Data center computing infrastructure provider Oracle Corporation (NYSE:ORCL) is one of the most discussed stocks in the AI space. The shares are down by more than 50% over the past year. Over this time period, Cramer has shifted between being optimistic about the firm to being wary about its massive backlog. The CNBC TV host briefly discussed Oracle Corporation (NYSE:ORCL) in a tweet after its founder and CTO, Larry Ellison, announced that he wouldn’t be selling $7.5 billion worth of shares:
“Larry’s going to jam up the shorts but good with that cancellation of his Oracle sell plan. He’s one canny fellow”
Oracle Corporation was in the spotlight after it recently reported its fiscal first quarter earnings. The narrative for the firm surrounds its valuation and whether it is justified, considering the current AI demand and future prospects. On this front, Oracle Corporation’s backlog surged by $209 billion to $664 billion in its fiscal first quarter. Out of the new orders, more than $30 billion were from new AI cloud contracts to indicate that the firm continues to benefit from strong AI demand. Additionally, Oracle Corporation’s revenue grew by 30% and profit rose by 60% to paint a strong growth picture. For the current quarter, the firm expects to maintain or exceed previous revenue growth, as it guided between 30% to 34% in growth for its fiscal Q2.
Yet, a major concern for Oracle Corporation, as noted multiple times by Cramer’s morning co-host David Faber, is the cost of funding this growth. While most of the concerns surrounding big tech firms such as Alphabet and Meta is for their capital expenditure, for Oracle Corporation, it’s also about the firm’s debt. Its debt is among the highest in the peer group, with the firm exiting the first quarter with $127 billion in debt while having $33 billion in cash and equivalents. The higher debt also appears to be having an impact on Oracle Corporation’s operations as the firm laid off 21,000 employees in its fiscal year 2026. Not to mention, the capital expenditure is high as well as it clocked in at negative $5.4 billion in Q1.
Consequently, the question is whether the valuation justifies the spending. On a price to sales basis, Oracle Corporation’s P/E ratio of 6 is in line with infrastructure provider CoreWeave’s. However, the forward P/E is lower than the cloud providers Microsoft and Amazon and significantly higher than infrastructure equipment provider Super Micro’s. Ellison’s initial disclosure to sell the stock and then the abrupt reversal factor into the overall debate as they can indicate his sentiment towards Oracle Corporation’s future valuation movement.
Looking at the hedge funds, sentiment remained static in Q2, with 119 funds tracked by Insider Monkey holding a stake in Oracle Corporation compared to 115 in Q1. Some notable additions included Tudor Investment Corp‘s $184 million stake and Tontine Asset Management‘s $126 million stake.
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