Oracle (ORCL -1.46%) is a behemoth in the software world. Its database software is indispensable for many companies, and its cloud computing businesses are growing fast.
NYSE: ORCL
Key Data Points
Like many of its rivals in the tech sector, Oracle is embracing artificial intelligence (AI), which is driving accelerated growth for the tech giant. Demand for its Gen2 AI infrastructure was stronger than supply in mid-2024 despite the company's heavy investments to rapidly expand its data center capacity and position itself for strong growth in the coming years.
Oracle's dominant position in database software and accelerating AI-driven cloud computing business has many investors interested in its stock these days. This guide will teach you everything you need to know about investing in Oracle and how to buy the technology stock.
Stock
How to buy Oracle stock
Anyone can buy shares of Oracle. The technology company trades on the New York Stock Exchange under the ticker ORCL. You can easily purchase shares through a brokerage account. Here's a six-step guide to show you how to invest in stocks.
- Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Oracle?
Before buying Oracle shares, you should consider whether the stock is right for your situation. Here are some reasons you might want to invest in Oracle:
- You're seeking a solidly profitable technology company with AI-powered upside potential.
- You want to invest in companies with significant insider ownership.
- You want a company that can supply some modest dividend income.
- Buying Oracle would help diversify your portfolio.
- You think Oracle's AI investments will drive accelerated growth in the coming years.
- You want to invest in a company with a history of producing solid total returns.
On the other hand, here are some reasons you might decide not to invest in the technology company:
- You already own several technology stocks.
- You're seeking companies earlier in their growth cycle than Oracle.
- You want more dividend income than Oracle currently provides.
- You're not a fan of Oracle's founder and Chairman, Larry Ellison.
- You're seeking a company with higher total return potential than Oracle.
- You're concerned about the company's competitive position and whether it can maintain its technological edge against start-ups vying for a piece of its market share.
Is Oracle profitable?
Analyzing a company's profitability is a key aspect of investment research. Earnings tend to drive a company's stock price over the long term.
Oracle is a very profitable company. In its fiscal 2024 third quarter, it reported $13.3 billion in revenue (up 7% from the prior year) and $3.8 billion in net income. Meanwhile, its non-GAAP (generally accepted accounting principles) operating income was $5.8 billion, or $1.41 per share, up 12% and 16%, respectively.
The company also generates lots of cash. Over the last 12 months, it produced $18.2 billion in operating cash flow and $12.3 billion in free cash flow. Oracle uses its strong cash flow to invest in its business, maintain a strong balance sheet, and return money to shareholders through dividends and share repurchases.
The company expects its profits to continue growing. It aims to grow its annual earnings per share by more than 10% per year through 2026, driven by rising revenue and improving margins.
Margin
Does Oracle pay a dividend?
Oracle has paid dividends to its shareholders since initiating a payout in 2009. As of mid-2024, the company paid a quarterly rate of $0.40 per share. That gave the software company a 1.4% dividend yield at the time, which was right in line with the S&P 500's dividend yield. The company has increased its dividend steadily over the years:
With its profits likely to grow, Oracle could continue increasing its dividend in the future, which should appeal to investors seeking a solid and growing dividend yield.
ETFs with exposure to Oracle
Many investors prefer to be more passive. They don't want to pick a portfolio of stocks they must manage actively. Thanks to the wide availability of exchange-traded funds (ETFs), it's easy to be a passive investor these days. Many ETFs allow you to gain some passive exposure to a company through a thematic strategy or broad market index.
Exchange-Traded Fund (ETF)
According to ETF.com, 296 ETFs held more than 222 million shares of Oracle in mid-2024. The Vanguard Total Stock Market ETF (VTI +0.07%) was the largest holder, with almost 52 million shares. However, the broad market index fund had a rather small allocation to the technology company at 0.4% of its holdings.
Investors seeking more exposure to Oracle could consider the iShares Expanded Tech-Software Sector ETF (IGV -1.36%). This sector ETF focuses on software companies and had 114 holdings in mid-2024, including Oracle (the third-largest at 8% of its net assets). The fund charges a 0.41% ETF expense ratio to provide passive exposure to the software sector.
Defiance Next Gen Connectivity ETF (NYSEMKT:FIVG) is another ETF with a meaningful allocation to Oracle stock. It focuses on stocks crucial to the rollout of 5G networks. In mid-2024, it held 50 stocks. Oracle was its fourth-largest holding, with a 4.5% allocation. The fund had a 0.3% expense ratio.
Will Oracle stock split?
As of mid-2024, Oracle didn't have an upcoming stock split. Its stock price wasn't too much more than $100 a share at the time, which is reasonably accessible for most investors, so it probably won't split its stock anytime soon. The cloud company has split its stock several times throughout its history:
Date | Type of Stock
Split |
October 2000 | 2-for-1 |
January 2000 | 2-for-1 |
February 1999 | 3-for-2 |
August 1997 | 3-for-2 |
April 1996 | 3-for-2 |
February 1995 | 3-for-2 |
November 1993 | 2-for-1 |
June 1989 | 2-for-1 |
December 1987 | 2-for-1 |
March 1987 | 2-for-1 |
While a stock split doesn't seem likely in 2024, continued earnings-driven share price appreciation could eventually drive Oracle to split its stock again.
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The bottom line on Oracle
Oracle is a dominant player in the database software market and an emerging leader in cloud computing and AI. Those catalysts drive its view that it can deliver double-digit earnings-per-share growth over the next several years. The profit growth could help drive its stock price higher. Add its rising dividend, and Oracle could be a solid long-term investment opportunity.
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