Key Takeaways
- Oracle shares have declined 25% year-to-date and 36% across the trailing 12 months
- The company reports quarterly results on September 10
- Despite lowering its target from $320 to $290, Jefferies maintains bullish stance with stock trading at $145.75
- Fiscal 2026 revenue expanded 17%, while cloud sales surged 39%
- Total borrowings have ballooned to $129.5 billion, raising investor concerns
Oracle (ORCL) shares currently sit at $145.75, representing a 25% decline since the start of the year and a steeper 36% drop over the past year. The database giant’s stock has tumbled approximately 57% from its 52-week peak of $345.72.
This downturn appears paradoxical given Oracle’s fiscal 2026 performance, which saw revenues climb 17%. The company’s cloud division spearheaded this expansion with an impressive 39% increase, surpassing software to become Oracle’s primary revenue generator.
Market participants have grown increasingly anxious about Oracle’s leverage profile and infrastructure investments. Outstanding debt ballooned to $129.5 billion as of May 31, representing a substantial jump from $92.6 billion twelve months prior. Capital outlays totaled $55.7 billion over the past year as the company aggressively expands its AI-focused data center footprint.
Additionally, Oracle maintains approximately $260 billion in off-balance-sheet obligations related to data center facilities, representing nearly triple its anticipated fiscal 2027 capital expenditure budget.
The company’s backlog continues expanding rapidly. From last September through the most recent quarter, it surged from $455 billion to $638 billion. Oracle secured $183 billion in new orders since September 9 of the previous year, compared to $138 billion recorded on that same date.
Initial enthusiasm stemmed largely from a massive $300 billion multi-year partnership with OpenAI unveiled last year. However, market sentiment toward this arrangement has cooled as doubts emerged regarding OpenAI’s capacity to fulfill its financial commitments.
Jefferies Maintains Constructive Stance Despite Price Target Reduction
A team of Jefferies analysts headed by Brent Thill reduced their price objective to $290 from $320 while preserving an optimistic perspective. The firm contends that negative catalysts have been substantially reflected in the current valuation, characterizing sentiment as approaching “peak negativity.”
From its present level of $145.75, Jefferies’ target implies potential upside approaching 100%. The analysts view the shares as “excessively punished” with an attractive asymmetric opportunity.
Top-line growth momentum accelerated throughout fiscal 2026, with quarterly revenue expansion improving from 12% to 21%. Book value more than doubled year-over-year, rising from below $21 billion to $43.1 billion.
Oracle’s price-to-earnings multiple stands at 25, moderately below the S&P 500’s average of 30. This discount suggests potential for multiple expansion should sentiment improve.
Depressed Software Names Attracting Renewed Interest
Oracle isn’t the only software company facing headwinds, though it may be distinctively positioned for recovery. Salesforce (CRM) rallied more than 20% following quarterly results. Elastic (ESTC) and Okta (OKTA) experienced comparable movements. Snowflake jumped 24% in pre-market trading Thursday after reporting second-quarter figures.
This emerging trend of discounted software stocks rebounding sharply on earnings releases is focusing attention on Oracle’s upcoming September 10 announcement.
Jefferies acknowledges persistent challenges remain. Infrastructure spending continues accelerating while cash generation stays negative, and credit ratings face downward pressure.
Oracle’s quarterly earnings release is scheduled for September 10.
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