Oracle Corporation (NYSE:ORCL) closed at $134.47 on October 15. The stock returned -24.60% over the last 6 months, compared with a 15.4% return for the Insider Monkey Billionaire Index and 11.4% for the State Street SPDR S&P 500 ETF Trust.
Oracle sells database software and, increasingly, the computing power that runs other companies’ artificial intelligence work. The second business is newer, far more expensive to build, and can be the reason the shares have behaved the way they have. The stock has lost 53.84% of its value over the past year. Even so, 80% of the analysts covering it still rate it a buy, and their median target sits 78.48% above today’s price, per CNN.
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What the Analysts Are Looking At:
The business is still growing quickly. Revenue in the most recent quarter grew by almost a third and earnings grew faster still. Nothing in those figures explains a share price down by more than half.
What analysts are weighing is the order book. Oracle has signed contracts to supply computing capacity far into the future, and those commitments now stand at $638 billion against annual revenue a fraction of that size.
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What the Market Is Looking At:
Those contracts have to be built before they can be billed. Oracle’s own cash flow statement shows $75.66 billion of capital spending over the past year against $46.94 billion of cash generated from operations. The company is paying out far more than it takes in.
The money is being borrowed, on a scale that has left Oracle with a different sort of balance sheet from the one it carried before this buildout began. So the disagreement is not really about whether the orders exist. It is about what they cost to fulfil, and whether the returns on all that spending arrive before the borrowing becomes a problem.
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Two Ways to Read the Same Company:
The shares trade at 17.76 times what analysts expect next year. For a business growing at this rate, neither that nor the 22.66 times what it earned over the past year is demanding, which is what makes the share price so strange.
The two sides are not disagreeing about the facts. They are pricing different ones. One is pricing the contracts Oracle has won. The other is pricing the cash going out the door to service them. Both are looking at the same company, and neither is obviously wrong.
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Conclusion:
A gap this wide between the price and the targets usually means the two sides are not arguing about the same question. Here the analysts are counting what has been ordered and the market is counting what is being spent. Whether the buildout pays depends on returns nobody can measure yet, which is exactly the kind of question a price target handles badly. Watch the cash flow rather than the order book, because that is where the argument gets settled.
Market Sentiment:
Oracle Corporation was held by 119 hedge funds with a combined stake value of about $7.00 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 115 hedge fund holders with a cumulative investment value of around $5.53 billion in the previous quarter.
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This article is originally published at Insider Monkey.
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