Diverging Views Emerge on Oracle’s AI Investment Strategy

The investment case for Oracle Corporation is currently the subject of a heated debate among Wall Street analysts. A series of recent research note updates from major financial institutions reveals a stark lack of consensus, centering on the sustainability of the company's aggressive spending on artificial intelligence infrastructure and its impact on the balance sheet.

The divergence in views is pronounced. In a bullish move, Goldman Sachs upgraded its rating on Oracle shares from "Neutral" to "Buy," establishing a price target of $240. From the current trading level around $195, this implies a potential upside of approximately 23%. The firm's analysts, led by Gabriela Borges, argue that Oracle holds a competitive edge in AI computing. They project that new cloud revenue could surge from under 10% today to about 25% within three years. A key pillar of their optimism is the belief that Oracle is nearing its peak debt level, with total corporate debt expected to stay below $80 billion even after completing its massive data center build-out.

In contrast, RBC Capital Markets struck a more cautious note, significantly reducing its price target from $250 to $195. The firm cited growing investor impatience regarding an anticipated revenue inflection in 2026, alongside risks from the company's debt-fueled investment strategy.

Other institutions have staked out positions across the spectrum. UBS trimmed its target to $280, pointing to increased volatility since the stock began correcting in mid-September 2025. Barclays remains decidedly positive, reiterating an "Overweight" rating with a $310 target and viewing the current valuation as an opportunity for long-term investors. Jefferies maintains the most optimistic stance with an unchanged $400 price target, suggesting the market has already priced in significant future cloud hypergrowth.

Debt and Growth: The Infrastructure Push

Operationally, Oracle's expansion is accelerating. In Michigan, regulators approved a plan by DTE Energy to supply power to a large-scale data center complex for Oracle and OpenAI. This facility is slated to be central to Oracle's AI capabilities and is seen as a primary driver for the cloud revenue acceleration forecast by Goldman Sachs.

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

Financially, the company's Remaining Performance Obligations (RPO) have surged to over $523 billion, largely fueled by long-term AI infrastructure contracts. While this underscores strong demand, the near-term pressure on free cash flow and margins is significant, as building out this capacity requires substantial upfront capital expenditure.

Seeking a Floor After a Sharp Decline

Oracle's shares are attempting to find stability following a substantial correction. Having fallen roughly 40% from its September 2025 record high near $345, the stock is now testing a crucial technical and psychological support zone around $195. The sell-off was triggered by broader sector doubts over the profitability of massive AI investments and concerns over rising leverage.

The valuation has concurrently normalized, with the price-to-earnings ratio retreating from previous premium levels to around 27. This reset is focusing investor attention on the tangible outcomes of the company's spending.

The Path Forward

Looking ahead, operational milestones at projects in Michigan and Abilene will be closely watched. Among bullish analysts, there is a prevailing view that gross margins could bottom within the next twelve months and begin to recover as new data center capacity comes online and is utilized.

In the immediate term, market focus rests on the $190-$195 support level and the upcoming quarterly earnings reports. The critical factor for Oracle's stock performance in the first half of 2026 will be its ability to demonstrate that heavy data center investments are translating into clear improvements in operational efficiency, profitability, and cash flow generation.