Oracle Shares of (NYSE: ORCL) have been trending lower since the tech giant struck a deal with OpenAI last September. The $300 billion deal sent the stock price up 36% in one day immediately after the deal was announced and fueled investor optimism. However, investors have begun to question whether OpenAI will be able to hold up its end of the deal.
Moreover, as of the end of fiscal 2026 (ended May 31), Oracle had borrowed nearly $130 billion to build out the necessary infrastructure, a significant burden for a company with a book value of $43 billion. As a result, the share price fell 60% from that high.
Did you miss Nvidia in 2009? This rare signal flashes again. In 2009, the signal to “double down” sounded for little-known chip maker Nvidia. For the first time in years, the same “Total Conviction” light is flashing for a company 1/100th the size of Nvidia. Continue “
Given these price fluctuations, it becomes increasingly likely that the market is underestimating Oracle’s enormous growth potential. These two reasons explain why investors should consider Oracle as a possible buying opportunity.
Oracle Chairman and CTO Larry Ellison. Image source: Oracle.
1. Oracle’s valuation is now more reasonable
The aforementioned stock pullback could change Oracle’s investment thesis, especially regarding its valuation. The stock’s rally last September pushed Oracle’s P/E ratio to 76. At the time, investors seemed willing to pay that premium for the OpenAI deal.
However, the combination of a falling share price and a 37% increase in net income in fiscal 2026 caused the earnings multiple to drop to 22, well below the company’s average P/E ratio of 32. S&P 500 Index.
In addition, analysts forecast continued earnings growth, bringing the forward P/E ratio to 16. Consequently, despite significant debt, such a low valuation has made Oracle shares increasingly attractive.
2. RPO growth is not entirely related to the OpenAI deal
This increase in earnings is also the result of an increase in remaining performance obligations (RPO), or backlog. At the time of OpenAI’s announcement, it accounted for about two-thirds of Oracle’s $455 billion RPO.
Admittedly, losing the OpenAI deal completely or partially would be a huge setback for Oracle. However, in the nine months since the announcement, its backlog has grown to $638 billion.
In other words, Oracle has reserved the equivalent of 60% of the OpenAI deal, which helped justify its borrowing and the $56 billion it spent on capital expenditures (capex) in fiscal 2026. This success in attracting additional business means Oracle can survive the loss of the OpenAI deal.
Potential Oracle Doppelganger
The above factors will cause Oracle’s share price to double by 2028, if not sooner.
Thanks to its lower share price and higher earnings, its P/E ratio has fallen well below S&P averages, and its forward P/E ratio will reach the teens if the stock doesn’t recover soon.
Moreover, the stock selloff implied that the OpenAI deal was a game-changer for Oracle’s AI infrastructure business. However, the fact that the company has signed nearly $200 billion in additional deals in nine months indicates that the business could still thrive if the OpenAI deal doesn’t fully materialize.
Thus, investors who can handle Oracle’s debt risk should consider this AI stock.
Should you buy Oracle stock right now?
Before you buy Oracle stock, consider this:
Motley Fool Stock Advisor a group of analysts have just determined what they believe is 10 best stocks so investors could buy them now… and Oracle wasn’t one of them. The 10 shorted stocks could deliver huge returns in the coming years.
Think when Netflix compiled this list on December 17, 2004… if you had $1,000 invested at the time of our recommendation, you will have $396,542!* Or when Nvidia compiled this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you will have $1,299,961!*
Now it’s worth noting Stock Advisor The overall average return is 931%, a staggering 210% for the S&P 500. Don’t miss the latest list of the top 10 companies, available on the S&P 500 website. Stock Advisorand join an investment community created by individual investors for individual investors.
View 10 stocks »
*Stock Advisor returns effective July 16, 2026.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions at Oracle and recommends them. The Motley Fool has disclosure policy.
“2 Reasons Oracle Stock Could Double in Price by 2028,” originally published by The Motley Fool.