Key Stats for Oracle Stock
- Past week’s performance: +2.27%
- 52-week range: $119 to $346
- Valuation model target price: $349
- Implied upside: 118% over 2.3 years
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What Happened?
Oracle (ORCL) shares have been volatile over the past few weeks, with the stock trading near $160 as investors digested earnings results, AI-related headlines, and shifting expectations around capital spending.
The most recent catalyst was Oracle’s fiscal Q2 earnings report, where the company delivered adjusted EPS of $2.26, well ahead of consensus estimates of $1.64. Net income rose 38% year over year, reflecting strong operating leverage and disciplined cost control.
Revenue for the quarter reached $16.1 billion, up 14% year over year, driven by continued momentum in cloud infrastructure and cloud applications. Cloud revenue growth accelerated, but some investors focused on margin pressure tied to higher infrastructure investment.
During the same period, Reuters reported that Oracle faced a securities fraud lawsuit related to disclosures around AI-related spending. The news followed a sharp prior stock move and contributed to near-term volatility, even though there were no changes to Oracle’s reported financial results.
Additional headlines around Oracle’s involvement in a potential TikTok U.S. joint venture and expanded public-sector contracts also kept the stock in focus, but none materially altered near-term guidance.
Overall, recent price action reflects heightened sensitivity to news flow and valuation rather than a deterioration in Oracle’s underlying operating performance.
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Is Oracle Stock Undervalued?
Under valuation model assumptions realized through May 2028, the stock is modeled using:
- Revenue growth (CAGR): 30.5%
- Operating margins: 38.7%
- Exit P/E multiple: 22.2x
Based on these inputs, the model estimates a target price of $349, implying 118% total upside from the current share price and a 40.4% annualized return over the next 2.3 years.
Business execution remains the key driver behind these assumptions, especially continued expansion in Oracle Cloud Infrastructure and enterprise application adoption.
Over the past year, Oracle generated $61 billion in revenue, up 8% year over year, while operating income rose nearly 14% as margins expanded to about 32%. Net income margins improved to 25%, reflecting scale benefits across the cloud business.
Cash flow remains mixed. Operating cash flow totaled $22 billion over the last twelve months, but free cash flow turned negative due to elevated capital expenditures tied to data center expansion.
Balance sheet leverage increased as long-term debt rose to about $100 billion, but management continues to prioritize investment in cloud capacity to support future growth.
Looking ahead, analysts expect revenue growth to accelerate into fiscal 2026, with forward estimates pointing to more than 20% growth as cloud infrastructure and AI workloads scale.
While legal and regulatory headlines can create short-term volatility, Oracle’s recent results show accelerating earnings power and improving revenue mix, which explains why the stock continues to command investor attention.
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