What Could Spark the Next Big Move In Oracle Stock

Oracle (ORCL) has demonstrated notable rallies historically. It recorded more than a 50% surge within two months in 2025. Additionally, there were seven instances where ORCL gained over 30% in under two months, notably in 2011 and 2024. If similar conditions arise, these powerful short-term rallies could drive Oracle stock to significant new heights again, rewarding shareholders substantially.

Specifically, we see these catalysts:

1. AI Backlog Monetization Accelerating
2. OCI Margin Inflection Point
3. New Industry-Specific AI Cloud Services

Catalyst 1: AI Backlog Monetization Accelerating

• Details: Accelerating revenue recognition from $455B RPO, OCI revenue growth guided to accelerate to 77% in FY26
• Segment Affected: Oracle Cloud Infrastructure (OCI)
• Potential Timeline: Throughout FY2026
• Evidence: RPO surged 359% to $455B, driven by multi-billion dollar AI contracts, Announced $35B CapEx for 37 new data centers in FY26 to meet demand

Catalyst 2: OCI Margin Inflection Point

• Details: Expanding gross margins beyond initial AI infrastructure rollout phase, Demonstrating a path to 35% gross margin on large AI projects
• Segment Affected: Oracle Cloud Infrastructure (OCI)
• Potential Timeline: Mid-2026 to FY2027
• Evidence: Management addressing margin concerns with specific project examples, Long-term OCI revenue forecast raised to $166B by FY30

Catalyst 3: New Industry-Specific AI Cloud Services

• Details: Unlocking new revenue streams in high-value verticals, Increasing customer stickiness with specialized, high-margin solutions
• Segment Affected: Cloud Applications and Industry Verticals
• Potential Timeline: Early 2026 and onwards
• Evidence: Launch of Oracle Life Sciences AI Data Platform, Introduction of Oracle AI Database 26ai with agentic AI capabilities

But The Stock Is Not Without Its Risks

Here are specific risks we see:

• Unfunded Capex Mandate Leading to Persistent Cash Burn
• Forced Shareholder Dilution via Massive Capital Raise
• RPO-to-Cash Conversion Mismatch

Looking at historical drawdown during market crises is another lens to look at risk.

Oracle fell 77% in the Dot-Com Bubble, 41% in the Global Financial Crisis, and 40% during the inflation shock. Smaller hits like 2018 and Covid still saw 19%+ drops.

Reference: Current Fundamentals

• Revenue Growth: 11.1% LTM and 9.8% last 3-year average.
• Cash Generation: Nearly -21.6% free cash flow margin and 31.9% operating margin LTM.
• Valuation: Oracle stock trades at a P/E multiple of 28.7

*LTM: Last Twelve Months | If you want more details, read Buy or Sell ORCL Stock.

Still not convinced about ORCL stock? Consider Portfolio Approach

Multi Asset Portfolios Offer More Upside With Less Risk

Single markets are unpredictable but different assets react differently. A multi asset portfolio cuts downside shocks while keeping upside on the table.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices