Should You Buy Oracle Stock Before December 8?

• Oracle has evolved from a rugged, legacy software company to a cloud-first service provider.

• The company wins huge multi-year cloud contracts with leading hyperscalers.

• Oracle is taking on debt and burning cash to fuel the buildout of its data center.

• 10 stocks we like better than Oracle ›

Oracle (NYSE: ORCL) is expected to announce its second-quarter 2026 earnings results on December 8. It’s a heavy follow-up to the tech giant’s latest earnings report, which resulted in Oracle’s largest single-day market cap in the company’s history as Oracle rose from $686.3 billion in market cap to $933 billion on September 10.

But Oracle has since given up all those gains (and then some), even as the broader market has continued to rise.

Here’s why there’s pressure on Oracle to deliver on its promises to investors, and whether the red-hot artificial intelligence (AI) growth stock is now a bargain.

Oracle’s stock price rose in September as the company forecast an ambitious plan to grow Oracle Cloud Infrastructure (OCI) revenue more than fourteen times, from approximately $10 billion in fiscal year 2025 to $144 billion in fiscal year 2030 – which would be calendar year 2031. If that prediction comes true, Oracle could become the top cloud provider for AI workflows.

To understand why investors are so excited about Oracle, it’s helpful to know a little about the company’s history.

Oracle’s success came from its database and business software. But Oracle was a proponent of on-premise software and initially resisted the transition to the cloud. That all changed in the early 2010s when Oracle began rolling out infrastructure-as-a-service, platform-as-a-service, and software-as-a-service solutions. But it wasn’t until 2016 that Oracle announced OCI.

Yet Oracle was a stodgy, relatively low-growth, old technology giant IBM And Cisco systemsit was seen more as a dividend-paying value play in the sector. And it certainly wasn’t top of mind for investors looking to invest in cloud computing stocks.

In December 2023, Oracle announced second-quarter fiscal 2024 results, which included plans to expand 66 of its existing data centers and build 100 new cloud data centers. Oracle said it could build these data centers quickly and cheaply, thanks to automation, consistent hardware and remote direct memory access (RDMA) data transfers. And it didn’t disappoint.

In the June 2025 quarter, Oracle said it had built 23 multi-cloud data centers and planned to build another 47 over the next twelve months. In September, Oracle said it had built 34 multi-cloud data centers, of which only 37 came online in less than a year.

Oracle’s forecast for fiscal year 2030 reaches an inflection point in fiscal year 2027, when the majority of its multicloud data centers become operational.

Oracle has high expectations from investors in the coming years. But the goals did not arise from nowhere. On the contrary, Oracle generates legitimate cloud bookings. In recent months it has announced mega deals with OpenAI and Metaplatforms.

The development of multi-cloud data centers is a response to rising demand from cloud giants Amazon Web services, Microsoft Azure, and Alphabetowned by Google Cloud. Oracle competes with these companies, but also collaborates with them by integrating its database products into data centers, reducing latency and costs.

Oracle’s data centers are ideally suited for high-performance computing due to their AI-first structure, making them well suited for large enterprise customers. OCI is especially cost-effective for customers who already use other Oracle services.

There’s a lot of pressure on Oracle heading into its December earnings release. For starters, investors will want more details about the profitability of these AI megadeals. OCI’s five-year goals relate to revenue, not operating income. Oracle’s pricing structure includes generous freebies and rewards that it claims deliver 50% lower compute costs, 70% lower block storage costs, and 80% lower networking costs. Some of these savings are due to the inherent structure of the data centers. But Oracle also undercuts its competitors on pricing. These deals aren’t a bad idea because Oracle can attract customers and get them more involved in its ecosystem. But they could also reduce margins and cash flow, which could hurt Oracle’s profitability and delay its debt payments.

Arguably the biggest risk to Oracle’s investment thesis is its highly leveraged balance sheet. Oracle ended the last quarter with total net long-term debt of more than $100 billion. By comparison, Amazon, Alphabet and Microsoft all have more cash, cash equivalents and marketable securities than debt on their balance sheets.

Of all the ‘Ten Titans’, a group of ten leading growth stocks that make up 40% of the shares S&P500Oracle has by far the most debt, with a debt-to-capital ratio (D/C) of over 80%.

The higher the D/C ratio, the more a company relies on debt to finance its operations. But there is some nuance to this. Apple has a lot of debt, but manages it responsibly thanks to its persistently high free cash flow (FCF) and inventory of cash, cash equivalents and marketable securities. In contrast, Oracle’s annual free cash flow turned negative due to rising capital expenditures.

Investors will tolerate the leverage effect if it results in earnings growth. But if one or two key customers cut spending, Oracle may not be able to deliver on its promises.

The faster OCI grows and the more Oracle can monetize its AI cloud infrastructure, the more expensive the stock is likely to become. Conversely, if Oracle stumbles, investors may be able to buy the stock at a much lower price.

Oracle remains a high-risk, high-potential bet at the intersection of software, cloud computing and AI. Now that the stock has given up all its gains after the first quarter, investors are essentially getting the five-year OCI revenue forecast for free – which could be an attractive entry point for those who believe Oracle can deliver on its targets.

Consider the following before buying shares in Oracle:

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Daniel Foelber has positions at Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Cisco Systems, International Business Machines, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Should You Buy Oracle Stock Before December 8? was originally published by The Motley Fool