After Plummeting 37% This Year, Is Oracle Stock a Buy Now?

Oracle (NYSE: ORCL) shares have been on a wild ride so far this year. Investors have been left wondering whether it's worth holding on to the tech giant's shares, or if they should avoid the volatile stock altogether.

Oracle is spending a lot of money right now as it builds out more AI infrastructure, which has spooked some shareholders, leading to an Oracle stock sell-off that's left its share price down 37% year to date.

That drop could represent a good buying opportunity. Here's why.

Image source: Oracle.

Oracle's stock fell hard after it revealed $70 billion in spending

Oracle is doing what nearly every other major tech company is doing right now -- accelerating its spending on artificial intelligence data centers. But shareholders weren't happy when management said capital expenditures (capex) could reach as high as $70 billion in fiscal 2027, and they really aren't happy with how Oracle plans to raise the money.

Management said on the fourth-quarter earnings call that it would raise $40 billion through debt and equity financing, $20 billion of which comes from a share sale that it had already announced.

The problem is that Oracle already raised $43 billion in debt in fiscal 2026, which means the company is continually funding its capex spending by raising large amounts of debt. It's not uncommon for tech companies to take on debt, but it's coming at a time when investors are increasingly skeptical that AI spending will eventually pay off.

Adding to investor skepticism is that Oracle is transitioning away from a higher-margin software business toward capital-intensive AI infrastructure, and management said margins will be a "step down" in the near term as a result.

Is it worth picking up some shares of Oracle right now?

Given Oracle's rising debt, it's not surprising that investors freaked out. But it might be a mistake to overlook Oracle stock right now.

First, consider that the company had $638 billion in remaining performance obligations (RPO) -- binding contracts that represent a revenue backlog -- at the end of fiscal 2026, an increase of 363% from the previous year. Management says this large amount of RPO gives "exceptional visibility into our future revenue growth" and said on the Q4 earnings call that 12% of current RPO -- nearly $77 billion -- will be realized as revenue in fiscal 2027.Management also expects another 34% to be realized over the next 13 to 36 months.

Oracle's earnings are expected to recover, too, with management guidance of $90 billion in sales and adjusted non-GAAP earnings per share of $8.05 in fiscal 2027, representing increases of 34% and 18%, respectively, from 2026.

What's more, Oracle shares look cheap right now. The stock has a price-to-earnings (P/E) ratio of just 21, compared to the tech sector average P/E ratio of 34.

It's understandable why investors are concerned about Oracle's debt and equity raises. Still, if the company's data center plans pan out as expected, it could put the company in a much better position for growth. If you're willing to ride out some of the risks, it might be worth buying some Oracle stock right now.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.