Down 55% From Its High, Is Oracle a Buy?
2026-09-03 19:37
•Catie Hogan •The Motley Fool
••••• •• Axe Cap view
Oracle’s 55% Drop: Opportunity or Trap?
Oracle’s steep price fall contrasts with strong growth and valuation appeal, but heavy data center spending keeps risks alive.
Oracle’s stock is down 55% from its September 2025 peak, yet the company posted 17% revenue growth and 36% net income expansion. Its cloud infrastructure business, growing 75%, is the real kicker here, supported by a $638 billion contracted backlog that offers strong revenue visibility. The issue behind the selloff is heavy spending on data centers, which turned Oracle’s free cash flow negative and pushed up debt. For JSE investors, the key lens is the USD/ZAR. A weaker rand makes Oracle’s American earnings more valuable locally, but if the rand recovers sharply, those dollar gains shrink. South African tech exposure is limited, so USD/ZAR movements and global tech sentiment will drive local appetite indirectly. The forward P/E of 17 and PEG below 1 suggest the market is pricing in significant near-term risks, but for patient investors, this could be a rare entry point. The main danger: if demand for cloud services slows, Oracle’s capital-heavy strategy could backfire. this is just our opinion and not financial advice
Watch USD/ZAR closely and consider a small, tactical exposure to Oracle as a currency-hedged play on long-term cloud growth. Avoid heavy allocation until cash flow normalizes.
- Oracle (ORCL)
- USD/ZAR
- Continued heavy capex eats cash flow
- Slowing global demand for cloud infrastructure
6/10
Oracle's stock has plummeted 55% from its September 2025 high of $345 to around $155, despite strong fundamentals including 17% revenue growth to $67B, 36% net income growth, and 75% cloud infrastructure revenue growth. The decline is driven by heavy data center spending that turned free cash flow negative and increased debt. With a forward P/E of 17 and a $638B contracted backlog providing revenue visibility, the article suggests Oracle presents an attractive entry point for investors, though risks remain if demand weakens.
Our take is based on reporting first published by The Motley Fool.
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