Oracle’s AI Ambitions Spark Investor Debate

The investment community is sharply divided on Oracle's future, with prominent figures taking opposing stances on whether the software giant can successfully capitalize on the artificial intelligence boom. This fundamental debate centers on the company's ability to manage its aggressive expansion against a backdrop of significant debt and high execution stakes.

A recent analyst upgrade to a "Buy" rating highlights the optimistic case for Oracle. Proponents argue that the stock's pullback has created an attractive entry point by pushing valuations to multi-year lows. The core of their argument rests on formidable growth metrics from Oracle's cloud and AI divisions:

• Cloud Revenue: Year-over-year increase of 34%
• Oracle Cloud Infrastructure (OCI): Growth of 68%, outpacing many rivals
• Remaining Performance Obligations (RPO): A surge of 438% to $523 billion

This massive $523 billion backlog is the cornerstone of the bullish thesis. It is seen as evidence that Oracle has secured long-term revenue visibility through extensive contracts with major AI players, including OpenAI and Meta. Bulls contend the market underestimates the durability of these infrastructure commitments and the substantial future revenue already contracted.

The Bearish Argument: Debt, Valuation, and Execution Risk

On the opposite side, famed investor Michael Burry of "The Big Short" has taken a bearish position through put options. His skepticism focuses on Oracle's balance sheet and valuation following a significant rally during the AI hype cycle. The stock had retreated approximately 40% from its September 2025 peak by the time his position was reported.

Burry's case emphasizes two primary concerns. First, Oracle carries an estimated debt load of $95 to $100 billion. In a high-interest-rate environment, this represents a clear risk, as rising financing costs can directly impact profitability and constrain further investment capacity.

Second, he questions Oracle's ability to seamlessly execute its massive AI infrastructure build-out. The bearish view suggests the market's previous enthusiasm, which drove shares up 36% in September 2025, already prices in highly ambitious AI revenue that may materialize slower or with thinner margins than expected. From this perspective, the stock remains overvalued despite its correction.

Should investors sell immediately? Or is it worth buying Oracle?

Strategic Shifts and Capital Expenditure Pressure

The debate unfolds alongside corporate governance changes, with two long-serving board members, George H. Conrades (86) and Naomi O. Seligman (87), stepping down. Oracle stated the transition is orderly and not due to strategic disagreements.

Strategically, the discussion is inextricably linked to Oracle's landmark cloud partnership with OpenAI, valued at approximately $300 billion and announced in September 2025. That deal initially propelled the stock above $345 before a sharp correction set in, reflecting growing market unease over the enormous required investments.

To support this expansion, Oracle has escalated its capital expenditure plans for fiscal year 2026 to $50 billion. This massive Capex figure is the crux where both bull and bear arguments converge. Optimists see it as the necessary foundation for a dominant long-term AI-cloud business, while pessimists fear the combination of debt and execution risk could overextend the company.

Market Performance and the Path Forward

Oracle's shares closed Friday's session at $198.52, marking a daily gain of 4.68%. While the stock has advanced roughly 25% over the past twelve months, it remains well below its 52-week high.

The coming quarters will bring a key test: Can Oracle meet its Q3 forecast for constant-currency revenue growth of 16 to 18%? Bears doubt the company can maintain both speed and profitability simultaneously. Bulls point to the colossal RPO figure as proof that the growth foundation is already secured.

Despite Burry's high-profile short bet, the broader analyst consensus currently sits at "Moderate Buy," with an average price target of approximately $304.94, suggesting significant potential upside from Friday's close. The decisive factor for the stock's trajectory will be Oracle's ability to justify the high expectations for its AI-cloud segment with concrete financial results in upcoming quarterly reports.