Oracle's numbers are insane but the stock just won't stop falling. Down 25% in two weeks.
u/Odd_Veterinarian4381 ·
Reddit — r/ValueInvesting
· June 17, 2026 at 15:23
· ⬆ 33 pts
· 💬 39 comments
| View on Reddit ↗
AI Summary
Summary
The post analyzes Oracle's Q4 FY2026 earnings: strong revenue (+21% YoY), cloud infrastructure up 93%, record operating cash flow, but stock down 25% due to massive capex ($55.6B) and negative free cash flow.
Author's thesis: the market is overreacting to AI infrastructure spending, as Oracle has a $638B committed demand backlog and the stock trades at ~21-22x annualized EPS with 21% top-line growth, creating a potential value opportunity.
Quality assessment: Well-researched DD with specific financials and a clear contrarian argument, though it lacks deep unit economics analysis of OCI.
Score33
Comments39
Upvote %77%
▶ Full Post Text
Oracle reported Q4 FY2026 a week ago $19.2B revenue (+21% YoY), cloud infrastructure up 93% to $5.8B, EPS of $2.11 beating estimates by 15 cents, and a record $32B in operating cash flow for the year. Backlog sits at $638B.
​
The stock opened 10% lower the next morning and hasn't recovered. It's now at $187 down from $248 just two weeks ago.
​
The market is terrified of the capex number. $55.6B for the year, up 162%. Free cash flow is deep in the red. They're planning to raise another $40B. Everyone sees a cash bonfire and runs.
​
Fair enough. But here's what I keep coming back to this isn't a company in trouble. They're growing revenue 21%. Their cloud business is nearly doubling. Operating cash flow hit a record. The capex is aggressive, sure, but it's going into AI infrastructure that already has a $638B pipeline of committed demand.
​
The stock is trading at about $188. That's roughly 21-22x the annualized Q4 EPS. For a company growing the top line 21% with a cloud segment compounding at 93%, that doesn't scream overvalued to me even with the capex overhang.
​
Am I being naive about how much this capex will actually return? Or is the market so allergic to AI spending right now that it's creating an actual opportunity? Curious what others who've dug into the OCI unit economics are seeing.
Oracle's Q4 FY2026 revenue grew 21% to $19.2B, cloud infrastructure surged 93% to $5.8B, operating cash flow hit a record $32B, and backlog is $638B. The stock's 25% drop from $248 to $187 is driven by fear of capex ($55.6B, up 162%) and negative FCF, but the capex funds AI infrastructure with massive pre-committed demand, suggesting the selloff is overdone. At ~21-22x annualized Q4 EPS, Oracle is undervalued relative to its growth rate (21% revenue, 93% cloud) and backlog visibility, making it a potential value buy amid market panic. Capex may not generate expected returns if AI demand slows; additional $40B debt/equity raise dilutes shareholders; competition from AWS, Azure, Google Cloud could pressure margins.
This Reddit post, published June 17, 2026,
features u/Odd_Veterinarian4381
discussing ORCL.
1 trade idea extracted by AI with direction and confidence scoring.