Is Oracle (ORCL) a Buy After the Earnings-Driven Selloff?

Oracle's recent earnings-driven selloff has sparked intense debate among investors. Following the release of its fiscal 2026 Q2 results, shares of Oracle (ORCL) plummeted over 13% on December 11, 2025, despite strong non-GAAP earnings and a record $523 billion in remaining performance obligations (RPO). This sharp decline reflects a mix of short-term execution concerns, strategic uncertainties, and broader fears of an AI-driven asset bubble. To assess whether Oracle is a buy post-selloff, we analyze its technical and fundamental outlook, weighing risks against long-term growth potential.

Technical Analysis: A Bearish Setup with Oversold Conditions

Oracle's stock has experienced a dramatic correction, falling nearly 30% from October highs to a low of $194.30 in late November 2025. Technically, the stock is trading near its lower Bollinger Band at $190.90, with a Relative Strength Index (RSI) of 39.68 and a bearish MACD crossover, signaling oversold conditions and potential short-term volatility. Critical support levels are now at $170, and the 50-day Simple Moving Average (SMA) sits at $249.08, far above the current price, reinforcing bearish momentum.

However, the RSI's oversold reading suggests a possible near-term bounce. Historical data indicates that stocks trading below key moving averages with RSI below 40 often experience temporary rebounds, though sustainability depends on fundamental catalysts. For now, the technical picture remains challenging, with investors closely watching whether Oracle can hold above $170 to avoid further downside.

Fundamental Analysis: Strong Margins and Growth, But High Costs

Despite the selloff, Oracle's fundamentals remain robust. The company reported $61.02 billion in revenue for the quarter, with 14.2% year-over-year growth, driven by a 68% surge in cloud infrastructure revenue to $4.08 billion. Its non-GAAP earnings per share (EPS) of $2.26 far exceeded estimates of $1.64, and its RPO of $523 billion-a 438% increase from prior periods-signals a massive backlog of future business.

Oracle's financial health is further underscored by strong gross (68.5%), operating (32.1%), and net (25.3%) margins. Analysts project forward EPS of $7.99, with a forward P/E ratio of 24.4, suggesting improved valuation as growth materializes. However, the company's aggressive $15 billion increase in AI infrastructure spending has raised concerns about margin compression and free cash flow. Oracle's debt-to-equity ratio of 408.4% and negative free cash flow highlight near-term financial pressures, though its long-term growth trajectory remains intact.

Market Sentiment and Strategic Risks

The selloff was exacerbated by Oracle's strategic pivot toward "chip neutrality" and its heavy investment in AI infrastructure. While these moves align with the broader tech sector's shift toward AI, they have introduced execution risks and margin pressures. Additionally, macroeconomic factors such as U.S. semiconductor tariffs have amplified market jitters.

Yet, Oracle's median analyst price target of $306.57, despite recent downward revisions, suggests confidence in its long-term potential. Options flow data also reveals bullish positioning, with call dollar volume outpacing puts and institutional activity indicating a potential rebound. Analysts maintain "buy" or "outperform" ratings, arguing that the selloff may be overdone given Oracle's dominant cloud position and AI-driven growth.

Conclusion: A Buy for the Long-Term, But Caution for the Short-Term

Oracle's earnings-driven selloff reflects a tug-of-war between short-term execution risks and long-term growth potential. Technically, the stock faces near-term headwinds but may find support in the $170–$190 range. Fundamentally, Oracle's strong margins, cloud growth, and massive RPO backlog justify a bullish outlook, albeit with caution on capital expenditure sustainability.

For investors with a long-term horizon, Oracle's discounted valuation and strategic alignment with AI trends make it an attractive buy. However, those sensitive to volatility should wait for a clearer technical rebound or a more favorable risk-rebalance in its capital spending plans. As the market digests Oracle's AI ambitions, patience may prove to be the most valuable asset.