Oracle Shares Face Profit-Taking Amid Record AI Backlog

As the year draws to a close, Oracle finds itself at a crossroads, characterized by formidable growth in its core operations and significant profit-taking by major institutional holders. This dynamic emerges even as the company reports a record-breaking multi-billion dollar order backlog, prompting questions about the market's current stance.

The recent trimming of positions by institutional investors follows Oracle's release of exceptionally strong results for the second quarter of fiscal year 2026 on December 10th. The quarterly figures presented a compelling growth narrative:

• Earnings Per Share (EPS): $2.26, significantly surpassing the consensus estimate of $1.64.
• Revenue: $16.06 billion, marking a year-over-year increase of 14.2%.
• Cloud Growth: Revenue from Oracle Cloud Infrastructure (OCI) surged by an impressive 68%.

This performance has been rewarded by the market with a substantially elevated valuation. Trading at a price-to-earnings (P/E) ratio of approximately 37.12, the stock commands a premium well above its historical average, reflecting its successful pivot from a traditional database provider to a key player in AI infrastructure.

Institutional Investors Lock in Gains

Recent filings on ownership structures reveal that several asset managers have scaled back their Oracle holdings. This activity appears to be a strategic move to realize profits following the stock's robust performance throughout the year.

A notable example is Munro Partners, which made significant adjustments:
* Sold 146,195 Oracle shares during the third quarter of 2025.
* Reduced its position by 28.5%.
* Holds a remaining stake of 367,340 shares, valued at approximately $103.3 million.

Other firms followed a similar pattern, albeit on a smaller scale:
* GLOBALT Investments LLC decreased its holding by 15.6%, divesting 3,347 shares.
* Wealth Alliance Advisory Group LLC reduced its position by 13.4%.

This institutional activity coincided with insider sales. Notably, Cloud CEO Clayton Magouyrk sold 10,000 shares worth about $1.93 million, and Executive Vice President Maria Smith also appeared as a seller.

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

Despite these transactions, Oracle's share price demonstrated resilience. On the shortened trading day before Christmas, it closed at $197.49, registering a daily gain of 1.10%.

Record AI Backlog Provides Fundamental Support

The fundamental case for Oracle is powerfully underpinned by its AI infrastructure business. The company reported a Remaining Performance Obligation (RPO) backlog of $523 billion. This metric, which represents committed but unrecognized future revenue, has reached an unprecedented level.

The expansion is driven by the build-out of specialized AI data centers ("AI factories") and the second generation of its cloud infrastructure, designed to train large-scale models such as NVIDIA's Blackwell GB200 clusters. From a market perspective, this solidifies Oracle's role as a critical infrastructure supplier for compute-intensive AI applications.

However, analyst opinion is not uniformly bullish. One analyst, identified as "Sky," recently reaffirmed a Sell rating, though they raised their price target from $150 to $185 per share. This target remains below the current trading price, indicating persistent doubts about the sustainability of the valuation despite the soaring order backlog.

Forward Look: Analyst Sentiment and Key Dates

Overall, analyst ratings remain favorable. Despite the cautious view from "Sky," the consensus recommendation stands at "Moderate Buy." The average price target of $312.88 suggests considerable upside potential from current levels.

Market participants are now looking ahead to a key date: January 9, 2026, is the ex-dividend date for the stock. A quarterly cash dividend of $2.00 per share has been declared, translating to an annualized yield of roughly 1.01%. Trading activity in the first sessions after the holidays will indicate the stability of demand at the current price level, as some investors continue to secure profits realized during the year's rally.

In this context, the recent selling by institutional investors resembles a portfolio rebalancing and a locking-in of gains after a multi-year advance, rather than a fundamental rejection of Oracle's business trajectory.