Oracle (ORCL): Rethinking Valuation After a Year of Quiet but Strong Gains

Oracle (ORCL) has been making moves that are catching investors’ eyes, even without a single headline-grabbing event to drive the story this time. The stock’s trajectory lately might look more like steady progress than a sudden breakout, but shifts like these can matter just as much for those trying to decide their next move. Sometimes, a quiet period says as much as the loud ones, especially when you’re thinking about what’s actually built into the price. Looking at the past year, Oracle’s gains have been hard to ignore. The stock is up around 91% since last June, and momentum has been especially strong this month. While there’s no clear catalyst in the headlines, the company’s growth numbers—revenue increased 22% and net income climbed 24% over the last year—suggest investors are factoring in continued strength. Oracle’s multi-year returns, which top 400% over three years, paint a picture of persistent interest and belief in the business, even as near-term volatility ebbs and flows. With this kind of run-up, it’s only natural to ask: is Oracle undervalued right now, or are markets already baking in every bit of future growth?

Most Popular Narrative: 48% Overvalued

According to Nenad, the most widely followed narrative sees Oracle as significantly overvalued relative to its calculated fair value. This perspective suggests the stock trades far above core business assumptions about growth and profitability.

Oracle is transforming into a cloud-first, AI-driven enterprise IT leader. While competition is fierce, its focus on regulated industries, hybrid cloud, and AI-enhanced applications provides a durable growth trajectory. If it can successfully scale OCI and integrate AI, Oracle could outperform its peers over the next 5 to 10 years.

What underpins this bold call? Nenad’s narrative is built on aggressive growth forecasts, future business bets, and an ambitious profit outlook for Oracle. Want to see the specific strategies and forward-looking assumptions that drive this big valuation gap? The full story reveals how long-term innovation and expansion plans collide with current price levels.

Result: Fair Value of $212 (OVERVALUED)

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

However, execution challenges in AI and intense cloud competition could always spark a reversal if Oracle’s growth story encounters unexpected roadblocks.

Find out about the key risks to this Oracle narrative.

Another View: DCF Model Tells a Different Story

But if you look through the lens of the SWS DCF model, a different take emerges. This approach suggests Oracle could actually be undervalued, which challenges the narrative that all optimism is already priced in. Which picture is closer to reality?

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 these views don’t match your own, or you want to dig into the numbers and reach your own conclusion, it's quick and easy to craft your own narrative too. Do it your way.

A great starting point for your Oracle research is our analysis highlighting 3 key rewards and 3 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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