Oracle Corporation (ORCL): A Bull Case Theory

We came across a bullish thesis on Oracle Corporation on techcache’s Substack by Joe Albano. In this article, we will summarize the bulls’ thesis on ORCL. Oracle Corporation's share was trading at $200.94 as of December 1st. ORCL’s trailing and forward P/E were 46.75 and 29.50 respectively according to Yahoo Finance.

Oracle Corporation (ORCL) reported a weak quarter, with revenue growth and guidance lagging peers such as Broadcom. However, a standout figure was its $455 billion cloud and AI-related backlog—up 359% year-over-year—signaling massive future demand. The surge stems from the industry’s transition from AI model training to inferencing, where real-time responses to user queries require constant compute power. As major AI players like OpenAI, Meta, Nvidia, and xAI struggle with limited inferencing capacity, Oracle’s database expertise and flexible cloud model make it a preferred provider.

Rather than owning vast data centers, Oracle embeds its hardware in partner facilities, reducing capital intensity and accelerating monetization as capacity goes live. Still, the scale of expansion is immense: Oracle spent $8.5 billion in CapEx last quarter and projects $35 billion for FY26, with revenue guidance of about $67 billion. Free cash flow remains thin near $1.4 billion as the company prioritizes infrastructure buildout over near-term profitability. This approach positions Oracle to capture long-term AI infrastructure growth, but investors may face a lull until 2028, when its backlog starts converting into substantial revenue.

While the company’s 29% operating margin and proven demand support the thesis, the stock’s valuation already prices in much of the expected upside, leaving limited short-term appeal and potential volatility ahead. Technically, Oracle’s multi-decade rally appears near the end of its fifth wave, with near-term upside capped around $364–$404 and downside risk toward $237. Overall, Oracle’s future looks strong, but timing and execution remain key.

Previously we covered a bullish thesis on Microsoft Corporation (MSFT) by Long-term Investing in February 2025, which highlighted the company’s AI-driven growth and strong cloud performance through its partnership with OpenAI. The company’s stock has appreciated approximately by 18.78% since our coverage as the AI-led growth thesis played out. Joe Albano shares a similar view but emphasizes Oracle’s distinct role in AI inferencing infrastructure.

Oracle Corporation is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 124 hedge fund portfolios held ORCL at the end of the second quarter which was 97 in the previous quarter. While we acknowledge the potential of ORCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.