Oracle (ORCL) Is Down 12.7% After Hiking AI Capex To $50 Billion And Posting Q2 Results - Has The Bull Case Changed?

• Earlier this week, Oracle reported fiscal Q2 2026 results showing revenue of US$16.06 billion and net income of US$6.14 billion, alongside a sharp increase in AI‑driven cloud infrastructure backlog and a quarterly dividend declaration of US$0.50 per share.
• At the same time, Oracle’s decision to lift its fiscal 2026 capital expenditure plan to about US$50 billion, largely to fund AI data centers for customers such as OpenAI, Meta, and Nvidia, has intensified concerns about its growing debt load and the timing of cash returns from its very large remaining performance obligations.
• We’ll now examine how Oracle’s much higher AI‑related capital spending plan reshapes the earlier investment narrative built around accelerating cloud demand.

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Oracle Investment Narrative Recap

To own Oracle today, you have to believe its huge AI and cloud backlog can eventually outweigh the strain from debt‑funded data center spending and negative free cash flow. The latest earnings beat, revenue miss, and US$50 billion CapEx plan sharpen that trade off, making the timing of AI‑driven cash conversion the key near term catalyst and the rising leverage profile the central risk.

Among the recent announcements, Pipefy’s rollout of OCI based AI Agents in the US nicely illustrates how Oracle is trying to turn its heavy AI infrastructure buildout into practical, enterprise workflow usage. If businesses like Pipefy can help drive more diverse, “everyday” AI workloads on OCI, that could support the thesis that Oracle’s massive remaining performance obligations are tied to real adoption rather than a narrow set of headline AI contracts.

But while growth headlines grab attention, investors should also be aware that Oracle’s expanding debt load and elevated credit risk metrics could...

Read the full narrative on Oracle (it's free!)

Oracle's narrative projects $99.5 billion revenue and $25.3 billion earnings by 2028. This requires 20.1% yearly revenue growth and roughly a doubling in earnings from $12.4 billion today.

Uncover how Oracle's forecasts yield a $342.28 fair value, a 80% upside to its current price.

Exploring Other Perspectives

Fair value estimates from 27 Simply Wall St Community members span roughly US$171 to US$390, showing how far apart views on Oracle can be. That spread sits against a business where AI driven remaining performance obligations rely heavily on a few large customers, so readers may want to compare multiple views before deciding how sustainable the current growth story looks.

Explore 27 other fair value estimates on Oracle - why the stock might be worth over 2x more than the current price!

Build Your Own Oracle Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Oracle research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Oracle research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Oracle's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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