Oracle stock (NASDAQ:ORCL) has faced a dramatic decline over the past month, dropping more than 31% from its recent highs. Despite the sell-off, some analysts see this pullback as a buying opportunity. This article talks about Oracle stock’s recent performance, the drivers behind its cloud and AI growth, and the potential risks and rewards for investors in 2026.
Mizuho Analysts Remain Bullish
Mizuho Securities analyst Siti Panigrahi continues to see promise in Oracle stock. After the recent correction, the firm maintained an “Outperform” rating and raised its price target from $350 to $400, implying roughly 84% upside potential. Panigrahi highlights four key growth drivers: AI infrastructure monetization, expanding multi-cloud partnerships, accelerating Database 26ai migrations, and growing Fusion AI capabilities.
Other analysts echo this optimism. Stifel has a “Buy” rating with a $350 target, Evercore ISI raised its target to $385 with an “Outperform,” Barclays moved to $400, and Citizens assigned a “Market Outperform” rating at $342.
AI Cloud Revenue and Margin Challenges
While Oracle stock shows strong momentum, the market is cautious about the profitability of AI initiatives. Oracle’s AI-linked cloud unit generated approximately $900 million in revenue last quarter but only $125 million in gross profit, resulting in a 14% margin. This is significantly lower than Microsoft (NASDAQ:MSFT) Azure and Amazon (NASDAQ:AMZN) Web Services margins.
Oracle’s current cloud strategy includes renting AI chips through Oracle Cloud Infrastructure (OCI) at around a 16% margin, with management projecting infrastructure margins could reach 30–40% by 2030. Despite ambitious targets, investors remain skeptical about the timing and consistency of profit growth.
Long-Term Growth Outlook
Oracle stock’s long-term potential lies in its AI and cloud roadmap. CEO Safra Catz forecasts total cloud growth exceeding 40% in FY 2026. Chairman and CTO Larry Ellison highlighted that multi-cloud database revenue with partners such as Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) grew 1,529% in Q1 FY 2026.
This rapid expansion positions Oracle stock for long-term gains if management can deliver on these projections. The company is betting on AI-driven demand across cloud services and enterprise software, which could significantly increase recurring revenue streams over the next several years.
Risks to Consider
Despite the upside potential, Oracle stock carries risks. Current AI infrastructure margins remain low, and the high capital expenditure required for data centers may limit short-term profitability. Analysts also warn that long-term revenue and EPS targets are aggressive and may lead to volatility.
Investors seeking stability or short-term returns may find Oracle stock challenging, as broader market skepticism about AI and cloud profitability may continue to pressure the shares.
Is Oracle Stock a Buy?
Oracle stock may appeal most to long-term, growth-oriented investors who are confident in the company’s AI and cloud execution. While the recent drawdown improves the risk-reward profile, the fundamental risks that triggered the decline have not disappeared.
For conservative investors, ORCL stock may warrant a “Hold” rating, but those willing to weather volatility could benefit from the significant upside potential if Oracle meets its ambitious growth targets.
Conclusion
Oracle stock (NASDAQ:ORCL) has seen a sharp decline, but analysts remain bullish due to strong AI and cloud growth prospects. Investors must weigh potential rewards against margin challenges, CapEx demands, and ambitious long-term targets. Careful evaluation is key to determining if ORCL fits a growth-focused portfolio heading into 2026.
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Author Stephanie Bédard-Châteauneuf 
