⚠️ This AI-generated report synthesizes publicly available information. AI can make mistakes. Please double check information in this report.
Oracle Corporation
Technology | Software - Infrastructure
⚡ Executive Summary
📊 The Bottom Line
Oracle Corporation is a dominant force in enterprise software and cloud services, transitioning effectively from on-premise licenses to a robust cloud infrastructure (OCI) and applications. Its strong recurring revenue model and strategic acquisitions like Cerner solidify its market position, though competitive pressures remain high.
⚖️ Risk vs Reward
At current levels, Oracle trades at a trailing P/E of 31.77 and a forward P/E of 20.74. With a wide analyst price target range of US$155 to US$400 and an average of US$288.26, the risk/reward appears favorable for long-term investors banking on continued cloud expansion and AI integration, despite near-term market volatility.
🚀 Why ORCL Could Soar
- • Rapid expansion of Oracle Cloud Infrastructure (OCI) driven by strong demand for high-performance computing, particularly for AI workloads.
- • Successful integration and cross-selling of Cerner's healthcare solutions within the Oracle ecosystem, unlocking new revenue streams.
- • Continuous innovation in database technologies, including the world's first autonomous database, maintaining its leadership in enterprise data management.
⚠️ What Could Go Wrong
- • Intense competition from hyperscale cloud providers (AWS, Azure, Google Cloud) could limit OCI's market share gains and pressure margins.
- • High debt levels (debt-to-equity of 432.511%) could restrict financial flexibility for future investments or acquisitions.
- • A slowdown in global enterprise IT spending or economic recession could impact new software license sales and cloud adoption rates.
🏢 Company Overview
💰 How ORCL Makes Money
- • Oracle primarily generates revenue through its Cloud and License business, offering a vast portfolio of cloud software applications (SaaS) like ERP, EPM, SCM, and HCM, alongside traditional on-premise licenses and extensive support services.
- • The company is significantly expanding its Cloud Infrastructure (IaaS) services, providing compute, storage, networking, and specialized services like the Oracle Autonomous Database, catering to diverse enterprise needs including AI workloads.
- • Oracle also provides hardware products such as engineered systems, enterprise servers, and storage solutions, complemented by related hardware support services and consulting offerings globally.
Revenue Breakdown
Cloud and License Business
85.77%
Includes cloud services, license support, cloud license, and on-premise license sales.
Services Business
9.12%
Revenue from consulting and advanced customer services.
Hardware Business
5.12%
Sales of Oracle's engineered systems, servers, and storage solutions.
🎯 WHY THIS MATTERS
This revenue model is shifting towards a higher proportion of recurring cloud services, enhancing predictability and stability. The comprehensive suite of offerings creates significant customer stickiness and cross-selling opportunities across its vast enterprise client base.
⭐ Competitive Advantage: What Makes ORCL Special
1. Database Dominance & Innovation
Oracle has maintained a leadership position in the enterprise database market for decades, serving as the backbone for critical business operations worldwide. Its continuous innovation, including the pioneering Oracle Autonomous Database and Exadata systems, provides superior performance, reliability, and security, creating a high barrier to entry for competitors. This deep-rooted presence fosters strong customer loyalty and long-term contracts.
2. Comprehensive Enterprise Ecosystem
Oracle offers an unparalleled breadth of integrated enterprise software and hardware solutions, from cloud applications (ERP, HCM, SCM) to infrastructure (OCI) and industry-specific platforms like Oracle Health. This comprehensive ecosystem allows customers to consolidate their IT needs with a single vendor, simplifying management, reducing costs, and ensuring seamless interoperability, making it difficult for competitors to displace. The acquisition of Cerner further extended this ecosystem into healthcare.
3. Strategic Multi-Cloud & AI Partnerships
Oracle Cloud Infrastructure (OCI) distinguishes itself with a strategic multi-cloud approach, including direct interconnects and partnerships with Microsoft Azure and Google Cloud, allowing customers to leverage OCI alongside other major clouds with low latency. OCI's significant investments in AI infrastructure, with offerings like OCI Supercluster supporting NVIDIA GPUs, position it as a key player in powering generative AI workloads for enterprises and partners like OpenAI.
🎯 WHY THIS MATTERS
These advantages collectively create a powerful and defensible position in the enterprise technology market. Oracle's ability to offer integrated, high-performance solutions, coupled with its strategic cloud and AI initiatives, allows it to maintain strong customer relationships and capture new growth opportunities in a rapidly evolving digital landscape.
👔 Who's Running The Show
Lawrence J. Ellison
Co-Founder, Chairman & CTO
The 81-year-old co-founder and current Chairman & CTO, Lawrence J. Ellison, is the visionary behind Oracle's database dominance and its aggressive pivot to cloud computing. His long tenure and strategic foresight, including significant investments in OCI and AI, are critical to shaping Oracle's technological direction and competitive strategy in the evolving enterprise software landscape.
⚔️ What's The Competition
Oracle operates in a highly competitive technology landscape, facing established giants and agile innovators across its various segments. In cloud infrastructure, it competes with hyperscalers like Amazon Web Services, Microsoft Azure, and Google Cloud. In enterprise applications, key rivals include SAP and Salesforce. The competition is intense, driven by continuous innovation, pricing strategies, and the ability to offer comprehensive, integrated solutions.
📊 Market Context
- Total Addressable Market - The global cloud computing market is valued at approximately US$943 billion in 2025, projected to surpass US$1 trillion in early 2026, driven by enterprise digital transformation and AI adoption.
- Key Trend - The rise of generative AI is a major inflection point, with exploding demand for compute, storage, and GPU/TPU-based infrastructure driving hyperscaler growth and specialized cloud providers.
Competitor
Description
vs ORCL
Microsoft
A technology giant with a strong presence in cloud computing (Azure), enterprise software (Dynamics, Office), and operating systems (Windows).
Competes directly with Oracle in cloud infrastructure, enterprise applications, and database solutions. Azure often targets hybrid cloud and leverages its vast enterprise ecosystem.
SAP
A leading provider of enterprise application software, particularly known for its ERP (Enterprise Resource Planning) solutions.
Primarily competes with Oracle's enterprise application suite. SAP is also transitioning to cloud-based offerings, directly challenging Oracle's SaaS portfolio.
Salesforce
The world's #1 AI CRM provider, offering cloud-based customer relationship management solutions across various industries.
Competes with Oracle's CRM and broader cloud application offerings, particularly in sales, service, and marketing automation. Salesforce focuses heavily on AI integration within its CRM platform.
Amazon Web Services (AWS)
The leading provider of cloud infrastructure services globally, offering a vast array of compute, storage, database, and networking solutions.
The primary competitor for Oracle Cloud Infrastructure (OCI). AWS holds the largest cloud market share due to early-mover advantage and extensive service catalog.
Market Share - Global Cloud Infrastructure Market Share (Q2 2025)
AWS
30%
Microsoft Azure
20%
Google Cloud
13%
Oracle Cloud Infrastructure
3%
Others
34%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 2 Sell, 10 Hold, 26 Buy, 5 Strong Buy
2
10
26
5
12-Month Price Target Range
Low Target
US$155
-6%
Average Target
US$288
+75%
High Target
US$400
+143%
Closing: US$164.58 (30 Jan 2026)
🚀 The Bull Case - Upside to US$400
1. Accelerated Cloud Infrastructure (OCI) Growth
High Probability
Oracle anticipates its total cloud growth rate to increase from 24% in FY25 to over 40% in FY26, with Cloud Infrastructure growth surpassing 70%. This rapid expansion, particularly fueled by AI workloads, could significantly boost revenue and market share, leading to substantial upside.
2. Successful Cerner Integration & Healthcare Market Expansion
Medium Probability
The successful integration of Cerner into Oracle Health positions Oracle to revolutionize the healthcare technology market. Expanding its Electronic Health Records (EHR) platform and cross-selling other cloud services could unlock a multi-billion dollar revenue opportunity and create a new, high-growth segment.
3. Strong AI Partnerships and Innovation
High Probability
Oracle's strategic alliances, such as those with OpenAI, and significant investments in AI infrastructure (OCI Supercluster with NVIDIA GPUs) could establish OCI as a preferred platform for AI development and deployment. This leadership in AI could attract new high-value clients and differentiate Oracle in the competitive cloud market.
🐻 The Bear Case - Downside to US$155
1. Intense Competition from Hyperscalers
High Probability
Oracle faces fierce competition from AWS, Microsoft Azure, and Google Cloud, which hold significantly larger market shares. Aggressive pricing and feature innovation from these established players could limit OCI's growth and profitability, leading to slower-than-expected cloud adoption rates.
2. High Debt Levels and Interest Rate Sensitivity
Medium Probability
With total debt significantly exceeding cash (US$131.73B total debt vs. US$19.77B total cash), Oracle carries a high debt-to-equity ratio of 432.511%. Rising interest rates could increase debt servicing costs, impacting profitability and limiting financial flexibility for strategic initiatives or shareholder returns.
3. Slowdown in Global Enterprise IT Spending
Medium Probability
An economic downturn or tightening IT budgets globally could lead to deferred software upgrades, slower cloud migrations, and reduced consulting services. This would directly impact Oracle's revenue growth across its cloud, license, and services segments, potentially missing its ambitious growth targets.
🔮 Final thought: Is this a long term relationship?
Owning Oracle for a decade hinges on its ability to execute its aggressive cloud and AI strategy successfully amidst intense competition. The company's deep enterprise relationships and database dominance provide a durable foundation. However, sustaining high growth in OCI and effectively monetizing AI investments, while managing its substantial debt, will be critical. If Oracle continues to win large cloud and AI workloads and successfully integrates new acquisitions, its long-term competitive position appears robust. Investors should monitor OCI's market share gains and profitability as key indicators.
📋 Appendix
Financial Performance
Metric
31 May 2025
31 May 2024
31 May 2023
Income Statement
Revenue
US$57.40B
US$52.96B
US$49.95B
Gross Profit
US$40.47B
US$37.82B
US$36.39B
Operating Income
US$18.05B
US$16.07B
US$13.77B
Net Income
US$12.44B
US$10.47B
US$8.50B
EPS (Diluted)
4.34
3.71
3.07
Balance Sheet
Cash & Equivalents
US$10.79B
US$10.45B
US$9.77B
Total Assets
US$168.36B
US$140.98B
US$134.38B
Total Debt
US$104.10B
US$93.12B
US$90.48B
Shareholders' Equity
US$20.45B
US$8.70B
US$1.07B
Key Ratios
Gross Margin
70.5%
71.4%
72.8%
Operating Margin
31.5%
30.3%
27.6%
Return on Equity
60.84
120.26
792.45
Analyst Estimates
Metric
Annual (31 May 2026)
Annual (31 May 2027)
EPS Estimate
US$7.37
US$7.93
EPS Growth
+22.3%
+7.6%
Revenue Estimate
US$66.9B
US$86.3B
Revenue Growth
+16.6%
+28.9%
Number of Analysts
38
42
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 31.77 | Measures the current share price relative to the company's trailing twelve-month earnings per share, indicating how much investors are willing to pay for each dollar of earnings. |
| Forward P/E | 20.74 | Indicates the current share price relative to the estimated future earnings per share, providing a forward-looking valuation metric. |
| Price/Sales (TTM) | 7.75 | Evaluates the company's market capitalization against its trailing twelve-month revenue, useful for valuing companies with low or negative earnings. |
| Price/Book (MRQ) | 15.79 | Measures how much investors are willing to pay for each dollar of book value (assets minus liabilities), indicating premium valuation relative to net assets. |
| EV/EBITDA | 22.29 | Compares the enterprise value of a company to its earnings before interest, taxes, depreciation, and amortization, often used for valuing capital-intensive businesses. |
| Return on Equity (TTM) | 0.69 | Measures the profitability of a company in relation to the equity invested by its shareholders, indicating how efficiently management is using shareholder funds to generate profits. |
| Operating Margin | 0.32 | Indicates the percentage of revenue remaining after paying for operating expenses, reflecting the company's operational efficiency. |
Peer Comparison
| Company | Market Cap (B) | P/E Ratio | P/B Ratio | Revenue Growth (%) | Operating Margin (%) |
|---|---|---|---|---|---|
| Oracle Corporation (Target) | 472.86 | 31.77 | 15.79 | 8.0% | 32.0% |
| Microsoft Corp. | 3200.00 | 28.08 | 8.18 | 15.0% | 45.6% |
| SAP SE | 243.06 | 28.18 | 5.22 | 7.6% | 28.0% |
| Salesforce Inc. | 216.25 | 28.32 | 3.60 | 9.0% | 33.0% |
| Sector Average | — | 28.19 | 5.67 | 10.5% | 35.5% |