Oracle’s Global AI Push Fuels Stock Surge Amidst Costly Restructuring

Oracle shares climbed over 4% intraday on Thursday, a rally coinciding with the payment of a $0.50 per share quarterly dividend. This advance extends a remarkable recovery, with the stock up roughly 39% from its February 52-week low and gaining more than 26% over the past 30 days. The stock currently trades at 161.26 EUR, a daily increase of 2.71%, though it remains about 43% below its September 2025 all-time high of 280.70 EUR.

Driving this momentum is a massive, capital-intensive expansion of the company’s artificial intelligence infrastructure. Oracle recently announced a significant expansion of its partnership with Google Cloud, making its Oracle AI Database@Google Cloud service available in 15 global regions, including Frankfurt, London, Tokyo, Sydney, Mumbai, and Toronto. Plans are in place to add Turin and Mexico within the next twelve months. This technical rollout includes the general availability of OCI GoldenGate for real-time database migrations and integrations with Google BigQuery and BigLake, facilitating cross-platform data access.

This aggressive growth strategy comes with a hefty price tag and internal upheaval. For fiscal year 2026, Oracle has raised its planned capital expenditures to $50 billion, up from a previous forecast of $35 billion. Concurrently, the company is undergoing a major restructuring, with reports indicating approximately 12,000 job cuts in India and unconfirmed industry sources suggesting up to 30,000 positions affected globally. The associated restructuring costs are estimated to reach $2.1 billion.

Financially, the results show robust top-line growth burdened by significant investment. Third-quarter fiscal 2026 revenue reached $17.19 billion, a nearly 22% year-over-year increase, with Cloud Infrastructure (IaaS) revenue surging 68%. However, long-term debt stands at $124.7 billion, with interest expenses rising 32% to $1.18 billion. Free cash flow remains deeply negative, driven by $48.25 billion in investment spending over the past four quarters.

The bull case for Oracle hinges on its unprecedented backlog. The company’s remaining performance obligations hit a record $553 billion, including a $300 billion contract signed with OpenAI in late 2025 and other major deals with Meta and xAI. Management emphasizes that much of the required equipment is either funded by customer prepayments or provided directly by clients, aiming to limit Oracle’s own capital risk.

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

Analyst sentiment reflects the stock’s dichotomous narrative. According to MarketBeat, 40 brokerages cover the stock with a consensus “Moderate Buy” rating. Price targets range widely from $160 to $400. Analysts at CreditSights and Guggenheim have issued positive ratings, citing the strong order backlog, while others remain cautious about the capital intensity of the AI build-out.

Looking ahead, Oracle’s management expects fourth-quarter fiscal 2026 earnings per share between $1.96 and $2.00. The company’s long-term targets are ambitious: it aims for total revenue of $90 billion by 2027 and $225 billion by 2030. A key pillar is Cloud Infrastructure revenue, which Oracle projects will grow from $18 billion this fiscal year to $32 billion next year, with further leaps anticipated, supported by a projected annual growth rate of 31% in this segment.

Valuation debates are intense. A discounted cash flow model from Simply Wall St. calculates a fair value of approximately $266 per share, suggesting the current price trades at a discount of about one-third. The stock’s price-to-earnings ratio of around 31.6 is near the industry average of 30 but well below the peer-group average of 56. The 28.6 RSI reading indicates technically oversold conditions, which may partly explain the recent rebound.

A shadow over the investment thesis is the ongoing class-action lawsuit “Barrows v. Oracle,” which alleges the company misled investors about the feasibility of its AI investment strategy. This legal proceeding is set to continue influencing the valuation discussion.

Ultimately, Oracle’s ability to sustain its stock recovery depends on translating its massive capital expenditures and record backlog into sustained, positive free cash flow. The company is betting its future on becoming a foundational AI infrastructure player, a high-stakes strategy playing out across global data centers and balance sheets.