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Oracle's Emotion-Driven Sell-Off Sets Up Generational Opportunity
Authored by Thomas Hughes. Published: 2/16/2026.
Key Points
- Oracle's stock price is set up to rebound robustly as its sell-off is overextended and catalysts are ahead.
- Analysts' valuation and growth forecasts suggest this stock can rise by several hundred percentage points from its critical moving average.
- Debt concerns are overshadowed by the backlog, more than sufficient to pay for the investments.
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Oracle’s (NYSE: ORCL) 2025–2026 stock sell-off has been monumental, creating what may be a generational opportunity for investors. While concerns remain, the key point is that the stronger outlook that powered the 2025 rally remains intact. Upcoming earnings releases will likely reaffirm that outlook, which features a rapidly expanding, AI-driven backlog worth more than $520 billion as of the end of Q2 fiscal 2026 (FY2026) — a potential catalyst for a rebound. The question then is how far the stock could rise; the answer could be substantial.
Analysts' sentiment, profit-taking and insider selling all contributed to Oracle’s pullback. Analysts trimmed targets in late 2025 and early 2026, feeding concerns about rising debt. That said, the trend implies Oracle’s fair value may lie below the broad consensus (which implies roughly an 80% upside), but a slide to the low-end target is unlikely. The $135 low-end target is an outlier more than eight months old; recent targets have been more ambitious. The average 2026 price target stands at $246, which implies roughly a 50% upside from key moving averages.
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In 2025, Oracle’s stock rose about 190% from low to high, creating incentives for insiders, institutions and retail investors to take profits. Insiders did sell, though not at the heavy pace seen in prior quarters, and institutional selling was offset by buyers, leaving the overall balance tilted bullish. Short sellers pared positions during the 2025 rally but not to a level that appears threatening — short interest was only about 2% in January.
Oracle’s Ballooning Debt Causes Concerns: Look Past the Debt to Backlog Growth
The foremost investor worry is Oracle’s growing debt load. Capital raises in 2025 and 2026 increased debt to more than $108 billion and nudged the share count higher by a modest single-digit amount, reversing the company’s recent trend of steady annual share-count reductions. There is, however, a rationale for the moves.
Oracle has deployed the proceeds to accelerate data-center expansion, modernization and product development to meet surging demand. The Q2 FY2026 report showed a high triple-digit increase in backlog driven by hyperscaler demand; that backlog is roughly five times the company’s current debt, suggesting both near-term capacity-driven revenue and longer-term services upside.
The takeaway is Oracle appears well-capitalized in 2026 and unlikely to need additional capital for several years, if at all. Debt coverage metrics remain ample, and the growth outlook is strong. With new data centers scheduled to come online this year and over the next three years, Oracle should be positioned to monetize its backlog while pursuing or exceeding targets. Meanwhile, it retains an investment-grade debt rating and can continue paying a dividend while investing in growth.
Analysts project a high-teens to low-20% compound annual earnings growth rate (CAGR) through the middle of the next decade. On those assumptions, Oracle would trade below 5x its 2035 consensus forecast — implying the potential for a large, multi-year advance. If Oracle simply moved to the market-average valuation relative to current-year earnings, the stock could rise by at least 400%; if it commanded a premium alongside blue-chip tech peers, gains to 700% by 2035 are within the realm of the scenario presented.
Oracle’s Catalysts: Results, Guidance, Cash Flow
Oracle is positioned to deliver a meaningful catalyst with its Q3 FY2026 results, due in early March. Analysts expect revenue growth to accelerate by nearly 20%, with earnings growth a bit slower. Since the last report some analysts have raised estimates while others have trimmed them, reflecting mixed sentiment despite favorable industry trends.
The most market-moving element will likely be guidance. Investors will look for continued backlog growth and clearer visibility into multi-year cash flow. If guidance disappoints, the stock could linger near mid-February lows until a stronger catalyst appears; if guidance satisfies or exceeds expectations, the reaction should be notably positive.
Price action has been volatile, and the usual caution about "catching a falling knife" applies. That said, early February activity shows signs of a bottom: significant divergences on the weekly chart suggest the sell-off may have reached an extreme and set the stage for a strong rebound. The monthly chart shows convergences in price action that have been building since late 2020 as Oracle’s shift to cloud-based data management and AI increasingly complemented one another — a pairing that has proven highly synergistic.
PayPal Is Back Near IPO-Era Prices—Value Setup or Value Trap?
Authored by Sam Quirke. Published: 2/20/2026.
Key Points
- PayPal’s drawdown has pushed valuation and technical indicators to extremes, setting up a potential contrarian opportunity.
- The bull case rests on durable profitability and a low multiple, while the bear case centers on slowing growth and competitive erosion.
- Leadership transition and any credible strategic reset are positioned as the near-term catalysts that could shift sentiment.
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Having fallen steadily since the summer of 2021, former tech darling PayPal Holdings Inc (NASDAQ: PYPL) is once again testing fresh lows. The stock now trades just above $40, roughly where it debuted publicly more than a decade ago. The past couple of years have been brutal for investors.
Behind the sell-off is a number that's hard to ignore. PayPal's price-to-earnings (P/E) ratio has collapsed to 7.67—one of its lowest-ever readings. For a roughly $38 billion technology company that still generates billions in annual profit and free cash flow, that multiple is strikingly low. It's not just cheap relative to its pandemic peak; it's cheap relative to its own history and to most of its mega-cap tech peers. The question for investors is whether this represents a generational value setup or a classic value trap.
Why the Valuation Screams Opportunity
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A single-digit P/E for a profitable tech company is rare. PayPal is not a pre-revenue startup or a structurally impaired business burning cash. In its most recent quarterly report, revenue grew 3.6% year over year to a new high. The problem is the pace of growth has slowed materially from its peak years. Still, the company is growing, profitable, and deeply embedded in the global payments ecosystem.
Historically, stocks that fall to single-digit earnings multiples tend to fall into one of two camps: either earnings are about to collapse, or the market has become excessively pessimistic about medium-term prospects.
A Rare Combination: PayPal Hits Extreme Oversold + Deep Value
PayPal's competitive moat has eroded over time and its status as the original digital-payments leader carries less weight than it once did. Yet at 7.67 times earnings, the market is pricing in persistently muted growth. That could be an overly negative assumption—especially when the technical picture supports a contrarian case.
PayPal's relative strength index (RSI) recently dipped as low as 12 and now sits around 28, still firmly in deeply oversold territory. That is the lowest RSI reading in the stock's history. Combined with a record-low P/E, this is a rare alignment of technical and fundamental compression. While it doesn't guarantee an immediate rebound, it signals that both sentiment and valuation have been pushed to extremes.
Why the Market Is Skeptical
The stock's collapse did not occur in a vacuum. Growth has slowed to near its weakest levels since PayPal went public. Although the most recent earnings report showed record revenue, the pace of expansion continues to decelerate.
Competitive pressure—particularly in branded checkout—has intensified. Apple Pay, Stripe and other fintechs have chipped away at parts of PayPal's business. Meanwhile, investor enthusiasm around AI-driven upside has cooled, as the company has not yet demonstrated a clear path to materially monetizing that opportunity.
Leadership change adds another layer of uncertainty. A new CEO is expected to step in next month, according to PayPal's announcement. While a management reset could be a positive catalyst, it also introduces short-term execution risk. Many analysts remain cautious, arguing a low multiple is justified if growth stays muted and competition persists.
A Tempting Risk/Reward Profile for PayPal
Still, the risk/reward profile is hard to ignore. Even within a cautious analyst community with a consensus Hold rating, there are contrarian voices. Susquehanna and Argus have both reiterated Buy ratings recently, with price targets as high as $65—implying roughly 35% upside from current levels.
Bullish scenarios don't require a heroic recovery to former highs—just some stabilization and a modest vote of confidence from value investors. When a stock and its valuation are beaten down this low, the bar for positive outcomes is relatively low.
The incoming CEO could provide the catalyst investors want: a clear strategic reset, renewed focus on revenue growth, and tangible progress defending market share could shift sentiment quickly.
PayPal is no longer priced as the growth darling it once was. But when a profitable, roughly $38 billion technology company trades at a single-digit P/E, near IPO-era prices, and at one of the most oversold technical readings in years, it deserves attention.
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