Down 42% From Its High, Is Oracle the Best AI Growth Stock to Buy in 2026?

Core Viewpoint - Oracle's stock has experienced a significant decline, dropping approximately 42% from its 52-week high, but the company's growth potential in artificial intelligence (AI) remains compelling [1]. Financial Performance - Oracle's stock fell as much as 16.5% following its second-quarter fiscal 2026 results, indicating market concerns about its performance [1]. - The company has over $80 billion in non-current notes payable and other borrowings net of cash, reflecting a substantial amount of long-term debt [3]. Competitive Position - Compared to other cloud giants like Amazon, Microsoft, and Alphabet, Oracle has a higher debt load, while these competitors maintain either minimal debt or more cash and marketable securities than debt [4]. - Oracle's strategy involves significant investment in AI infrastructure, which is seen as a high-risk, high-reward approach compared to its competitors who leverage existing cash flows [5]. Growth Strategy - Oracle is in the process of building 72 multicloud data centers that integrate its database services with major cloud platforms, which is expected to enhance performance and reduce costs [8]. - As these data centers are completed, Oracle anticipates an increase in free cash flow (FCF) and a reduction in capital expenditures, allowing for accelerated debt repayment [9]. Valuation and Investment Potential - Oracle's current trading valuation is under 30 times forward earnings, which is considered attractive for a growth stock with potential for accelerated earnings growth [10]. - The company's focus on high-performance computing infrastructure aligns with anticipated future demand, making it a potentially lucrative investment for those with a long-term perspective [10].