Does Oracle Corporation (ORCL) have an economic moat?

MoatScan AI rates Oracle Corporation (ORCL) 65/100 for moat strength, assessed across five sources of competitive advantage: network effects, switching costs, intangible assets, cost advantages and efficient scale. Oracle retains a real but not impregnable competitive advantage.

What is Oracle Corporation's moat score?

Oracle Corporation (ORCL) has a moat score of 65/100. The score is a weighted average of five pillar ratings: network effects, switching costs, intangible assets, cost advantages, and efficient scale. A higher score means the competitive advantages MoatScan AI identifies are wider and more durable.

Is ORCL stock overvalued or undervalued?

MoatScan AI answers this by estimating ORCL's intrinsic value with a discounted cash flow (DCF) model, then comparing that estimate to the current market price. A share price meaningfully below the estimate is flagged undervalued; meaningfully above it, overvalued. The estimate updates with each new financial analysis.

What is Oracle Corporation's fair value estimate?

MoatScan AI derives Oracle Corporation's (ORCL) fair value per share from a discounted cash flow (DCF) model built on the company's reported financials, analyst growth forecasts, and a discount rate reflecting its cost of capital. The Financial Analysis tab shows the estimate alongside every assumption behind it.

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ORCL$144.55

Oracle Corporation

Last Updated

Jul 21, 2026about 1 month ago

Moat & Trend

Management

AI Impact

Competitive Radar

Moat Score

65/100

Executive Summary

Oracle retains a real but not impregnable competitive advantage. Its deepest moat comes from high switching costs around mission-critical databases, enterprise applications, and increasingly cloud infrastructure, where migration risk, retraining, and integration complexity keep customers sticky. The Oracle brand, installed base, and decades of tooling also matter, especially in regulated and data-intensive workloads. However, network effects are limited, and the company faces formidable rivals in cloud and enterprise software, including hyperscalers and SAP. The moat score sits in the mid-range because Oracle’s strength is concentrated in a few sticky product categories rather than across a broad ecosystem. The trend is positive: rapid OCI growth, expanding AI infrastructure demand, and large remaining performance obligations suggest the moat is strengthening even if the competitive field remains intense.

Network Effects

Limited Ecosystem Reinforcement

Pillar Strength

4.5/10

Oracle benefits from some ecosystem reinforcement, but it is not a classic network-effects business. The value of Oracle Database, Fusion Applications, and OCI rises when more developers, consultants, and systems integrators support the stack, and that does create a self-reinforcing installed base. Still, the underlying products are typically adopted for functionality, reliability, compliance, and performance rather than because each additional user dramatically increases value for all others. Customers often multi-home across clouds and software vendors, which dilutes network strength. Oracle’s partnerships with Microsoft, AWS, and Google broaden reach, but they also show that the company depends more on interoperability and distribution than on a proprietary user network. Overall, the effect exists, but it is secondary.

Switching Costs

Deep Enterprise Lock-In

Pillar Strength

8.5/10

Switching costs are Oracle’s strongest moat pillar. Databases, ERP, HCM, SCM, healthcare systems, and cloud infrastructure are deeply embedded in customers’ operations, data models, workflows, and compliance processes. Replacing Oracle often requires major migration projects, extensive testing, retraining, and risk acceptance around downtime or data integrity. For large enterprises, the cost is not just financial; it includes business disruption, integration complexity, and vendor re-qualification. Oracle also benefits from the breadth of its stack, which increases stickiness when customers standardize on multiple Oracle products. Even if some workloads can be moved to hyperscalers or open-source alternatives, the legacy footprint and operational dependence remain powerful retention tools. This is a durable and meaningful barrier to defection.

Intangible Assets

Strong Brand And IP

Pillar Strength

7.5/10

Oracle has substantial intangible assets, led by its long-standing enterprise brand, deep database expertise, and an intellectual-property portfolio built over decades. The Oracle Database remains one of the most recognized names in mission-critical data management, and the company’s reputation for reliability still carries weight with CIOs and database administrators. Its ownership of Java from the Sun acquisition, plus proprietary middleware, tooling, and vertical-specific software, adds technical defensibility. However, the brand is more associated with enterprise incumbency than universal admiration, and much of the advantage is execution-based rather than legally unassailable. Rivals can replicate features over time, and open-source alternatives pressure pricing. Still, Oracle’s name, installed trust, and technical know-how create meaningful pricing and adoption advantages.

Cost Advantages

Scale Helps But Not Dominates

Pillar Strength

6/10

Oracle has moderate cost advantages, but they are less decisive than its switching costs. In software, its gross margins and operating leverage reflect a mature scale platform, while in cloud infrastructure the company is investing aggressively to improve unit economics and capacity utilization. OCI appears to have some architectural advantages in certain workloads, especially database-heavy and AI-related deployments, but Oracle is not the lowest-cost general-purpose cloud provider. Hyperscale competitors such as AWS, Microsoft, and Google still possess enormous procurement, data-center, and ecosystem scale. Oracle’s advantage is more selective: it can bundle database, applications, and infrastructure in ways that can lower total cost of ownership for some customers. That is useful, but not yet a dominant structural cost moat across the business.

Efficient Scale

Focused Oligopoly Positions

Pillar Strength

6/10

Oracle operates in several markets where scale matters, but only some resemble efficient-scale structures. In enterprise databases, high reliability requirements and deep customer trust have historically concentrated the market, though competition from Microsoft, IBM, PostgreSQL, and cloud-native substitutes prevents true monopoly economics. In enterprise applications and cloud infrastructure, Oracle faces a small set of large rivals, but the markets are still large enough to support multiple winners. Certain verticals, such as healthcare IT and property management, can look more concentrated, yet Oracle’s overall footprint is not a natural monopoly. The company does benefit from high fixed costs, integration complexity, and customer trust, which raise entry hurdles. Still, new entrants can and do win niche workloads, so the efficient-scale advantage is real but limited.

Management Quality Assessment

Evaluating leadership track record, capital allocation, and governance

Verdict

Strong

Safra Catz led Oracle as CEO or co-CEO from 2014 to 2025, during which revenue more than doubled and market value rose sharply, while founder Larry Ellison remained the dominant strategic influence as chair and CTO. Capital allocation has been mixed but generally shareholder-friendly: Oracle has returned about $163 billion via dividends and buybacks, including roughly $5.3 billion of repurchases in fiscal 2025, though large deals such as Sun, NetSuite and Cerner show a willingness to spend heavily for growth. ROIC remains solid near 12% but has softened. Insider ownership appears high, but the trend is unclear. Compensation looks stretched, with Ellison above $108 million and top-four pay over $400 million, drawing notable shareholder pushback.

Key Highlights

Catz’s 11-year CEO/co-CEO run coincided with Oracle’s revenue more than doubling and its market value climbing to roughly $870 billion.
Oracle has returned about $163 billion to shareholders over the past decade, including about $5.3 billion of buybacks in fiscal 2025.
ROIC remains solid at around 12%, but recent readings indicate a modest decline rather than continued improvement.
Founder-led structure gives Oracle continuity and strategic consistency, but Ellison’s chair/CTO role concentrates influence and reduces classic CEO-board separation.
Executive pay appears rich relative to performance: Ellison’s package topped $108 million and the top four executives exceeded $400 million, with roughly 46% of votes cast against the pay package.

AI Impact Assessment

Evaluating how AI strengthens or disrupts existing moat pillars

AI Opportunity

6/ 10

AI Threat

5/ 10

Net AI Impact

+1Neutral

Oracle’s AI posture is best read as a Net Reinforcer: AI should strengthen, not replace, its moat in enterprise infrastructure, databases, and mission-critical applications. The clearest benefit is that Oracle can bundle AI into OCI, Fusion, and NetSuite, using its installed base, data gravity, and security controls to raise switching costs and monetize AI workloads without needing to win a standalone model race. That said, most of the advantage is defensive and execution-dependent, not a new structural moat. The main near-term uncertainty is whether OCI’s large AI-capacity buildout converts into durable utilization and margin rather than expensive overbuild, especially as foundation models and app-layer features become more standardized.

AI Opportunity Highlights

Oracle’s OCI buildout and reported multi-year AI capacity commitments give it a direct way to monetize demand for training and inference workloads.
Oracle can embed AI into Fusion, NetSuite, and vertical SaaS modules, deepening workflow lock-in across finance, HR, and supply-chain functions.
Oracle’s installed base of mission-critical databases and enterprise applications creates data gravity that makes AI-enabled migration and integration harder for customers.
Oracle’s partnerships with frontier-model providers let it sell AI infrastructure and enterprise deployment services without bearing full model-development risk.
Oracle’s database-first security and governance position AI features as an enterprise control layer, which can support adoption in regulated workloads.

AI Threat Highlights

Foundation-model capabilities are rapidly commoditizing, which can reduce differentiation in generic chat and copilot features across enterprise software.
AI-native vendors can target specific ERP, HR, and finance workflows with cheaper point solutions, pressuring Oracle’s application-layer pricing.
Multicloud deployment and model portability lower switching barriers, weakening Oracle’s historical lock-in if customers can mix providers more easily.
If OCI demand fails to keep pace with the very large capacity buildout, Oracle could face margin pressure and weaker returns on AI capex.

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Last Updated

Aug 25, 20263 days ago

Target Price

Analyst Consensus

FAIR VALUE

Financial Strength

Financial Score

70/100

Executive Summary

Oracle’s standout strength is its improving earnings power and forward growth profile, with revenue accelerating materially in FY26 and analysts expecting a much larger step-up ahead. Income statement trends are constructive overall: operating and net margins have held up well, earnings have compounded, and cash conversion is solid, even if gross margin pressure, a higher tax rate, and rising expense intensity deserve monitoring. The balance sheet has improved in liquidity and equity, with positive working capital and substantial cash, but leverage remains high and debt-heavy relative to peers. Cash flow is the main tension point: operating cash flow is strong, yet aggressive capital spending has driven free cash flow negative and financing activity has been heavy. Overall, Oracle presents a high-quality, growth-oriented profile with strong profitability and liquidity, offset by elevated leverage and near-term cash use, consistent with its mid-to-high rated scorecard.

Income Statement

Revenue · Margins · Profitability

Section Score

7.5/10

Assuming Oracle is a software and infrastructure platform business, the multi-year trend is constructive: revenue rose steadily from FY23 to FY26, with the latest year accelerating to 17.3% growth, while TTM is essentially flat versus FY26, suggesting the recent surge has normalized rather than collapsed. Profitability remains strong, with operating margin improving over time even as gross margin compressed in FY26 due to a sharp cost-of-revenue increase. Net income has compounded well, but some of that improvement reflects non-operating support: other income swung from negative to positive and the effective tax rate has risen notably in TTM. Overall earnings appear durable, though expense growth and margin pressure at the gross level warrant monitoring.

Financials are in millions USD unless otherwise specified

Metric	TTM	FY 2026	FY 2025	FY 2024	FY 2023
Period Ending	May 31, 2026	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023
Revenue	67,358	67,357	57,399	52,961	49,954
Revenue Growth	0.00%	17.35%	8.38%	6.02%	—
Net Income	17,087	17,087	12,443	10,467	8,503
Net Income Growth	0.00%	37.32%	18.88%	23.10%	—

Data as of May 31, 2026

Balance Sheet

Assets · Liabilities · Equity

Section Score

6.5/10

Oracle’s balance sheet shows clear improvement in liquidity and equity, but leverage remains elevated. Total current assets rose to $46.6B from $24.6B in FY2025, while total current liabilities increased to $41.8B, leaving working capital positive at $4.8B after several years of deficits. Cash and short-term investments are strong at $31.9B, providing a solid near-term buffer. However, total debt expanded sharply to $156.2B, and total liabilities climbed to $218.7B against $261.8B of assets, so the capital structure is still debt-heavy. Shareholders’ equity improved meaningfully to $42.5B from $20.5B, and retained earnings have moved closer to break-even, but the balance sheet remains more leveraged than typical for most non-financial peers.

Financials are in millions USD unless otherwise specified

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

Data as of May 31, 2026

Cash Flow Statement

Operations · Investing · Financing

Section Score

5.5/10

Oracle’s operating cash flow has improved steadily, rising from $17.2B in FY2023 to $32.0B TTM, which is stronger than net income and suggests solid cash conversion. The main weakness is reinvestment intensity: capital expenditures jumped to $55.7B TTM from $21.2B in FY2025, pushing free cash flow to a negative $23.7B after being slightly negative in FY2025. Working capital was also volatile, with a $4.1B positive swing TTM after prior declines, so cash generation is not fully steady. Dividends remained consistent at $5.8B, buybacks were minimal, and debt issuance of $49.4B far exceeded repayments, showing heavy financing support. Compared with typical large-cap software peers, cash generation is strong but current cash use is aggressive.

Financials are in millions USD unless otherwise specified

Metric	TTM	FY 2026	FY 2025	FY 2024	FY 2023
Period Ending	May 31, 2026	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023
Operating Cash Flow	31,977	31,977	20,821	18,673	17,165
Operating Cash Flow Growth	0.00%	53.58%	11.50%	8.79%	—
Free Cash Flow	-23,686	-23,686	-394	11,807	8,470
Free Cash Flow Growth	0.00%	-5,911.68%	-103.34%	39.40%	—

Data as of May 31, 2026

Key Ratios

Liquidity · Leverage · Efficiency · Returns

Section Score

7.5/10

Oracle shows very strong short-term liquidity, with current and quick ratios rising to exceptionally high levels by the latest period, indicating ample coverage of near-term obligations. Leverage has improved materially over time: debt-to-equity and long-term debt-to-equity have fallen sharply from very elevated levels, suggesting a less burdened capital structure, though leverage remains meaningful. Efficiency is the main weakness, as asset turnover has trended lower, pointing to slower use of assets to generate revenue. Profitability is solid and improving overall, with operating, pre-tax, and net margins all strengthening across the period. ROA has stayed in a steady mid-single-digit range, while ROE remains high but has declined as leverage eased.

Ratios are dimensionless unless otherwise noted

Metric	Current	FY 2026	FY 2025	FY 2024	FY 2023
Period Ending	—	May 31, 2026	May 31, 2025	May 31, 2024	May 31, 2023
Current Ratio	111.5	111.5	75.296	71.5	90.966
Quick Ratio	111.5	111.5	75.296	71.5	90.966
Profit Margin	25.37%	25.37%	21.68%	19.76%	17.02%
After Tax ROE	40.197	40.197	60.843	120.255	792.451
Return on Assets	6.53%	6.53%	7.39%	7.42%	6.33%
Debt to Equity	3.67	3.67	5.09	10.7	84.33
P/E Ratio	24.81	40.54	38.86	30.92	34.96
Forward P/E	13.25	28.17	23.87	18.73	18.9

Data as of May 31, 2026

Growth

Revenue · EPS · Valuation · Estimates

Section Score

8/10

Oracle’s performance shows a clear step-up from steady mid-single-digit growth into a stronger expansion phase, with revenue rising from 49.95B USD to 67.36B USD and then accelerating in the analyst outlook to 89.34B USD and 130.64B USD. That forward path suggests an inflection toward much faster top-line compounding rather than simple continuation of the prior trend. EPS growth has generally been stronger and more volatile than revenue growth, with the forecast years still showing solid earnings expansion, though not as uniformly fast as revenue in FY 2027. Analyst sentiment is constructive: a Buy consensus from 41 analysts, a wide but favorable 110 to 400 USD target range, and a median near the average. Recommendation mix has stayed broadly stable, with only a mild increase in Hold.

Analyst Price Targets

Low$110-23.90%

Median$240+66.03%

Average$246.43+70.48%

High$400+176.72%

BuyConsensus rating based on analyst coverage

41 analysts

Recommendation Trends

Rating	Aug '26	Jul '26	Jun '26	May '26
Strong Buy	8	8	8	6
Buy	28	29	29	30
Hold	7	6	5	6
Sell	1	1	1	1
Strong Sell	0	0	0	0
Total	44	44	43	43

Forecast · Analyst Estimates

Revenue This Year89.34B

+32.63%from 67.36B

FY 2027

Revenue Next Year130.64B

+46.23%from 89.34B

FY 2028

EPS This Year· non-GAAP adj.8.05

+5.55%

FY 2027

EPS Next Year· non-GAAP adj.10.91

+35.54%

FY 2028

Historical · Reported Actuals

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

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 · +11.9% Margin of Safety · Fairly Valued

AI Fair Value Estimate (DCF)

$161.74vs$144.55

Margin of Safety+11.9%

Fairly Valued — Trading near intrinsic value

A discounted cash flow framework suits Oracle because the business is highly cash generative, with recurring enterprise software and cloud revenues that can be projected through a multi-year operating ramp. The modeled cash-flow path points to expanding scale with durable margins, but also reflects meaningful capital intensity and an eventual growth fade as reinvestment normalizes and terminal growth takes over.

AI Valuation Verdict

DCF is the right lens for Oracle because its value is driven by long-duration cash generation rather than near-term earnings noise. The valuation assumes a 9.4% discount rate, 4% terminal growth, mid-single-digit revenue expansion, and resilient EBITDA margins, while also recognizing ongoing capital spending and eventual growth normalization. On that basis, fair value lands at $161.74 per share versus a current price of $144.55, implying an 11.89% margin of safety and a verdict of fairly valued. The outcome is most sensitive to WACC, terminal growth, and whether margin durability holds as the growth mix shifts. Stronger cloud economics or lower capital intensity would improve the case; weaker margins or a higher discount rate would soften it.

DCF Assumptions

WACC

9.4%

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	18,420
Yr 2	74,761	55,388	29,008	24,237
Yr 3	80,184	62,528	33,236	25,384
Yr 4	86,325	67,597	34,756	24,264
Yr 5	93,153	66,626	32,053	20,454
Yr 6	100,360	71,942	34,731	20,259
Yr 7	105,203	76,297	37,248	19,860
Yr 8	110,411	80,823	40,012	19,501
Yr 9	118,689	86,880	42,716	19,030
Yr 10	127,640	93,414	45,858	18,674
Terminal Value (PV)				359,651

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Frequently asked questions about Oracle Corporation

Does Oracle Corporation (ORCL) have an economic moat?: MoatScan AI rates Oracle Corporation (ORCL) 65/100 for moat strength, assessed across five sources of competitive advantage: network effects, switching costs, intangible assets, cost advantages and efficient scale. Oracle retains a real but not impregnable competitive advantage.Sign in free to see the Moat Type verdict and the pillar-by-pillar reasoning.
What is Oracle Corporation's moat score?: Oracle Corporation (ORCL) has a moat score of 65/100. The score is a weighted average of five pillar ratings: network effects, switching costs, intangible assets, cost advantages, and efficient scale. A higher score means the competitive advantages MoatScan AI identifies are wider and more durable.Sign in free to see each pillar rating, the Moat Type verdict and the moat trend.
Is ORCL stock overvalued or undervalued?: MoatScan AI answers this by estimating ORCL's intrinsic value with a discounted cash flow (DCF) model, then comparing that estimate to the current market price. A share price meaningfully below the estimate is flagged undervalued; meaningfully above it, overvalued. The estimate updates with each new financial analysis.Sign in free to see the fair value estimate, the implied upside or downside, and the verdict.
What is Oracle Corporation's fair value estimate?: MoatScan AI derives Oracle Corporation's (ORCL) fair value per share from a discounted cash flow (DCF) model built on the company's reported financials, analyst growth forecasts, and a discount rate reflecting its cost of capital. The Financial Analysis tab shows the estimate alongside every assumption behind it.Sign in free to see the estimate and the full assumptions behind it.

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.

ORCL$144.55

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