Down 50% Over the Past Year, Is It Time to Back Up the Truck and Buy Oracle Stock as Revenue Surges?

Oracle (NYSE: ORCL) shares were unable to gather any momentum despite soaring revenue and a robust backlog. The stock is down around 50% over the past year, as investors continue to fret more about the company's capex spending than its growth.

With one of the best growth opportunities in the cloud computing space, let's see if now is the time to go all in on Oracle shares.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

AI infrastructure spending fears

At one point last year, investors were celebrating Oracle's push to become a cloud leader, with the stock more than doubling in less than six months. However, that sentiment has done a complete 180-degree turn, with the stock round-tripping its gains.

At this point, the Oracle story largely centers around its cloud infrastructure buildout and associated growth. The company currently has a huge backlog, with $664 billion in remaining performance obligations (RPOs), a metric that measures the remaining value of its already-signed contracts with customers. These are generally non-cancelable contracts for artificial intelligence (AI) data centers it needs to build, and Oracle has turned to innovative methods to help fund its infrastructure buildout to reduce its own capex, including getting upfront payments and having customers buy their own hardware.

Its RPOs were up $209 billion year over year, and $26 billion sequentially. Oracle forecasted that it will spend between $90 billion and $95 billion in capex this year. However, it said net cash capex will be $70 billion or below.

While Oracle's data center capex is a lot less than the big three cloud providers of Amazon, Microsoft, and Alphabet, the company's balance sheet is not as strong and its cash flow is not as robust. However, its $23.1 billion in operating cash flow was a big jump from the $8.1 billion generated in Q1 of last year, and its total operating cash flow in fiscal 2026 was only $32 billion. Still, it spent $28.5 billion in capex in the quarter, so its free cash flow came to an outflow of $5.5 billion. To help pay for its investment, it sold $20 billion in stock in the quarter through an at-the-market equity program.

Oracle also carries a fairly heavy debt load, stemming from a past of large acquisitions and aggressively stock buybacks. It ended last quarter with $125.3 billion in debt against $37.1 billion in cash and marketable securities. The combination of its debt and current negative cash flow makes its AI infrastructure bet a riskier one versus its large cloud competitors.