Oracle (ORCL) stock trades at $145.75, down 25% year-to-date and 36% over the past 12 months. The stock sits roughly 57% below its 52-week high of $345.72.

The decline has come despite Oracle's revenue growing 17% in fiscal 2026. The cloud segment led the way with 39% growth, overtaking software as the company's largest revenue source. That shift reflects a broader industry realignment, as businesses move workloads to cloud infrastructure providers and AI training demands push spending toward large-scale data centers — a market where Oracle competes with larger rivals Amazon, Microsoft, and Google.

Debt and Spending Commitments Weigh on Investors

Investors have been unsettled by Oracle's debt load and spending commitments. Total debt reached $129.5 billion as of May 31, up from $92.6 billion a year earlier. Capital expenditures over the last year hit $55.7 billion as the company builds out AI infrastructure. The heavy spending mirrors an industry-wide race among cloud and AI infrastructure providers to expand data center capacity for AI workloads.

Oracle also carries around $260 billion in off-balance-sheet data center commitments, roughly three times its projected full-year 2027 capex.

The company's backlog has grown rapidly. Since last September, it has climbed from $455 billion to $638 billion. Oracle added $183 billion in order backlog since September 9 last year, compared to $138 billion on that date. Backlog — contracted revenue not yet recognized — is a commonly watched indicator of future cloud revenue, but it converts to recognized sales only as services are delivered over the life of multiyear contracts.

Much of the original optimism stemmed from a $300 billion multiyear deal with OpenAI announced last year. However, investor confidence in that deal has faded as questions grew about OpenAI's ability to meet its financial obligations.

Jefferies Sees Favorable Risk/Reward

Jefferies analysts, led by Brent Thill, cut their price target to $290 from $320 but maintained a bullish outlook. They believe most of the bad news is already priced in, calling the stock "near peak negative sentiment."

At $145.75, Jefferies still sees the stock nearly doubling to reach its target. The analysts described Oracle as "overly beaten down" with a favorable risk/reward setup.

Quarterly revenue growth accelerated from 12% to 21% during the fiscal year ending May 2026. Book value more than doubled from under $21 billion a year ago to $43.1 billion.

Oracle's P/E ratio stands at 25, slightly below the S&P 500 average of 30, leaving room for the stock to re-rate if investor confidence returns.

Beaten-Down Software Stocks Getting a Second Look

Oracle is not alone in being under pressure, but it may be uniquely positioned for a bounce. Salesforce (CRM) gained over 20% after earnings, and Elastic (ESTC) and Okta (OKTA) saw similar moves. Snowflake jumped 24% pre-market Thursday following its fiscal second-quarter results.

The pattern of beaten-down software stocks surging on earnings is drawing attention to Oracle ahead of its September 10 report.

Jefferies does flag ongoing risks: capital spending is still ramping while free cash flow remains negative, and credit ratings are under pressure. For Oracle, the central question for investors is whether contracted backlog converts into revenue and cash flow fast enough to service the debt taken on to build it out.

Oracle reports earnings on September 10.