ORCL$140.27

Oracle Corporation

Last Updated

Jul 3, 202611 days ago

Moat & Trend

Management

Strong

AI Impact

Competitive Radar

Moat Score

68/100

Executive Summary

Oracle retains a meaningful competitive advantage built on mission-critical databases, deeply embedded enterprise applications, and a large installed base that is expensive and risky to replace. Its strongest moat element is switching costs: once Oracle software and data models are woven into core finance, HR, supply chain, and transactional systems, customers tend to stay for years. The moat is not wide because network effects are limited, cost leadership is inconsistent, and cloud infrastructure remains intensely competitive against larger hyperscalers. Still, the moat trend is positive: cloud infrastructure growth, AI-driven demand, and expanding long-duration backlog suggest Oracle’s strategic importance is rising even as the competitive field stays demanding.

Network Effects

Ecosystem, Not True Network

Pillar Strength

4.5/10

Oracle benefits from an ecosystem, but not from a classic self-reinforcing network effect. More customers attract more consultants, implementation partners, and developers, which makes Oracle easier to adopt and support. That matters in enterprise software, where talent availability and integration know-how influence buying decisions. The company’s database, cloud services, and applications also benefit from a broad base of third-party tools and certified integrations. However, most customers can multi-home across Oracle, AWS, Microsoft, SAP, and open-source options with limited loss of value. Because incremental users do not dramatically raise the utility of the platform for other users, the effect is indirect and modest rather than durable or dominant.

Switching Costs

Deep Mission-Critical Lock-In

Pillar Strength

8.5/10

Switching costs are Oracle’s strongest moat driver. Its databases often sit at the center of transaction processing, analytics, and regulatory reporting, where data models, stored procedures, applications, and operational workflows are tightly customized. Replacing Oracle Database or a core ERP/HCM suite requires data migration, retraining, revalidation, downtime risk, and extensive systems integration work. Those frictions are especially high in large enterprises and public-sector environments, where reliability and compliance matter more than price. Even when customers adopt cloud alternatives, Oracle can remain embedded through hybrid deployments, support contracts, and application dependencies. Cloud migration may reduce some lock-in over time, but the cost and risk of switching remain substantial for most incumbents.

Intangible Assets

Trusted Enterprise Brand

Pillar Strength

8/10

Oracle’s intangible assets are substantial, led by a trusted brand in enterprise computing, a long operating history, and proprietary technologies that are difficult to replicate quickly. The Oracle Database remains one of the most recognized names in mission-critical data management, and the company has durable credibility with CIOs, CFOs, and regulated industries. Oracle also owns valuable intellectual property across middleware, engineered systems, Java, and vertical applications, which reinforces product depth and customer confidence. Still, these assets are not monopoly-like. Competitors can imitate many features with enough investment, and open-source alternatives erode some differentiation. Oracle’s brand is strong, but its pricing power comes more from embeddedness and reliability than from purely exclusive legal protection.

Cost Advantages

Selective TCO Efficiency

Pillar Strength

6.5/10

Oracle has real but uneven cost advantages. Its engineered systems, optimized database stack, and vertically integrated cloud architecture can deliver attractive total cost of ownership for workloads centered on Oracle software. For database-heavy customers, Oracle can reduce performance bottlenecks, administrative overhead, and infrastructure sprawl relative to a patchwork of vendors. The company’s software economics also benefit from a massive installed base, which spreads development and support costs over many customers. However, Oracle is not a universal low-cost leader. AWS, Microsoft, and Google possess broader scale in cloud infrastructure, and software rivals can undercut pricing in some categories. Oracle’s advantage is therefore workload-specific rather than structurally dominant across the market.

Efficient Scale

Concentrated But Not Closed

Pillar Strength

6.5/10

Oracle operates in markets with meaningful concentration, but not in a true natural monopoly. Enterprise databases, middleware, and integrated applications are dominated by a handful of large vendors, and customer trust, certification requirements, and migration complexity create real entry barriers. That structure supports efficient scale in pockets of the business, especially where reliability and compatibility matter more than experimentation. Yet cloud infrastructure remains highly competitive, with AWS, Azure, and Google able to invest aggressively and challenge Oracle on breadth, distribution, and pricing. Likewise, enterprise applications face strong competition from SAP, Workday, Microsoft, and newer SaaS vendors. Oracle enjoys scale-based advantages in certain niches, but the market structure is not closed enough to qualify as a strong efficient-scale moat.

Management Quality Assessment

Evaluating leadership track record, capital allocation, and governance

Verdict

Strong

Oracle’s management has a long execution record under Safra Catz, who led the company for about 12 years and helped drive the cloud transition, major acquisitions, and sizable capital returns. Leadership is now in transition: Clay Magouyrk and Mike Sicilia became co-CEOs in 2026, so their direct track record is still short. Capital allocation is shareholder-friendly through dividends and buybacks, but ROIC around 9.6% remains below estimated cost of capital, and some large acquisitions, especially Cerner, still need time to prove value. Oracle is founder-influenced rather than purely hired-management run; insider ownership is very high, though recent direction is mixed. Compensation appears reasonably aligned, and governance looks solid.

Key Highlights

Safra Catz completed roughly a 12-year CEO run marked by strong operating execution, a successful cloud migration, and the scaling of Oracle’s AI infrastructure business.
Oracle returned about $54 billion to shareholders over the past five years, including roughly $33 billion of buybacks and $21 billion of dividends; FY2025 repurchases were about $5.3 billion.
Capital allocation is not flawless: Oracle’s ROIC near 9.6% is below its estimated cost of capital, and the large Cerner acquisition remains a key test of value creation.
Oracle remains founder-influenced, with Larry Ellison still chairman and CTO and insiders owning roughly 41% of the company, indicating strong alignment with shareholders.
Ellison’s 2026 compensation was cut about 50% and future payouts were tied to performance and share-price targets, which is a shareholder-friendly structure.

AI Impact Assessment

Evaluating how AI strengthens or disrupts existing moat pillars

AI Opportunity

6/ 10

AI Threat

5/ 10

Net AI Impact

+1Neutral

Net Reinforcer. Oracle’s AI advantage is anchored in data gravity and full-stack integration: a large installed base in databases, Fusion, NetSuite, and legacy enterprise systems makes it difficult for rivals to replicate the same governed data context or migrate customers quickly. AI is therefore more likely to deepen lock-in and expand OCI usage than to create a step-change in differentiation. That said, the moat is defensive rather than uniquely irreplicable: much of the opportunity comes from embedding generative AI into existing workflows and selling more compute, not from a proprietary model advantage. The key near-term uncertainty is whether Oracle’s AI investments translate into durable cloud share and higher application retention before hyperscalers and AI-native software vendors narrow the gap.

AI Opportunity Highlights

Oracle AI Data Platform unifies structured and unstructured enterprise data with embedded governance, which is hard for competitors to mirror once workloads are already inside Oracle stacks.
Oracle can embed generative AI directly into Fusion and NetSuite workflows, increasing switching costs by making core business processes more dependent on Oracle’s data model and controls.
OCI’s high-performance infrastructure lets Oracle sell the compute layer for model training and inference, expanding wallet share from existing enterprise customers.
Oracle’s long-standing database footprint creates data gravity that can be monetized through retrieval-augmented generation and in-database AI without forcing customers to move data elsewhere.

AI Threat Highlights

Large language models are increasingly commoditized, which can reduce the uniqueness of software features and pressure Oracle’s application-layer pricing power.
AI-native vendors can automate business workflows more cheaply, lowering barriers to entry in parts of ERP, CX, and developer tooling.
Hyperscale cloud rivals can bundle AI services aggressively, making infrastructure and inference pricing more competitive and potentially limiting OCI margin expansion.
If customers standardize on external model layers, Oracle risks becoming a transaction and hosting layer rather than the primary AI control point inside the enterprise.

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Last Updated

Jul 3, 202611 days ago

Target Price

Analyst Consensus

Buy43 analysts

FAIR VALUE

Financial Strength

Financial Score

63/100

Executive Summary

Oracle’s standout characteristic is its strong top-line and earnings momentum, with revenue and net income rising materially over FY22–FY26 and a constructive growth outlook pointing to further EPS acceleration. That said, the quality of growth is uneven: gross margin has compressed, free cash flow turned sharply negative in FY26 amid very heavy capital spending, and asset turnover has weakened. The balance sheet has improved in liquidity, with cash and current assets rising enough to cover short-term obligations, but leverage remains elevated, debt-heavy, and sensitive given the large expansion in PP&E and total liabilities. Operating cash flow is solid and profitability remains acceptable, though ROA and ROIC have softened. Overall, Oracle presents a mixed but credible financial profile—growth and cash generation are strong, while capital intensity, leverage, and FCF pressure temper the 6.5/10 to 8/10 ratings.

Income Statement

Revenue · Margins · Profitability

Section Score

6.5/10

Oracle shows strong multi-year revenue and earnings growth, with revenue rising from $42.4bn to $67.4bn and net income from $6.7bn to $17.1bn over FY22-FY26, suggesting solid demand momentum. However, growth quality is mixed: gross margin steadily compressed from 79.1% to 65.8%, while operating margin stayed resilient around 26%–31%, implying effective expense control but heavier cost of revenue. Earnings appear broadly durable, though FY26 benefited from a large non-operating gain and net income was helped by lower net expense below operating income; the effective tax rate stayed fairly stable. Assuming this is an enterprise software company, margins remain acceptable but below best-in-class software peers. The main flag is free cash flow, which deteriorated sharply into negative territory, pointing to capex or working-capital pressure.

Financials are in millions USD unless otherwise specified

Metric	FY 2026	FY 2025	FY 2024	FY 2023	FY 2022
Period Ending	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022
Revenue	67,357	57,399	52,961	49,954	42,440
Revenue Growth (YoY)	17.35%	8.38%	6.02%	17.71%	4.84%
Net Income	17,087	12,443	10,467	8,503	6,717
Net Income Attributable to Preferred Dividends	103	—	—	—	—
Net Income Growth	36.49%	18.88%	23.10%	26.59%	-51.13%
Profit Margin	25.37%	21.68%	19.76%	17.02%	15.83%

Data as of May 31, 2026

Balance Sheet

Assets · Liabilities · Equity

Section Score

6.5/10

Oracle’s balance sheet shows improving liquidity, but leverage remains high. Cash and short-term investments rose sharply to $31.9 billion in FY2026 from $11.2 billion in FY2025, while total current assets increased to $46.6 billion versus current liabilities of $41.8 billion, leaving modest positive working capital. Total assets expanded to $261.8 billion, driven largely by net PP&E jumping to $129.6 billion, a major structural shift. The main pressure point is debt: total debt climbed to $156.2 billion and total liabilities reached $218.7 billion, outpacing the asset expansion. Equity strengthened materially to $43.1 billion from $21.0 billion, which is a positive trend, but the overall capital structure remains debt-heavy and sensitive to execution on the enlarged asset base.

Financials are in millions USD unless otherwise specified

Metric	FY 2026	FY 2025	FY 2024	FY 2023	FY 2022
Period Ending	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022
Total Current Assets	46,567	24,579	22,554	21,004	31,633
Total Assets	261,759	168,361	140,976	134,384	109,297
Total Current Liabilities	41,764	32,643	31,544	23,090	19,511
Total Liabilities	218,703	147,392	131,737	132,828	115,065

Data as of May 31, 2026

Cash Flow Statement

Operations · Investing · Financing

Section Score

4/10

Cash generation improved steadily, with operating cash flow rising from $9.5B in FY2022 to $32.0B in FY2026, helped by higher net income and strong deferred revenue inflows. However, the quality of that growth weakened because working capital movements remained uneven, especially receivables and tax payable swings, while FY2026 saw very large capital spending of $55.7B. As a result, free cash flow turned sharply negative to $(23.7)B in FY2026 after being positive in prior years, and FCF margin fell to -35.2%. Financing activity supported the cash profile, including $46.1B of long-term debt issuance and $5.0B of preferred stock, while dividends stayed steady and buybacks were modest. Overall, cash generation is strong, but reinvestment intensity and funding reliance are concerning.

Financials are in millions USD unless otherwise specified

Metric	FY 2026	FY 2025	FY 2024	FY 2023	FY 2022
Period Ending	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022
Operating Cash Flow	31,977	20,821	18,673	17,165	9,539
Operating Cash Flow Growth	53.58%	11.50%	8.79%	79.94%	-39.96%
Free Cash Flow	-23,686	-394	11,807	8,470	5,028
Free Cash Flow Growth	—	—	39.40%	68.46%	-63.44%

Data as of May 31, 2026

Key Ratios

Liquidity · Leverage · Efficiency · Returns

Section Score

6.5/10

Oracle shows a mixed but generally stable operating profile. Liquidity improved over the period: the current ratio recovered from sub-1.0 levels in FY2023–FY2024 to 1.12 currently, while the quick ratio also moved back to 1.01, suggesting short-term obligations are now covered more comfortably. Leverage remains meaningful, with debt-to-equity declining from very elevated historical levels but still above 3x, and debt-to-EBITDA staying around 5x, so balance-sheet risk is not trivial. Efficiency has weakened, as asset turnover trended down from 0.41 to 0.29. Profitability is solid but easing: ROA and ROIC/ROCE have declined from prior highs, while ROE normalized sharply from distorted extremes and remains positive, indicating decent but moderating capital returns.

Ratios are dimensionless unless otherwise noted

Metric	Current	FY 2026	FY 2025	FY 2024	FY 2023	FY 2022
Period Ending	Jul 2, 2026	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022
Debt / Equity Ratio	3.63	3.63	4.96	10.08	58.15	-13.15
Quick Ratio	1.01	1.01	0.61	0.59	0.74	1.43
Current Ratio	1.12	1.12	0.75	0.72	0.91	1.62
ROEReturn on Equity (ROE)	46.49%	53.38%	82.38%	193.92%	-403.75%	7,301.09%
ROAReturn on Assets (ROA)	7.72%	8.37%	10.04%	9.94%	10.01%	7.98%
ROICReturn on Invested Capital (ROIC)	11.24%	12.81%	15.11%	15.77%	14.21%	14.38%
ROCEReturn on Capital Employed (ROCE)	10.64%	11.59%	14.42%	13.91%	13.02%	11.11%

Data as of Jul 2, 2026

Growth

Revenue · EPS · Valuation · Estimates

Section Score

8/10

Oracle’s history shows a clear reacceleration after a softer growth phase, with revenue rising from mid-single-digit gains to a much stronger forecast ramp in FY2027 and FY2028. EPS growth has generally been stronger and more volatile than revenue, suggesting expanding margins and operating leverage, especially in the forward years where earnings are expected to compound briskly. The forward P/E compresses from 17.44 to 12.85 as growth accelerates, which looks broadly aligned with the outlook. Analyst sentiment is constructive: the consensus is Buy, the target range is wide but centered well above current levels, and 43 analysts provide solid coverage. Recommendation trends also improved modestly, with more Strong Buy and fewer Hold names overall.

Analyst Price Targets

Low$155+10.50%

Median$240.5+71.46%

Average$251.85+79.55%

High$400+185.16%

BuyConsensus rating based on analyst coverage

43 analysts

Recommendation Trends

Rating	Jun '26	May '26	Apr '26	Mar '26	Feb '26	Jan '26
Strong Buy	29	30	28	28	27	26
Buy	8	6	7	7	6	6
Hold	5	6	8	8	10	10
Sell	0	0	0	0	0	0
Strong Sell	1	1	1	1	1	2
Total	43	43	44	44	44	44

Forecast · Analyst Estimates

Revenue This Year89.22B

+32.46%from 67.36B

FY 2027

Revenue Next Year130.19B

+45.92%from 89.22B

FY 2028

EPS This Year· non-GAAP adj.8.05+5.44%Fwd P/E 17.4x

EPS Next Year· non-GAAP adj.10.92+35.65%Fwd P/E 12.8x

Historical · Reported Actuals

Metric	FY 2026	FY 2025	FY 2024	FY 2023	FY 2022
Revenue	67.36B	57.40B	52.96B	49.95B	42.44B
Revenue Growth	+17.35%	+8.38%	+6.02%	+17.70%	—
EPS (GAAP diluted)	5.83	4.34	3.71	3.07	2.41
EPS Growth	+34.33%	+16.98%	+20.85%	+27.39%	—

Revenue in USD · EPS per share · Price targets in USD

Data as of May 31, 2026 · Forecast EPS is analyst non-GAAP adjusted; historical EPS is GAAP diluted — not directly comparable.

Fair Value Estimation

DCF · +107.8% Margin of Safety · Undervalued

AI Fair Value Estimate (DCF)

$291.53vs$140.27

Margin of Safety+107.8%

Undervalued — Margin of safety detected

A discounted cash flow framework fits Oracle well because the business is highly cash generative and the earnings profile can be modeled through a multi-year operating ramp rather than a one-period snapshot. The projected path shows revenue growth outpacing capex intensity over time, which supports expanding free cash flow and suggests durable margin strength even as growth gradually normalizes toward terminal assumptions.

AI Valuation Verdict

DCF is the right lens for Oracle because the valuation is driven by long-duration cash generation, not just near-term earnings. Using a 7.3% discount rate and 4% terminal growth, the model assumes 10-year revenue CAGR of 6.8%, very high EBITDA margins averaging 73.59%, and disciplined capex at 32.12% of revenue, with free cash flow rising from $20.2 billion to $45.9 billion. On that basis, fair value is $291.53 per share versus a current price of $140.27, implying a 107.83% margin of safety and an Undervalued verdict. The thesis is most sensitive to discount rate, terminal growth, and margin durability; stronger cloud monetization would improve upside, while weaker operating leverage would narrow it.

DCF Assumptions

WACC

7.3%

Weighted avg cost of capital

Revenue Growth (10Y)

6.8%

CAGR assumption

EBITDA Margin

73.6%

Steady-state projection

CapEx / Revenue

32.1%

Capital investment

Terminal Growth

4.0%

Long-run growth rate

Projection Period

10 yrs

Explicit forecast horizon

Projected Cash Flows

Values in millions USD

Year	Revenue	EBITDA	FCF	Discounted FCF
Yr 1	70,636	49,561	20,151	18,780
Yr 2	74,761	55,388	29,008	25,195
Yr 3	80,184	62,528	33,236	26,904
Yr 4	86,325	67,597	34,756	26,220
Yr 5	93,153	66,626	32,053	22,536
Yr 6	100,360	71,942	34,731	22,757
Yr 7	105,203	76,297	37,248	22,746
Yr 8	110,411	80,823	40,012	22,772
Yr 9	118,689	86,880	42,716	22,657
Yr 10	127,640	93,414	45,858	22,668
Terminal Value (PV)				714,393

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Disclaimer: The analysis on this page is generated by AI and is provided for informational purposes only. It does not constitute financial advice, investment recommendations, or an offer to buy or sell any security. Always conduct your own due diligence and consult a qualified financial adviser before making any investment decisions.