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    Oracle (ORCL) Stock May Be 33% Below Fair Value As Debt Concerns Grow

    Simply Wall St·10/20/2026 11:32:34
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    Oracle shares have retreated sharply over the past year, and that slide now highlights a simple question for investors. Is the current US$129.59 price a fair reflection of the cash the business is expected to generate, or has sentiment moved faster than its underlying cash flows?

    • The stock is down 52.6% over the past year, which puts recent price action in direct conflict with earlier multi year gains and makes the link between the share price and Oracle's cash generation more important than usual.
    • Heavy spending on AI infrastructure, rising debt costs and delays at large data center projects may affect how quickly Oracle can turn its cloud backlog and AI partnerships into cash that supports the current equity value.
    • If you'd rather focus on earnings, this one's for you. See what Oracle's 21.0x P/E says about the price.

    The stock's next move may depend on whether the Discounted Cash Flow (DCF) view of Oracle's future cash streams supports what the market is currently paying for the shares.

    If you are weighing whether Oracle's US$129.59 share price is justified by its cash flows, you can pressure test the same question across a wider set of 55 AI infrastructure stocks

    Does Oracle Look Undervalued on Cash Flow?

    The Discounted Cash Flow (DCF) model here projects what Oracle could return to shareholders based on future free cash flows rather than reported earnings. Latest twelve month free cash flow sits around $3.8b, yet the forecast path in this model is lumpy, with several years of forecast cash outflows before a recovery to larger positive figures by 2031 and beyond.

    This pattern fits an Oracle story that hinges on heavy AI and data center investment today with the aim of larger cash generation later, so the valuation leans on those long dated projections rather than near term comfort. Because the recent credit downgrade, data center delays and AI demand questions have all hit confidence, the DCF outcome, which puts Oracle's estimated intrinsic value substantially above the current US$129.59 share price, suggests the market is heavily discounting that future cash conversion. Find out what Oracle could be worth using our Discounted Cash Flow (DCF) estimate.

    The Oracle Narrative: What Would Justify Today's Price?

    Narratives on Simply Wall St’s Community page pick up where the DCF puzzle for Oracle leaves off and explain which paths for growth, margins and earnings would need to occur for the stock to be worth significantly more or less than the current price. Rather than relying on a single multiple or one model output, each narrative lays out the specific assumptions behind its fair value so you can track those against future results as they are reported.

    Oracle bulls lean into the AI buildout story while bears focus on what that ambition means for the balance sheet and cash generation.

    Bull case: 67% undervalued

    "The story of Oracle’s transformation is a narrative of strategic repositioning that has culminated in the company emerging as an indispensable infrastructure partner for the world’s most demanding Artificial Intelligence workloads…"

    Discover why this Narrative puts Oracle at 67% undervalued.

    Bear case: roughly fairly valued

    "To support its aggressive AI data-centre expansion, Oracle has borrowed heavily, while Q1 free cash flow was negative $5.4b due to the scale of infrastructure investment required…"

    Explore why this Narrative puts Oracle at roughly fairly valued.

    One more angle on Oracle that could shift your view

    Beyond the cash flow story, research checks on Oracle have flagged specific areas of concern that deserve a closer look before forming a view on the stock. Take a closer look at 3 warning signs (1 major) before settling on a valuation.