Parkev Tatevosian, CFA on $ORCL (Nov 9, 2026)

Oracle held an investor day on October 28, 2026, during which it presented some ambitious goals to the analysts who follow the company. One of these goals is the company's projection that it is looking to reach more than $30 billion in free cash flow by fiscal year 2029.

That figure is much larger than what I estimate the company to have in that year. So, if they achieve this goal, they will exceed my expectations by about 50%. This illustrates how ambitious that goal is.

Furthermore, they provided projections of returning to operating profit margins exceeding 40% by fiscal year 2030. I see this as a more realistic target and expect the company to be able to achieve it with relative confidence.

But does all this make Oracle stock a buying opportunity for long-term investors? This is the question I want to answer in this video by incorporating these recent developments into the company’s long-term performance record , and balancing it against the valuation to determine whether it is an attractive stock to buy right now.

I mentioned the Wall Street analysts who follow Oracle and the Investor Day conference that Oracle held with them to provide those long-term forecasts. Well, whatever Oracle tells Wall Street, they find it a good thing.

Earnings per share estimates from analysts who follow the company have risen significantly over the past eighteen months or so. You can see that those numbers have dropped to around 10%, as Wall Street analysts had been expecting Oracle to achieve earnings per share growth of around 10% over the next few years.

This is the growth rate you would expect from a telecom company like Verizon or AT&T operating in a completely saturated market, not from a company like Oracle that is building data centers and operating in a rapidly expanding market.

Since then, there have been almost continuous upward revisions, with the latest estimates being three times their level 18 months ago. Now, Wall Street analysts who follow Oracle are expecting earnings per share growth of 30% between now and the next few years.

But that's not the problem with Oracle. The problem lies in the amount of capital the company needs to spend to generate that growth in earnings per share and the pressure that this puts on its balance sheet.

So, thinking about that, you can see the pressure on the balance sheet through this chart which shows long-term debt, cash balance and short-term investments in Oracle accounts.

You can see that the company has $37 billion in cash and short-term investments, which it will soon employ in building one or more new data centers. But the company now has more than $165 billion in long-term debt.

This figure has ballooned and more than tripled since 2020, when it had nearly $50 billion in long-term debt.

This is what worries most Oracle stock investors . It's not just about the fact that the company's revenue is growing, and that its profits and profit margins are also likely to increase.

Rather, it is about the fact that they have to build a lot in order to achieve this growth. Growth is not occurring within its current capabilities. Growth occurs because it adds new assets and new data centers, making the business larger in terms of total assets and total long-term debt.

This makes the company riskier than if it were achieving the same level of growth without needing to invest in new assets.

Therefore, Oracle is in a unique situation that doesn't happen often, where Wall Street analysts are constantly revising the company's earnings per share estimates upwards, while the valuation is constantly moving downwards.

You can see that the earnings per share estimates are the highest ever. Earnings per share growth estimates are the highest they've been in a very long time, and the valuation is the cheapest it's been in a very long time.

I don't see that much, and I work in this field from Monday to Saturday, 10 to 12 hours a day , with hundreds of companies and thousands of financial reports, earnings, etc. I don't see this situation very often.

It is a unique situation here because of the dynamics surrounding Oracle's business, the required capital investments, etc.

The stock is currently trading at a forward price-to-earnings ratio of only 10. Again, it's very similar to telecom companies like AT &T and Verizon, although this company has much stronger growth prospects and a larger target market opportunity that is still expanding.

I've shared with you management's estimates of the free cash flow they expect to generate by fiscal year 2029. So, I wanted to share with you my estimate of what I expect for Oracle, which is $17.5 billion in free cash flow in 2029.

Management says it will generate at least $30 billion by 2029. So, there's a big difference between my estimate and management's estimate. And now, this is three years in the future.

It is very difficult to know what will happen before this long time, but there is a clear difference. So, if the management team actually manages to meet their cash flow expectations, that would be much better than I expect.

Even with my expectations, which are more pessimistic than management's, the stock still appears to be undervalued . I calculated a fair value for the stock at 167 compared to the current market price of 112.

Therefore, the stock appears to be undervalued. It is currently trading near its 52-week low of 109.

If you have more confidence in management's forecasts than mine, or if you take a middle ground between the two and believe the results will be closer to management's forecasts, the stock will look more attractive to you as a long-term investor.

Therefore, I rated Oracle stock as a buy opportunity with a low conviction level when I last updated my rating on the company on September 24, 2026. Today I will reaffirm my buy rating while raising my confidence and conviction level.

Therefore, I am raising my conviction level from low to medium, and reaffirming the buy rating I previously assigned to the company, but now I am more confident in this rating based on price action and management's long- term outlook.

When comparing it to my own expectations, I realized that the trend may be closer to what management expects , which means that I may have underestimated the company's prospects.

Therefore, I am more confident in my assessment that the stock is undervalued.