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Yahoo Finance | Why Wall Street Is Still Bullish on Oracle Despite Its Steep Selloff

Wall Street remains bullish on Oracle despite its steep selloff, with analysts seeing significant upside driven by the company's strong fundamentals and growth prospects. Oracle's stock is trading near $146 while the consensus analyst price target stands at $246.46, representing a potential upside of over 68%. Although the stock is down 24.9% year to date and has fallen from a 52-week high of $345.72, Oracle recently reported what management called its strongest quarter in over 15 years, underscoring the disconnect between its current market valuation and operational performance.

The primary driver of Wall Street's optimism is Oracle's massive Remaining Performance Obligations (RPO) backlog, which reached $553 billion in Q3 FY2026 — up 325% year over year — fueled by large-scale AI infrastructure contracts. This backlog represents signed contracts not yet converted to revenue and signals strong future demand. Oracle's cloud infrastructure revenue grew 84% year over year to $4.89 billion, and total cloud revenue reached $8.91 billion, up 44%. Management has raised FY2027 revenue guidance to $90 billion and projects Oracle Cloud Infrastructure could scale to $144 billion over five years, much of which is already contracted in the RPO.

Analysts also highlight potential cost savings from workforce reductions, estimating layoffs could free up $8 billion to $10 billion in annual cash flow, which could be redirected toward debt service and AI infrastructure investment. While concerns remain about Oracle's rising debt — now at $124.7 billion — and negative free cash flow projected through 2030, the consensus among 33 of 44 analysts is a Buy rating. The bullish case hinges on the belief that Oracle's AI-driven cloud growth will validate its current investments, making the stock appear cheap at a forward P/E of 18x relative to its growth trajectory, provided macroeconomic and geopolitical headwinds subside.

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