Oracle (NYSE:ORCL | ORCL Price Prediction) shares are making a strong comeback today, shaking off ongoing worries about the company’s hefty spending, climbing debt, and the risks of its all-in bet on artificial intelligence (AI) cloud infrastructure.
The stock had taken a brutal hit, dropping around 60% from its September high above $345 down to recent lows near $136 per share. It closed around $143 on Friday, but is jumping 10% in morning trading today after some encouraging words from analysts, pushing it above $156 per share.
That kind of rollercoaster ride really highlights how torn the market feels: Oracle is betting big to become a top player in AI training infrastructure, but plenty of people are nervous about whether they can actually deliver and how much stress it puts on their balance sheet in a cloud world dominated by Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Google.
Massive Infrastructure Push Is Getting a Lot of Attention
Oracle just laid out plans to pull in $45 billion to $50 billion in cash this calendar year through a blend of debt and equity offerings. All of it is aimed at expanding Oracle Cloud Infrastructure (OCI) to handle huge demand. The spending backs long-term deals with heavy hitters like Advanced Micro Devices (NASDAQ:AMD), Meta Platforms (NASDAQ:META), Nvidia (NASDAQ:NVDA), OpenAI, TikTok, and xAI.
For their fiscal 2026, they’re guiding for about $50 billion in capital expenditures, and their future operating lease commitments have swelled to $248 billion as of last November — far bigger than what Microsoft or Amazon are carrying. Those long-term obligations have flipped trailing free cash flow into negative territory, even though operating cash flow remains solid at more than $22 billion.
A Huge Backlog Shows Real Demand
When Oracle reported its fiscal second quarter in mid-December, the standout number was remaining performance obligations (RPO) hitting $523 billion — a staggering 438% increase from the year before, including a $68 billion jump just from the prior quarter. Cloud infrastructure revenue soared 68% to $4.1 billion, while total cloud sales rose 34% to $8 billion. The team held steady on their full-year revenue outlook of $67 billion and keeps forecasting faster cloud growth ahead.
Today’s rally was sparked in part by D.A. Davidson analyst Gil Luria upgrading Oracle to Buy from Neutral while keeping his $180 price target. He made a compelling case: the core software business by itself basically covers the company’s current enterprise value at around 18 times earnings, so everything from OCI is essentially bonus potential.
Luria sounded more reassured about OpenAI’s ability to keep up their spending after recent strategy tweaks, new model launches, and a cash position of roughly $40 billion (with possible room to raise even more, up to $100 billion). He also assigned a $5 billion to $9 billion value to Oracle’s 15% stake in the U.S. TikTok joint venture, which locks in a reliable customer generating about $1 billion in annual OCI revenue.
Key Takeaways
Right now, two very different views are battling it out on Oracle. The skeptics focus on the execution hurdles, potential share dilution, roughly $130 billion in debt, those outsized lease commitments, and free cash flow that could stay negative for years if demand falters or timelines slip.
Meanwhile, the bulls emphasize the unmatched visibility from that $523 billion backlog, the impressive 68% cloud infrastructure growth, and how the legacy software side looks undervalued with significant upside from the cloud expansion — helped along by stronger signals from OpenAI and the TikTok tie-in.
Trading at $156 per share, Oracle presents a tempting opportunity for long-term investors willing to stomach the risks of this high-stakes AI infrastructure wager — so long as the tech giant successfully converts that enormous backlog into real results.
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