Analyst Explains Why Oracle (ORCL) Valuation Is Still Attractive Despite Post-Earnings Surge

We recently published Trending Analyst Calls: Top 10 Stocks. Oracle Corporation (NYSE:ORCL)is one of the stocks analysts were recently talking about.

Tyler Radke, Citi’s co-head of U.S. software equity research, said in a recent program on CNBC that Oracle’s stock was not expensive even after its post-earnings rally amid strong revenue growth. The analyst was expecting further “surprises” from Oracle in an upcoming event.

"I mean what’s crazy about this move, I mean our numbers for revenue and EPS for FY28, which is two years out, they went up by 25 to 30%, right? And so you look at this move in the shares up today almost 40% on a valuation basis that it’s actually not that much more expensive than it was earlier this week and certainly pre-market when we upgraded it the shares were up only about 25%. So our view is I mean you’re going to see revenue growth for Oracle at a consolidated level approach 50% in a few years out which is really unheard of at this scale. We think there’s going to be a lot more exciting news to come whether that’s additional contracts. They talked about more bookings coming in the next few months closing in on half a trillion of RPO and then they have their AI world conference next month in Las Vegas where we think they’re going to give additional surprises on margins. And so stepping back, yeah, the shares are up a lot, but they’re trading at kind of a mid-30s earnings multiple on our numbers for FY28, which is right about where we value Microsoft. So I still don’t think the stock is particularly stretched here," Radke said.

Oracle Corp (NYSE:ORCL) shares skyrocketed after the company’s latest quarterly results. The company said it expects booked revenue to exceed $0.5 trillion. Oracle’s moat is its strong roots in enterprise databases and ERP software that are in high demand with large clients like banks and hospitals. Oracle Corp (NYSE:ORCL) differentiates itself by offering cheaper cloud services while integrating SaaS, ERP, and HCM, creating high switching costs and a durable moat.  

Loomis Sayles Growth Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its second quarter 2025 investor letter:

“Oracle Corporation (NYSE:ORCL) is a leader in the enterprise software market with a strong market position in database, infrastructure and application software, and cloud-based software and services. We believe the company’s competitive advantages include its large and experienced direct sales force, a founder-driven management team that reinvests relentlessly to maintain a leading intellectual property (IP) portfolio and differentiated product suite, and a large installed base of clients with high switching costs where it consistently achieves renewal and retention rates in the mid-90% range. We believe Oracle is well positioned to benefit from the continuing growth in data storage and enterprise application software, as well as the shift to cloud-based solutions.

A long-term fund holding, Oracle reported strong quarterly financial results that were above management guidance and consensus expectations on most measures, including remaining performance obligation (RPO) bookings, a forward-looking measure of revenue. As a result, the company expects revenue growth to accelerate and raised its guidance to at least 16% revenue growth in its 2026 fiscal year, driven by cloud growth in excess of 40%. Oracle is the world leader in its largest business segment, enterprise database software used in customer on-premise IT environments. However, the company continues to focus on transitioning its business from a traditional on-premise, up-front software licensing and maintenance revenue model to a cloud computing subscription-based model where software revenue is recognized over the life of the client’s contract. While there has been pressure on year-over-year overall revenue comparisons during this transition, which started over a decade ago as Oracle released cloud versions of its applications and infrastructure software, as up-front license revenue shifts to subscription revenue, we have long expected this to lead to faster growth over time due to a higher customer lifetime value as the transition progresses. We believe the cloud model also allows Oracle to monetize its services and technology more efficiently and yield savings to the customer… (Click here to read the full text)

While we acknowledge the potential of ORCL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.