◆ What the Market Isn't Pricing In

Oracle (ORCL) — the variant view

Oracle trades at a lower multiple than it did as a slow database company, which prices the AI build at less than nothing despite $75 billion of it being paid for by customers.

📈 ORCL valuation, revenue & earnings — P/E, P/S, revenue, EPS →

The share price has more than halved in a year. At $139.54 on 24 September 2026 Oracle was worth $421.93 billion1, down about 55.5% over 52 weeks2, from a 52-week high of $322.543. Over the same year revenue grew and remaining performance obligations rose to $664 billion4.

Price to earnings at fiscal year end28.6May 202233.6May 202330.8May 202437.3May 202538.2May 202621.9Sep 2026stockanalysis ratios and statistics (S&P data)
Cheaper than before the AI contracts.

The multiple tells the story more clearly than the price. At the end of fiscal 2022, before the AI contracts, Oracle traded at 28.57 times earnings; at the end of fiscal 2023 at 33.64 and fiscal 2024 at 30.775. Today the trailing multiple is about 22 and the forward multiple 16.386. The market pays less for each dollar of Oracle's earnings than it did when Oracle was a slow-growing database company.

One reading is that the market now values the AI build at less than nothing: it assigns the old business a lower multiple than before and adds nothing for the new one, because of the debt, the leases and the concentration of the backlog. That reading may miss the structure of the contracts. Oracle says the prepaid and customer-supplied hardware in its large AI contracts totals $75 billion, which "substantially reduces the amount of capital Oracle must raise"7. It says the more than $30 billion it booked in the latest quarter had "no incremental impact on its plans to raise capital"8.

The other reading is that the market is right to discount earnings that depend on a few customers paying for capacity for fifteen years. Analysts' price targets range from $110 to $400, averaging $237.979; a range that wide is itself a statement of uncertainty.

The balance sheet has already changed shape in a way that supports the optimistic view. Oracle stockholders' equity was $1,073 million at the end of fiscal 202310; total stockholders' equity was $67,196 million at the end of August 202611, after years in which buybacks kept it near zero. Cash was $36,369 million12. Oracle is far more leveraged in debt terms than it used to be, but it is also far better capitalised in equity terms, partly because shareholders have put money in rather than taken it out.

The credit market takes the darker view. The cost of insuring Oracle's debt rose to about 198.6 basis points, which TipRanks reported would be higher than levels seen during the 2008 financial crisis13. Shareholders and lenders are asking the same question from different ends: whether the customers behind the backlog will pay for fifteen years of leases.

The number that will settle the argument is free cash flow excluding customer prepayments. It was about minus $16.8 billion in the latest quarter14; if it turns positive in fiscal 2028 as the large contracts begin paying, today's multiple will have been far too low.

References
  1. ReportedAt $139.54 on 24 September 2026 Oracle was worth $421.93 billion, down about 55.5% over 52 weeks, from a 52-week high of $322.54.
    Oracle (ORCL) market data - $139.54 at the close on 24 September 2026, market cap $421.93B, 52-week range 114.50-322.54. — September 2026 · publ. 24 September 2026 · source ↗
  2. ReportedAt $139.54 on 24 September 2026 Oracle was worth $421.93 billion, down about 55.5% over 52 weeks, from a 52-week high of $322.54.
    Oracle (ORCL) statistics - trailing P/E 21.88, forward P/E 16.38, P/S 5.88, price down 55.54% in 52 weeks. — September 2026 · publ. 24 September 2026 · source ↗
  3. ReportedAt $139.54 on 24 September 2026 Oracle was worth $421.93 billion, down about 55.5% over 52 weeks, from a 52-week high of $322.54.
    Oracle (ORCL) market data - $139.54 at the close on 24 September 2026, market cap $421.93B, 52-week range 114.50-322.54. — September 2026 · publ. 24 September 2026 · source ↗
  4. ReportedOver the same year revenue grew and remaining performance obligations rose to $664 billion.
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - revenue by line and region for the quarter. — Q1 FY2027 · publ. 10 September 2026 · source ↗
  5. ReportedAt the end of fiscal 2022, before the AI contracts, Oracle traded at 28.57 times earnings; at the end of fiscal 2023 at 33.64 and fiscal 2024 at 30.77.
    Oracle ratios by fiscal year - market capitalisation and P/E at each 31 May, FY2022-FY2026 (S&P data). — FY2022-FY2026 · publ. September 2026 · source ↗
  6. ReportedToday the trailing multiple is about 22 and the forward multiple 16.38.
    Oracle (ORCL) statistics - trailing P/E 21.88, forward P/E 16.38, P/S 5.88, price down 55.54% in 52 weeks. — September 2026 · publ. 24 September 2026 · source ↗
  7. ReportedOracle says the prepaid and customer-supplied hardware in its large AI contracts totals $75 billion, which "substantially reduces the amount of capital Oracle must raise".
    Oracle fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1 - financing, $75 billion of prepaid and customer-supplied hardware, Oracle Health and multicloud. — FY2026 · publ. 10 June 2026 · source ↗
  8. ReportedIt says the more than $30 billion it booked in the latest quarter had "no incremental impact on its plans to raise capital".
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - commentary, bookings, capacity delivered and guidance. — Q1 FY2027 · publ. 10 September 2026 · source ↗
  9. Third-party estimateAnalysts' price targets range from $110 to $400, averaging $237.97; a range that wide is itself a statement of uncertainty.
    Oracle analyst forecast - consensus revenue $90.48bn (FY2027) and $131.45bn (FY2028), EPS $8.14 and $11.00, free cash flow -$37.60bn (FY2027), average price target $237.97 (low $110, high $400). — September 2026 · publ. September 2026 · source ↗
  10. ReportedOracle stockholders' equity was $1,073 million at the end of fiscal 2023; total stockholders' equity was $67,196 million at the end of August 2026, after years in which buybacks kept it near zero.
    Oracle Form 10-K for fiscal 2024 - cloud services and licence support for FY2022-FY2024, revenue by ecosystem and geography. — FY2024 · publ. June 2024 · source ↗
  11. ReportedOracle stockholders' equity was $1,073 million at the end of fiscal 2023; total stockholders' equity was $67,196 million at the end of August 2026, after years in which buybacks kept it near zero.
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - income statement, cash flow statement and balance sheet. — Q1 FY2027 · publ. 10 September 2026 · source ↗
  12. ReportedCash was $36,369 million.
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - income statement, cash flow statement and balance sheet. — Q1 FY2027 · publ. 10 September 2026 · source ↗
  13. Third-party estimateThe cost of insuring Oracle's debt rose to about 198.6 basis points, which TipRanks reported would be higher than levels seen during the 2008 financial crisis.
    TipRanks, Oracle credit default swap prices near record levels (about 198.6 basis points); about $120 billion of bonds in the Bloomberg high-grade index. — September 2026 · publ. September 2026 · source ↗
  14. Moat Explorer calcIt was about minus $16.8 billion in the latest quarter; if it turns positive in fiscal 2028 as the large contracts begin paying, today's multiple will have been far too low.
    Moat Explorer calculation from Oracle's reported figures ($ millions unless stated; fiscal years end 31 May). Revenue lines: software support 19,804 / 19,365 - 1 = 2.3% (FY2022-FY2026); support share 19,804 / 67,357 = 29.4%; support Q1 FY2027 4,895 / 4,955 - 1 = -1.2%; licences FY2026 4,737 / 5,201 - 1 = -8.9%; licences Q1 FY2027 655 / 766 - 1 = -14.5%; licences FY2017 to FY2026 4,737 / 6,523 - 1 = -27.4%; fourth-quarter licences 1,881 / 4,737 = 39.7%. Software (licence plus support) FY2022 5,878 + 19,365 = 25,243; FY2023 5,779 + 19,426 = 25,205; FY2026 24,541 / 24,724 - 1 = -0.7%; software share 24,541 / 67,357 = 36.4%. Cloud infrastructure FY2026 18,101 / 10,234 - 1 = 76.9%; FY2024 to FY2026 18,101 / 6,840 = 2.6 times; share 18,101 / 67,357 = 26.9%; Q1 FY2027 share 7,388 / 19,345 = 38.2%; annual run rate 7,388 x 4 = 29,552. Cloud applications FY2025 14,272 / 12,934 - 1 = 10.3%; FY2026 15,888 / 14,272 - 1 = 11.3%; share 15,888 / 67,357 = 23.6%; trailing twelve months 15,888 - 3,839 + 4,219 = 16,268. Applications ecosystem revenue 18,172 / 16,651 - 1 = 9.1%; 19,383 / 18,172 - 1 = 6.7%. Hardware segment margin 2,017 / 3,084 = 65.4% (FY2026); 1,709 / 4,152 = 41.2% (FY2017); 1,903 / 3,443 = 55.3% (FY2020); 1,932 / 3,274 = 59.0% (FY2023); 452 / 774 = 58.4% (Q1 FY2027); hardware revenue 3,084 / 4,152 - 1 = -25.7%; 3,084 / 5,205 - 1 = -40.7%; share 3,084 / 67,357 = 4.6%. Services margin 1,533 / 5,743 = 26.7% (FY2026); 993 / 5,233 = 19.0% (FY2025); 698 / 3,359 = 20.8% (FY2017); 450 / 3,106 = 14.5% (FY2020); 1,104 / 5,594 = 19.7% (FY2023); 445 / 1,414 = 31.5% (Q1 FY2027); services growth 5,743 / 5,233 - 1 = 9.7%; share 5,743 / 67,357 = 8.5%; revenue per services employee 5,743 / 34,000 = about $169,000. Cloud and software segment margin 20,801 / 30,452 = 68.3% (FY2017); 23,169 / 34,101 = 67.9% (FY2021); 26,126 / 41,086 = 63.6% (FY2023); 28,514 / 44,464 = 64.1% (FY2024); 30,930 / 49,230 = 62.8% (FY2025); 34,468 / 58,530 = 58.9% (FY2026); 7,691 / 12,907 = 59.6% (Q1 FY2026); 9,358 / 17,157 = 54.5% (Q1 FY2027); segment expenses 16,850 / 8,783 - 1 = 91.8%; segment revenue 58,530 / 44,464 - 1 = 31.6%; Q1 segment revenue 17,157 / 12,907 - 1 = 32.9%. Revenue growth 67,357 / 57,399 - 1 = 17.3%; FY2022 to FY2026 67,357 / 42,440 - 1 = 58.7%; Cerner share of FY2023 revenue 5,900 / 49,954 = 11.8%. Research and development 10,272 / 5,524 = 1.9 times; 10,272 / 67,357 = 15.3%. Sales and marketing 8,274 / 52,961 = 15.6% (FY2024); 8,651 / 57,399 = 15.1% (FY2025); 8,331 / 67,357 = 12.4% (FY2026); 8,331 / 8,651 - 1 = -3.7%; revenue per dollar of selling 52,961 / 8,274 = 6.4 and 67,357 / 8,331 = 8.1. Operating margin 15,353 / 52,961 = 29.0%; 17,678 / 57,399 = 30.8%; 20,606 / 67,357 = 30.6%; before amortisation (15,353 + 3,010) / 52,961 = 34.7%, (17,678 + 2,307) / 57,399 = 34.8%, (20,606 + 1,671) / 67,357 = 33.1%; amortisation 1,671 / 67,357 = 2.5%; non-GAAP less GAAP operating income 28.9 - 20.6 = 8.3 bn. Headcount 162,000 - 141,000 = 21,000, 21,000 / 162,000 = 13%. Headcount against the fiscal 2023 peak 164,000 - 141,000 = 23,000. Hardware FY2015 to FY2026 3,084 / 5,205 - 1 = -40.7%. Amortisation Q1 420 - 202 = 218. Stock compensation plus restructuring FY2026 4,811 + 1,838 = 6,649. Americas 44,478 / 36,339 - 1 = 22.4%; Americas share 23,679 / 42,440 = 55.8% (FY2022), 33,122 / 52,961 = 62.5% (FY2024), 44,478 / 67,357 = 66.0% (FY2026), 13,711 / 19,345 = 70.9% (Q1 FY2027); Asia Pacific 7,582 / 6,750 - 1 = 12.3%; EMEA plus Asia Pacific Q1 FY2027 3,726 + 1,908 = 5,634. US long-lived assets 102,717 / 45,439 = 2.3 times. Free cash flow FY2025 20,821 - 21,215 = -394; FY2024 18,673 - 6,866 = 11,807. Capital expenditure share of revenue 6,866 / 52,961 = 13%; 21,215 / 57,399 = 37%; 55,663 / 67,357 = 83%; 28,499 / 19,345 = 147%. Property added 127,845 - 99,957 = 27,888. Q1 FY2027 operating cash flow excluding prepayments 23,103 - 11,363 = 11,740; prepayments share 11,363 / 23,103 = 49%; free cash flow excluding prepayments -5,396 - 11,363 = -16,759. Borrowings 130,105 / 87,202 - 1 = 49%; net debt May 2025 92,568 - 10,786 - 417 = 81,365; May 2026 129,541 - 31,289 - 605 = 97,647; August 2026 7,625 + 117,712 - 36,369 - 708 = 88,260. Interest 1,428 / 923 - 1 = 55%; interest over operating income 1,428 / 6,728 = 21%. Leases not yet commenced over borrowings 288 / 125.3 = 2.3 times; over total assets 288 / 303.3 = 95%. Depreciation 3,156 / 1,351 = 2.3 times. Diluted shares 3,000 / 2,823 - 1 = 6.3%, 3,000 - 2,823 = 177 million; Ellison 1,158.2 / 3,023.7 = 38.3%; pledged 346 / 1,158 = 30%. Remaining performance obligations: 664 / 138 = 4.8 times; 664 / 455 - 1 = 46%; next twelve months 12% x 638 = 77 bn and 13% x 664 = 86 bn; beyond 36 months 100% - 13% - 37% = 50%; quarterly increases 455 - 138 = 317, 523 - 455 = 68, 553 - 523 = 30, 638 - 553 = 85, 664 - 638 = 26. Targets: 225 / 67.357 = 3.3 times; 225 - 24.5 = about 200 bn; 144 / 18 = 8 times; 20 / 2.4 = 8.3 times; Q1 FY2027 revenue 19,345 / 90,000 = 21.5% of guidance. Other: total assets 303,259 - 261,759 = 41,500 in one quarter; revenue FY2026 against FY2023 67,357 / 49,954 - 1 = 34.8%; cloud infrastructure Q1 FY2027 over Q4 FY2026 7,388 - 5,787 = 1,601; quarterly steps 4,079 - 3,347 = 732, 4,888 - 4,079 = 809, 5,787 - 4,888 = 899; cloud applications share 3,839 / 14,926 = 25.7% (Q1 FY2026) and 4,219 / 19,345 = 21.8% (Q1 FY2027); dividends over support 5,787 / 19,804 = 29.2%; interest, research and dividends 4,599 + 10,272 + 5,787 = 20,658; support FY2015 to FY2026 19,804 - 18,847 = 957; US revenue share 39,835 / 67,357 = 59.1%. Trailing twelve months to August 2026: revenue 67,357 - 14,926 + 19,345 = 71,776; net income 17,087 - 2,927 + 4,760 = 18,920; diluted EPS 5.83 - 1.01 + 1.56 = 6.38; P/E 421,930 / 18,920 = 22.3; P/S 421,930 / 71,776 = 5.88 - cash flow, capital spending, debt, leases, shares and backlog. — FY2015-Q1 FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Oracle's Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
Sources
Generated September 25, 2026