Oracle Stock Undervalued

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Oracle Stock Undervalued

Oracle (ORCL) Stock Looks Undervalued

Oracle continues to take on some heavy debt to keep funding its AI ambitions. It seems investors are not happy, and that's a key reason why the Oracle stock is down by almost 55% from its yearly highs.

AI is the trending word these days, and a lot of people think it has the potential to change the world. Amidst all of this, it makes sense to think that the enterprise application business of Oracle could be impacted by AI.

Oracle's Debt Keeps Rising

That's why Oracle is trying to find a way out of this problem by investing heavily in AI infrastructure. But building the AI infrastructure requires huge upfront costs, and this is why Oracle keeps taking a lot of debt.

Since the start of 2025, the long-term debt of Oracle has increased by 66%, which is quite alarming. But we must also understand that Oracle has a massive backlog, which keeps rising.

In simple words, Oracle stands to gain a lot if it can manage to build its AI infrastructure. Once the AI infrastructure is built, the backlog will turn into revenue, and this could solve most of Oracle's problems.

The backlog of Oracle is now sitting at $553 billion, and even if a little of that turns into revenue, it could change everything.

Also, Oracle is not a new player and is actually a well-established tech company with a lot of history. We can't just compare it with any other AI startup that's struggling to make money.

The valuation of Oracle stock also looks very attractive as it is now trading at a discount. The P/E and the P/S ratios of Oracle are also below the 5-year average.

With all things considered, Oracle stock can be a good option for those willing to invest for the long term. There's a certain degree of risk due to high debt, but if Oracle succeeds in turning backlog into revenue, it would lead to massive upside in the stock price.

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