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Given Oracle's (ORCL) strong growth and low valuation, along with the fact that it's benefiting a great deal from the ongoing AI revolution, Oracle's stock looks like a good buy for both value investors and growth investors. What's more, renowned investor Paul Tudor Jones acquired a sizable position in ORCL stock last quarter, while multiple, well-known investment banks and Zacks, a prominent research firm, are upbeat on the shares.
Powerful Growth at a Cheap Price
In Oracle's fiscal fourth quarter that ended in May, its revenue jumped 21% versus the same period a year earlier to $19.2 billion, while its earnings per share, excluding certain items, soared 24% year-over-year (YoY) to $2.11. Moreover, propelled largely by the AI Boom, its total cloud revenue climbed 47% YoY to $9.9 billion. Also noteworthy was that its remaining performance obligations (RPO), which include preferred revenue and backlog, jumped 363% YoY to a very impressive $638 billion.
The company reported that “Most of the RPO increase in both Q3 and Q4 were (the result of) large scale AI contracts.” With the AI Boom continuing and likely to keep going for the foreseeable future, Oracle's RPO is likely to keep expanding quickly, enabling its top and bottom lines to also continue rising at a brisk pace.
Despite these points, Oracle's forward price-earnings ratio of 22.6x is rather low.
Endorsements by a Multibillionaire Investor and a Number of Investment Banks
In Q2, Tudor Investment Corp., the hedge fund controlled by multi-billionaire and prominent investor Paul Tudor Jones, acquired 1.3 million shares of ORCL stock.
Jones is a frequent name on top ten most influential investors lists and has been called the “pioneer” of the modern hedge fund industry. He is known for “predicting the 1987 stock market crash” and has very effectively utilized both macro- and technical analysis to help him reach a net worth estimated at over $8 billion. In light of his tremendous success, many investors may want to consider emulating his purchase of ORCL stock.
In June, Japanese investment bank Mizuho reiterated an “Outperform” rating and a $320 price target on Oracle following the tech giant's fiscal Q4 results. Mizuho was upbeat about Oracle's earnings and viewed its fiscal 2027 top-line guidance, which calls for 34% growth excluding currency fluctuations, as conservative. In July, investment bank Guggenheim reiterated its $400 price target and “Buy” rating on the name. After meeting with Oracle's CFO, Guggenheim reported that the executive stated that the company's AI infrastructure buildout does not pose any risk to the firm at this point.
For its part, research firm Zacks recently asserted that the demand for Oracle's offerings is increasing faster than ORCL can provide them. As a result, Oracle's profit margins should continue to climb, Zacks believes.
