Oracle (ORCL +1.05%) looks like a solid buy right now. The stock is trading at just 17 times forward earnings as analysts raise their estimates for future earnings. The company reported fiscal first-quarter 2027 revenue of $19 billion, up 30% year over year. Even with this level of growth, the stock trades 60% below its 2025 high.
Image source: The Motley Fool.
Shares have slipped on worries that Oracle won't be able to deliver on its massive -- and growing -- $664 billion in remaining performance obligations (RPO). Investors also fear that those obligations can't be met without major capital needs, whether by issuing shares (diluting shareholders) or by taking on more debt.
But per CFO Hilary Maxson on the Sept. 10, 2026, earnings call, the company saw "strong conversion" of RPO during the quarter. That helped drive a 121% increase in cloud infrastructure revenue. Management expects that momentum to continue, with about half of today's RPO converting into revenue over the next three years.
Debt is a risk. Oracle's debt-to-equity ratio is 2.53 times, indicating that debt exceeds shareholders' equity. This could bite the company if spending on artificial intelligence infrastructure slows. Still, cash from operations jumped 184% year over year to $23 billion in the quarter, reaching $47 billion on a trailing 12-month basis.
NYSE: ORCL
Key Data Points
If Oracle continues converting RPO into revenue, cash flow should continue to grow over the next several years. The market doesn't appear to be pricing in that potential. For an investor who can tolerate near-term volatility, Oracle could deliver substantial long-term upside from here.
