Oracle’s Two-Speed Recovery: A 12% Short-Term Bounce Masks the Long-Term Debt Debate

Oracle shares are staging a modest comeback, climbing 2.7 percent on Friday to trade at 135.88 euros. The gain extends a seven-day advance of 4.5 percent, yet the broader picture remains sobering: the stock is still down 18 percent year-to-date and 29 percent over the past twelve months.

The rebound has been building for several sessions, with the equity now trading roughly 12 percent above its 50-day moving average of 121.41 euros. That short-term momentum, however, has yet to translate into a reversal of the medium-term trend — the shares remain 6.4 percent below the 200-day average of 145.11 euros, a technical signal that the recovery is still in its early innings.

The Bull and Bear Case, Side by Side

The divergent analyst views on Oracle could hardly be starker. TD Cowen trimmed its price target on September 2 from 300 to 240 US dollars, while maintaining a “Buy” rating. The firm cited concerns over capital expenditures for AI data centers, the company’s debt load, free cash flow generation, and whether the massive contract backlog can actually translate into returns.

Bernstein’s Mark Moerdler takes the opposite view, holding firm to a 325 US-dollar target and an outperform recommendation — implying more than 100 percent upside from current levels. His thesis rests on Oracle being in the early stages of an investment cycle that should meaningfully lift revenue, earnings, and free cash flow in the years ahead. The backbone of that argument is the order book: remaining performance obligations jumped from 553 billion to 638 billion US dollars in the fourth quarter.

The Cost of Ambition

That growth story carries a hefty price tag. Media reports have linked Oracle’s recent share weakness to a debt-financed AI expansion, with investments in fiscal 2026 projected at 55.7 billion US dollars, supported in part by 43 billion dollars in newly issued debt. These figures stem from market commentary rather than a formal company filing, but they have become the foundation of the debate over rising financing costs.

S&P has lifted its investment estimate for fiscal 2027 to more than 90 billion dollars — roughly half above its prior projection — while simultaneously forecasting an operating cash flow deficit of 42 billion dollars. Adding to the unease is a concentration risk: market observers suggest a single customer accounts for more than half of the contract backlog, a detail that keeps some on Wall Street cautious despite the predominantly positive analyst sentiment.

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

Regulatory Clouds Gather

Oracle’s licensing practices have also drawn attention in Brussels. Reuters reports that the European Commission is gathering information from third parties as part of a broader review of cloud licensing practices across the industry. No formal proceedings have been opened against any specific company, but the scrutiny follows a similar case involving SAP, which was settled in July and now serves as a benchmark for the Commission’s approach.

Separately, media reports have circulated about potential job cuts at Oracle, with estimates ranging from roughly 3,000 positions in India to 7,000–10,000 roles globally. The company has not officially confirmed any restructuring plans.

Product Pipeline Moves Forward Regardless

None of this has slowed Oracle’s product cadence. On Friday, the company released its “What’s New in Oracle AI? September 2026 Edition” update, featuring new capabilities for the OCI Enterprise AI cloud platform — including support for importing the Moonshot AI Kimi K3 model, expanded model import options, availability for government and defense clouds, and new NL2SQL functions. Additional events are scheduled for September 24 and October 1.

The previous day brought the “Monthly Product Pulse: September 2026,” highlighting new governance features for the Autonomous AI Database, enhancements to Oracle AI Database 26ai, and integrations with Rust and LangChain.js. An online edition of the OSC2026 conference in Tokyo is set for October 2–3.

The Quarter Ahead

Oracle’s upcoming September earnings will offer investors their next clear read on whether the free cash flow gap can be closed without sacrificing the growth trajectory that Bernstein finds so compelling. For now, the market appears to be pricing in both scenarios simultaneously — a short-term technical recovery underway, even as the structural questions around debt, regulation, and customer concentration remain unresolved.