Is Oracle Stock A Buy

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Is Oracle Stock A Buy

Is Oracle (ORCL) Stock A Buy?

The Oracle stock price moved higher after the OpenAI deal was announced. But at the same time, the backlog has now grown to around $523 billion, which is quite a lot.

But Oracle needs to spend a lot of money to capture the business. This has led to an increase in the debt as well as the number of shares. As a result, the Oracle stock is struggling and is already trading at lows.

Oracle Stock Trades At A Discount

But many think that now's the time to buy Oracle stock as it is trading at a discount. On the surface, it appears that buying Oracle stock should be a no-brainer, as its backlog has increased by 438% on an annual basis.

But the key risk for Oracle is still that massive backlog, as it means Oracle must take more debt to serve the customers. During Q2 FY 2026, the debt held by Oracle was $108 billion, which is quite high for a company with a book value of $30 billion.

Also, Oracle is planning to raise $45 billion - $50 billion that will be spent on capital expenditures. That's lower than Amazon's capex spending of $200 billion.

Amidst all of this, the P/E ratio of Oracle is around 28, which is lower than the S&P 500 average of around 29. Also, the forward P/E ratio of Oracle is very attractive, which makes it a good stock to buy despite the massive debt.

Also, the financials of Oracle are improving while its valuation is falling. This makes it the ideal opportunity to buy the Oracle stock.

But if the OpenAI deal fails, then investors will need to reevaluate whether the stock is still worth being present in the portfolio. Also, the huge backlog remains a big issue that must also be considered when buying the Oracle stock.

Last but not least, Oracle has been around for several decades, and it is not just going away because of issues like these! So, that's also something that inspires confidence in the Oracle stock.

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