Oracle Just Hit a New 52-Week Low. Wall Street’s Average Target Is Still More Than Double the Stock
Daniel Sparks, The Motley Fool
Sat, July 25, 2026 at 4:27 AM GMT+5:30
5 min read
- ORCL
-4.21% - NVDA
-0.92%
Six weeks ago, Oracle (NYSE: ORCL) management guided for about $8.05 in non-GAAP (adjusted) earnings per share this fiscal year. As of this writing, the stock trades around $117 — less than 15 times that figure, after setting a new 52-week low of $114.75 on Friday. A multiple like that is usually reserved for mature software companies whose growth is ending, not for a business that just guided for revenue growth of about 34%
However, the analysts covering the software and cloud computing giant haven’t followed the stock’s price all the way down. The average price target on Oracle sits at about $248, more than double the current share price of about $117
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To be clear, an average price target isn’t an investment case, and I wouldn’t buy any stock because of one. But a gap this wide is worth understanding. Each side of it is pricing a different answer to the same question: Will Oracle’s enormous backlog of AI (artificial intelligence) contracts convert into cash before the cost of building for it damages the company?
What the market has stopped paying for
The selling has been relentless. Oracle shares have fallen about 66% from their high of $345.72, and the pressure traces back to spending
Oracle’s capital expenditures reached $55.7 billion in fiscal 2026 (the year ended May 31, 2026), most of it going into data centers for its cloud infrastructure business. Operating cash flow rose 54% to a record $32 billion, and the build-out consumed all of it. Free cash flow for the year came in at a negative $23.7 billion
The bill has started arriving in other forms, too. S&P Global Ratings cut Oracle’s credit rating to BBB- earlier this month, one notch above junk status, citing the cost of the build-out. And Oracle has said it expects to raise $40 billion through debt and equity financing this fiscal year, including a $20 billion share sale that will dilute existing shareholders
When a company is burning more than $20 billion of cash a year, the market stops valuing its earnings and starts scrutinizing its balance sheet. A forward multiple below 15 says the market is worried about more than the durability of growth — but also the risks presented by a deteriorating balance sheet
