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Named-site schedules provide dated evidence of capacity delivery.
Annual free cash flow remains at or below $0 in both FY2027 and FY2028.
Buy means building the position in stages rather than committing all at once. At the $158.78 report-date price on September 4, 2026, Oracle sits below $192.84 Fair value. The main risk is free cash flow remaining non-positive after major capacity delivery, increasing financing pressure. The clearest upside is the documented delivery schedule. If customers use that capacity and reach contractual revenue levels, management expects infrastructure margins to improve.34
The report was prepared at $158.78 on September 4, 2026. Fair value is $192.84, with $244.32 Potential value secondary to the main conclusion.
FY2026 free cash flow was negative $23.69 billion after $55.66 billion of capex. If that continues through FY2028, financing pressure would rise and value per share would fall.56
Upside can persist if scheduled capacity becomes utilized workloads. That would raise sales, spread infrastructure costs, and support better cash generation.4
Customer choice can reduce upfront deployment costs, while prepayments may lower company-funded capital needs. The benefit depends on the realized funding mix.4
Timely site delivery and utilization could release constrained cloud capacity, lift revenue, and spread infrastructure costs across more workloads.4
Buy because scheduled capacity can support strong growth if it also restores positive free cash flow.4
Buy because the report-date price is below Fair value, though the discount justifies staged additions rather than a full position until the capacity build produces sustained positive free cash flow.356
cost by combining operating system and management software with Oracle server, storage and networking hardware.
Restructuring costs recorded to each of the operating segments presented primarily related to employee severance costs. Other restructuring costs represented employee severance costs not related to its operating segments and certain other restructuring plan costs.
The harshest combination is weak utilization, sustained cash consumption, and elevated debt. That would require more funding while investors pay less for future earnings.
Debt then magnifies the shortfall, and investors pay less for each dollar of future earnings.
Non-positive free cash flow in both FY2027 and FY2028 would show that infrastructure spending is not becoming distributable cash.56
The five developments that would weaken our investment case.
A weaker revenue step would indicate that scheduled capacity is not becoming paid workloads, cutting sales growth and delaying the absorption of infrastructure costs.
Current:FY2027 house path: 32.64% year over year.
Alert ifBelow 20% in FY2027.
The available evidence does not establish a durable structural moat. Management described customer-owned, prepaid and provider-funded choices, but could not specify the future mix. These choices may ease deployment without showing protection of pricing or customer retention.
Cloud and software supplied most FY2026 revenue, but scale is an outcome. It does not establish integration, switching costs, distribution, installed-base lock-in or another barrier that protects pricing or retention.
FY2026 operating profit was positive, while free cash flow was negative. Those outcomes do not establish a barrier that protects prices or customer retention.56
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
The highlighted cell is Fair value when every assumption sits at its base level ($192.84). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $2.6B after modeled reinvestment of $21.2B, with terminal value at 77.3% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Confirmation requires revenue delivery and improving cash generation by FY2028. Persistent cash use would disconfirm the path.5
A beat would support the capacity-conversion case only if higher sales come with stronger margins and cash generation. Delivery timing alone does not establish utilization or those financial outcomes.
The FY2028 revenue estimate supports the growth premise, while FY2026 free cash flow was negative after the capital build. If revenue only meets estimates and cash remains pressured, the key economic test is still unmet.
Weak utilization would lower sales and delay cost absorption.
Operating cash exceeded reported profit in FY2026, but heavy investment still produced negative free cash flow.56
It tests whether capacity becomes paid workloads.4
FY2026 operating cash flow was $31.98 billion, but $55.66 billion of capex drove free cash flow to negative $23.69 billion.56
Total debt reached $156.19 billion in FY2026. Customer prepayments could reduce future company-funded spending, but management could not specify the eventual funding mix.
FY2026 capex was committed while named facilities were still moving through staged delivery. Those observations do not establish utilization or returns after delivery, so the direction of invested-capital returns remains unresolved.
The 9.2074% WACC is the hurdle for enterprise cash returns; negative FY2026 free cash flow shows that the build had not yet cleared a cash-return test.
The business produced $58.53 billion of FY2026 revenue, compared with $67.36 billion consolidated.
Growth or weakness in this line will outweigh changes in the smaller hardware and services businesses.
| Revenue | $67,357,000,000 |
|---|---|
| Cost of revenue | $23,441,000,000 |
| Gross profit | $43,916,000,000 |
| Operating expenses | $23,310,000,000 |
| Operating income | $20,606,000,000 |
| Non-operating items and tax | -$3,519,000,000 |
| Net income | $17,087,000,000 |
| Total assets | $261,759,000,000 |
|---|---|
| Cash | $31,289,000,000 |
| Current assets | $46,567,000,000 |
| Total liabilities | $218,703,000,000 |
| Current liabilities | $41,764,000,000 |
| Shareholders’ equity | $43,056,000,000 |
| Net income | $17,087,000,000 |
|---|---|
| Operating inflow | $31,977,000,000 |
| Depreciation and amortization | $9,294,000,000 |
| Stock-based compensation | $4,811,000,000 |
| Other operating adjustments | $785,000,000 |
| Operating cash flow | $31,977,000,000 |
| Cash available | $83,143,000,000 |
| Beginning cash | $10,786,000,000 |
| Financing inflow | $40,284,000,000 |
| Exchange-rate effect | $96,000,000 |
| Investing outflow | $51,854,000,000 |
| Ending cash | $31,289,000,000 |
| Investing cash flow | -$51,854,000,000 |
| Financing cash flow | $40,284,000,000 |
Source: SEC EDGAR · Filed 2026-06-22 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| Cloud And Software Business | $58.5B | 86.9% | 18.9% |
| Services Business | $5.7B | 8.5% | 9.7% |
| Hardware Business | $3.1B | 4.6% | 5% |
Source: SEC EDGAR · Filed 2026-06-22 · SEC EDGAR
| Revenue by geography | Revenue | Share | YoY |
|---|---|---|---|
| Americas | $44.5B | 66% | 22.4% |
| EMEA | $15.3B | 22.7% | 9.1% |
| Asia Pacific | $7.6B | 11.3% | 7.8% |
Point-in-time financial data used in the 2026-09-07 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017-05-31 | $37.8B | $15.9B | $9.5B | $14.1B | $12.1B | $2B | $2.5B | $1.4B | $3.6B | $2.6B | — | -$21.5B | $9.1B | — | $21.8B | $66.1B | $57.9B | 34.2% | — | 5.6% | — |
| 2018-05-31 | $39.4B | $17.2B | $3.6B | $15.4B | $13.7B | $1.7B | $2.8B | $1.6B | $11.3B | $3.1B | — | -$5.6B | -$10B | $21.8B | $21.6B | $67.3B | $60.6B | 33.7% | — | 5.6% | — |
| 2019-05-31 | $39.5B | $17.3B | $11.1B | $14.6B | $12.9B | $1.7B | $2.9B | $1.7B | $36.1B | $2.9B | — | $26.6B | -$42.1B | $21.6B | $20.5B | $37.8B | $56.2B | 34.3% | — | 5.6% | — |
| 2020-05-31 | $39.1B | $17B | $10.1B | $13.1B | $11.6B | $1.6B | $3B | $1.6B | $19.2B | $3.1B | — | $9.8B | -$6.1B | $20.5B | $37.2B | $43.1B | $71.6B | 35.6% | — | 3.1% | — |
| 2021-05-31 | $40.5B | $18.4B | $13.7B | $15.9B | $13.8B | $2.1B | $2.9B | $1.8B | $20.9B | $3.1B | — | -$13.1B | -$10.4B | $37.2B | $30.1B | $46.6B | $84.2B | 37.6% | — | 4.1% | — |
| 2022-05-31 | $42.4B | $13.5B | $6.7B | $9.5B | $5B | $4.5B | $3.1B | $2.6B | $16.2B | $3.5B | -$8.3B | $11.2B | -$29.1B | $30.1B | $21.4B | $21.9B | $0 | 25.7% | — | 6.3% | — |
| 2023-05-31 | $50B | $18.7B | $8.5B | $17.2B | $8.5B | $8.7B | $6.1B | $3.5B | $1.3B | $3.7B | $12.9B | -$36.5B | $7.9B | $21.4B | $9.8B | $10.2B | $90.5B | 26.2% | — | 6.7% | — |
| 2024-05-31 | $53B | $21.4B | $10.5B | $18.7B | $11.8B | $6.9B | $6.1B | $4B | $1.2B | $4.4B | -$3.7B | -$7.4B | -$10.6B | $9.8B | $10.5B | $10.7B | $94.5B | 29.0% | — | 7.5% | — |
| 2025-05-31 | $57.4B | $23.9B | $12.4B | $20.8B | -$394M | $21.2B | $6.2B | $4.7B | $600M | $4.7B | $7B | -$21.7B | $1.1B | $10.5B | $10.8B | $11.2B | $104.1B | 30.8% | — | 9.0% | — |
| 2026-05-31 | $67.4B | $32.1B | $17.1B | $32B | -$23.7B | $55.7B | $9.3B | $4.8B | $95M | $5.8B | $40.2B | -$51.9B | $40.3B | $10.8B | $31.3B | $31.9B | $156.2B | 30.6% | — | 9.3% | — |
Oracle Corporation (ORCL) trades at 19.1x forward earnings against a peer median of 23.6x. Its EV/EBITDA of 19.6x compares with a peer median of 36.9x. The comparison uses 4 peers: Palo Alto Networks Inc., Microsoft Corporation, Synopsys Inc. and Applied Materials Inc., as of 2026-09-04 to 2026-09-05.
FY2026 capex reached $55.66 billion, while named facilities were still moving through staged delivery.46
Named-site schedules support staged capacity delivery, not utilization. If customers use that capacity enough to reach contractual revenue levels, management expects infrastructure margins to improve; sales and cash gains remain conditional.
If workloads reach delivered capacity slowly, continued investment could precede matching sales and keep cash use elevated. Management has already reported near-term infrastructure margin pressure.
Oracle has a large software revenue base and scheduled capacity additions, but debt raises the cost of execution delays.37
Use a moderate, investor-specific allocation. The Buy view reflects valuation support, but FY2026 negative free cash flow and elevated debt limit a suitable position size.35
Keep additions conditional on revenue, margin, and cash checkpoints. Do not treat scheduled capacity as realized revenue before utilization is reported.
Buy in stages because the report-date price is below Fair value, while FY2028 cash generation remains the key test.
The FY2028 revenue and earnings estimates support substantial growth, though their wide ranges require close execution checks.1
Add selectively while revenue growth, margins, and free cash flow remain consistent with capacity conversion.45
Buy Oracle in stages. The report-date price is below Fair value, and that discount supports accumulation, while unresolved cash-generation and execution risks argue for staged sizing rather than a full position at once.345
The case assumes delivered capacity becomes utilized workloads. Value then requires higher revenue, acceptable margins and better free cash flow; the delivery schedule alone does not establish those outcomes.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
An FY2028 margin below 26% would indicate that utilization is not absorbing infrastructure costs as expected.4
Cloud-and-software growth below 10% for two consecutive fiscal years through FY2029 would shorten the earnings runway.7
Continued cash use would increase financing pressure while debt remains elevated, leaving less cash available to support value per share despite reported earnings growth.
Current:FY2026: negative $23.69 billion.
Alert ifAt or below $0 in both FY2027 and FY2028.
A margin breach would show that infrastructure revenue is not absorbing data-center costs as expected, so additional sales produce less operating profit and cash.
Current:FY2026 operating income was $20.61 billion on $67.36 billion revenue.
Alert ifBelow 26% in FY2028.
Sustained slowing would dominate consolidated results because hardware and services are materially smaller than the cloud-and-software business.
Current:FY2026: $58.53 billion.
Alert ifAnnual growth below 10% for two consecutive fiscal years through FY2029.
Faster dilution would spread future profit across more shares, weakening per-share growth even if the infrastructure build raises company earnings.
Current:FY2026 diluted average shares: 2.914 billion.
Alert ifShare-count growth above the 1.60% annual path through FY2031.
Under the moderate discount rate, $88.59 comes from forecast-period earnings and $94.44 from the long-term value, totaling $183.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at WACC, then adjust for signed net debt per current share.
Limitation: Terminal value is 77.3% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Solve for the growth rate that makes the model value equal the report-date share price.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
The path gains support if the dominant cloud-and-software business expands and free cash flow turns positive after FY2026’s cash use.57
Improvement would show spending is becoming cash.5
It shows whether utilization absorbs infrastructure costs.4
| $89.34B |
| $130.67B |
| $167.26B |
| $197.37B |
| $221.05B |
| $240.95B |
| $255.40B |
| $263.06B |
| Revenue growth | 32.6% | 46.3% | 28.0% | 18.0% | 12.0% | 9.0% | 6.0% | 3.0% |
| Operating margin | 30.3% | 30.0% | 29.6% | 29.3% | 29.0% | 29.0% | 29.0% | 29.0% |
| Operating income | $27.05B | $39.14B | $49.57B | $57.86B | $64.10B | $69.87B | $74.07B | $76.29B |
| Tax rate | 12.0% | 12.0% | 12.0% | 12.0% | 12.0% | 12.0% | 12.0% | 12.0% |
| NOPAT | $23.80B | $34.44B | $43.62B | $50.92B | $56.41B | $61.48B | $65.17B | $67.13B |
| Reinvestment | $21.25B | $27.06B | $29.59B | $29.08B | $26.17B | $23.41B | $19.39B | $14.38B |
| Reinvestment rate (of NOPAT) | 89.3% | 78.6% | 67.8% | 57.1% | 46.4% | 38.1% | 29.8% | 21.4% |
| Depreciation and amortization | $12.33B | $18.03B | $23.08B | $27.23B | $30.50B | $33.25B | $35.24B | $36.30B |
| Free cash flow to firm | $2.55B | $7.38B | $14.03B | $21.83B | $30.24B | $38.07B | $45.78B | $52.74B |
| Cloud and Software Business revenue | $77.64B | $113.55B | $145.35B | $171.51B | $192.09B | $209.38B | $221.94B | $228.60B |
| Services Business revenue | $7.62B | $11.15B | $14.27B | $16.84B | $18.86B | $20.55B | $21.79B | $22.44B |
| Hardware Business revenue | $4.09B | $5.98B | $7.66B | $9.04B | $10.12B | $11.04B | $11.70B | $12.05B |
| Terminal growth | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% |
| Diluted shares | 2.96B | 3.01B | 3.06B | 3.10B | 3.15B | 3.20B | 3.26B | 3.31B |
| EPS | $7.62 | $10.93 | $13.56 | $15.50 | $16.82 | $18.04 | $18.82 | $19.08 |
| Net margin | 25.3% | 25.2% | 24.8% | 24.4% | 24.0% | 24.0% | 24.0% | 24.0% |
| Implied net income | $22.57B | $32.86B | $41.43B | $48.13B | $53.05B | $57.83B | $61.30B | $63.14B |
| Margin |
|---|
| ORCL | Oracle Corporation | $457.4B | 19.1x | 6.8x | 19.6x | 53.4% | — |
| PANW | Palo Alto Networks Inc. | 68.1x | 23.7x | 146.0x | 1.7% | 5.0% | |
| MSFT | Microsoft Corporation | 21.2x | 11.2x | 19.8x | 34.0% | 45.1% | |
| SNPS | Synopsys Inc. | 22.5x | 8.0x | 39.9x | 3.7% | 14.5% | |
| AMAT | Applied Materials Inc. | 24.6x | 11.7x | 33.9x | 41.1% | 33.7% |
| Pause additions because infrastructure costs are not being absorbed.4 |
| Annual free cash flow | At or below $0 in both FY2027 and FY2028. | Reassess capital needs before committing more funds.5 |
