Since its mid-September peak, Oracle's stock price has experienced a sharp -41% correction. This is not merely a technical pullback but a direct reflection of the market's collapsing confidence in the "OpenAI complex." Investors are currently highly anxious: can OpenAI deliver on its trillion-dollar promise? Will Oracle's massive $88 billion in net debt crush its balance sheet? According to the analysis, UBS, in a research report dated January 4, presented a clear contrarian view, reiterating its "Buy" rating. UBS argues that the market has overpriced the risks of an OpenAI default and Oracle's financing pressure. The market narrative could fundamentally reverse in the first half of 2026, provided OpenAI completes a new funding round, GPT-6 launches as scheduled in Q1, and Oracle alleviates capital expenditure pressure through "off-balance-sheet financing" methods. For investors, Oracle currently trades at a price-to-earnings ratio of 29 times based on 2026 expected earnings, and just 11 times based on 2030 expected earnings, presenting a highly attractive risk-reward profile.
OpenAI Faith Recharge: Securing Funds and the "Redemption" of GPT-6 Oracle's stock plunge is not entirely due to its own operational performance but is collateral damage from its role as a core compute "arms supplier" to OpenAI. The market fears OpenAI cannot honor its commitments to suppliers. UBS notes that restoring this faith requires just two catalysts: money and technology.
A hundred-billion-dollar funding round materializing: Reports indicate OpenAI is raising $100 billion at an $830 billion valuation, with SoftBank having fully funded its $40 billion commitment and Amazon in talks for a $10 billion investment. Once this massive capital is secured, the risk of OpenAI defaulting on its obligations to Oracle would vanish instantly.
GPT-6 is imminent: Although ChatGPT's user growth is slowing, OpenAI's CEO has hinted at a major model update (i.e., GPT-6) in Q1. If the new model can demonstrate that compute investments yield a qualitative leap, it would directly shatter the competitive anxiety fueled by Google's Gemini and end market panic about an AI bubble.
Moat Still Intact: OpenAI Remains King in the Enterprise Market, Gemini Threat Exaggerated The release of Google's Gemini 3 triggered a "code red" crisis within OpenAI and led investors to worry about OpenAI's growth peaking in the consumer market. However, UBS's latest enterprise AI survey suggests this concern is overstated in the B2B market.
Enterprise adoption is steadily rising: The production-level adoption rate for enterprise AI projects has increased from 14% in March 2025 to 17% in December. While the growth pace isn't rapid, the trend is upward.
OpenAI's dominance persists: Among enterprise users, OpenAI's models occupy three of the top five spots (first, third, and fifth). Although Google Gemini's ranking has improved, OpenAI remains far ahead in terms of enterprise productization.
Debt Black Hole or Masterful Finance? Off-Balance-Sheet Financing and BYOC to Rescue the Balance Sheet Beyond OpenAI-related risks, investors' greatest concern is Oracle's own balance sheet. As of the quarter ending November 2025, Oracle's net debt stood at a hefty $88.3 billion, with a net debt/EBITDA ratio of 2.8x (which could approach 4x from an S&P rating perspective when including lease liabilities). To maintain its investment-grade rating, Oracle must walk a tightrope between massive capital expenditures and debt. UBS forecasts that Oracle's average annual capital expenditure from FY26 to FY30 will reach a staggering $72 billion. To fill this funding gap, Oracle is adopting an aggressive financing strategy:
Off-balance-sheet financing: By having partners (like Crusoe, Vantage) build data centers where Oracle acts merely as a tenant, it can move massive infrastructure costs off its balance sheet.
Bring Your Own Chip (BYOC): Oracle is exploring a new model where large customers (like OpenAI) use their own contracts with Nvidia to purchase chips directly, which are then installed in Oracle's data centers. This would significantly reduce Oracle's direct capital investment. UBS estimates that if 50% of funding needs are met through such structures, Oracle's direct financing requirement over the next three years could drop from $80 billion to $40 billion, greatly alleviating credit pressure.
Infrastructure Juggernaut: Abilene Data Center Not Delayed, Nearly 100,000 GB200s Ready Rumors about delays in Oracle's data center construction have been rampant, but UBS refutes this view based on field research and data analysis.
Impressive delivery speed: Oracle disclosed on its earnings call that its Abilene, Texas supercluster has delivered over 96,000 Nvidia GB200 chips as planned.
Revenue surge imminent: UBS calculates that these 96,000 GPUs only partially contributed revenue last quarter. As capacity ramps to a peak of 400,000 GPUs, the Abilene project alone could generate $9.5 billion in annualized revenue. UBS expects this to drive Oracle Cloud Infrastructure (OCI) revenue growth to accelerate to over 87% in the Feb/May quarter of 2026.
Valuation Floor: Risks Fully Priced In, Is Now the Time to Buy the Dip? Despite numerous uncertainties, Oracle's growth story remains one of the most aggressive among tech giants. Company guidance indicates revenue growth will accelerate from 16% in FY26 to 46% in FY28. UBS conducted a stress test: even in a "disaster scenario" (where OpenAI's revenue contribution falls to zero by FY30), Oracle's current stock price corresponds to a FY30 P/E of just 12.4x. Under the base case, the P/E based on FY30 EPS ($21 guidance) is only 11x. In comparison, Microsoft's forward P/E is around 18x. UBS believes the stock's decline of over 36% (relative to the average drop in the AI sector) has already over-discounted financing and execution risks. As long as funding is secured and infrastructure is delivered on schedule, Oracle is poised for significant valuation recovery.
