Oracle (ORCL +1.92%) was one of the most shorted stocks by hedge funds in the first half of 2026, according to the Data Insights Crowding Report.
This meant that a lot of investors were betting that the shares will fall. Only two companies were more heavily shorted, Data Insights found: Charter Communications (NASDAQ: CHTR) and Super Micro Computer (SMCI +4.12%).
It has been a wild 12 months for Oracle stock. It spiked to an all-time high last summer on strong earnings and a growing backlog. As of June, the end of its fiscal year, it had amassed a huge order backlog, with a whopping $638 billion in remaining performance obligations.
Image source: Getty Images.
The backlog was highlighted by a $300 billion deal with OpenAI for cloud computing.
But it also has infrastructure deals with Nvidia (NVDA +0.54%), Microsoft (MSFT +0.90%), AMD (AMD +0.02%), and Meta (META +2.79%), to name just some of the major partnerships.
Oracle stock soared to an all-time closing high of $324 on Sept. 10, 2025. It’s now trading at about $153 per share, after losing more than half its value. What happened?
Shorting Oracle
A confluence of factors are responsible.
The major factor is the huge capital spending plans to build out data centers and artificial intelligence (AI) infrastructure to fulfill these contracts. Oracle reported $21 billion in capital expenditures (capex) last year and a whopping $55 billion in fiscal 2026. This left Oracle with negative cash flow of $23.7 billion in fiscal 2026.
And in fiscal 2027, the company plans to raise another $40 billion through debt and equity financing to fund its capex.
Today’s Change
(1.92%) $2.94
Current Price
$156.22
Key Data Points
Market Cap
Day’s Range
$151.91 – $159.26
52wk Range
$114.50 – $345.72
Volume
80K
Avg Vol
31.9M
Gross Margin
63.34%
Dividend Yield
1.28%
Its debt is through the roof at $167 billion and a sky-high 388% debt-to-equity ratio.
Investors also are concerned about OpenAI’s finances and whether it can fulfill all its contracts, including those with Oracle. It certainly plays into the growing investor narrative that AI stocks are spending too much on infrastructure in relation to the potential return.
Is Oracle stock a buy now?
So, with a series of setbacks, not to mention a high valuation, it is clear to see why investors have been betting on Oracle’s stock to drop.
However, after such a steep drop, the share valuation has returned to a reasonable level. Oracle stock has a price-to-earnings (P/E) ratio of 25, a forward P/E of 18, and a low five-year price/earnings-to-growth ratio, or PEG ratio, of 0.85. A PEG of less than 1 indicates that the stock is undervalued relative to its anticipated earnings expectations.
Oracle is poised for a rebound, according to Wall Street analysts. Some 82% of analysts rate the stock as a buy, and the median price target is $241 per share. That would suggest a 57% return during the next 12 months.
But there are a lot of balls in the air for Oracle. There is a lot of money being spent on AI as it continues to rack up debt, which can weigh on earnings because at some point it must be paid down. If you’re a long-term investor, there are probably better AI stocks out there that you don’t have to worry so much about.