To The Moon

The Short Version

I think $Oracle(ORCL)$ is fundamentally solid at its core, but it's no longer the safe, boring stock it used to be.

Oracle sells the database software and business apps that big companies run on. Now it's using that cash, plus a lot of borrowed money, to build a giant AI cloud. Revenue growth just hit 30%, and Oracle has $664 billion of signed contracts it hasn't delivered yet.

The stock closed at $116.10 on November 6, about 66% below its 2025 high. The reason: Oracle is spending far more than it earns to build data centers, and investors are worried about the debt. Morningstar thinks the stock is worth $195.

On my chart, Oracle is sitting at the bottom of its 2025 range, one of its strongest long-term discounts. I think there's a really good chance it recovers to $340 in the next 12 to 24 months.

1. How Oracle Makes Money

Oracle makes money three ways: renting out AI computing power, selling cloud software subscriptions, and licensing its database with yearly support contracts.

• AI cloud (Oracle Cloud Infrastructure, or OCI). Oracle fills data centers with Nvidia GPUs and rents that computing power to AI companies like OpenAI, Meta and xAI. This is the fastest-growing piece by far.

• Cloud apps. Subscription software that runs a company's finances, supply chain and HR, plus NetSuite for smaller businesses.

• Database and everything else. Oracle sold the first commercial SQL database back in the late 1970s. Companies still pay for licenses and yearly support, plus some hardware and consulting.

Why it matters: the old database and apps business throws off steady cash. The AI cloud is where the growth is, and where the spending is. Morningstar expects cloud to be about 85% of Oracle's revenue by fiscal 2030.

2. Economic Moat

Oracle has a real moat, but it lives in the old business. Morningstar rates it "narrow," and I agree.

A moat is whatever stops competitors from taking your customers. "Narrow" means Morningstar expects above-average returns for at least 10 years. In March 2026, Morningstar cut Oracle from "wide" to "narrow" because AI could change how companies use business software.

Bottom line: the moat is in the database and apps. The AI cloud borrows that moat. It doesn't have one of its own yet.

3. Growth Opportunities

Oracle's growth engine is the AI cloud, and $664 billion of signed contracts are waiting to be delivered.

Source: Morningstar Investment Detail Report, Nov 6, 2026.

• The backlog. Contracts signed but not yet delivered hit $664 billion in the quarter ending August 2026, up $209 billion in a year. That's about 9 years of Oracle's current revenue.

• More capacity. Oracle delivered 850 megawatts of data center capacity last quarter, nearly triple the quarter before. The target is 10 gigawatts by the end of fiscal 2028, and its GPUs are running at about 98% utilization.

• AI cloud revenue. Cloud infrastructure revenue grew 121% last quarter. Morningstar forecasts it at $86 billion in fiscal 2028 and $136 billion in fiscal 2029.

• Database everywhere. Oracle's database now runs inside the other big clouds too, so customers don't have to pick a side. That helps Oracle, the other clouds and the customer at the same time.

• Cross-selling. AI customers who come for GPUs can end up buying Oracle's database and apps. Morningstar thinks it's too early to count on this.

• Big targets. At its October 28 investor day, management reaffirmed more than $225 billion of revenue in fiscal 2030, up from $67.4 billion in fiscal 2026. It also expects free cash flow to turn positive in the second half of fiscal 2028.

4. Risks and Weaknesses

The biggest risk is money. Oracle is spending tens of billions ahead of revenue, on contracts with AI customers who need to raise money themselves.

1. One customer is a huge share of the backlog. OpenAI booked more than $300 billion of Oracle's cloud capacity, starting in 2027. That's close to half the backlog. If OpenAI's products miss their growth targets, it could cut or cancel those bookings.

2. Financing. Oracle needs about $220 billion of investment over the next seven quarters. It plans to cover half with vendor financing, customer prepayments and "bring your own hardware" deals, where the customer buys the GPUs and Oracle runs them. Morningstar isn't fully counting on that last one yet.

3. Cash burn. Free cash flow was -$28.7 billion over the last 12 months, and Morningstar's model keeps it negative through fiscal 2030.

4. Debt. Oracle carries about $125 billion of debt, one of the heaviest loads in Morningstar's software coverage. Higher borrowing costs are why Morningstar cut its fair value from $220 to $195 in October.

5. Data center delays. In September, Oracle sent a force majeure notice on Project Jupiter, a 2.45-gigawatt site in New Mexico. That's a legal notice protecting Oracle if the site runs late. A delay could push $25 billion or more of revenue further out.

6. Dilution. After years of buybacks, the share count is rising again. Management says it will cap new capital raises at $20 billion through fiscal 2030.

7. A thinner moat. AI could change how companies use business software, and newer databases keep competing for Oracle's customers.

8. Wild price swings. Over the past year, the stock traded between $109.21 and $250.25.

What to watch: the next earnings report, whether new data centers come online on schedule, whether OpenAI can fund its commitments, and any new debt or stock sales.

5. Financial Health

Oracle is very profitable, but it's spending far more cash than it makes, and it's covering the gap with debt and new shares.

Oracle's fiscal year ends May 31, so fiscal 2026 ran from June 2025 to May 2026.

Revenue grew 17% in fiscal 2026 to $67.4 billion. Morningstar expects about 31% a year for the next five years, landing at $264 billion in fiscal 2031. Every forecast bar depends on data centers getting built, filled and paid for on time.

Profits and cash flow

The business itself is very profitable. Operating margin was 33% in fiscal 2026, so 33 cents of every revenue dollar became operating profit. Morningstar expects that to dip to about 29% during the buildout, then recover.

The problem is cash. Over the last 12 months, Oracle spent $75.7 billion on data centers and equipment while its operations brought in $46.9 billion.

This is Morningstar's free cash flow to the firm: the cash left after running the business and building data centers, before paying lenders. Its model stays negative for five straight years. Management, using its own measure, expects positive free cash flow in the second half of fiscal 2028. The gap between those two views is the whole bet.

As of August 2026, Oracle had $36.4 billion of cash against $125.3 billion of debt, about $89 billion net. Less than a quarter of that debt comes due in the next three years, the credit rating has held at investment grade, and yearly EBITDA covers the interest bill about 9 times over.

The other way Oracle pays for the buildout is new shares. Each new share means existing owners hold a slightly smaller slice of the company.

Valuation

Oracle is the cheapest of the four against Morningstar's fair value. At $116.10, it trades at about 14 times Morningstar's fiscal 2027 adjusted earnings estimate and under 10 times fiscal 2028. That's cheap if the buildout pays off, and expensive if it doesn't.

Even Morningstar's lowest fair value of the year, $195, sits about 68% above today's price. Its 5-star price, where it sees the stock as clearly cheap, is $97.50.

6. Smart Money Framework

Oracle is trading at one of the strongest long-term discounts it has offered, right at the bottom of its range.

I measure the range from the April 2025 swing low to the September 15, 2025 swing high at $341.69. Price closed at $116.10 on November 6, right back at the bottom of that range.

My ORCL weekly chart as of November 7, 2026.

What I expect: I think there's a really good chance price fully recovers back to about $340 in the next 12 to 24 months. If I really wanted to hold this stock long term, this is a beautiful place to do it. This could be the start of a new bull cycle.

What has to hold: from a trading perspective, price needs to stay above $105 in the coming weeks. I also don't want to see multiple weekly candles close below the April 2025 swing low.

Where the chart and the fundamentals differ: Morningstar's fair value is $195, well below my $340 target. The old high of $341.69 sits almost exactly at Morningstar's 1-star price of $341.25, the level where it would call the stock expensive. So I see $195 as the first checkpoint on the way up. Getting all the way back to $340 would take the AI buildout going better than Morningstar expects.

Bull Case vs Bear Case

Bulls say Oracle has the contracts, the customers and the cash machine to become an AI giant. Bears say it's betting a heavily borrowed balance sheet on a few AI customers who need to raise money themselves.

The Verdict: Is Oracle Fundamentally Solid?

Yes, at the core. But this is a different company than it was three years ago, and the risk now sits on the balance sheet.

Overall: a great old business funding a high-stakes new one. If the data centers get built and paid for, the stock looks cheap. If financing or AI demand cracks, the debt makes it hurt.

How it fits my framework

Morningstar says $195. My chart says $340. Both say $116.10 is cheap. I'd treat this as a long-term buy area or great trade opportinity as long as price holds above $105 and doesn't close below the April 2025 swing low for multiple weeks.

What would change my view: OpenAI cutting or delaying its bookings, another major data center delay, a credit rating downgrade, or a large new stock sale.