Key Highlights

• Shares of Oracle have declined 25% year-to-date in 2024 and 36% over the trailing 12-month period
• The company reports quarterly results on September 10
• Jefferies reduced its price objective to $290 from $320 while maintaining a positive stance—implying nearly 100% upside from current levels of $145.75
• Fiscal 2026 revenue increased 17%, with cloud services revenue surging 39%
• The company's total debt of $129.5 billion remains a significant investor concern

Oracle (ORCL) shares are currently trading at $145.75, reflecting a 25% decline year-to-date and a 36% drop over the past year. The stock has plummeted approximately 57% from its 52-week peak of $345.72.

This steep decline has occurred even as Oracle posted 17% revenue growth in fiscal 2026. The cloud division drove performance with 39% expansion, surpassing the software business to become the primary revenue contributor. The shift mirrors a broader transition across enterprise software, where vendors are repositioning around cloud infrastructure and AI workloads as customers move spending away from traditional on-premises licenses.

Market participants have grown increasingly concerned about Oracle's leverage and capital commitments. Total borrowings reached $129.5 billion as of May 31, a substantial increase from $92.6 billion in the prior year. The company invested $55.7 billion in capital expenditures over the past year as it expands AI data center infrastructure. That spending pattern is not unique to Oracle—hyperscale rivals such as Microsoft, Amazon, and Alphabet have likewise committed tens of billions of dollars annually to AI data center buildouts, and investors across the sector have been weighing how quickly that infrastructure translates into cash flow.

Oracle also carries approximately $260 billion in off-balance-sheet data center obligations—roughly triple its anticipated fiscal 2027 capex.

The company's backlog has expanded rapidly. From last September to now, it has grown from $455 billion to $638 billion. Backlog represents contracted but not yet recognized revenue, so the figure signals future bookings visibility—though investors are focused on how quickly it converts and on what margin. Oracle has accumulated $183 billion in new order backlog since September 9 of last year, compared to $138 billion at that time.

A substantial portion of initial investor enthusiasm stemmed from a $300 billion multi-year partnership with OpenAI announced previously. However, market confidence in this arrangement has weakened amid concerns about OpenAI's capacity to fulfill its financial commitments.

Jefferies Maintains Constructive View on Risk/Reward Profile

Analysts at Jefferies, led by Brent Thill, lowered their price objective to $290 from $320 while preserving a constructive perspective. They contend that most negative factors are already reflected in the current valuation, characterizing sentiment as "near peak negative."

From the current price of $145.75, Jefferies' target implies potential appreciation of nearly 100%. The firm described the shares as "overly beaten down" with an attractive risk/reward dynamic.

Quarterly revenue expansion accelerated from 12% to 21% throughout the fiscal year that concluded in May 2026. Book value more than doubled from approximately $21 billion a year earlier to $43.1 billion.

Oracle's price-to-earnings multiple stands at 25, modestly below the S&P 500 average of 30, which provides potential for multiple expansion should investor sentiment improve.

Depressed Software Names Drawing Renewed Interest

Oracle is not the only software company facing headwinds, but it may be particularly well-positioned for recovery. Salesforce (CRM) rallied more than 20% following its earnings release. Elastic (ESTC) and Okta (OKTA) experienced comparable upward moves. Snowflake surged 24% in pre-market trading Thursday after reporting fiscal second-quarter numbers.

This pattern of beaten-down software stocks rallying sharply on quarterly results is drawing increased attention to Oracle ahead of its September 10 announcement.

Jefferies acknowledges that persistent challenges remain. Capital expenditures continue to escalate while free cash flow remains in negative territory, and the company's credit ratings face potential pressure.

Oracle is scheduled to announce earnings on September 10. Beyond the headline numbers, the report will give investors an update on backlog conversion, capital expenditure guidance, and commentary on the OpenAI arrangement—the same questions that have driven the stock's decline over the past year.

Source: Blockonomi