Oracle Stock Seeks Footing Amid Cloud Growth and Strategic Moves

Oracle's shares are attempting to stabilize following a significant correction. In after-hours trading yesterday, the stock advanced by 1.10 percent to $197.49. This represents a modest recovery from a decline of approximately 43 percent from its all-time high of $345.72, reached in September 2025. Investor focus is now fixed on two primary elements: the strategic TikTok transaction and the company's massive backlog in its cloud and artificial intelligence segments.

From a fundamental perspective, Oracle continues to see robust demand for its cloud infrastructure. A key indicator, the Remaining Performance Obligation (RPO), currently stands at a staggering $523 billion. This figure marks a year-over-year surge of 438 percent. The primary catalyst for this growth is a series of long-term cloud contracts with major AI clients, including industry leaders like Nvidia and Meta Platforms.

Several critical financial metrics are currently under the market's microscope:

• Revenue Growth: For the second quarter of fiscal year 2026, Oracle reported revenue of $16.1 billion, a 14 percent increase.
• Cloud Momentum: Revenue from cloud services jumped 34 percent to $8.0 billion, highlighting the company's accelerating shift toward AI-focused infrastructure.
• Backlog Coverage: The current $523 billion RPO substantially exceeds the full fiscal year 2026 revenue forecast of $67 billion.
• Valuation: The equity is trading at a multiple of roughly 24.7 times expected earnings.

This combination of rapidly expanding cloud revenue and long-duration contracts provides a solid foundation for the long-term demand outlook.

The TikTok Deal: A Strategic and Sentiment Boost

A specific strategic development is also influencing market sentiment: Oracle's involvement in the restructuring of TikTok's US operations. In mid-December, an agreement was finalized for a consortium comprising Oracle, Silver Lake, and MGX to acquire the video platform's US segment.

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

The total transaction volume is approximately $14 billion. Oracle is securing a 15 percent stake, thereby bolstering its position in data management and security. The market views this deal as a crucial stabilizing factor after weeks of notable share price pressure, as it delivers a tangible catalyst for Oracle's platform and cloud business.

Aggressive Investment Strategy Weighs on Cash Flow

However, the high visibility on future revenue comes with a significant near-term cost. Oracle is aggressively accelerating its build-out of AI data centers to meet its record contractual obligations. This substantial capital expenditure is reflected in the company's cash flow statement: free cash flow turned negative, reaching minus $10 billion in Q2 FY2026.

To bridge this funding gap, Oracle is arranging extensive external financing. The company is currently organizing new debt totaling roughly $56 billion, split into about $38 billion in loans and $18 billion in bonds. This approach essentially represents "growth financed by higher leverage," creating a divided market perception. On one side is the immense $523 billion order backlog; on the other is the immediate financial strain from the infrastructure expansion.

Technical and Fundamental Outlook

From a charting perspective, the stock is trying to establish a support zone around the $195 level. The current risk-reward profile is largely defined by the tension between the exceptionally high backlog and the immediate costs of AI infrastructure build-out.

While the TikTok transaction offers a short-term stability factor, it does not overshadow the significant investment and financing challenges. In the coming quarters, the operational execution of the major AI contracts will move to the forefront. The market will be watching closely to see if the substantial upfront investments translate into sustainably profitable growth and a stronger balance sheet structure.