Oracle (ORCL): Assessing Valuation After GPT-5 AI Launch and Google Cloud Partnership Expansion

Oracle (ORCL) just sent another jolt through the enterprise tech world, announcing the full rollout of OpenAI’s GPT-5 across its cloud and SaaS portfolio. This leap puts cutting-edge AI tools directly into the hands of Oracle’s customers, raising the stakes in a market where clients are demanding more automation, analytics, and decision-making power. With this news coming so soon after Oracle’s expanded partnership with Google Cloud and a string of new client wins, it is no wonder many investors are asking if this is a game-changing moment for the stock or if the excitement is already reflected in the current price.

The stock’s trajectory this year has been hard to ignore. Oracle shares have climbed 42% year to date and gained 72% over the past 12 months, handily outpacing many large-cap peers. Much of this momentum has come from intensifying enterprise appetite for AI and cloud solutions. Numerous high-profile announcements, from healthcare system partnerships to major AI deployments, have kept Oracle in the spotlight and spurred a reassessment of its long-term growth prospects and competitive positioning. While the narrative is shifting in Oracle’s favor, the price gains mean investors are right to question how much upside is left.

The big question now, with Oracle’s stock trading near all-time highs, is whether the market has fully priced in the growth potential from these new partnerships and technologies or if there is still value left for those considering a new position.

Most Popular Narrative: 11.5% Overvalued

According to the narrative by Nenad, Oracle is currently trading above its calculated fair value. The valuation reflects a discount rate based on expected growth in cloud, AI, and recurring enterprise contracts. However, it ultimately identifies the stock as expensive at present market prices.

Oracle is a compelling investment opportunity for long-term growth driven by the following factors:
Cloud Momentum: Accelerated adoption of OCI and Fusion applications.
AI Integration: Leveraging AI to enhance product offerings and gain market share.
Resilient Business Model: Strong client retention and recurring revenue from enterprise contracts.
Key Metrics to Watch: Cloud revenue growth rates (currently 29% YoY for OCI), margins and cash flow to assess operational efficiency, as well as debt reduction and R&D investment trends.

Curious about why this 11.5% premium might signal more than just hype? There is a bold vision here, powered by unique growth levers and financial ambition. The fair value hinges on Oracle’s laser focus on industry depth, rapid cloud adoption, and the disruptive promise of AI. But how do these themes play out in the numbers? Get the full story behind the calculations and see whether this confidence is warranted, or if risk is quietly building beneath the surface.

Result: Fair Value of $212 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, fierce competition and Oracle’s high debt load could quickly challenge the upbeat narrative if growth falls short or if industry headwinds intensify.

Find out about the key risks to this Oracle narrative.

Another View: DCF Suggests Oracle Is Undervalued

Taking a different approach, our DCF model suggests Oracle may actually be trading below its intrinsic value. This contrasts with the earlier narrative and raises the question: are markets underestimating Oracle’s long-term earning power?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Oracle for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Oracle Narrative

If your perspective is different, or if you'd rather dive into the numbers yourself, you can easily craft your own take in just a few minutes. do it your way.

A great starting point for your Oracle research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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