Oracle (ORCL +2.66%) stock is up a 45.5% over the past 52 weeks, but tumbled 6% through 9:45 a.m. ET Wednesday morning.
One Wall Street analyst thinks this is the exact opposite of what should be happening. According to Mizuho, Oracle stock, which trades at barely $230 per share today, is actually worth $320.
Image source: Oracle.
What Mizuho says about Oracle
Oracle reports fiscal Q4 2026 earnings June 10, and Mizuho analyst Siti Panigrahi predicts the results will be "solid," with Oracle likely to beat on both sales and earnings. Sales probably grew 17% in 2026, says Panigrahi, and the analyst believes Oracle will guide for twice that rate of growth in fiscal 2027.
Of course, revenue growth isn't really what investors are worried about at Oracle -- not with the company boasting a backlog of work stretching well past half a trillion dollars, as it provides server access to artificial intelligence giants such as OpenAI.
What makes investors nervous is how much Oracle must spend to build all the data centers it will need to fulfill its contract obligations and claim the revenue.
NYSE: ORCL
Key Data Points
What to look for in the Oracle earnings report
In Panigrahi's opinion, Oracle needs to convince investors that it can produce enough cash from selling AI services to limit its need to borrow less than $100 billion -- total -- to build all the servers it needs.
The good news is that Panigrahi thinks Oracle will generate enough free cash flow to make this happen, forecasting free cash flow will turn positive in 2029 and grow to $36 billion in 2030. At that point, "Oracle self-funds growth and financing concerns weighing on sentiment should fade."
The bad news: Oracle probably has to burn at least $80 billion over the next three years before that happens.
