ORCL
ORACLE CORPNYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 13, 2026
What drives ORCL's base case?
base-case thesisOracle finished fiscal 2026 with revenue up 17% to $67.4 billion, its fourth straight quarter of accelerating growth, and an order backlog of $638 billion after cloud infrastructure revenue grew 93% in the final quarter. Management has publicly committed to about $90 billion of revenue in fiscal 2027, and this case takes that guide largely at face value while assuming growth then decays as the base gets very large. The offset is cost: fourth-quarter gross margin fell about five points as data-centre spending ran ahead of the revenue it will eventually carry, and capital spending is guided to roughly $70 billion net next year. So this case pairs strong top-line delivery with somewhat lower profitability than today and a business that stays capital-hungry for years.
What shapes the assumptions
$638B contracted backlog, up 363% year over year
Remaining performance obligations
Raises revenue growth
Management's guided ~$90B FY2027 revenue, +34% constant currency
Guided next-year revenue
Raises revenue growth
Mix shift toward cloud infrastructure with a stated 30%-40% margin profile, versus a legacy licence base earning more
Revenue mix between OCI and licence/applications
Lowers operating margin
$20-25B of FY2027 capex funded by customer prepayments and customer-supplied GPUs
Net versus gross capital expenditure
Lowers reinvestment
Stable reported non-GAAP effective tax rate of 19.9% in FY2026 and 19.7% in FY2025
Effective tax rate
Informs tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 75.7% a year. Over the last 5 years it grew 10.7% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- How confident is this estimate?
- Robustness 63.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$67.4B
Diluted shares
2,912,000,000
Net cash
—
Bear
medium confidence$9.64
IV / share
-93.6% vs $150.52
- Explicit cash flows
- $4.14
- Terminal value
- $5.50
- Net cash
- $0.00
- Intrinsic value / share
- $9.64
57.0% of the value rests on the terminal value — elevated dependency.
Revenue growth26.0% → 18.0% → 12.0% → 9.0% → 7.0%medium
How derived: Starting from FY2026 revenue of $67.4B (+17.4%) and management's ~$90B FY2027 guide (+34%), this path assumes Oracle delivers materially less than guided because that guide depends on powering datacenters on schedule and because roughly half of the $638B RPO sits with a single unprofitable counterparty, so growth decays quickly toward the 2%-5% pace Oracle ran at from FY2012 through FY2022 once the AI contract wave is lapped.
Why this confidence: Contracted RPO of $638B anchors the near-term path ↑, Management issued explicit FY2027 revenue guidance ↑, Half the backlog rests on one unprofitable counterparty ↓, Five-year horizon for a business model only two years old ↓
Evidence for
- Oracle's own 15-year history shows revenue growth of roughly 0%-5% in every year from FY2012 through FY2022, so the current 17% pace is an anomaly, not a baseline.[Oracle FY2025 Form 10-K]· primary
- S&P downgraded Oracle to BBB- and named customer concentration — OpenAI representing about half of the ~$638B RPO — as the central risk to contracted revenue converting to cash.[S&P cuts Oracle to BBB-, cites OpenAI exposure]· secondary
- Moody's publicly flagged execution and counterparty risk in roughly $300B of Oracle's recently signed AI contracts and holds a negative outlook.[Moody's flags risk in Oracle's $300B of AI contracts]· secondary
Evidence against
- RPO ended FY2026 at $638B, up 363% year over year and up $85B sequentially, a contracted backlog nearly ten times FY2026 revenue.[Oracle Q4 FY2026 press release]· primary
- Every quarter of FY2026 accelerated year over year — Q1 +12.2%, Q2 +14.2%, Q3 +21.7%, Q4 +20.6% — and management guided Q1 FY2027 cloud revenue growth of 58%-64%.[Oracle Q4 FY2026 earnings call transcript]· primary
Operating margin22.0%medium
How derived: FY2026 GAAP operating margin was about 30.6% ($20.6B on $67.4B), but Q4 gross margin already fell roughly 5 points to 65% as cloud costs grew 56% against 47% cloud revenue growth, so this case assumes depreciation on a capital base heading past $125B plus the low-value-add mix of prepaid and customer-supplied-hardware contracts pushes the margin down to 22% and it does not recover.
Why this confidence: Management explicitly guided FY2027 gross margin down ↑, Reported Q4 gross-margin compression is observed, not forecast ↑, Depreciation schedule on unbuilt datacenters is an estimate ↓, Contract mix between hosted and customer-supplied hardware is not fully disclosed ↓
Evidence for
- Q4 FY2026 gross margin fell about 5 points to 65% because cloud and software costs rose 56% against 47% cloud revenue growth.[Oracle Q4 FY2026 earnings call transcript]· primary
- CFO Hilary Maxson said FY2027 gross margin will step down further because of datacenter ramp timing and revenue mix.[Oracle Q4 FY2026 earnings call transcript]· primary
- Of the $67B of AI infrastructure contracts signed in Q4, most were bring-your-own-hardware or prepaid structures, and $75B of the RPO build was prepaid or customer-supplied hardware — revenue that carries little Oracle value-add margin.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Q4 FY2026 GAAP operating margin was 31.97%, up from 32.13% a year earlier and above every quarter of FY2025 except Q4, showing operating leverage has so far offset cost growth.[Oracle Q4 FY2026 press release]· primary
Tax rate22.0%high
How derived: Oracle's FY2026 non-GAAP effective rate was 19.9% and its GAAP rate only 12.6% thanks to stock-compensation benefits and a legal-entity realignment; this case assumes those one-time benefits lapse and the rate drifts above the 21% U.S. statutory rate to 22% as state and foreign minimum taxes bite on a more domestically concentrated datacenter footprint.
Why this confidence: Two years of reported effective tax rates within 0.2 points of each other ↑, U.S. statutory rate provides a hard anchor ↑, Tax legislation over a five-year horizon is unknowable ↓
Evidence for
- Oracle's FY2026 GAAP effective tax rate of 12.6% was helped by a non-recurring income tax benefit from a partial realignment of its legal entity structure, a benefit that will not repeat.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle's reported non-GAAP effective tax rate was 19.9% in FY2026 and 19.7% in FY2025 — remarkably stable and below 22%.[Oracle Q4 FY2026 press release]· primary
Reinvestment rate80.0%medium
How derived: Oracle spent $55.7B of capex in FY2026 against just $20.6B of GAAP operating income and generated negative $23.7B of free cash flow, and guided FY2027 net capex to about $70B; in this case capital intensity stays punishing because Oracle must keep building to hold contracts while revenue converts slowly, so 80 cents of every dollar of after-tax operating profit is consumed by net reinvestment throughout the forecast.
Why this confidence: One year of explicit management capex guidance ↑, Reported FY2026 capex and free cash flow are audited actuals ↑, No company guidance beyond FY2027 for capex ↓, GPU replacement cycle length materially changes the answer and is unknown ↓
Evidence for
- Oracle reported FY2026 free cash flow of negative $23.7B, with capital expenditures of $55.7B against about $32B of operating cash flow.[CNBC: Oracle Q4 FY2026 results]· secondary
- Oracle guided FY2027 net cash outlay for capital expenditures to around $70B, up from $48B net in FY2026.[Oracle Q4 FY2026 earnings call transcript]· primary
- Oracle raised $43B of debt and $5B of equity in FY2026 and announced a further plan to fund calendar 2026 with roughly $25B of bonds plus a $20B equity distribution agreement — external funding of the reinvestment burden.[Oracle equity and debt financing plan for CY2026]· primary
Evidence against
- $75B of the RPO increase came from customers prepaying for GPUs or supplying hardware themselves, which reduces the capital Oracle must fund from its own balance sheet.[Oracle Q4 FY2026 press release]· primary
Terminal growth2.0%medium
How derived: Terminal growth must sit below the 4.68% long-run risk-free rate, and this case assumes that once the AI capacity land-grab ends Oracle reverts to something close to the roughly 1%-3% growth it actually delivered from FY2012 to FY2022, with commoditised GPU hosting offering no pricing power, so 2% — roughly inflation only — is the steady state.
Why this confidence: Bounded above by the observable long-run risk-free rate ↑, Oracle's own decade of ~1% growth is a real precedent ↑, Perpetuity assumptions are inherently unverifiable ↓
Evidence for
- Oracle's revenue grew from $37.1B in FY2012 to $42.4B in FY2022, a compound rate of about 1.3% per year over a full decade.[Oracle FY2025 Form 10-K]· primary
Evidence against
- Oracle's database and applications franchise still grew — FY2023 through FY2026 revenue rose from $50.0B to $67.4B — showing the legacy base is not in decline.[Oracle Q4 FY2026 press release]· primary
Base
medium confidence$30.18
IV / share
-80.0% vs $150.52
- Explicit cash flows
- $11.66
- Terminal value
- $18.51
- Net cash
- $0.00
- Intrinsic value / share
- $30.18
61.3% of the value rests on the terminal value — elevated dependency.
Revenue growth33.0% → 28.0% → 22.0% → 17.0% → 13.0%high
How derived: Management guided FY2027 revenue to approximately $90 billion, which is +34% on the FY2026 base of $67.4B, so year one is set just below that guide at 33% to allow for currency and datacenter timing, and growth then decays steadily as the $638B backlog is worked down and the law of large numbers takes hold on a revenue base heading toward $185B.
Why this confidence: Explicit management revenue guidance for year one ↑, $638B of contracted backlog covers most of the five-year path ↑, Four consecutive quarters of accelerating growth confirm the trend ↑, Years three to five are unguided extrapolation ↓
Evidence for
- Oracle confirmed FY2027 total revenue guidance of approximately $90 billion, growth of 34% in constant currency, and raised non-GAAP EPS guidance to $8.05.[Oracle Q4 FY2026 press release]· primary
- RPO reached $638B at the end of FY2026, up 363% year over year, providing roughly nine years of contracted revenue coverage at the FY2026 run rate.[Oracle Q4 FY2026 press release]· primary
- Cloud infrastructure (OCI) revenue grew 93% year over year in Q4 FY2026, and management guided Q1 FY2027 cloud revenue growth of 58%-64%.[Oracle Q4 FY2026 earnings call transcript]· primary
Evidence against
- S&P downgraded Oracle to BBB- citing OpenAI concentration in the backlog and widened its forecast FY2027 free operating cash flow deficit to nearly $42B, implying delivery risk on the guided ramp.[S&P cuts Oracle to BBB-, cites OpenAI exposure]· secondary
- Before FY2023 Oracle had never grown revenue faster than 5% in a year, so a sustained 13%-33% path has no precedent in the company's own history.[Oracle FY2025 Form 10-K]· primary
Operating margin28.0%medium
How derived: FY2026 GAAP operating income was $20.6B on $67.4B of revenue, about 30.6%, and management has said OCI should settle into a 30%-40% margin profile once datacenters reach full contractual revenue; this case assumes near-term depreciation and ramp costs pull the consolidated margin down modestly to 28% by year five as lower-margin infrastructure grows into a larger share of a mix that used to be almost entirely high-margin licence and applications revenue.
Why this confidence: Management has given an explicit long-run OCI margin range ↑, Six years of quarterly margins in a tight 28.7%-32.1% band ↑, Depreciation on a rapidly growing asset base is an estimate ↓, Segment-level margin disclosure is limited ↓
Evidence for
- Management reiterated a 30%-40% long-term margin profile for OCI and said infrastructure margins improve as data centers reach full contractual revenue contribution.[Oracle CEO on the Q4 FY2026 earnings call]· primary
- Oracle's GAAP operating income rose 17% in FY2026 to $20.6B, keeping pace with the 17% revenue increase, and non-GAAP operating income reached a record $28.9B.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Q4 FY2026 gross margin fell roughly 5 points to 65% and CFO Hilary Maxson guided FY2027 gross margin to step down further on datacenter ramp timing and mix.[Oracle Q4 FY2026 earnings call transcript]· primary
Tax rate20.0%high
How derived: Oracle's reported non-GAAP effective tax rate was 19.9% in FY2026 and 19.7% in FY2025, an unusually stable figure, so 20% is carried forward as the normalised operating tax rate — above the flattered 12.6% GAAP rate but below the 21% statutory rate given remaining foreign and R&D credit benefits.
Why this confidence: Two consecutive reported years within 0.2 points ↑, Sits between the observed GAAP and statutory rates ↑, Gap between GAAP and non-GAAP rates leaves some ambiguity about the true cash rate ↓
Evidence for
- Oracle reported a non-GAAP effective tax rate of 19.9% for FY2026 versus 19.7% for FY2025.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle's FY2026 GAAP effective tax rate was only 12.6%, so cash taxes in the near term may run well below 20% while stock-compensation and depreciation shields persist.[Oracle Q4 FY2026 press release]· primary
Reinvestment rate65.0%medium
How derived: Oracle's FY2026 capex was $55.7B reported and $48B net of about $8B of prepayments, with FY2027 net outlay guided to about $70B including $20-25B of prepayments and timing effects; this case assumes capex peaks in FY2027-FY2028 and then flattens while revenue and depreciation catch up, so net reinvestment settles at roughly 65% of after-tax operating profit — still capital-heavy, but improving from today's outright cash burn.
Why this confidence: Explicit FY2027 net capex guidance from the CFO ↑, Customer prepayment structure is disclosed and quantified ↑, No guidance beyond FY2027 ↓, GPU useful life and replacement cadence drive the answer and are not disclosed ↓
Evidence for
- CFO Hilary Maxson guided FY2027 net cash outlay for capital expenditures to about $70B, which includes $20B-$25B of customer prepayments and timing impacts.[Oracle Q4 FY2026 earnings call transcript]· primary
- $75B of the FY2026 RPO increase came from customer prepayments for GPUs or customer-supplied hardware, meaning a meaningful share of the AI build is funded by customers rather than Oracle's balance sheet.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle's FY2026 free cash flow was negative $23.7B and the company raised $43B of debt plus $5B of equity in the year, showing reinvestment currently exceeds internally generated profit by a wide margin.[CNBC: Oracle Q4 FY2026 results]· secondary
Terminal growth2.5%medium
How derived: Terminal growth is capped by the 4.68% long-run risk-free rate, and this case sets it at 2.5% — modestly above pure inflation because Oracle's database, applications and OCI franchise should compound roughly with nominal enterprise IT spending once the AI capacity cycle normalises, but well below the 17% it grew last year.
Why this confidence: Anchored below the observable long-run risk-free rate ↑, Consistent with long-run nominal GDP ↑, Perpetuity assumptions cannot be validated against any disclosure ↓
Evidence for
- Oracle's revenue grew from $42.4B in FY2022 to $67.4B in FY2026, a 12.3% CAGR, showing the franchise can sustain growth above inflation even before terminal assumptions.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle grew revenue at only about 1.3% per year from FY2012 to FY2022, so a 2.5% perpetuity is above its own long-run realised rate.[Oracle FY2025 Form 10-K]· primary
Bull
low confidence$64.77
IV / share
-57.0% vs $150.52
- Explicit cash flows
- $23.22
- Terminal value
- $41.55
- Net cash
- $0.00
- Intrinsic value / share
- $64.77
64.1% of the value rests on the terminal value — elevated dependency.
bull revenue growth (avg 28%) runs well above the trailing 11% trend
Revenue growth38.0% → 34.0% → 28.0% → 22.0% → 17.0%medium
How derived: Oracle signed $67 billion of AI infrastructure contracts in a single quarter and ended FY2026 with $638B of RPO against only $67.4B of revenue, so this case assumes Oracle beats its own ~$90B FY2027 guide by bringing datacenter capacity online faster than planned and keeps converting backlog at a high rate, sustaining growth well above 15% through year five to a revenue base near $228B.
Why this confidence: Q4 bookings and OCI growth are reported actuals, not projections ↑, Backlog is nearly ten times current annual revenue ↑, Path assumes management beats its own public guidance ↓, Depends on power and datacenter construction timelines outside Oracle's control ↓
Evidence for
- CEO Clayton Magouyrk said Oracle signed $67 billion of AI infrastructure contracts in Q4 FY2026 alone — roughly a full year of company revenue in one quarter of bookings.[Oracle Q4 FY2026 earnings call transcript]· primary
- OCI revenue grew 93% year over year in Q4 FY2026 and Oracle guided Q1 FY2027 cloud revenue growth of 58%-64%.[Oracle Q4 FY2026 press release]· primary
- RPO rose $85B sequentially in Q4 FY2026 on top of an already record Q3, indicating demand was still building at year end rather than plateauing.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle's own guidance for FY2027 is approximately $90 billion (+34%), below this case's year-one assumption, so this path requires the company to beat its stated plan.[Oracle Q4 FY2026 press release]· primary
- S&P downgraded Oracle to BBB- on OpenAI concentration risk, and Moody's flagged risk in roughly $300B of recently signed AI contracts — both bearing directly on whether backlog converts on schedule.[Moody's flags risk in Oracle's $300B of AI contracts]· secondary
Operating margin33.0%medium
How derived: Oracle already earned a 31.97% GAAP operating margin in Q4 FY2026, and management said infrastructure margins improve as datacenters reach full contractual revenue contribution within a 30%-40% OCI margin profile; this case assumes the current ramp-cost drag is temporary and that scale across a $228B revenue base plus the high-margin database and applications franchise lifts the consolidated margin to 33%, modestly above the FY2026 full-year 30.6%.
Why this confidence: Q4 FY2026 already printed a 31.97% operating margin ↑, Management has publicly framed an OCI margin range ↑, Requires reversing a currently deteriorating gross-margin trend ↓, Depreciation on a $125B+ capital base is unmodelled at the disclosure level ↓
Evidence for
- Management stated that combined with a previously outlined 30%-40% margin profile, OCI should grow into an extremely large and extremely profitable business as data centers reach full contractual revenue contribution.[Oracle CEO on the Q4 FY2026 earnings call]· primary
- Oracle's quarterly GAAP operating margin rose through FY2026 from 28.65% in Q1 to 31.97% in Q4 even while absorbing datacenter ramp costs.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Q4 FY2026 gross margin fell about 5 points to 65% and the CFO guided FY2027 gross margin to step down further, so margin expansion is not the near-term trajectory.[Oracle Q4 FY2026 earnings call transcript]· primary
Tax rate17.0%medium
How derived: Oracle's FY2026 GAAP effective tax rate was just 12.6% versus 19.9% non-GAAP, and with tens of billions of annual datacenter capex generating accelerated depreciation and R&D deductions, this case sets the operating tax rate at 17% — between the two reported figures — on the view that the shield from a rapidly growing asset base keeps cash taxes below the normalised rate for years.
Why this confidence: Both bounding rates are disclosed company actuals ↑, Large and growing depreciation shield is quantified by capex guidance ↑, Part of the low GAAP rate is explicitly one-time ↓, Depreciation shields reverse over time as the asset base matures ↓
Evidence for
- Oracle reported a GAAP effective tax rate of 12.6% in FY2026, well below the 21% U.S. statutory rate.[Oracle Q4 FY2026 press release]· primary
- Oracle reported $55.7B of capital expenditures in FY2026 and guided to about $70B net in FY2027, generating a very large depreciation shield against taxable income.[Oracle Q4 FY2026 earnings call transcript]· primary
Evidence against
- Oracle attributed part of the low FY2026 GAAP rate to a non-recurring benefit from partial realignment of its legal entity structure, and its normalised non-GAAP rate was 19.9%.[Oracle Q4 FY2026 press release]· primary
Reinvestment rate50.0%low
How derived: Oracle disclosed that $75B of its RPO build came from customers prepaying for GPUs or supplying the hardware themselves, and FY2027 net capex of ~$70B already nets out $20-25B of prepayments; this case assumes that customer-funded model scales, capex peaks in FY2028 and then flattens against a revenue base growing toward $228B, so net reinvestment falls to about half of after-tax operating profit by the end of the forecast.
Why this confidence: Customer prepayment amounts are specifically disclosed ↑, Assumes a capex peak Oracle has not guided to ↓, Directly contradicted by current free-cash-flow trajectory and credit-agency forecasts ↓, GPU refresh cycle could force repeated capex waves rather than a single build ↓
Evidence for
- The prepaid and customer-supplied hardware portions of Oracle's large AI contracts totalled $75B, shifting a large share of GPU funding off Oracle's balance sheet.[Oracle Q4 FY2026 press release]· primary
- Oracle's FY2027 guided net capex of ~$70B already reflects $20B-$25B of customer prepayments and timing effects, so gross build is substantially customer-financed.[Oracle Q4 FY2026 earnings call transcript]· primary
Evidence against
- Oracle burned $23.7B of free cash flow in FY2026 and S&P forecasts the FY2027 free operating cash flow deficit widening to nearly $42B, the opposite of a moderating reinvestment path.[S&P cuts Oracle to BBB-, cites OpenAI exposure]· secondary
- Oracle raised $43B of debt and $5B of equity in FY2026 and announced a further ~$25B bond offering plus a $20B equity distribution agreement for calendar 2026 to fund the build.[Oracle equity and debt financing plan for CY2026]· primary
Terminal growth3.0%medium
How derived: Terminal growth is held below the 4.68% risk-free rate, and this case sets it at 3% on the view that Oracle's combined database, applications and AI infrastructure franchise — which just grew 17% and holds $638B of contracted backlog — settles into a steady state growing a little faster than nominal GDP because AI inference demand is a structurally growing share of enterprise IT spend.
Why this confidence: Capped below the observable long-run risk-free rate ↑, Four consecutive years of above-trend growth support a higher steady state ↑, Contradicted by Oracle's pre-2023 growth history ↓, Perpetuity assumptions are unverifiable ↓
Evidence for
- Oracle's revenue growth accelerated from 4.8% in FY2022 to 17.7%, 6.0%, 8.4% and 17.4% in FY2023-FY2026, showing a step-change in the franchise's structural growth rate.[Oracle Q4 FY2026 press release]· primary
Evidence against
- Oracle grew revenue only about 1.3% annually from FY2012 to FY2022, so 3% in perpetuity is more than double its own decade-long realised rate.[Oracle FY2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating63 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- The bear-to-bull range spans 183% of the base value — the outcome is highly uncertain.→ scenarios
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | 6.9% | 1.8 | -10.4% | 2.85B | 1.0% |
| Q2 2025 | 8.6% | -0.93 | -179.4% | 2.87B | 1.8% |
| Q3 2025 | 6.4% | 0.02 | -98.2% | 2.87B | 2.0% |
| Q1 2026 | 12.2% | -0.12 | -106.9% | 2.91B | 2.0% |
| Q2 2026 | 14.2% | -3.41 | -267.1% | 2.92B | 1.8% |
| Q3 2026 | 21.7% | -3.94 | -16063.6% | 2.91B | 1.3% |
Valuation history every run
Why intrinsic value changed
Sequential deterministic bridge · order-dependent contributions · exactly reconciled
Market inputs researched
The U.S. 10-year Treasury note yielded about 4.68% on 12 August 2026, and the 10-year constant maturity yield is the standard default-free discounting anchor for a USD-denominated cash flow forecast of this horizon.
ORCL's published regression beta is 2.62, materially above 1.0 and above its own pre-2023 history, reflecting that the stock is now a leveraged proxy on AI capital spending — consistent with shares falling roughly 40% over the past year and 25% since the May-quarter results.
Damodaran's forward-looking implied ERP for the S&P 500 at the start of 2026 was 4.23% over the U.S. Treasury bond rate, backed out of current index prices and expected cash flows, which is the internally consistent premium to pair with a spot 10-year risk-free rate rather than a backward-looking historical average.
ORCL last traded at $147.19 on 12 August 2026 (intraday range $144.24-$152.70), down roughly 40% over the trailing year and about 25% since the May-quarter results, and the spot market price is the correct benchmark against which to compare a computed intrinsic value.
Oracle's own long-dated 5.375% 2040 notes trade at a 7.19% yield in the secondary market — with some Oracle bonds quoted as high as 7.8% — reflecting S&P's downgrade to BBB- and a ~145bp new-issue spread on the February 2026 deal, so the marginal pre-tax cost of debt is taken from Oracle's traded paper rather than a generic BBB index.
Generated 8/13/2026, 1:04:34 AM · pipeline v1.1.0