Oracle (ORCL) could be trading 62% below fair value as AI advances gain new attention

Oracle (ORCL) is putting AI at the center of its story, launching Oracle Manager Edge for administrators and new Fusion Agentic Applications for supply chains in June, even as its stock has faced a recent sell-off.

Check out our latest analysis for Oracle.

This AI push comes amidst a rough patch for Oracle stock, with the stock down 40.65% in the past 30 days and 28.33% since the beginning of the year. The 5-year total shareholder return is 71.01%, which is still in positive territory for long-term holders. The recent decline signals near-term momentum is fading as investors reassess their AI spending and debt plans against large contract backlogs.

If you’ve been considering Oracle’s recent AI developments and want to see what else is moving on this theme, now is a good time to scan these 29 AI small-cap stocks.

Oracle is currently at a crossroads, with its stock price plummeting and its business tied to a $638 billion AI backlog and heavy data center spending. Is this reset creating an undervalued entry point or has the market already priced in its growth potential?

Most popular story: 62.4% are underrated

On the one hand, Oracle’s closing price of $140.27 and on the other hand, the widely supported fair value estimate of $373.13, suggesting a large valuation gap.

Oracle’s underlying business model still has the characteristics of a high-quality company. Its database, Fusion applications, and support contracts generate a steady, recurring revenue stream, and switching costs remain significant for mission-critical workloads. Gross margins of over 67% and net margins of nearly 20% demonstrate true pricing power and management discipline. The shift from on-premises licenses to cloud subscriptions continues, and vertical integration of apps, databases, and infrastructure provides an argument for reliable performance in an AI-driven world.

Read the whole story.

Want to know how Oracle achieves its higher fair value? This story focuses on high margins, revenue growth, and ambitious long-term cash flow assumptions. The whole story ties these parts together.

Result: Fair value $373.13 (undervalued)

Read the full explanation to understand what’s behind the predictions.

But there are still fault lines in Oracle’s story, with heavy AI capital spending squeezing free cash flow and a large concentration of AI customers driving aggregate demand.

Find out about the key risks in this Oracle story.

next step

Given this mix of concern and optimism about Oracle, it makes sense to take a look at the underlying data yourself to quickly determine where you stand. Start by weighing 4 important rewards and 3 important warning signs.

Looking for investment ideas other than Oracle?

If Oracle has changed the way you think about AI and evaluation, don’t stop there. Expand your watchlist now so you don’t miss the next one.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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