Freedom Broker analysts recommend buying shares of Oracle Corporation (ORCL) with a target price of $250. At the current price of $164,7, the upside potential is 51,79%. Catalysts could include OCI cloud infrastructure revenue growth of more than 100%, further expansion of the order backlog, and a strong outlook for fiscal Q2 2027.
What Oracle does
Oracle is one of the world’s largest developers of enterprise software, databases, and cloud solutions. The company provides customers with computing power via Oracle Cloud Infrastructure (OCI), including data centers and graphics processing units for training and running the largest artificial intelligence models.
The market capitalization of Oracle at the time of writing was $457,36 bn. The recommended entry level is $164, stop-loss is $110, and the investment idea horizon is through November 8, 2026.
The report may confirm OCI acceleration
Oracle’s new report could support the stock if OCI growth exceeds 100%, the order backlog continues to expand, and guidance confirms resilient demand for AI capacity, Freedom Broker analysts note.
In fiscal Q1 2027, OCI revenue could more than double after a 92% increase the prior quarter. Results from other major cloud providers, which showed accelerating demand for AI computing power, support this scenario.
Additional catalyst could be Oracle’s outlook for Q2. If the company confirms further order growth and its ability to bring data centers online on time, the market may raise its estimates of future revenue, Freedom Broker believes.
Contract backlog reached $638 bn
Remaining performance obligations (RPO) at the end of fiscal Q4 2026 reached a record $638 bn. Over the quarter, the figure increased by $85 bn—from $553 bn—and its year-over-year growth was 363%.
Most of the RPO increase in Q3 and Q4 was driven by large contracts in artificial intelligence. The prepaid or customer-provided hardware component of these agreements reached $75 bn. This structure reduces the amount of capital Oracle needs to raise on its own to build AI data centers.
Cloud infrastructure accelerated growth
In fiscal Q4 2026, Oracle’s total revenue grew 21% to $19,2 bn. Cloud revenue rose 47% to $9,9 bn. IaaS cloud infrastructure revenue reached $5,8 bn, up 93% in U.S. dollars and 92% in constant currency. SaaS cloud applications revenue increased 10% to $4,1 bn. Software revenue declined 2% to $6,8 bn as customers continued migrating from on-premise products to the cloud.
GAAP operating income increased 20% to $6,1 bn, adjusted operating income rose 22% to a record $8,6 bn. Net income grew 23% to $4,2 bn, and adjusted net income increased 26% to $6,2 bn. GAAP EPS rose 21% to $1,45, while adjusted EPS increased 24% to $2,11.
Annual revenue reached $67,4 bn
For the full fiscal year 2026, Oracle’s revenue increased 17% to a record $67,4 bn. The cloud segment grew 39% to $34 bn, including IaaS growth of 77% to $18,1 bn and SaaS growth of 11% to $15,9 bn.
GAAP operating income totaled $20,6 bn, up 17%, while adjusted operating income was $28,9 bn, up 16%. Net income increased 36% to $17 bn, and adjusted net income rose 29% to $22,2 bn. Operating cash flow jumped 54% to a record $32 bn. However, free cash flow was negative at −$23,7 bn due to investments in expanding Oracle Cloud Infrastructure.
The valuation remains below historical levels
Oracle’s forward P/E for fiscal 2028 is about 14,4x versus a five-year average of 19,4x. The PEG multiple is 0,53x versus a historical average of 1,38x.
According to Freedom Broker, these indicators point to a low share valuation relative to expected earnings growth. The discount reflects investors’ concerns about high capital expenditures, rising debt, and possible pressure on margins.
In fiscal 2026, Oracle raised $43 bn in debt financing and $5 bn in equity financing. In fiscal 2027, the company expects to raise around $40 bn through a combination of debt and equity instruments, including the previously announced $20 bn at-the-market share offering program.
How Oracle’s investment case has evolved
In July, Freedom Broker already included Oracle among the most attractive investment ideas. At the time, analysts believed the market had overreacted to capex concerns despite the rapid expansion of the cloud and AI business. With the price at $121,2, the previous target of $158,21 implied upside potential of nearly 30%.
Since then, the investment thesis has received additional support. Oracle reaffirmed its fiscal 2027 revenue forecast at $90 bn and raised its adjusted earnings-per-share guidance to $8,05. In July, the company also introduced Oracle AI Agent Studio— a tool for creating enterprise AI agents and automating processes within Oracle Fusion Applications.
In June, the U.S. Office of Personnel Management signed a $395,8 mn contract with Oracle. The company is to build a unified human capital management platform based on Oracle Fusion Cloud HCM for more than 2 mn federal employees and replace over 100 disparate HR systems.
This is not an individual investment recommendation.