, Oracle's capital expenditures totaled $55.7 billion, easily more than double what it spent a year ago -- $21.2 billion. It also reported long-term liabilities of $176.9 billion, up from $114.7 billion in the prior-year period. The company continues to invest heavily in AI cloud infrastructure, with it projecting to raise $40 billion for the current fiscal year, through a combination of debt and equity.
This aggressive spending on AI has been a concern in the tech sector lately, and it has weighed heavily on Oracle's stock, particularly after the company signed a $300 billion cloud deal with OpenAI last year.
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Is Oracle's stock cheap enough that it's worth the risk? There is a risk that Oracle's aggressive investments in AI simply won't pan out as expected. But if a stock is trading at a low enough price, it can sometimes be a calculated risk for investors. Right now, Oracle is trading at a forward price-to-earnings multiple below 16 (based on analyst expectations), which is far less than the S&P 500 average of 22. It's also trading around where it was three years ago.
For long-term investors, Oracle's stock could make for a compelling buying opportunity today. With so much bearishness priced in, it could be a good contrarian pick up given its reduced valuation. While there may be some short-term risk, this is still a top tech company that generates strong profit margins, which is why I wouldn't be surprised if it recovers in the long run.
Cantillon Capital Management LLC increased its holdings in shares of Oracle Corporation (NYSE:ORCL – Free Report) by 49.1% in the first quarter, according to the company in its most recent filing with the Securities and Exchange Commission. The firm owned 1,283,185 shares of the enterprise software provider’s stock after purchasing an additional 422,508 shares during the period. Cantillon Capital Management LLC’s holdings in Oracle were worth $188,769,000 as of its most recent filing with the Securities and Exchange Commission.
Several other hedge funds also recently added to or reduced their stakes in ORCL. DDD Partners LLC purchased a new position in Oracle in the 4th quarter worth approximately $1,677,000. New Mexico Educational Retirement Board raised its stake in shares of Oracle by 4.2% during the fourth quarter. New Mexico Educational Retirement Board now owns 76,590 shares of the enterprise software provider’s stock valued at $14,928,000 after purchasing an additional 3,100 shares during the period. Planning Center Inc. raised its stake in shares of Oracle by 142.2% during the fourth quarter. Planning Center Inc. now owns 6,376 shares of the enterprise software provider’s stock valued at $1,243,000 after purchasing an additional 3,743 shares during the period. Wealth Enhancement Advisory Services LLC lifted its position in shares of Oracle by 13.0% during the fourth quarter. Wealth Enhancement Advisory Services LLC now owns 917,304 shares of the enterprise software provider’s stock worth $178,001,000 after purchasing an additional 105,368 shares in the last quarter. Finally, U.S. Capital Wealth Advisors LLC lifted its position in shares of Oracle by 15.4% during the fourth quarter. U.S. Capital Wealth Advisors LLC now owns 42,616 shares of the enterprise software provider’s stock worth $8,306,000 after purchasing an additional 5,692 shares in the last quarter. 42.44% of the stock is owned by hedge funds and other institutional investors.
Oracle News Summary Here are the key news stories impacting Oracle this week:
Positive Sentiment: Some analysts remain bullish, arguing Oracle’s huge cloud backlog could eventually translate into much stronger revenue and that the stock may be oversold after its steep decline. Oracle Stock Crash Erases $213 Billion from Billionaire Founder Larry Ellison’s Net Worth Positive Sentiment: Oracle’s database and multicloud AI businesses continue to show strong growth momentum, suggesting the long-term AI demand story is still intact. Can Oracle’s Database Business Sustain Long-Term Margins? Neutral Sentiment: Commentary from Jim Cramer and other market writers added to the volatility, with some calling Oracle a cautionary tale while others argued the selloff may be overdone. Jim Cramer Says Oracle Is “Going Down” and Avoid Every Liquor Stock. Here’s What He’d Buy Instead Negative Sentiment: New Mexico blocked the pipeline for Oracle’s 2.5 GW data-center project, increasing the chance of delays and adding uncertainty to its AI infrastructure expansion. New Mexico Blocks Pipeline for Oracle’s (ORCL) 2.5 GW Data Center Project Negative Sentiment: Investors are worried Oracle’s AI spending spree is being financed with too much debt, pushing the company’s credit profile close to junk territory. Oracle’s (ORCL) AI Spending Spree Pushes Its Credit Rating Near Junk Negative Sentiment: Oracle’s stock has also been hit by broader articles emphasizing that the company is falling fast as markets question whether the AI growth story can justify the spending and financing risks. Oracle Stock Slides To 52-Week Low Amid AI Spending Fears Insider Activity In other news, Vice Chairman Jeffrey Henley sold 400,000 shares of the stock in a transaction dated Wednesday, June 24th. The shares were sold at an average price of $159.16, for a total transaction of $63,664,000.00. Following the transaction, the insider owned 400,000 shares of the company’s stock, valued at approximately $63,664,000. This trade represents a 50.00% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. 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 research firms recently weighed in on ORCL. Morgan Stanley reaffirmed a “mixed” rating on shares of Oracle in a report on Thursday, June 11th. BTIG Research reiterated a “buy” rating and issued a $400.00 price objective on shares of Oracle in a report on Friday, June 5th. Scotiabank reissued an “overweight” rating on shares of Oracle in a research report on Thursday, June 11th. Cantor Fitzgerald restated an “overweight” rating and set a $284.00 target price on shares of Oracle in a research note on Thursday, June 11th. Finally, Guggenheim reaffirmed a “buy” rating and set a $400.00 target price on shares of Oracle in a research report on Thursday, June 11th. Two analysts have rated the stock with a Strong Buy rating, twenty-eight have given a Buy rating, eight have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the company has an average rating of “Moderate Buy” and a consensus target price of $268.27.
Read Our Latest Research Report on ORCL
Oracle Stock Up 0.1% Shares of NYSE:ORCL opened at $126.48 on Monday. The company has a current ratio of 1.12, a quick ratio of 1.12 and a debt-to-equity ratio of 3.21. The company has a fifty day simple moving average of $177.30 and a 200 day simple moving average of $169.28. The firm has a market cap of $364.32 billion, a PE ratio of 21.69, a price-to-earnings-growth ratio of 0.79 and a beta of 1.72. Oracle Corporation has a 12-month low of $121.50 and a 12-month high of $345.72.
Oracle (NYSE:ORCL – Get Free Report) last posted its quarterly earnings results on Wednesday, June 10th. The enterprise software provider reported $2.11 earnings per share (EPS) for the quarter, beating 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 firm had revenue of $19.18 billion for the quarter, compared to analysts’ expectations of $19.10 billion. During the same period in the prior year, the company posted $1.70 earnings per share. The firm’s quarterly revenue 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. On average, equities research analysts anticipate that Oracle Corporation will post 6.47 EPS for the current fiscal year.
Oracle Announces Dividend The business also recently announced a quarterly dividend, which will be paid on Friday, July 24th. Stockholders of record on Friday, July 10th will be paid a $0.50 dividend. This represents a $2.00 dividend on an annualized basis and a dividend yield of 1.6%. The ex-dividend date is Friday, July 10th. Oracle’s dividend payout ratio is 34.31%.
Oracle Profile (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 Strait of Hormuz Tensions Spike Tanker Trade: These 2 Stocks Are Set to Benefit Shopify’s Quiet AI Strategy Could Be Its Biggest Advantage Yet Why These 3 Nuclear ETFs Are Getting a Fresh Look as AI Power Demand Rises 3 Aerospace Suppliers That Could Benefit as Aircraft Makers Face Bottlenecks Want to see what other hedge funds are holding ORCL? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Oracle Corporation (NYSE:ORCL – Free Report).
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Dimensional Fund Advisors LP increased its position in Oracle Corporation (NYSE:ORCL – Free Report) by 1.7% during the first quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). The institutional investor owned 8,586,492 shares of the enterprise software provider’s stock after purchasing an additional 147,048 shares during the period. Dimensional Fund Advisors LP owned approximately 0.30% of Oracle worth $1,262,827,000 at the end of the most recent reporting period.
Other institutional investors also recently bought and sold shares of the company. HFM Investment Advisors LLC raised its holdings 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 buying an additional 96 shares during the last quarter. Basepoint Wealth LLC purchased a new stake in shares of Oracle during the fourth quarter valued at approximately $26,000. FSA Wealth Management LLC bought a new stake in shares of Oracle during the third quarter valued at approximately $28,000. Osbon Capital Management LLC bought a new stake in shares of Oracle during the fourth quarter valued at approximately $28,000. Finally, Joseph Group Capital Management purchased a new position in Oracle in the 4th quarter worth approximately $29,000. 42.44% of the stock is owned by hedge funds and other institutional investors.
Insider Transactions at Oracle In related news, Vice Chairman Jeffrey Henley sold 400,000 shares of the business’s stock in a transaction that occurred 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 transaction, the insider directly owned 400,000 shares of the company’s stock, valued at approximately $63,664,000. The trade was a 50.00% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Company insiders own 40.90% of the company’s stock.
Key Oracle News Here are the key news stories impacting Oracle this week:
Positive Sentiment: Some analysts remain bullish, arguing Oracle’s huge cloud backlog could eventually translate into much stronger revenue and that the stock may be oversold after its steep decline. Oracle Stock Crash Erases $213 Billion from Billionaire Founder Larry Ellison’s Net Worth Positive Sentiment: Oracle’s database and multicloud AI businesses continue to show strong growth momentum, suggesting the long-term AI demand story is still intact. Can Oracle’s Database Business Sustain Long-Term Margins? Neutral Sentiment: Commentary from Jim Cramer and other market writers added to the volatility, with some calling Oracle a cautionary tale while others argued the selloff may be overdone. Jim Cramer Says Oracle Is “Going Down” and Avoid Every Liquor Stock. Here’s What He’d Buy Instead Negative Sentiment: New Mexico blocked the pipeline for Oracle’s 2.5 GW data-center project, increasing the chance of delays and adding uncertainty to its AI infrastructure expansion. New Mexico Blocks Pipeline for Oracle’s (ORCL) 2.5 GW Data Center Project Negative Sentiment: Investors are worried Oracle’s AI spending spree is being financed with too much debt, pushing the company’s credit profile close to junk territory. Oracle’s (ORCL) AI Spending Spree Pushes Its Credit Rating Near Junk Negative Sentiment: Oracle’s stock has also been hit by broader articles emphasizing that the company is falling fast as markets question whether the AI growth story can justify the spending and financing risks. Oracle Stock Slides To 52-Week Low Amid AI Spending Fears Oracle Stock Performance Shares of ORCL opened at $126.48 on Monday. The business has a 50-day simple moving average of $177.30 and a two-hundred day simple moving average of $169.28. The company has a quick ratio of 1.12, a current ratio of 1.12 and a debt-to-equity ratio of 3.21. Oracle Corporation has a 52 week low of $121.50 and a 52 week high of $345.72. The stock has a market cap of $364.32 billion, a price-to-earnings ratio of 21.69, a PEG ratio of 0.79 and a beta of 1.72.
Oracle (NYSE:ORCL – Get Free Report) last posted its quarterly earnings data on Wednesday, June 10th. The enterprise software provider reported $2.11 earnings per share for the quarter, beating analysts’ consensus estimates of $1.96 by $0.15. Oracle had a return on equity of 58.62% and a net margin of 25.37%.The firm had revenue of $19.18 billion for the quarter, compared to analysts’ expectations of $19.10 billion. During the same period in the previous year, the firm earned $1.70 EPS. The business’s quarterly revenue 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. On average, analysts expect that Oracle Corporation will post 6.47 EPS for the current year.
Oracle Dividend Announcement The firm also recently announced a quarterly dividend, which will be paid on Friday, July 24th. Investors of record on Friday, July 10th will be paid a dividend of $0.50 per share. This represents a $2.00 annualized dividend and a yield of 1.6%. The ex-dividend date of this dividend is Friday, July 10th. Oracle’s dividend payout ratio (DPR) is 34.31%.
Analysts Set New Price Targets ORCL has been the topic of several analyst reports. TD Cowen upped their price objective on Oracle from $250.00 to $300.00 and gave the company a “buy” rating in a research report on Monday, June 8th. Evercore reaffirmed an “outperform” rating and issued a $245.00 price objective on shares of Oracle in a report on Monday, June 8th. BTIG Research reiterated a “buy” rating and set a $400.00 price objective on shares of Oracle in a research report on Friday, June 5th. BMO Capital Markets increased their target price on Oracle from $200.00 to $220.00 and gave the company an “outperform” rating in a report on Thursday, June 11th. Finally, Moffett Nathanson set a $325.00 target price on Oracle in a research report on Thursday, June 11th. Two 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’s stock. Based on data from MarketBeat, the stock currently has a consensus rating of “Moderate Buy” and an average target price of $268.27.
Read Our Latest Research Report on Oracle
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.
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Artificial intelligence has become the defining investment theme of the decade, with hyperscalers committing hundreds of billions to data centers, chips, power, and software. The spending has rewarded companies across the AI supply chain, but markets are shifting from excitement to accountability.
Investors now want proof that massive capital expenditures can produce lasting returns. Banks and Goldman Sachs traders are warning that AI infrastructure spending is increasingly fueled by debt, while credit markets show growing concern as borrowing accelerates faster than near-term cash generation.
AI Spending Has Become a Debt-Fueled Race The AI arms race is rapidly reshaping balance sheets. Companies are issuing bonds at unprecedented scale to fund data centers, expand energy capacity, and secure scarce computing resources. The six largest AI infrastructure spenders — Microsoft (NASDAQ:MSFT | MSFT Price Prediction), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Meta Platforms (NASDAQ:META), Oracle (NYSE:ORCL), Nvidia (NASDAQ:NVDA), and SpaceX (NASDAQ:SPCX) — have issued a combined $244 billion in bonds this year, more than double last year’s total and 14 times 2024 levels.
This surge in borrowing reflects the enormous capital requirements behind AI. Building the infrastructure needed to support advanced models requires billions of dollars before those investments begin producing meaningful revenue. Unlike traditional software businesses, where additional users can often be added at minimal cost, AI requires expensive physical infrastructure.
Goldman Sachs reports that hyperscaler leverage ratios have doubled from 0.9x to 1.8x in roughly six months. Market indigestion is evident: Goldman’s AI bond basket spreads widened sharply, and the supply pain threshold has collapsed — where $75 billion once stressed the market, just $25 billion now puts it on the defensive.
The concern is not that AI lacks potential — it is that the timeline for turning massive investments into profitable businesses remains uncertain.
While companies like Microsoft and Alphabet benefit from fortress balance sheets and strong free cash flow, the broader ecosystem — including smaller players and aggressive capex plans — faces greater strain. Goldman Sachs estimates $5.8 trillion in combined AI capital expenditures for major hyperscalers through 2030, already consuming most operating cash flow and necessitating heavy borrowing.
Companies are effectively committing trillions of dollars today based on expectations that AI will create productivity gains and new revenue streams over years. If those returns arrive slower than anticipated, investors may become less patient.
The Risk of Delayed Returns The core concern is timing. Massive upfront costs for data centers create cash flow gaps if revenue and productivity gains lag. Companies may eventually need to slow expansion, refinance debt at higher rates, or accept lower returns on invested capital.
A slower-than-expected payoff could trigger rating pressure, higher financing costs, equity dilution, or forced capex cuts — with potential spillover into simultaneous stock and bond weakness, especially amid Federal Reserve policy uncertainty.
AI may become just as transformative as the internet, but not every company spending money on the trend will emerge as a winner.
Rising caution does not negate the opportunity, but it signals a decisive shift. The first phase rewarded infrastructure suppliers. The next phase will separate companies that deliver measurable returns on invested capital from those that do not.
Revenue growth, margin expansion, customer adoption, and free cash flow will become the scoreboard. History shows that spending booms without timely monetization often end in painful repricings.
Key Takeaway The AI boom has entered a high-stakes accountability phase. Massive spending and debt issuance alone can no longer sustain valuations. Investors need clear evidence of revenue growth, expanding margins, and sustainable cash flows.
The best-positioned companies combine strong balance sheets, existing profit engines, and credible paths to monetization. The AI revolution is real — but it still requires a robust business model that delivers returns before the credit markets force one.
Shares of Oracle (ORCL +1.77%) touched a fresh 52-week low of $121.50 on Friday. The database and cloud infrastructure company now trades about 63% below its high of $345.72, and its market capitalization has shrunk to about $365 billion.
The new low wasn't even the month's worst news.
On July 9, S&P Global Ratings cut Oracle's credit rating from BBB to BBB-, leaving the company one notch above junk status. The driver was the enormous cost of the AI (artificial intelligence) infrastructure build-out Oracle has signed up for.
The market, in short, is now treating Oracle's AI opportunity as a balance-sheet problem. But with the stock trading at about 16 times the earnings management just guided for this fiscal year, it's worth asking whether the fear has traveled further than the facts warrant.
Image source: Getty Images.
What S&P is worried about The numbers behind the downgrade are uncomfortable. Oracle spent $55.7 billion on capital expenditures in fiscal 2026 (the year ended May 31, 2026) as it raced to build data centers for AI customers. The company generated $32 billion in operating cash flow, up 54% year over year -- and still spent it all, posting free cash flow of negative $23.7 billion for the year.
S&P expects the gap to widen. The agency projects Oracle's fiscal 2027 capital expenditures will reach $90 billion to $95 billion, and it sees the company's free operating cash flow deficit widening to about $42 billion. Oracle already carried nearly $130 billion in borrowings at the end of fiscal 2026. And after issuing $5 billion of mandatory convertible preferred stock in February, the company plans another $20 billion equity issuance later this calendar year.
There's a concentration problem, too. S&P noted that roughly half of Oracle's $638 billion in remaining performance obligations (the contracted revenue Oracle has signed but not yet delivered) comes from a single customer: OpenAI. If the ChatGPT maker ever struggles to fund its commitments, Oracle could be left holding data centers built for demand that never arrives.
That, to me, is the sharpest risk on the list.
The strain shows up in guidance, too. Management expects revenue to climb about 34% this fiscal year, to $90 billion. But it guided for non-GAAP (adjusted) earnings per share of $8.05 -- about 18% growth once one-time investment gains are stripped from fiscal 2026's figure. That's healthy, but it's still barely half the pace of revenue, because depreciation and interest are climbing alongside the build-out.
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Demand isn't the problem Oracle's fiscal 2026 results, meanwhile, were excellent. Revenue rose 17% year over year to $67.4 billion, and growth accelerated over the year, with fiscal fourth-quarter revenue climbing 21%. The company's cloud infrastructure business, the part of Oracle actually selling AI computing capacity, grew 93% year over year in fiscal Q4 to $5.8 billion. And full-year net income under generally accepted accounting principles (GAAP) rose 37% to $17.1 billion.
The backlog, concentration risk aside, is extraordinary.
Remaining performance obligations ended the year at $638 billion, up 363% year over year and up $85 billion from the prior quarter alone. A year earlier, the figure was about $138 billion. Notably, about $75 billion of the recent large AI contracts involve customers prepaying for graphics processing units (GPUs) or supplying the chips themselves -- an arrangement that shifts some of the build-out's cost off Oracle's books.
Then there's the price. With shares near $127 as of this writing, Oracle trades at roughly 22 times earnings and about 16 times the adjusted earnings management just guided to for fiscal 2027. However, that's a multiple more commonly attached to slow-growing legacy software companies than to a business guiding for 34% revenue growth.
So, has the panic overshot? Partly, I think.
The fear itself is rational. Negative free cash flow, a credit rating one notch above junk, and half the backlog riding on one unprofitable customer are real risks. And the coming share issuance will dilute existing shareholders. But at today's valuation, an awful lot of failure is already priced in -- and if the backlog converts anywhere near schedule, earnings growth could reaccelerate once the heaviest spending is behind the company.
I'm not buying yet, because the thing that would make this stock work (confidence that OpenAI's commitments turn into cash) isn't something Oracle controls. For investors with a strong stomach who believe AI demand is durable, though, a small position arguably starts to make sense at this price. I'd consider changing my mind if free cash flow stops deteriorating ahead of schedule, or if OpenAI's funding keeps showing up quarter after quarter. Those two things matter more than the next rating action.
I haven't bought too many AI stocks in my portfolio yet, except for a few data center REITs and one major chipmaker. But recently, I pulled the trigger and added shares of Oracle (ORCL +1.77%) to my portfolio after shares declined by more than 60% from their 52-week high.
The short version is that the market has legitimate concerns about Oracle's massive backlog and the debt it is taking on to fulfill its contracted orders. But if the company's strategy works out, the stock could be an incredible bargain at the current share price. Here's a rundown of why Oracle's stock has been beaten down, why I bought, and why I may add even more to my position.
Image source: Getty Images.
Oracle: The good and the bad The biggest bull case for Oracle is also the same reason many investors are skeptical. The company has a $638 billion remaining performance obligation (RPO), which represents the contracted future revenue its customers have committed to. This is 363% higher than it was a year ago, and as you can probably guess, the surge in AI infrastructure spending is the main reason.
For its 2027 fiscal year, which started June 1, Oracle is guiding for $90 billion in revenue. For reference, in its 2026 fiscal year, the company generated about $67 billion. And keep in mind that the $638 billion figure represents only contracts that have already been signed -- as customer needs grow, this figure could increase.
However, many investors are justifiably skeptical about the massive backlog. And it's fair to say that if we knew Oracle would actually get all $638 billion of that contracted revenue, the stock wouldn't be as beaten down as it is.
For one thing, about half of the backlog comes from a single customer -- AI platform giant OpenAI. That company recently delayed its IPO, which added to major concerns about its ability to meet its obligations. In addition, Oracle is not only spending all of its income to set itself up to fulfill its backlog but is also taking on debt. The company added $43 billion in debt to its balance sheet in the 2026 fiscal year, and expects to raise an additional $40 billion between debt and equity in the current fiscal year.
In short, Oracle's spending plan is frightening investors, and it's not hard to see why. The company is spending billions of real dollars (much of which it doesn't have) in pursuit of promised revenue.
A substantial discount for a wonderful business After the recent decline, Oracle trades for less than 16 times forward earnings. The stock has a 1.6% dividend yield and has produced a net margin of nearly 27% over the past four quarters. This is a highly profitable business that is sacrificing short-term cash flow to take full advantage of the tailwinds from the AI infrastructure build-out.
Of course, there are some legitimate risks. It's entirely possible that OpenAI won't be able to raise the capital needed to cover all of the spending it has committed to (Oracle isn't the only one with a large, multi-year agreement with the AI giant). We could see a general downturn in AI capex instead of the multi-year spending surge investors are expecting.
I don't view those as particularly likely scenarios. OpenAI hasn't had much of an issue raising money at lofty valuations whenever it has tried to. And all recent signs point toward more infrastructure capex than originally expected in 2027 and beyond, not less.
The key question is whether a significant portion of the backlog will convert into actual revenue before Oracle's spending plan becomes unmanageable. If the answer is yes, Oracle at 16 times forward earnings could be a steal.
The bottom line is that Oracle has been a wonderful business for decades, and for most of its 35-year publicly traded history, it has been a mistake to bet against it. With the stock trading at its lowest price since 2023, before the AI investment boom even kicked into high gear, I decided to open a position in my portfolio. And if it stays this cheap, I plan on adding more shares very soon.
Steve Eisman si do svého podcastu pozval Torstena Sloka, hlavního ekonoma investiční společnosti Apollo. Na úvod řekl, že americkému hospodářství nyní výrazně pomáhá AI investiční boom. Přidává přibližně 1 procentní bod k celkovému asi 2% růstu. A pozitivně působí i akciový trh přes efekt bohatství, který posiluje spotřebu. Probíhá také „průmyslová renesance“, a to ve více sektorech. V neposlední řadě je tu stimulační fiskální politika. Pak se diskuse přesunula k celé řadě dalších témat včetně umělé inteligence a rozpočtových deficitů a dluhů.
Slok odhaduje, že letos americké hospodářství poroste něco nad 2 % a poukázal na to, že jmenované tahouny růstu nejsou citlivé na sazby, což je téma relevantní pro monetární politiku a centrální banku. Pravděpodobnost snižování sazeb je kvůli této celkové situaci podle ekonoma nulová. Ekonomická aktivita je totiž hodně silná, tématem je spíše inflace. Trhy také počítají s tím, že na konci roku půjdou sazby Fedu nahoru, což je velký obrat ve srovnání s předchozími očekáváními. Bydlení, které je naopak velmi citlivé na sazby, by si nemuselo v takovém nastavení vést nejlépe, a to samé by mělo platit o prodejích automobilů, které jsou také citlivější na sazby.
Experti pak poukázali na to, že umělá inteligence se stala odvětvím velmi náročným na kapitál a investice. Eisman posléze uvažoval o tom, že jde zároveň o oblast, kde bude existovat jen malá konkurenční výhoda. Tato kombinace pak není investičně nijak zajímavá. Slok dodal, že dosavadní podnikatelské modely velkých technologických firem jsou mimořádně ziskové a tím doposud financovaly investice do AI. Co ale budoucí konkurenční výhoda? Eisman k tomuto tématu přidal přirovnání s leteckými společnostmi a dodavateli dílů pro letadla. V prvním případě panuje ostrá konkurence, která snižuje ziskovost, druhý případ je „velmi dobrým byznysem“. Slok si myslí, že může nastat situace, kdy někteří hyperscaleři budou mít konkurenční výhodu a někteří ne.
V takovémto scénáři by některé společnosti byly schopné prodávat za vyšší ceny, protože by měly „lepší produkty“. Jiné společnosti by ale byly v horší pozici, protože jejich služby by nebyly na takové úrovni. Eisman si pak zaspekuloval úvahou o tom, že by ve druhé skupině byla OpenAI. Podle něj by pak byly dopady takové situace velmi citelné a šly by daleko za hranice této společnosti. Například Oracle má velký objem zakázek, ale jejich značná část je právě od OpenAI. Slok k tomu dodal, že ve hře jsou i otevřené modely z Číny, které mohou mít výrazně nižší ceny. Výhodou amerických technologických firem ale může být neochota zákazníků poskytovat svá data do Číny.
Eisman se následně ptal na „ekonomiku tvaru K“. Tedy na rozdíl v tom, jak si vedou různé části hospodářství, kdy některé z nich zaostávají, ale jiné prosperují. Ekonom v této souvislosti poukázal na rozdíl mezi domácnostmi s nižšími příjmy a domácnostmi nejbohatšími. Ty druhé těží mimo jiné z rostoucího akciového trhu a vyšších sazeb. Mají tak vysoký tok hotovosti ze svých investic, který je třeba v oblasti dluhopisů nejvyšší za dlouhou řadu let. Zde tedy lze jasně rozeznat tvar „K“. To samé platí o inflaci. Ta je nejvyšší u položek, kterým jsou nejvíce vystaveny chudší domácnosti. Podstatná část jejich příjmů totiž jde na nákup energií a potravin.
Jim Cramer delivered a blunt message to investors during the member Q&A on Friday, July 17th’s episode of CNBC Mad Money Investing Club.
He said: sell Oracle, avoid liquor stocks entirely, and lean into cyclicals, defensives, and select semiconductors for late 2026.
Why Cramer Says Sell Oracle A member asked what to do with Oracle (NYSE:ORCL | ORCL Price Prediction) after holding it for two years. Oracle has fallen about 6% over the past 2 years, although the stock does pay a 1.6% dividend yield today. Cramer’s answer ignored that the caller might be down on their position: “I don’t care where you bought a stock. I care where it’s going to, and I think that stock is going down. It doesn’t fit in for what I would consider to be an IRA. I think it’s too risky. I think you should sell it.”
Oracle’s Q4 FY2026 filing shows Cloud Infrastructure revenue jumped 93% year over year to $5.79 billion and remaining performance obligations exploded to $638 billion, up 363%. Full-year free cash flow was negative $23.69 billion, against capex of $55.66 billion, with management planning to raise roughly $40 billion in FY2027 through debt and equity. The stock fell 47.64% over the past year and 33.43% in the past month to $126.78.
Avoid Liquor Stocks, Including Diageo On spirits, Cramer was categorical: “I know this liquor business is cold… I would not touch any liquor company right now. There are a lot of ones, the gins, the vodkas, the browns, they’re all doing terribly. You don’t need to try to call a bottom.”
Even Diageo (NYSE:DEO) fits the warning, with reported net sales rising only modestly in fiscal Q3 2026 while North America, the company’s largest region, weakened materially and US Spirits contracted. Management has flagged North America as its biggest challenge, citing soft market conditions and the need for a more competitive offer. The stock is down 49.1% over the past five years.
Cramer’s Favorite Sectors for Late 2026 Talking about what he does like, Cramer said: “I like the banks. I like the pharmaceuticals… I know it sounds crazy, but I love travel and aerospace. And then I will like tech when the big unwind is over, particularly some of the less speculative semiconductors that I think are really great.”
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Banks JP Morgan (NYSE:JPM), a leading money-center bank delivered a strong Q2 2026, with a large EPS beat, double-digit revenue growth, standout Equity Markets performance, and a sizable new share repurchase authorization. Shares are up 22.34% over the past year.
Pharmaceuticals Johnson & Johnson (NYSE:JNJ), a diversified healthcare industry leader, grew Q1 revenue at a high-single-digit pace, raised its dividend for a 64th consecutive year, and lifted FY26 adjusted EPS guidance. The stock is up 55.49% over the past year.
Travel Delta Airlines (NYSE:DAL), a major US carrier, posted a Q2 adjusted EPS beat, with premium revenue up double digits and a 15% dividend increase starting in the September quarter. Delta is up 25.89% year-to-date.
Aerospace and Defense RTX Corporation (NYSE:RTX), a leading aerospace and defense company, beat on Q1 EPS, grew free cash flow sharply year over year, and ended the quarter with a record multi-hundred-billion-dollar backlog spanning commercial and defense. Shares are up 31.49% over the past year.
Less-Speculative Semiconductors Nvidia (NASDAQ:NVDA), the world’s dominant AI silicon supplier, reported Q1 FY2027 revenue growth above 80% year over year, with Data Center revenue up sharply and a fresh multi-billion-dollar buyback authorization. Management has described the AI factory buildout as the largest infrastructure expansion in modern history.
Jim Cramer’s End of 2026 Outlook On Friday, Cramer said he believes Oracle and liquor stocks belong in the sell pile, while banks, pharmaceuticals, travel, aerospace, and select semiconductor companies offer more attractive opportunities heading into late 2026.
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SummaryOracle Corporation faces heightened risks as its AI infrastructure buildout is heavily tied to OpenAI's success, now lagging Anthropic in model leadership and IPO momentum.ORCL's aggressive AI CapEx has significantly pressured free cash flow margins, increased debt, and triggered a credit downgrade to BBB-.Despite steep execution risks and market fear, ORCL trades at 15.4x forward earnings, well below its five-year average, suggesting the sell-off may be overdone.With compute constraints persisting and a potential double bottom forming, this could be an opportune entry for investors willing to bet on margin recovery.If you have been waiting for an opportunity to get into ORCL, it might be time to finally endure the pain and catch the falling knives well before the turnaround begins.Looking for a helping hand in the market? Members of Ultimate Growth Investing get exclusive ideas and guidance to navigate any climate. Learn More » Mesut Dogan/iStock Editorial via Getty Images
Oracle is getting caught up in an incredible selloff again It must have been a torrid two months for Oracle Corporation (ORCL) investors as they continue to endure another market selloff. Thankfully, as I
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Oracle (NYSE: ORCL | ORCL Price Prediction) has been the AI cloud story of the year, then the AI cloud panic of the last month. Shares are down 35.29% year to date and 33.43% over the past month, yet the underlying business is growing faster than at any point in Oracle’s history.
Our 24/7 Wall St. price target for Oracle is $198.72 over the next 12 months, implying 59.99% upside from current levels. Our recommendation is buy with high confidence.
24/7 Wall St. Price Target Summary Metric Value Current Price $124.21 24/7 Wall St. Price Target $198.72 Upside 59.99% Recommendation BUY Confidence Level 90% Why Oracle Just Cratered Oracle sits 26% below its 52-week high of $341.82 and just above the 52-week low of $123.66.
Recent catalysts include S&P Global downgrading Oracle from BBB to BBB- on July 13 tied to AI infrastructure debt, New Mexico rejecting a gas pipeline permit for an Oracle data center, and sector contagion after IBM (NYSE:IBM) shares dropped more than 25% on a Q2 miss.
Yet Q4 FY2026 delivered EPS of $2.11 on revenue of $19.18 billion, with IaaS growing 93% year over year to $5.79 billion and remaining performance obligations exploding 363% to $638 billion. The fundamentals and the tape have completely decoupled.
The Case for $250+ The bull thesis rests on two engines that both accelerated last quarter. First, multi-cloud database revenue grew 531% year over year, with Oracle now live in 33 Microsoft regions, 14 Google regions, and exiting Q4 with 22 AWS regions.
Second, $75 billion of the $638 billion RPO is tied to customer-supplied GPUs, dramatically shrinking Oracle’s capex burden.
Management guides FY2027 revenue of $90 billion with non-GAAP EPS raised to $8.05, and Safra Catz’s five-year OCI roadmap climbs from $18 billion to $144 billion. Our bull case implies $351.26 within 12 months, roughly matching the Street’s $251.85 consensus.
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What Could Go Wrong The bear case starts with the balance sheet. Free cash flow was negative $23.69 billion for FY2026 against capex of $55.66 billion, and Oracle plans to raise roughly $40 billion in debt and equity in FY2027, including a $20 billion at-the-market equity program.
S&P’s downgrade to BBB- leaves Oracle one notch above junk. Bulls counter that greater than 90% of AI capacity is fully funded through partners and negative cash flow reflects heavy investment in capacity buildout. If AI demand cools, the bear case sits at $172.49.
How Oracle Compares to Microsoft and Salesforce Microsoft (NASDAQ: MSFT) is the direct hyperscaler comp. Microsoft trades at a trailing P/E of 29 with Azure growing 40% and commercial RPO of $627 billion. Oracle’s trailing P/E of 23 and $638 billion RPO now match or exceed Microsoft’s backlog at a discount, making our target look conservative.
Salesforce (NYSE: CRM) is the applications-side comparison. Salesforce trades at a P/E of 19 after its own drawdown, growing revenue 13.3% in Q1 FY27. Oracle’s Fusion suite grew 11% on a much larger cloud infrastructure base, suggesting the sum-of-parts case is stronger for ORCL.
Company Forward P/E Recent Cloud Growth Oracle 16 IaaS +93% Microsoft 29 Azure +40% Salesforce 19 Agentforce ARR +205% The Setup After the Selloff Our 24/7 Wall St. price target of $198.72 implies 59.99% upside with 90% confidence. RPO grew 363% while the stock lost a third of its value. That dislocation rarely lasts.
The bullish setup depends on the FY2027 $90 billion revenue target holding through the first two earnings reports. The key risk to watch is whether equity issuance dilutes shareholders faster than RPO converts to recognized revenue.
Year 24/7 Wall St. Price Target 2026 $141 2027 $198.72 2028 $257 2029 $332 2030 $429 These projections assume Oracle converts its RPO backlog on schedule and OCI compounds toward management’s $144 billion five-year target. Significant upside or downside could result from AI capex discipline, GPU sourcing, or the pace of Oracle Health rollout.
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