Is Oracle Stock Getting Too Cheap To Ignore After A 53% Drop?

Trefis Team

Fri, August 28, 2026 at 8:00 PM GMT+3 4 min read

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For Oracle stock, the upside now depends less on the size of the order book than on the pace at which the company can energize what it has already sold.

Oracle (ORCL) has spent the past year getting cheaper while its order book got bigger. The stock is down about 34% over the trailing twelve months and sits roughly 53% below its high of the past year, at a market value of about $436.8 billion, even as contracted future work reached $638 billion.

Just 12% Of The Backlog Is Expected To Reach Revenue Inside A Year

Remaining performance obligations finished fiscal 2026 at $638 billion, up from $553 billion at the end of fiscal Q3 2026. Management expects 12% of that to convert within twelve months, roughly $77 billion, against $67.4 billion of revenue over the trailing twelve months, and sees that share accelerating over the coming quarters. Oracle earns that trailing-twelve-month revenue at an operating margin of 33.3%, its own three-year peak, so what comes next starts from strength rather than repair. Demand is not the constraint; a contract pays only once a data hall is energized and handed to the customer.

Oracle Guides One Quarter To Nearly Match What Fiscal 2026 Delivered In Four

Oracle handed customers more than 1.2 gigawatts across fiscal 2026, and more than 400 megawatts of that landed in fiscal Q3 2026. Management said in June that fiscal Q1 2027 delivery was approaching a gigawatt on its own, close to the previous four quarters combined. At Abilene, Texas, the company had delivered 42% of total capacity as of June, with a further 35% then due inside ninety days. In Shackelford County, Texas, first power came online ahead of schedule. Owning the shares is primarily dependent on one company's build-out arriving on time, a different proposition from the Trefis High Quality Portfolio, whose returns do not rest on the handful of largest technology names.

The Customers Are Pre-Funding Part Of The Build

What matters is the shape of the $67 billion of AI infrastructure contracts signed in fiscal Q4 2026: the majority were either bring your own hardware or prepaid, taking Oracle's cumulative pool of such contracts to $75 billion, which management says carries no margin degradation against its other contracts. The customers most eager for capacity help fund the plant that serves them, lowering the cash Oracle itself must raise. Fiscal 2027 still calls for about $70 billion of net cash capital spending, a figure already net of $20 billion to $25 billion of customer prepayments and timing. Funding it takes around $40 billion of debt and equity, including a $20 billion at-the-market issuance already announced.

Gross Margin Is Where The Case Gets Tested

Gross margin stepped down around 5 points across fiscal 2026 and management guides it lower again in fiscal 2027, with infrastructure margin expected to improve rapidly as the new data centers reach full contractual revenue. The distinction between gross and operating margin matters: in fiscal Q4 2026 the same ramp pulled gross margin down while non-GAAP operating margin still rose, because lower operating costs more than offset the decline. While margin execution will take quarters to confirm, the stock's trading history around sharp pullbacks offers a different signal. Oracle has produced eight rallies of more than 30% inside two months since 2011, the most recent of them in 2026, and the stock still sits far below its high; from a base this far down, the Dip Buyer's Playbook is where that history gets weighed against the bases that never re-rated.

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