Oracle Corporation (ORCL) | Investment Case

1. Company Snapshot

1.a. Company Description

Oracle 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.

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1.b. Last Insights on ORCL

Oracle's recent underperformance is attributed to investor concerns regarding the company's aggressive AI investments, which have not yet translated into bottom-line strength. A lawsuit initiated by bondholders over possible losses resulting from Oracle's debt-driven AI infrastructure expansion has added to the stock's downward pressure. Furthermore, Oracle's high debt-to-equity ratio and negative free cash flow have raised concerns among investors. Additionally, institutional investors such as Exencial Wealth Advisors LLC and Commerzbank Aktiengesellschaft FI have reduced their holdings in the company.

1.c. Company Highlights

Last Price	160.13
Change Percentage	-2.70%
Open	170.92
Previous Close	164.58
Market Cap ( Millions)	460074
Volume	43252223
Year High	345.72
Year Low	118.86
M A 50	195.47
M A 200	219.6

FCF Yield	-2.86%
Dividend Yield	1.25%
ROE	67.59%
Debt / Equity	415.30%
Net Debt / EBIDTA	389.48%
Price To Book	15.31
Price Earnings Ratio	29.73
Price To FCF	-34.9
Price To sales	7.54
EV / EBITDA	20.94

2. Oracle's Q2 FY 2026 Earnings: A Strong Showing in Cloud and AI

Oracle Corporation reported a robust Q2 FY 2026, with total revenues reaching $16.1 billion, a 13% increase from the previous year. Total cloud revenue was a highlight, growing 33% to $8 billion, driven by a 66% surge in cloud infrastructure revenue to $4.1 billion and an 11% increase in cloud applications revenue to $3.9 billion. The company's operating income grew 8% to $6.7 billion, and non-GAAP EPS was $2.26, a 51% increase, significantly beating estimates of $1.64. The strong EPS performance was accompanied by a pretax gain of $2.7 billion from the sale of its interest in Ampere, contributing to the overall financial success.

Publication Date: Dec -20

                                    📋 Highlights
                                    Cloud Infrastructure Surge:
                                                Cloud infrastructure revenue jumped 66% to $4.1 billion, outpacing cloud applications' 11% growth to $3.9 billion.
Historic RPO Growth:
                                                Remaining Performance Obligations soared 433% to $523.3 billion, reflecting strong future revenue visibility.
AI-Driven Profitability:
                                                AI workload margins for OCI are projected to reach 30-40%, with rapid capacity scaling to boost margins.
Accelerating Applications Growth:
                                                Fusion ERP, SCM, HCM, and CX grew 17-18%, with 330 cloud apps go-lives and 14% deferred revenue growth.
EPS & Guidance Expansion:
                                                Non-GAAP EPS surged 51% to $2.26, while FY 2026 revenue guidance reached $67 billion with $15 billion added to CapEx forecasts.

                                

Cloud and AI Momentum

The company's cloud business continues to gain momentum, with Remaining Performance Obligations (RPO) ending the quarter at $523.3 billion, up 433% from the previous year. Oracle's AI data platform is a key differentiator, allowing customers to quickly gain value from enterprise-grade AI by combining industry-leading foundational models with company-specific proprietary data. The platform's ability to tie in non-Oracle applications, competitive data sources, and unstructured data is enabling customers to build enterprise lake houses, AI agents, and applications with built-in AI, as seen in the deal with Tim Brazil, which signed a five-year expansion to accelerate AI adoption.

Financial Outlook and Guidance

Oracle expects full-year FY 2026 revenue of $67 billion and has increased its fiscal 2026 CapEx forecast by about $15 billion. For Q3, total cloud revenue is expected to grow 37-41%, and total revenues are expected to grow 16-18%. Non-GAAP EPS is expected to grow 12-14%. The company's guidance suggests continued strong growth in its cloud business, driven by its AI capabilities and infrastructure.

Valuation and Growth Prospects

With a P/E Ratio of 35.49 and an EV/EBITDA of 28.74, Oracle's valuation reflects its strong growth prospects. Analysts estimate next year's revenue growth at 17.3%, indicating a continued upward trajectory. The company's ROIC of 9.36% and ROE of 67.22% demonstrate its ability to generate returns on its investments. Oracle's AI infrastructure and applications business are expected to drive future growth, with the company poised to capitalize on the increasing demand for AI solutions.

Applications Business Acceleration

Oracle's applications business is expected to accelerate this year, driven by its unique position offering complete application suites with baked-in AI. Over 400 AI features are live in Fusion, and customers are implementing AI agents quickly. The company's growth rates in industry applications are strong, with Fusion ERP up 17%, SCM up 18%, HCM up 14%, and CX up 12%. Deferred revenue for apps grew 14%, outpacing in-quarter revenue growth of 11%, supporting optimism for the apps business going forward.

3. NewsRoom

What Oracle Has to Lose From OpenAI and Nvidia's Rocky Relationship

01:00

Source: wsj.com

Oracle's Huge Bond Sale, Musk Eyes SpaceX and xAI Combo | Bloomberg Tech 2/2/2026

Feb -02

Source: youtube.com

Oracle's credit default swaps are plummeting as financing plan boosts investor confidence

Feb -02

Source: cnbc.com

Oracle Commodity Holding Announces Closing of Non-Brokered Private Placement

Feb -02

Source: newsfilecorp.com

Dow Jones Today: Stock Indexes Surge to Begin February Trading; S&P 500 on Pace for Record Close; Dow Adds 450 Points; US, India Reach Trade Deal

Feb -02

Source: investopedia.com

Oracle buys time on AI ambitions with $50 bln financing plan: analysts

Feb -02

Source: proactiveinvestors.com

Oracle Shares Seesaw After Company Announces $50 Billion Fundraising Plan

Feb -02

Source: benzinga.com

Oracle Is Raising Billions to Fund Its AI Buildout. Today, Investors Are Cheering

Feb -02

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.54%)

6. Segments

Cloud and License

Expected Growth: 6.4%

Oracle’s Cloud and License segment is driven by increasing demand for cloud-based services and licenses for its software products, growth in emerging markets, and expanding partner networks.

Services

Expected Growth: 8.5%

Oracle's Services segment growth is driven by increasing demand for digital transformation, cloud adoption, and the need for effective implementation and support of its software and hardware products.

Hardware

Expected Growth: 5.1%

Oracle Hardware’s growth is driven by increasing demand for cloud infrastructure, need for high-performance computing, and growing adoption of big data analytics, as well as Oracle’s strong brand recognition and continued innovation in servers, storage, and networking equipment.

7. Detailed Products

Oracle Autonomous Database

A cloud-based relational database that uses machine learning to automate administrative tasks, providing high performance, security, and scalability.

Oracle Cloud Infrastructure (OCI)

A comprehensive cloud platform that provides a range of services, including compute, storage, networking, and database, for building, deploying, and managing applications.

Oracle Enterprise Resource Planning (ERP) Cloud

A comprehensive ERP system that provides a range of modules, including financial management, human capital management, and supply chain management, to manage business operations.

Oracle Customer Experience (CX) Cloud

A suite of cloud-based applications that provide a range of customer experience management capabilities, including sales, marketing, and customer service.

Oracle NetSuite ERP

A cloud-based ERP system that provides a range of modules, including financial management, inventory management, and order management, to manage business operations.

Oracle Data Science

A cloud-based platform that provides a range of data science tools and services, including machine learning, data preparation, and model deployment.

Oracle Integration Cloud

A cloud-based integration platform that provides a range of integration tools and services, including API management, data integration, and process automation.

Oracle Security and Identity

A suite of security and identity management solutions that provide threat detection, identity governance, and access management capabilities.

8. Oracle Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Oracle's products and services have a high switching cost, making it difficult for customers to switch to substitutes.

Bargaining Power Of Customers

Oracle's customers have some bargaining power due to the availability of alternative products and services, but Oracle's strong brand and customer loyalty mitigate this power.

Bargaining Power Of Suppliers

Oracle has a diverse supplier base, and no single supplier has significant bargaining power over the company.

Threat Of New Entrants

The technology industry has high barriers to entry, and new entrants would need significant resources and expertise to compete with Oracle.

Intensity Of Rivalry

The technology industry is highly competitive, and Oracle faces intense rivalry from established players such as Microsoft, SAP, and IBM.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	98.31%
Debt Cost	4.16%
Equity Weight	1.69%
Equity Cost	9.05%
WACC	4.24%
Leverage	5814.97%

11. Quality Control: Oracle Corporation passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

CrowdStrike

A-Score: 5.1/10

Value: 4.0

Growth: 8.8

Quality: 3.7

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

Oracle

A-Score: 4.8/10

Value: 2.7

Growth: 6.8

Quality: 6.0

Yield: 2.0

Momentum: 8.5

Volatility: 3.0

1-Year Total Return ->

Zscaler

A-Score: 4.7/10

Value: 2.3

Growth: 8.4

Quality: 3.5

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

1-Year Total Return ->

Fortinet

A-Score: 4.5/10

Value: 1.0

Growth: 9.1

Quality: 7.9

Yield: 0.0

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

Adobe

A-Score: 4.5/10

Value: 3.0

Growth: 5.4

Quality: 9.2

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

Synopsys

A-Score: 2.2/10

Value: 0.9

Growth: 0.8

Quality: 6.4

Yield: 0.0

Momentum: 2.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

30.08%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.24%

Oracle Corporation - US68389X1054

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ORCL

1.c. Company Highlights

Higher Yield

Expensive

Less Volatile

Earnings Beats

Earnings Miss

Revenues Miss

Stable Momentum

Average Quality

Medium Volatility

Strong Momentum

Average Yield

Average Growth

Revenues Beats

Fairly Valued

2. Oracle's Q2 FY 2026 Earnings: A Strong Showing in Cloud and AI

Cloud and AI Momentum

Financial Outlook and Guidance

Valuation and Growth Prospects

Applications Business Acceleration

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.54%)

6. Segments

Cloud and License

Expected Growth: 6.4%

Services

Expected Growth: 8.5%

Hardware

Expected Growth: 5.1%

7. Detailed Products

Oracle Autonomous Database

Oracle Cloud Infrastructure (OCI)

Oracle Enterprise Resource Planning (ERP) Cloud

Oracle Customer Experience (CX) Cloud

Oracle NetSuite ERP

Oracle Data Science

Oracle Integration Cloud

Oracle Security and Identity

8. Oracle Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Oracle Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

160.13$

Current Price

160.13$

Potential

-0.00%

12.e Scoring ^Insights

12.f DCF ^BETA