Oracle (ORCL) Stock Drops 20% in 2026 — Is This the Best AI Buying Opportunity Right Now?

TLDR

• Oracle stock is down 52% from its September 2024 peak, trading near $152
• Q3 FY2026 revenue hit $17.2 billion, up 22% year-over-year — beating analyst estimates across all segments
• Cloud infrastructure revenue surged 84% to $4.9 billion in the quarter
• Oracle trades at ~20x forward earnings, near its cheapest valuation in three years
• Analysts project 35% annual revenue growth through 2029, with EPS growth forecast at 28%

Oracle’s stock has had a rough few months. Down 52% from its all-time high hit in late September 2024, the software giant now trades around $152 — and some analysts think that’s too cheap to ignore.

Oracle Corporation, ORCL

The sell-off has been driven by a few concerns. Oracle signed a deal with OpenAI to provide $300 billion in computing power through 2031. The market worried whether OpenAI could actually fund that commitment. On top of that, Oracle is spending big — capital expenditures are expected to hit $57 billion this year, partly funded by $135 billion in total debt.

Broader fears that AI would disrupt traditional software businesses also hit the stock. The so-called “SaaS-pocalypse” — the idea that AI tools would eat into software-as-a-service revenues — spooked investors.

But Oracle’s fiscal Q3 2026 results told a different story.

Total revenue came in at $17.2 billion, growing 22% year-over-year. That’s an acceleration from 14% growth the prior quarter. The company beat analyst estimates across every segment. Co-CEO Michael Sicilia said Oracle is embedding AI features directly into its products, making them more useful — not replacing them.

Cloud Infrastructure Leads the Charge

The standout number was cloud infrastructure revenue, which jumped 84% to $4.9 billion. That’s the business serving AI companies that need massive compute capacity — customers like OpenAI and Anthropic.

It was the first time in 15 years that both total revenue and non-GAAP earnings per share grew 20% or more in the same quarter. Management called it an “exceptional” quarter.

Cantor Fitzgerald analyst Thomas Blakey highlighted Oracle’s recent customer wins in healthcare, finance, and industrial sectors. Oppenheimer also backed the growth story. Mizuho analyst Siti Panigrahi noted that OpenAI’s $110 billion equity raise in February helped ease concerns about Oracle’s contract being funded.

Margins are a genuine watch item. The faster-growing cloud compute business runs at roughly 35% gross margins — lower than the company’s overall gross margin in the high 60s. However, Oracle’s multi-cloud database service carries gross margins of 60% to 80%, which helps offset the drag.

Debt Load Has Likely Peaked

Oracle has nearly $40 billion in cash on hand. Analysts estimate cumulative cash needs of around $75 billion from 2025 through 2028. Even if Oracle borrows an additional $35 billion to cover the gap, older debt repayments should keep total debt from growing further. Management also confirmed it hasn’t used its equity financing program — removing a key dilution concern.

To fund infrastructure build-out, Oracle announced plans to raise $50 billion in 2026 through investment-grade bonds and convertible preferred stock. It had already reached $30 billion of that target at the time of reporting.

Revenue from the OpenAI contract is expected to start coming through in 2027. Analysts forecast annual revenue growth of 35% through 2029, reaching $207 billion. EPS growth is projected at 28% annually.

At roughly 20x forward earnings, Oracle is trading near its cheapest level in three years. At the same multiple as the S&P 500 — 21x — the stock would already be higher. If it returns to 25x earnings, a conservative estimate by historical standards, analysts put the price target at $240 by year-end.

Oracle’s Q3 free cash flow came in better than expected, which management pointed to as evidence the company could run ahead of its own financial projections.

The post Oracle (ORCL) Stock Drops 20% in 2026 — Is This the Best AI Buying Opportunity Right Now? appeared first on CoinCentral.