Michael Burry Took a Bearish Bet Against Oracle. Here’s What It Means for ORCL Stock.

Michael Burry is betting against Oracle (ORCL) stock again, and his warning goes straight to the heart of the company’s massive artificial intelligence (AI) infrastructure spending. The investor famous for predicting the 2008 housing crash has taken a new short position in Oracle around $145 per share. His concern is that AI infrastructure companies are taking on enormous financial obligations to build data centers before those investments generate enough cash.

Burry described Oracle as one of the “very fat, very large, easy to shoot” fish in the AI trade, pointing specifically to roughly $260 billion of future data-center lease commitments. That matters for ORCL stock because Oracle’s AI business is growing rapidly. The problem is that investors now have to decide whether that growth will generate enough cash to justify the capital required to achieve it.

Oracle Stock Has Already Taken a Beating

ORCL stock is still down roughly 25% year-to-date (YTD), even after a recent rebound. The stock plunged to around $115 in late July, highlighting just how sharply sentiment has shifted around Oracle’s AI strategy. 

The selloff has not been caused by weak demand. Instead, investors have become increasingly concerned about what Oracle must spend to meet that demand.

Oracle generated a record $32 billion in operating cash flow during fiscal 2026. But free cash flow was -$23.7 billion because capital spending surged to support its cloud infrastructure expansion. The company also ended the year with about $129.5 billion of debt.

That is where Burry’s argument gets interesting. The $260 billion in future leases is not the same thing as $260 billion of current debt. But they do represent contractual obligations that Oracle will have to fund over time. If AI demand remains strong, those commitments could help produce substantial revenue. If demand disappoints, Oracle could be left carrying expensive infrastructure with far less attractive economics.

Is ORCL Stock Cheap After the Selloff?

Oracle’s valuation looks considerably more reasonable after the collapse. ORCL stock trades at 23 times trailing earnings and roughly 22.7 times forward earnings. That is far less demanding than the valuation investors were willing to pay during Oracle’s AI-fueled rally.

But Burry’s argument is that earnings multiples alone do not tell the whole story.

Oracle is essentially transforming itself from a traditional enterprise software company into a capital-intensive cloud infrastructure player. Management expects to spend up to $95 billion on capital expenditures in fiscal 2027 and raise about $40 billion through debt and equity financing.

Oracle has already announced a $20 billion at-the-market equity issuance. More shares can help finance the AI buildout, but they also mean existing shareholders will own a smaller percentage of the company.

Oracle’s Results Give Bulls Plenty to Work With

There is also a very strong counterargument to Burry’s thesis.

Oracle’s latest quarter was impressive. Fiscal fourth-quarter revenue climbed 21% year-over-year (YOY) to $19.2 billion, while total cloud revenue jumped 47% YOY to $9.9 billion. Cloud infrastructure revenue was the standout, surging 93% YOY to $5.8 billion. Adjusted EPS increased 24% to $2.11, while net income rose 23% to $4.2 billion.

Then there is Oracle’s enormous backlog. Remaining performance obligations reached $638 billion at the end of Q4, up 363% YOY. That is nearly 10 times Oracle’s fiscal 2026 revenue of $67.4 billion. 

Importantly, Oracle says $75 billion of its large AI contracts involve customers prepaying for GPUs or supplying the hardware themselves. That reduces the amount of capital Oracle has to provide upfront.

So, Burry is not betting against a company with no customers. He is betting that the economics of serving those customers may not justify the enormous cost of building the infrastructure.

Wall Street Remains Bullish on Oracle Stock

Analysts are considerably more optimistic than Burry.

Goldman Sachs has a “Buy” rating and a price target of $239 for ORCL stock, arguing that the pace of capacity expansion and Oracle’s ability to translate that investment into earnings will be crucial. JPMorgan also has a “Buy” rating with a $210 target, while a broader group of analysts remains overwhelmingly constructive.

Overall, the Wall Street consensus is a “Strong Buy” rating with a mean price target of $248.49, which suggests Oracle could run up as much as 71% from current levels. That creates a fascinating setup for ORCL stock.

Burry sees a highly leveraged AI infrastructure bet with enormous future obligations. Wall Street sees a company with 93% cloud infrastructure growth, a $638 billion backlog, and a potentially massive AI opportunity.