Oracle Maintains Dividend Amidst Significant Share Price Decline

Oracle US68389X1054

Despite a steep decline in its share price, Oracle Corporation is proceeding with its quarterly cash distribution to shareholders. The technology giant will pay a dividend of $0.50 per share on January 23, with the record date set for January 9. This payout arrives during a challenging period for the stock, which has retreated more than 40% from its September 2025 all-time high above $328.

Currently trading around $189, Oracle's shares have shed an additional 3.4% in the past week alone. The equity carries a premium valuation, with a price-to-earnings ratio of approximately 35 and a price-to-sales multiple of 8.9. This contrasts with the S&P 500's average sales multiple of 3.3. Oracle's market capitalization stands at about $544 billion.

Broader sector concerns are applying pressure. Analysts at UBS, who reiterated a Buy rating on January 5, cited diminishing investor confidence related to OpenAI as a primary factor weighing on a cluster of technology stocks, including Oracle. Consequently, the bank reduced its price target from $325 to $280 per share.

Strong Fundamentals Contrast with Market Sentiment

The market's tepid reaction is notable given Oracle's robust second-quarter fiscal 2026 results, released on December 10. The company posted revenue of $16.1 billion, a 14% year-over-year increase. Cloud revenue surged 34%, with Infrastructure-as-a-Service (IaaS) leading the charge at $4.1 billion, representing a 68% gain.

Non-GAAP earnings per share jumped 54% to $2.26. A key forward-looking metric, remaining performance obligations (RPO), skyrocketed 438% to $523 billion, signaling a substantial pipeline of future revenue.

Strategic Pivot and Growth Segments

In December, Chairman Larry Ellison announced a significant strategic shift, stating Oracle no longer views designing and manufacturing its own chips as strategic for its cloud data centers. The company sold its stake in chipmaker Ampere, realizing a pre-tax gain of $2.7 billion, and is now pursuing a "chip-neutral" approach.

Co-CEO Clay Magouyrk highlighted the company's multicloud strategy, noting that the multicloud database business expanded by 817% in Q2, making it Oracle's fastest-growing segment.

Outlook and Analyst Perspective

Management's guidance for the current third fiscal quarter anticipates constant-currency cloud revenue growth between 37% and 41%. Total revenue is projected to increase by 16% to 18%. These figures are scheduled for release around March 9, 2026.

Despite near-term headwinds, UBS analysts see potential for recovery. They point to an impending acceleration in revenue growth, the ramping up of data center capacity in Abilene, and a possible easing of OpenAI-related concerns in the first half of 2026 as reasons for optimism. The bank also believes financing and credit risks are already largely reflected in the share price. The average analyst price target for Oracle remains at $291, well above the current trading level.