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ORCL · Analyze
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Snapshot
| Field | Value |
|---|---|
| Price (Jul 22, 2026 close) | $126.29 |
| Shares out / Market cap | ~2.88B / ~$364B |
| Net debt | $98.3B (total debt $156.2B) |
| Enterprise value | ~$462B |
| Sector / mapping | Technology (enterprise software + cloud infra) |
| FY (ends May 31) | FY2026 reported Jun 10, 2026; Q1 FY2027 due Sep 10, 2026 |
| FY26 revenue / growth | $67.36B / +17% |
| FY26 GAAP / non-GAAP EPS | $5.94 / $7.63 |
| Fwd P/E (non-GAAP FY27 $8.05) | ~15.7x |
| EV/Rev (FY26 / fwd FY27 ~$90B) | 6.9x / ~5.1x |
| Dividend / yield | ~$2.00/yr / ~1.6% |
| FY26 free cash flow | –$23.7B (the crux) |
| RPO | $638B (+363% y/y) |
Fundamentals
| Metric | FY2024 | FY2025 | FY2026 | Read |
|---|---|---|---|---|
| Revenue | ~$53B | $57.4B | $67.36B | Accelerating (+17.4%) |
| Net income (GAAP) | ~$10.5B | $12.44B | $17.09B | +37% |
| Operating margin | ~30% | 31.5% | 33.3% | Holding (efficiency offsets GM decline) |
| Gross margin | ~71% | 70.5% | 65.8% | –4.7pts — datacenter ramp; guided lower FY27 |
| Operating cash flow | ~$18B | $20.8B | $32.0B | +54% — genuinely strong |
| Capex (gross reported) | ~$7B | $21.2B | ~$55.7B | Explosive; net outlay ~$48B after prepayments |
| Free cash flow | ~+$11B | ~–$0.4B | –$23.7B | Collapsed into deep deficit |
| FCF / share | ~+$4 | ~$0 | –$8.29 | — |
| Total debt | ~$88B | $104.1B | $156.2B | +$52B in one year |
| Net debt / EBITDA | ~2.8x | 3.4x | 3.1x | (Total debt/EBITDA 4.9x) |
| Interest coverage | ~5.5x | 5.0x | 4.9x | Eroding as debt compounds |
| Debt / assets | ~55% | 61.8% | 59.7% | High |
| Shares outstanding | ~2.76B | 2.81B | 2.88B | Rising — buyback era over |
| Tangible book / share | neg | –$14.79 | –$8.45 | Negative equity ex-goodwill ($62B) |
| ROIC | ~15% | 14.0% | 12.1% | Declining as capital base balloons |
The capex/FCF trajectory is the whole story. OCF is excellent and rising (+54% to $32B), but Oracle spends it — and far more — into the ground: gross capex ~$56B FY26, guided ~$90–95B reported ($70B net cash outlay) FY27. FCF was –$23.7B FY26 and, against ~$40–45B FY27 OCF vs $70B net capex, likely deepens to roughly –$45B to –$50B FY27. Currently converts none of its earnings to owner cash — a capital-intensity bet dressed as a software stock.
Debt is the second story. Total debt +$52B to $156.2B. Net debt $98.3B, net-debt/EBITDA 3.1x — still IG-ish, but interest coverage thinning (4.9x, interest expense $4.6B and climbing). Guided ~$40B additional FY27 financing (debt + a $20B ATM equity program); no further debt in CY2026. The $20B ATM equity is dilutive — with shares already drifting up (2.81B→2.88B), the buyback engine is thrown in reverse.
Data gaps: (1) roic FCF field unreliable (see note); (2) no clean debt-maturity schedule via these tools — pull from 10-K; (3) segment OCI margin/ROIC is management-asserted ("high-20s project ROIC," "30–40% OCI margins"), not yet independently verifiable — consolidated ROIC is 12% and falling.
Moat
Quant base: ROIC 12.1% (down from 14%), gross margin 65.8% (down from 70.5%), op margin 33.3% (up). Margin compression is deliberate — high-margin database/apps annuity diluted by lower-margin, capital-heavy OCI. Blended returns keep sliding until (unless) OCI reaches promised steady-state economics.
Revenue-stream map — three different businesses: 1. Legacy database + apps (the annuity): Cloud Apps $4.1B/qtr (+10%), database +29%, multi-cloud +404%. Durable, wide-moat core — ERP/database switching costs are evergreen; multi-cloud tie-ups (Azure/AWS/GCP hosting Oracle DB) extend the annuity. Justifies a large fraction of EV alone. 2. OCI / AI infra (the growth + the risk): +93% to $5.8B/qtr, 97.5% GPU utilization, $67B AI-infra contracts signed in Q4. A capacity-and-execution moat, not a durable one — rests on being fast/cheap/competent at datacenters in a market flooded with capital (AWS, MSFT, Google, CoreWeave, neoclouds). "Massively higher demand than supply" describes a current shortage, not structural advantage. 3. Cerner / health: VA EHR rollout progressing (14 medical centers), OPM Fusion HCM win — steady, not the driver.
Adversarial stress-test: On OCI, a rival needn't out-innovate — just add capacity. When GPU supply loosens, OCI's pricing power and "snapped up on renewal" dynamic soften, testing the 30–40% margin promise. The cost-pass-through-clause + "cloud is more than a rack" defense is credible but a services moat, not a technology one. On the core database, the generational threat: if AI-native data platforms become where enterprises inference against data, Oracle's "data already in Oracle DB" edge erodes over 5–10yr. Management is defending (agent-memory, data-security, vector features).
Concentration as moat-vs-risk: OpenAI (~$300B/5yr, 4.5GW) is both why RPO is $638B and the single largest risk. Not a moat — a customer-financing arrangement with a cash-burning counterparty mid-pivot on self-build. Mitigant (real & important): majority of new AI contracts are now bring-your-own-hardware or prepaid ($75B BYO/prepaid), shifting capital + residual-value risk to customers at equal/better margins — materially de-risks the model vs six months ago. Does not de-risk the demand concentration.
Evergreen rating: Core database/apps = HIGH (8/10); OCI/AI-infra = MEDIUM-LOW, unproven (5/10), high-variance. Blended, the moat is widening in breadth but thinning in quality — trading a fortress annuity's returns for a capital-hungry growth call.
Valuation
| Model / multiple | Input | Output | Note |
|---|---|---|---|
| Fwd P/E (non-GAAP) | $126.29 / $8.05 FY27 | 15.7x | Cheap for +34% rev / +18% EPS guide |
| Trailing P/E (GAAP) | $126.29 / $5.94 | 21.3x | — |
| EV / Revenue (fwd) | $462B / ~$90B | 5.1x | Below hyperscaler-adjacent peers on growth |
| EV / EBITDA (fwd) | $462B / ~$40B | ~11.5x | — |
| EV / FCF | n/m (FCF –$24B) | negative | Useless here |
| P/B | $364B / $43B equity | 8.4x | Equity thin, tangible book negative |
| Bogle expected return | ~1.6% yield + ~18% EPS growth ± P/E | ~15–19%/yr if multiple holds | Growth-dominated |
| DDM / DYT | ~1.6% yield, ~15% div growth | Not an anchor | Dividend is a rounding error here |
Fair-value range: ~$95 – $155, midpoint ~$125 → trading essentially at fair value. - Bear (~$75–95): OCI margins disappoint, OpenAI restructures/delays, dilution proceeds — ~10–11x FY27 EPS. - Base (~$113–135): Backlog converts on schedule, OCI holds 30%+ margins — 14–16x FY27 EPS. - Bull (~$150–170 near-term, optionality to $250+): If FY2030 targets (31% rev CAGR → ~$200B rev, 28% EPS CAGR → ~$20 EPS) become visible, 18–20x supports the high analyst PTs.
Reverse-DCF / "what must happen": At $462B EV the market discounts a large share of the $638B RPO converting at target margins. But the backlog is back-end-loaded — only 12% recognizes in 12 months (~$77B), 34% in months 13–36, ~54% (~$345B) beyond 3 years, much OpenAI-linked and contingent on ~1GW/quarter delivery. The price isn't demanding heroics on multiple (15.7x fwd is reasonable) — it demands heroics on execution and counterparty solvency, financed with $40B+/yr fresh debt + equity, for cash flows that don't turn positive until the capex wave crests (~FY2028+).
Sentiment
- Consensus: Buy (≈37 buy / 5 hold / 1 sell). Avg PT ~$248–262, high $400, low $110 — ~50% above spot; the Street is emphatically bullish, signaling how much execution the market is pricing out. Barclays → $202.
- Q4 FY26 (Jun 10): Record — revenue $19.2B (+21%), OCI +93% to $5.8B, Cloud Apps +10%, non-GAAP EPS $2.11 (+24%). RPO $638B (+363%), +$85B in the quarter; $67B AI-infra bookings; 4 customers >$8B each (some diversification). FY27 guide: revenue +34% cc, non-GAAP EPS $8.05 (+18%); Q1 FY27 revenue +27–29%. LT targets reconfirmed: 31% rev CAGR / 28% EPS CAGR through FY2030.
- Leadership change (material): Safra Catz → Executive Vice Chair (Sep 2025); Clay Magouyrk + Mike Sicilia now co-CEOs; Hilary Maxson CFO (Apr 6 2026). Ellison remains Chairman/CTO, 40.3% / 1.16B shares — still controls the company. Tone aggressively confident; new CFO deliberately disciplined ("investment-grade credit rating," new "net cash outlay for capex" disclosure) — pre-empting the FCF/leverage criticism.
- Stargate/OpenAI: Mixed but net-intact. Broader Stargate expanded (5 new sites; OpenAI reconfirmed the 4.5GW deal). But a ~600MW Abilene expansion scrapped (Mar 2026), and OpenAI reportedly pivoting toward third-party compute leasing over self-build — genuine edge-wobble. Oracle site progress real (Abilene 42% delivered). Net: relationship bigger, concentration bigger, counterparty visibly straining.
- Debt/dilution: $30B raised early CY26; $40B more planned FY27 incl a $20B ATM equity (dilutive).
- Class action: Active — Kessler Topaz securities-fraud suit; leads appointed Apr 27, 2026; class period Jun 12 – Dec 16, 2025, alleging Oracle overstated capex-to-revenue conversion speed. Ongoing overhang.
- Insider/institutional: Insiders ~40.7% (Ellison the bulk — no sell-down signal); institutions ~41.9% (Vanguard 4.5%, BlackRock 3.8%); retail ~17%. No red-flag insider exodus.
Tensions / Debate
- Fundamentals vs Sentiment/Moat: Fundamentals flashing red (negative/deepening FCF, +$52B debt, dilution, ROIC falling); Sentiment/Moat point to a once-in-a-decade demand capture with $638B contracted visibility. Both true — a timing disagreement: bear owns FY26–FY28 (cash bleed, leverage, execution), bull owns FY2028+ (margin harvest). Fair value reflects an honest standoff.
- Valuation vs Valuation: On earnings/growth (15.7x fwd for 34% growth) it's cheap; on cash (negative FCF, negative tangible book) it's uninvestable by classic value standards.
- Real de-risking: The BYO/prepaid shift ($75B) genuinely lowers capital-at-risk vs the prior thesis — the single biggest improvement since 2026-07-14.
- Trigger partly fired: Prior thesis named "dilutive raise" as a break trigger. A $20B ATM equity issuance is now official guidance — planned, not distressed, but it counts. Flag, don't panic.
Verdict — Conviction [7]/10 (unchanged; a high-variance 7)
The core thesis strengthened on bull metrics — RPO $638B (vs $523B), OCI +93% (vs +68%), both blowing past the "<40% for 2 quarters" break floor — and the BYO/prepaid shift materially de-risks the capital model. Simultaneously the bear case strengthened: FCF –$23.7B heading toward ~–$50B, debt $156B, a $20B dilutive equity program now guided, ROIC falling to 12%, an active fraud class action. They offset. At ~$126 the stock sits at the midpoint of a wide $95–155 fair-value range — priced honestly as a coin-flip between flawless execution and a capex/leverage trap.
Key risks: (1) Customer concentration/counterparty — OpenAI dominates the backlog and is itself cash-burning, mid-pivot; a restructuring is the biggest single thesis-killer. (2) FCF/leverage spiral — FY27 burns ~$50B; sub-30–40% OCI margins or delivery slips make the funding treadmill expensive, threatening the IG rating. (3) Dilution — $20B ATM real, more could follow. (4) Margin/moat quality — ROIC and gross margin both falling; high-return OCI economics asserted, not proven. (5) Litigation overhang.
A portfolio-specific passage was removed from the public build.
Thesis-break (updated): OCI/cloud-infra growth <40% for 2 consecutive quarters (now +93%, miles away); OpenAI materially restructures/delays/defaults on Stargate (partial wobble already visible — monitor); a distressed or larger-than-guided equity raise / debt-market shutout; loss of investment-grade credit rating (new — the line the CFO is defending); BYO/prepaid mix reverses, pushing capital risk back onto Oracle.
Bottom line: a great annuity business making a heroic, debt-and-dilution-financed bet on a single AI counterparty. At fair value, held small, a defensible [7] — earned on backlog and execution promise, not on the cash it generates today, which is deeply negative and getting worse before it gets better.