Oracle Stock Buy

last updated on

Oracle Stock Buy

Oracle Stock: Should You Buy It?

Oracle (ORCL) looks really attractive at its current trading price. Oracle stock is trading at a forward P/E of 17. Meanwhile, analysts have already raised their forecasts for future earnings.

The Q1 FY2027 revenue of Oracle was $19 billion. That is an increase of 30% y/y. So, even with this current pace of growth, Oracle stock is trading 60% lower than its high made in 2025.

Oracle Enjoys Strong Revenue Growth

All of this tells us that Oracle stock is a solid buy considering its strong growth prospects. So, why is the Oracle stock pricenot reflecting that optimism?

A key reason why Oracle's stock price is trading lower has to do with investors' worries. The investors are worried that Oracle will not be able to deliver on its RPO. The backlog is now sitting at $604 billion and keeps growing.

It is also a reality that Oracle needs serious capital to fulfill these obligations. Only then will that backlog convert into actual profit for Oracle.

The two viable ways for Oracle to meet its capital needs are to take on more debt or issue more shares. Both of these things will have a negative impact on the Oracle stock price.

However, the CFO of Oracle remains confident and highlighted how the company managed to handle its RPO during the quarter. The cloud infrastructure revenue jumped by 121% during that period.

Oracle management thinks the strong momentum of revenue growth will continue in the coming quarters. Over the next 3 years, the company is expecting to convert a big part of RPO into revenue.

However, one key risk for the Oracle stock is debt. The debt-to-equity ratio of Oracle is 2.53. This highlights that the debt is already more than the shareholders' equity.

The high debt could become a problem if the AI infrastructure spending slows down. But the cash from operations has increased by 184% y/y and reached $23 billion.

The bottom line is that Oracle's stock price could soar if the company continues to convert its RPO into revenue. So, if you are willing to take some risk, then you can consider buying Oracle stock. It is in a very good position to deliver strong upside in the next 3 years.

Trending Stories