Stock Analysis
Oracle Corporation (ORCL)
NYSE: ORCL · Enterprise Software & Cloud Infrastructure
Updated
Rated Watchlist, with a fair value of $162.75 against a last close of $137.30 (+18.5% implied upside). Oracle fell to $137.30, inside the zone flagged in September, but a force majeure notice on Project Jupiter, Wisconsin power delays and a 33 bp rise in long yields cut fair value to $162.75, so the level that makes it interesting moves to $125.
- Verdict
- Watchlist
- Fair Value
- $162.75
- Investment Score
- 59/100prev 59
Investment Scorecard
Composite score 59/100 (previous 59). Every factor is scored out of 10, ten always being the best outcome, including for risk.
| Factor | Score | Weight | Change | Basis |
|---|---|---|---|---|
| Business Quality | 7/10 | 15% | unchanged | Unchanged. OCI scale and database franchise intact |
| Financial Strength | 3/10 | 15% | unchanged | Unchanged. Negative free cash flow, heavy capex, higher yields |
| Competitive Advantage | 7/10 | 15% | unchanged | Unchanged. Multicloud database and deployment breadth |
| Management | 6/10 | 10% | unchanged | Unchanged. Still no dated path to positive free cash flow |
| Growth Potential | 9/10 | 15% | unchanged | Unchanged. Guidance intact; Tencent lease reported |
| Valuation | 7/10 | 15% | +1 vs last report | Up from 6. About 17x the FY27 EPS guide |
| Risk (10 = lowest risk) | 2/10 | 10% | unchanged | Unchanged. Funding, site delays and concentration |
| Technical Setup | 3/10 | 5% | -2 vs last report | Down from 5. Below all four moving averages |
Recent Developments
| Date | Development | Impact |
|---|---|---|
| Wisconsin (Port Washington) power timing Regulators revoked the completeness finding on the transmission application in August; the utility refiled in September. Aterio models partial power between Oct 2027 and Jun 2028 versus a 2H 2027 target. Reading: Second delay signal in a week; unconfirmed by Oracle. | Medium | |
| Tencent AI chip lease Reported by the Financial Times, unconfirmed: about 100,000 chips over five years for roughly $7bn, about 30% upfront. Reading: About 1.5% of FY27 revenue a year if confirmed; broadens the customer base. | Medium | |
| Project Jupiter force majeure notice Notice sent to Blue Owl's unit on the 2.45 GW New Mexico Stargate campus; gas pipeline delayed about six months to 1 Feb 2027; air-permit decision due by 23 Nov. Oracle says the project remains on schedule. Reading: No FY27 revenue at stake, but a confirmed delay signal on the largest campus; bear probability raised to 28%. | Medium | |
| NetApp OCI-native storage service Joint storage service natively on OCI announced. Reading: Supports OCI breadth; not material to earnings. | Low |
Key Risks
| Risk | Probability | Severity | Comment |
|---|---|---|---|
| Site and power delays | Medium-high | High | Jupiter pipeline and permit; Wisconsin transmission review. |
| Funding and dilution | Medium | High | Negative FCF through peak build; 10-year at 5.29%. |
| Customer concentration | Medium | High | No customer-level RPO disclosure. |
| Credit pressure | Medium | High | Credit protection near multi-year wides in late August. |
| Margin compression | High | Medium | Infrastructure mix lowers gross margin during the ramp. |
| Export-rule exposure | Low-medium | Medium | A Tencent lease depends on US rules permitting offshore leasing. |
Scenario Analysis
| Case | Probability | Fair Value | Outlook |
|---|---|---|---|
| Bull | 25% | $240 | RPO converts on schedule, sites energize on time, gross margin stabilizes; FY28 EPS supports a low-20s multiple. |
| Base | 47% | $165 | FY27 floor met, some FY28 slippage on large campuses, FCF pressured through peak build. |
| Bear | 28% | $90 | Site delays compound, a large customer defers, or funding costs rise further; earnings quality and multiple compress. |
The Case
Oracle's growth is real: fiscal Q1 revenue rose 29.6%, OCI 121%, RPO reached $664 billion and FY27 guidance is intact. The binding risk is the cash and time needed to energize the campuses that backlog depends on, and the past three weeks produced a force majeure notice on Project Jupiter and a power-delay warning in Wisconsin while the 10-year yield rose to 5.29%. At $137.30 the shares trade at about 17x the FY27 EPS guide and 18.5% below the $162.75 weighted fair value, short of the margin a bear case near $90 requires; Watchlist holds, with $125 the level that would make the name interesting.
Archived Reports
Beating The Bull keeps every past version of this report on file. Verdicts and numbers reflect what was known when each one was published.
Informational use only. Not financial advice.