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Oracle stock fell 45% from peak to trough but now trades at 30x forward P/E after recent bounce.
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OpenAI owes Oracle hundreds of billions tied to AI data center builds. OpenAI’s 2026 cap raises or IPO could validate Oracle’s massive RPOs.
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OpenAI acquired Torch for $100M and launched OpenAI Health to expand monetization into healthcare and other industries. This bodes well for Oracle.
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A recent study identified one single habit that doubled Americans’ retirement savings and moved retirement from dream, to reality. Read more here.
Shares of Oracle (NYSE:ORCL) have been looking up in recent weeks, thanks in part to the TikTok deal as well as an exhaustion in pessimism surrounding Oracle, its debt load, and its OpenAI exposure. In any case, the selling pressure was overdone, and the latest bounce, I think, might have legs as investors warm up to the premier AI infrastructure plays again.
Of course, not much has changed about Oracle’s heavy debt load or its dependence on OpenAI in these recent weeks. That said, I do think investors have a lot to be optimistic about as shares of Oracle start off a fresh year at an incredibly low price point. Either way, here are two reasons why Oracle stock might have more gas in the tank as it bounces back from its vicious 45% peak-to-trough sell-off.
Oracle stock has acted like a bit of a proxy for OpenAI of late. Undoubtedly, given the hundreds of billions that OpenAI will need to be good for as Oracle floors it on AI data centers, every piece of good news for OpenAI is bound to be good news for shares of Oracle. Undoubtedly, 2026 could be a big year that sees Sam Altman’s AI titan raise big money, either through private capital raises or a big IPO. Of course, more clarity on the path to profitability might also bode well for the firm’s ability to pay its bills.
For now, OpenAI rival Anthropic is farther along when it comes to profitability, but one has to think that OpenAI won’t be all too far behind, especially as the AI innovator pulls the curtain on new AI innovations, some of which might be major sellers.
With OpenAI making a big splash in healthcare, launching OpenAI Health, and acquiring a small startup named Torch for $100 million, I see plenty of monetization runway. Either way, such initiatives have to give investors more confidence as OpenAI looks to raise more cash to show that it is, in fact, good for the money.
As OpenAI expands its disruptive impact into new industries, I think the odds that Oracle’s massive RPOs (remaining performance obligations) translate into real revenue increase drastically.
Perhaps Oracle stock might be ridiculously undervalued at around $200 per share, especially since debt and OpenAI exposure concerns seemed overblown beyond proportion at the end of 2025. For now, the exposure to OpenAI is a negative, but how long before the implied discount commands a premium? Time will tell, but 2026 is shaping up to be a big year for OpenAI and, in turn, Oracle.
The stock has also become reasonably priced after its painful crash over AI bubble fears. Even after the latest bounce off multi-month lows around $178 per share, the AI infrastructure juggernaut goes for 30.0 times forward price-to-earnings (P/E). That’s a very reasonable price for a firm that’s ready for the age of Nvidia (NASDAQ:NVDA) Vera Rubin chips.
Undoubtedly, Oracle will be quick to deploy the latest and greatest Nvidia hardware, giving its customers (most notably OpenAI) a huge boost in record time. Effectively, OpenAI will be jumping to the front of the line as many other AI firms wait in line for their chance to punch their ticket to the Vera Rubin era.
It’s not just Oracle’s ability to procure chips quickly and early that makes it such a force in the AI data center. Given its networking expertise and Oracle Acceleron RoCE (RDMA over Converged Ethernet) fabric, the firm can build superclusters effectively in a way that allows for lower latency, greater efficiencies, and scalability.
In essence, perhaps it’s less about how many pieces of the puzzle a firm has and more about how it puts them together. When it comes to Oracle Cloud Infrastructure (OCI), I think it’s a fast runner with distinct advantages that will allow it to be an AI winner for years to come. In any case, sell-side analyst Jefferies thinks Oracle shares could run as high as $400.00 per share. I think that’s a realistic target.
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