Oracle Corporation

New York Stock Exchange
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Bullish +65

Price Prediction: Two Big Reasons Oracle Stock Could Surge 60% This Year

📉 Oracle shares have cratered 35% year-to-date and 33% in the last month, creating a valuation dislocation with its business fundamentals.

💰 Q4 FY2026 delivered revenue of $19.18 billion and EPS of $2.11, marking faster growth than any point in company history.

☁️ IaaS revenue grew 93% year-over-year to $5.79 billion, with remaining performance obligations exploding 363% to $638 billion.

🚀 Multi-cloud database revenue surged 531% year-over-year as Oracle expanded presence into 33 Microsoft and 14 Google regions.

💻 The company utilizes customer-supplied GPUs worth $75 billion of its backlog, significantly shrinking its own capital expenditure burden.

🎯 Analysts at 24/7 Wall St. set a price target of $198.72, implying nearly 60% upside from current trading levels.

📈 Management guides FY2027 revenue to $90 billion and raised non-GAAP EPS guidance to $8.05.

⚠️ S&P Global downgraded Oracle from BBB to BBB- on July 13 due to concerns over AI infrastructure debt levels.

🏗️ The company plans to raise approximately $40 billion in debt and equity in FY2027, including a $20 billion at-the-market program.

📊 Oracle trades at a forward P/E of 16 versus Microsoft's 29, despite matching its commercial RPO backlog size.

⚖️ The bear case targets a stock price of $172.49 if AI demand cools or equity issuance dilutes shareholders excessively.

🔍 Key risks include the pace of Oracle Health rollout and whether OCI compounds toward the $144 billion five-year target.

Bullish Signals
  • Q4 FY2026 revenue reached $19.18 billion with EPS of $2.11, demonstrating robust business growth.
  • IaaS revenue grew 93% year-over-year to $5.79 billion, indicating strong infrastructure demand.
  • Multi-cloud database revenue exploded 531% year-over-year as the platform expanded into major cloud regions.
  • $75 billion of the backlog is tied to customer-supplied GPUs, reducing Oracle's capex burden and improving margins.
  • Remaining performance obligations grew 363% to $638 billion, signaling a massive pipeline of future revenue.
  • Analysts project a price target of $198.72, implying nearly 60% upside from current levels.
  • Management raised FY2027 non-GAAP EPS guidance to $8.05 and guided revenue to $90 billion.
  • Oracle trades at a forward P/E of 16 compared to Microsoft's 29, suggesting the stock is undervalued relative to peers.
Risk Factors
  • Free cash flow was negative $23.69 billion for FY2026 against capex of $55.66 billion.
  • S&P Global downgraded Oracle from BBB to BBB- on July 13 tied to AI infrastructure debt concerns.
  • Oracle plans to raise roughly $40 billion in debt and equity in FY2027, including a $20 billion at-the-market program.
  • The downgrade leaves Oracle one notch above junk status, potentially increasing borrowing costs.
  • Equity issuance could dilute shareholders faster than the RPO backlog converts to recognized revenue.
  • Recent catalysts include New Mexico rejecting a gas pipeline permit for an Oracle data center.
  • Sector contagion is evident after IBM shares dropped more than 25% on a Q2 miss.
Full Analysis
Oracle (ORCL) shares have dropped approximately 35% year-to-date and 33% over the past month, creating a significant divergence between its stock price and underlying business fundamentals. Despite this decline, the company reported strong Q4 FY2026 results with revenue of $19.18 billion and EPS of $2.11. A key driver of growth is Infrastructure-as-a-Service (IaaS), which surged 93% year-over-year to $5.79 billion, while remaining performance obligations exploded by 363% to a record $638 billion. The article highlights two primary bullish engines accelerating Oracle's growth: multi-cloud database revenue, which grew 531% year-over-year as the platform expanded into major cloud regions like Microsoft Azure and Google Cloud; and a strategic shift in capital expenditure where $75 billion of its backlog is tied to customer-supplied GPUs. This arrangement dramatically reduces Oracle's own capex burden while it scales its infrastructure. Analysts from 24/7 Wall St. maintain a 'buy' rating with a price target of $198.72, implying nearly 60% upside from current levels. Management has guided FY2027 revenue to $90 billion and raised non-GAAP EPS guidance to $8.05. However, the company faces balance sheet headwinds, including negative free cash flow of $23.69 billion in FY2026 and a recent S&P Global downgrade to BBB- due to AI infrastructure debt. The investment thesis relies on Oracle successfully converting its massive backlog into recognized revenue without excessive shareholder dilution from planned equity issuances. While risks include potential cooling of AI demand or delays in the rollout of Oracle Health, the current valuation at a forward P/E of 16 appears discounted compared to peers like Microsoft, which trades at a forward P/E of 29 despite similar backlog sizes.