Oracle Shares Jump After Citi Calls Selloff A Buying Opportunity
Rose 4.5% Wednesday after Citi said the selloff had created a buy opportunity. The bank pointed to heavy AI spending, a $85 billion backlog and a possible path…
Oracle stock price jumped 4.5% through 9:50 a.m. ET Wednesday after Citigroup said the shares were a buy following one of the most severe selloffs in the company’s history.
The move came as investors kept weighing Oracle’s huge AI infrastructure spending against a fresh argument that the worst may already be priced in. The stock has been volatile for months, and the latest bounce shows how fast sentiment can shift when Wall Street changes its tone.
Citigroup sees the damage as done
In a note covered on StreetInsider.com, Citi said Oracle had gone through “one of the most extreme dislocations and drawdowns in the stock's history.” The bank argued that the weakness had pushed the stock into buy territory.
That call landed after a sharp fall in the shares. From June peak to July trough, Oracle stock dropped 54% as investors worried about the company’s spending and debt commitments tied to artificial intelligence infrastructure for clients including Microsoft and OpenAI.
The concerns are not small. Over five years, Oracle’s debt load has risen 60%, while free cash flow swung from positive $13.8 billion to negative $23.7 billion, according to the Yahoo Finance report. Analysts polled by S&P Global Market Intelligence expect another $90 billion in cash burn over the next two years.
The AI bet is still costing money
Oracle’s pitch is that the spending will pay off later. Citi said demand for AI services is “insatiable” and pointed to the $85 billion in backlogged work Oracle has already built up. The bank said that backlog is nearly enough to cover the company’s cash needs.
The same note also sketched a much brighter future. By 2030, Citi estimated Oracle’s current GAAP profits could triple or even quadruple, with per-share earnings reaching $22. On that view, the stock could be worth as much as $330 per share.
Oracle now trades at a price-to-earnings ratio of less than 25, with growth estimated at 27% annually over the next five years, according to the Yahoo Finance report.
That valuation matters because it shapes how much patience investors are willing to give Oracle while the company keeps pouring cash into data centers and AI cloud capacity. For traders, the question is no longer whether Oracle is spending aggressively. It is whether that spending will turn into earnings fast enough to justify the pain already absorbed by the stock.
What the stock still has to prove
Forbes offered a more cautious view in a separate report, saying Oracle’s stock has declined 59% from its peak last September. It also said the stock closed Aug. 3 at about $142, down 28% year-to-date, 44% over 52 weeks and 59% below its September high.
Forbes said Oracle fails investor tests that AI providers are being measured against, passing only on revenue acceleration. It also flagged OpenAI dependence, credit rating scrutiny and execution risk in AI data centers.
Those risks keep the debate alive. The stock’s next move will depend on whether Oracle can keep building its AI business without letting cash burn outrun the payoff Citi is betting on.
