Oracle Stock Is Off 59% From Its High. Why This Could Be the Best Time to Buy.

Oracle's stock has plummeted over 59% from its peak as investors became wary of the company's substantial AI infrastructure investments. A key concern is Oracle's planned increase in capital spending, as the company expects capital expenditures to surge in fiscal 2027 to capitalize on strong AI demand. Despite this, Oracle's backlog of contracted business is expected to gradually convert into revenue, with total revenue projected to grow by about 34% in fiscal 2027.

The company has also secured $67 billion in AI infrastructure contracts, with many being prepaid or involving customers providing their own hardware. This has pushed the value of Oracle's combined prepaid and customer-supplied AI contracts to $75 billion. However, Oracle is expected to raise $40 billion through a mix of debt and equity to fund this expansion, which may create concerns for shareholders regarding increased debt and potential dilution.

Despite this, Oracle's strong demand for its cloud infrastructure, large contracted backlog, and significant prepaid and customer-supported AI commitments provide a solid foundation for future growth. Analysts remain positive, with a "Strong Buy" consensus rating for Oracle. The current drop in ORCL shares presents a potential buying opportunity for long-term investors, as the company's revenue and earnings are expected to compound at annual rates of 31% and 28% through the end of the decade.