Is Oracle Stock (ORCL) a Buy Ahead of Earnings?
Oracle (ORCL) is set to release its Q2 fiscal 2026 results on December 10. Analysts are concerned about Oracle's debt and high valuation, with a P/S ratio of 8x. Despite a 30% year-to-date increase, the stock has fallen 30% after missing Q1 expectations. Analysts have mixed views, with price targets ranging from $280 to $375, reflecting potential upsides of 30.6% to 75%. Oracle's AI partnerships and growth prospects are key factors in its investment outlook.
Software giant Oracle (ORCL) is scheduled to release its second-quarter fiscal 2026 results after the market closes on December 10. Investors and analysts will closely watch Oracle's mounting debt burden, rising credit‑default‑swap (CDS) spreads, and an update on its $300 billion OpenAI partnership.
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Oracle boasts strong RPO (remaining performance obligation) and cloud growth, but concerns about its high valuation remain. ORCL stock trades at a price-to-sales (P/S) ratio of around 8x, significantly higher than the sector median of 3.4x and its own five-year average.
Oracle's shares surged more than 100% between the April and September. However, the stock has given back roughly 30% of those gains after the company missed Q1 FY26 earnings and sales expectations. Nonetheless, ORCL is up about 30% year-to-date.
Expectations from Oracle's Results
The Street expects Oracle to report adjusted earnings per share (EPS) of $1.64, up from the prior year quarter's $1.47. Also, sales are expected to jump 15% year-over-year to $16.19 billion. During its Q1 results, Oracle guided for Q2 revenue to grow in the range of 12% to 14% (constant currency) and adjusted EPS between $1.61 and $1.65.
Historically, Oracle has surpassed earnings estimates in four of the past eight quarters and missed sales estimates in six.
Analysts Reset Price Targets Ahead of Results
Ahead of the Q2 print, Citi analyst Tyler Radke cut his price target on ORCL shares from $415 to $375, implying 75% upside potential. He kept his Buy rating, while noting that investor sentiment has deteriorated after Q1 results and an upbeat analyst day. He highlighted questions about capex and debt financing, while broader AI and OpenAI demand concerns remain. Although clarity on capex and debt magnitude is pending, Radke argues that worries about Oracle's rising CDS prices are overstated and reflect a broader AI hedging dynamic.
Conversely, Wells Fargo analyst Michael Turrin initiated coverage of ORCL with a Buy rating and $280 price target, implying 30.6% upside potential. Turrin believes that Oracle is likely to lead the coming AI "supercycle." He noted that Oracle has secured about half a trillion dollars in AI deals and sits in a strong position with major clients like OpenAI (PC:OPAIQ), xAI, Meta (META), and TikTok. He also pointed out that the stock is currently 42% below its recent high.
Is ORCL Stock a Buy?
Analysts remain divided about Oracle's long-term outlook. On TipRanks, ORCL stock has a Moderate Buy consensus rating based on 25 Buys, 11 Holds, and one Sell rating. The average Oracle price target of $350.27 implies 63.4% upside potential from current levels.
