Oracle (ORCL) AI Stock Analysis

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Oracle

(NYSE:ORCL)

Rating:81Outperform

Price Target:―

Oracle's overall stock score reflects its strong financial performance, particularly its profitability and revenue growth, despite high leverage. The earnings call's positive outlook on cloud services and AI advancements bolsters this score. However, high valuation metrics and mixed technical signals are factors to consider.

Positive Factors

AI Infrastructure

Oracle's deployment of NVIDIA GPUs at scale is seen as a validation of its AI Infrastructure as a Service capabilities.

Competitive Edge

Oracle is one of the first providers to offer NVIDIA GB200 systems with advanced networking and software integrations, which enhances its competitive edge in the cloud services market.

Revenue Growth

Oracle's deployment of NVIDIA GPUs could help drive revenue momentum, demonstrating potential growth in revenue.

Negative Factors

Competition

Intensified competition could create downward pressure on product pricing and margins.

Cybersecurity

The occurrence of any disruptive cyber incidents could harm Oracle's business or damage its brand and reputation, leading to the loss of existing customers.

Price/Performance

Oracle's price/performance figures remain well below major hyperscalers, often 50% lower in cost, providing a competitive edge.

Oracle (ORCL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$437.38B

Dividend Yield1.09%

Average Volume (3M)8.18M

Price to Earnings (P/E)36.6

Beta (1Y)1.44

Revenue Growth6.23%

EPS Growth12.37%

CountryUS

Employees159,000

SectorTechnology

Sector Strength76

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)1.47

Shares Outstanding2,804,234,000

10 Day Avg. Volume8,400,184

30 Day Avg. Volume8,177,568

Financial Highlights & Ratios

PEG Ratio7.08

Price to Book (P/B)22.07

Price to Sales (P/S)0.00

P/FCF Ratio61.89

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$175.96

Price Target Upside12.82% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering29

Oracle Business Overview & Revenue Model

Company DescriptionOracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, Oracle Fusion cloud supply chain and manufacturing management, Oracle Fusion cloud human capital management, Oracle Advertising, and NetSuite applications suite, as well as Oracle Fusion Sales, Service, and Marketing. The company also offers cloud-based industry solutions for various industries; Oracle application licenses; and Oracle license support services. In addition, it provides cloud and license business' infrastructure technologies, such as the Oracle Database, an enterprise database; Java, a software development language; and middleware, including development tools and others. The company's cloud and license business' infrastructure technologies also comprise cloud-based compute, storage, and networking capabilities; and Oracle autonomous database, MySQL HeatWave, Internet-of-Things, digital assistant, and blockchain. Further, it provides hardware products and other hardware-related software offerings, including Oracle engineered systems, enterprise servers, storage solutions, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services; and consulting and customer services. The company markets and sells its cloud, license, hardware, support, and services offerings directly to businesses in various industries, government agencies, and educational institutions, as well as through indirect channels. Oracle Corporation was founded in 1977 and is headquartered in Austin, Texas.

How the Company Makes MoneyOracle makes money primarily through the sale of software licenses, cloud services, and hardware products. Its revenue model is heavily reliant on its cloud and license business, which includes software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS), and software license updates and product support. A significant portion of Oracle's revenue also comes from its hardware business, which involves the sale of servers, storage, and network products. Additionally, Oracle generates income through consulting services and technical support. The company has established numerous strategic partnerships and alliances to bolster its cloud offerings, thereby enhancing its competitive position in the rapidly evolving technology landscape.

Oracle Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Shows how much revenue each business segment contributes, highlighting Oracle's key areas of strength and potential growth drivers within its diverse product and service offerings.

Chart InsightsOracle's Cloud Services and License Support segment continues its robust growth trajectory, reflecting a strategic focus on cloud infrastructure and applications. The recent earnings call highlights a 12% increase in this segment, driven by Oracle Cloud Infrastructure and strategic cloud applications. Despite exiting the advertising business, which slightly dampened cloud revenue growth, Oracle's aggressive expansion of cloud regions and multi-cloud partnerships with major tech firms underscore its commitment to capturing market share. The company's confidence is further bolstered by a record backlog and ambitious revenue growth targets for the coming years.

Data provided by:

Main Street Data

Oracle Financial Statement Overview

Summary

Oracle shows strong profitability with impressive revenue growth and operational efficiency. However, high leverage and a declining free cash flow growth rate present potential risks.

Income Statement

Very Positive

Oracle's income statement is strong, with a robust gross profit margin of 88.5% TTM and a net profit margin of 21.8% TTM, indicating high profitability. The revenue growth rate was impressive at 5.3% annually from 2023 to 2024 and 5.3% from 2024 to TTM, showing consistent growth. EBIT and EBITDA margins were solid at 31.3% and 24.7% TTM, respectively, reflecting efficient operations.

Balance Sheet

Positive

Oracle's balance sheet shows a high debt-to-equity ratio of 5.58 TTM, indicating significant leverage, which could pose a risk. However, return on equity (ROE) was strong at 70.5% TTM, suggesting effective use of equity. The equity ratio was relatively low at 10.7% TTM, highlighting a potential risk in financial stability.

Cash Flow

Positive

Oracle's cash flow statement demonstrates robust operating cash flow to net income ratio of 1.71 TTM, indicating strong cash generation relative to earnings. The free cash flow margin is stable, but the free cash flow growth rate decreased by 50.8% from 2023 to TTM, suggesting a need for improvement in cash retention.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
55.78B	52.96B	49.95B	42.44B	40.48B	39.07B
	Gross Profit
38.93B	37.82B	36.39B	33.56B	32.62B	31.13B
	EBIT
17.45B	15.35B	13.67B	15.84B	15.65B	14.15B
	EBITDA
23.72B	21.58B	18.90B	18.96B	18.57B	17.12B
	Net Income Common Stockholders
12.16B	10.47B	8.50B	6.72B	13.75B	10.13B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
17.82B	10.66B	10.19B	21.90B	46.55B	43.06B
	Total Assets
161.38B	140.98B	134.38B	109.30B	131.11B	115.44B
	Total Debt
96.28B	94.47B	90.48B	75.86B	84.25B	71.60B
	Net Debt
78.87B	84.02B	80.72B	54.48B	54.15B	34.36B
	Total Liabilities
144.12B	131.74B	132.83B	115.06B	125.16B	102.72B
	Stockholders Equity
16.73B	8.70B	1.56B	-5.77B	5.95B	12.72B
Cash Flow		Free Cash Flow
5.81B	11.81B	8.47B	5.03B	13.75B	11.57B
	Operating Cash Flow
20.75B	18.67B	17.16B	9.54B	15.89B	13.14B
	Investing Cash Flow
-15.29B	-7.36B	-36.48B	11.22B	-13.10B	9.84B
	Financing Cash Flow
2.64B	-10.55B	7.91B	-29.13B	-10.38B	-6.13B

Oracle Technical Analysis

Technical Analysis Sentiment

Positive

Last Price155.97

Price Trends

50DMA

144.72

Positive

100DMA

155.12

Positive

200DMA

160.35

Negative

Market Momentum

MACD

4.60

Negative

RSI

57.50

Neutral

STOCH

35.05

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ORCL, the sentiment is Positive. The current price of 155.97 is above the 20-day moving average (MA) of 152.88, above the 50-day MA of 144.72, and below the 200-day MA of 160.35, indicating a neutral trend. The MACD of 4.60 indicates Negative momentum. The RSI at 57.50 is Neutral, neither overbought nor oversold. The STOCH value of 35.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ORCL.

Oracle Risk Analysis

Oracle disclosed 30 risk factors in its most recent earnings report. Oracle reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Oracle Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	84 Outperform	$3.35T	34.79	33.61%	0.70%	14.13%	12.10%
PANW	81 Outperform	$124.52B	106.87	21.16%	―	13.91%	-50.96%
ORCL	81 Outperform	$437.38B	36.65	108.79%	1.09%	6.23%	12.37%
SNPS	79 Outperform	$77.13B	36.89	16.27%	―	-1.19%	48.33%
ADBE	77 Outperform	$173.76B	26.85	47.28%	―	10.65%	44.84%
CRWD	76 Outperform	$113.48B	721.64	-0.69%	―	29.39%	-119.62%
Sector *	61 Neutral	$11.29B	10.07	-7.05%	2.96%	7.47%	-10.75%

* Technology Sector Average

Performance Comparison

ORCL

Oracle

155.97

32.85

26.68%

ADBE

Adobe

407.69

-70.74

-14.79%

MSFT

Microsoft

450.18

23.14

5.42%

PANW

Palo Alto Networks

186.75

32.75

21.27%

SNPS

Synopsys

498.85

-89.09

-15.15%

CRWD

CrowdStrike Holdings

455.59

108.77

31.36%

Oracle Earnings Call Summary

Earnings Call Date:Mar 10, 2025

(Q3-2025)

% Change Since: 5.20%|

Next Earnings Date:Jun 17, 2025

Earnings Call Sentiment Positive

The earnings call reflected Oracle's strong performance with record-breaking bookings, robust cloud revenue growth, and significant advancements in AI and cloud infrastructure. However, the exit from the advertising business, component delays, and currency impacts posed challenges. Overall, the highlights significantly outweigh the lowlights.

Q3-2025 Updates

Positive Updates

Record-Breaking Bookings and RPO Growth

Oracle's backlog increased by $48 billion, and their RPO balance reached $130 billion, up 63% year-over-year. This excludes contracts with project Stargate.

Expansion of Cloud Services

Oracle's 101st cloud region came online, marking a milestone. The company aims to have more cloud regions than competitors combined, leveraging their Gen 2 architecture.

Strong Cloud Revenue Growth

Total cloud revenue was up 25% at $6.2 billion, with SaaS revenue of $3.6 billion (up 10%) and IaaS revenue of $2.7 billion (up 51%).

AI Demand and Infrastructure Growth

Record level AI demand drove OCI revenue up 51%. GPU consumption revenue is nearly 3.5 times the size of last year's.

Dividend Increase

Oracle's Board of Directors increased the quarterly dividend by 25%, from $0.40 to $0.50 per share.

Multi-Cloud Partnerships

Oracle's multi-cloud business with Amazon, Google, and Microsoft grew 200% in the last three months alone, with plans for 40 more regions.

Negative Updates

Exit from Advertising Business

The exit from the advertising business last year lowered total cloud revenue growth by 2% this quarter.

Component Delays Impact Capacity Expansion

Oracle experienced delays in cloud capacity expansion due to component shortages, expected to ease in Q1 FY '26.

Higher Non-GAAP Tax Rate

The non-GAAP tax rate for the quarter was 19.9%, higher than the 19% guidance, affecting EPS by $0.02.

Currency Headwind

Currency fluctuations resulted in a $0.04 negative impact on EPS, more than initially expected.

Company Guidance

During the Oracle Corporation Third Quarter Fiscal Year 2025 Earnings Conference Call, the company provided detailed guidance and metrics reflecting their strong performance and future outlook. Oracle reported a record $48 billion addition to their backlog, with a Remaining Performance Obligation (RPO) balance now at $130 billion, up 63% year-over-year. Oracle's cloud revenue, comprising SaaS and IaaS, was up 25% to $6.2 billion, with SaaS revenue increasing by 10% and IaaS revenue surging by 51%. The total cloud services and license support revenue reached $11 billion, up 12%, driven by Oracle Cloud Infrastructure (OCI) and strategic cloud applications. Oracle's infrastructure subscription revenues were $6.2 billion, up 18%, with OCI consumption revenue up 57%, and GPU consumption revenue nearly 3.5 times the size of last year’s. They forecast a fiscal year 2025 CapEx of approximately $16 billion and projected total cloud revenue to grow by 24% to 28% in constant currency for Q4. Additionally, Oracle expects a 15% revenue growth rate for FY '26 and a 20% growth rate for FY '27, highlighting confidence in their $66 billion revenue target for FY '26.

Oracle Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Oracle’s Edward Screven to Retire After 38 Years

Neutral

Jan 13, 2025

Oracle announced that Edward Screven, Executive Vice President and Chief Corporate Architect, will be retiring after 38 years with the company. He will support the transition of his responsibilities until February 2025 and continue representing Oracle on Ampere Computing Holdings LLC’s Board of Directors, impacting the company’s strategic continuity.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.