Citi’s software research chief just called Oracle’s brutal summer selloff a rare statistical anomaly and went on CNBC to argue the stock belongs in your portfolio. But his own reasoning contains a contradiction that changes everything about the trade.
Oracle (NYSE:ORCL | ORCL Price Prediction) has been the loudest cautionary tale in software this summer, which is exactly why Citi’s Tyler Radke went on CNBC today to argue the selloff has gone too far. Radke, co-head of U.S. software equity research at the bank, opened a positive catalyst watch on Oracle and called the drawdown “a 4 to 5 standard deviation move” driven largely by technical factors.
The stock closed at $148.87 on Wednesday, down 22.88% year to date and 35.71% below its price a year ago. Radke cited Oracle as down over 20% year to date and pacing for its first negative year in four.
His argument rests on three claims: the selling is mechanical, the growth is real, and the valuation is cheap. He describes Oracle as “growing revenue and earnings over 30% over the next few years” and trading at a mid-teens earnings multiple, which lines up with a forward P/E of 18x. The tension in his case is that he blames technical selling while acknowledging Oracle’s credit rating is teetering on the edge of investment grade. Those two things are not independent.
How Bad the Selloff Has Been
Oracle traded as high as $341.82 in the past year and as low as $114.50. That is a rare range for a mature megacap software company, following a Q1 FY26 report where the stock jumped 35.95% on the day of earnings.
The Q4 FY2026 report on June 10, 2026, saw shares drop 8.53% on the day and 28.03% over the following 30 days, while the S&P 500 was up modestly over the same period.
Radke thinks that is overdone because the underlying booking data has continued to improve. Oracle finished FY26 with remaining performance obligations of $638 billion, up 363% year over year, and IaaS revenue grew 93% in Q4. Guidance for FY27 was set at $90 billion in revenue and $8.05 in non-GAAP EPS.
Reddit sentiment in early August was dominated by a post about Larry Ellison pledging 346 million Oracle shares as collateral for a loan. That narrative feeds forced selling if the stock keeps sliding.
What ATM Equity Issuance Does to a Share Price
Radke told CNBC he wants Oracle to “communicate to investors that they’re done with this at the market equity issuance”. An at-the-market program allows a company to sell new shares directly in the open market at prevailing prices.
That is helpful for the company because it avoids discounting a marketed offering. It is painful for the stock because there is constant latent supply, and any rally can be met by the company itself selling into it.
Oracle disclosed plans to raise approximately $40 billion through debt and equity in fiscal 2027, including a $20 billion at-the-market equity issuance. That program is both a technical drag on the stock and a direct reflection of the fundamentals, because Oracle needs the equity for the AI data center buildout, which has to be powered, cooled, and networked by a whole cast of suppliers we profiled in a free report on the AI infrastructure names that aren’t chipmakers, and which is generating negative $23.7 billion in free cash flow.
When Radke calls the sell-off technical and also worries about the credit rating, that’s the same story told twice. The market is repricing a balance sheet that carries $218.7 billion in total liabilities against a capital plan that continues to grow.
Business Case Underneath the Financing Case
Radke’s operating argument is stronger than his technical one. He said Oracle’s “database business is well positioned” and that its applications business is gaining share, growing faster than Salesforce and Workday.
The Q4 numbers back up the direction. Multi-cloud revenue grew 404% year over year, and management said global GPU utilization was 97.5%. Cloud applications revenue was $4.126 billion, up 10%.
Management expects OCI margins to settle in the 30% to 40% range, with a steady-state return on invested capital in the “high 20s”. Those numbers make a mid-teens forward multiple look interesting if you believe them.
The catch is that Radke’s 30%+ revenue and earnings growth figure is his estimate, not a company forecast, and it depends on Oracle continuing to sign multi-billion-dollar contracts without further diluting shareholders. Oracle’s next earnings report is expected on September 8, 2026, though the company has not confirmed the date.
What I Think About the Setup
Radke’s most useful observation is that the investor day at the end of October is a real catalyst, because management could signal that new deals carry higher prepayments and do not require incremental financing. If they do, the technical overhang eases.
The problem is that Oracle has to earn that outcome. The $75 billion in bring-your-own-hardware and prepaid contracts disclosed in Q4 is genuinely helpful for capital intensity, but it does not, by itself, resolve the credit question.
At $148.87, the stock is pricing in the risk that another quarter of heavy capex and further equity supply keeps a lid on things through year-end. Radke can be right about the long-term trajectory and still early on the entry.
The setup looks like a legitimate dislocation with a fundamental overhang attached, more complicated than the clean technical story Radke framed it as. Anyone taking his side of the trade is betting that the September earnings report and October investor day give management a chance to change the financing narrative, and that is a real bet with a real timeline attached.
Contact [email protected] for any questions or corrections.
