Is Oracle (ORCL) Fairly Priced After Recent Share Price Pullback And Cloud Growth Focus

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If you are wondering whether Oracle’s current share price reflects its long term potential, it helps to step back and look closely at what you are paying for today.
The stock last closed at US$179.92, with a 7 day return of an 11.1% decline, a 30 day return of a 6.3% decline and a 1 year return of 5.3%, while the 3 year and 5 year returns sit at 107.9% and 211.8% respectively.
Recent news coverage has focused on Oracle’s role as a major software and cloud player, with investors watching how it positions its offerings against other large tech peers. This context has kept attention on how the market is pricing Oracle’s long term prospects rather than just short term headlines.
On our simple 6 point valuation checklist, Oracle scores 2 out of 6. This suggests some areas may look cheap while others do not, so next we will compare different valuation methods before finishing with a more complete way to think about what the shares could be worth.

Oracle scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

A Discounted Cash Flow (DCF) model projects a company’s future cash flows and then discounts them back to today’s dollars to estimate what the business could be worth right now.

For Oracle, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at about $2.94b. Analyst inputs and subsequent extrapolations extend out to 2035, with projections that shift from periods of negative free cash flow to positive figures, reaching projected free cash flow of $53.83b in 2035 based on the data provided.

Simply Wall St’s DCF output suggests an estimated intrinsic value of about $165.30 per share, using these discounted cash flow projections. Compared to the recent share price of $179.92, this implies Oracle is around 8.8% overvalued on this model, which sits within a relatively tight band around the current market price.

Result: ABOUT RIGHT

Oracle is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.

ORCL Discounted Cash Flow as at Jan 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Oracle.

For profitable companies like Oracle, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It gives you a quick sense of how the market is weighing those earnings relative to other stocks.

What counts as a normal or fair P/E depends a lot on growth expectations and risk. Higher expected earnings growth or lower perceived risk can support a higher P/E, while slower growth or higher uncertainty usually point to a lower multiple.

Oracle currently trades on a P/E of 33.51x. That is above the broader Software industry average of 31.60x, but below the peer group average of 63.05x. Simply Wall St’s Fair Ratio for Oracle is 55.24x, which is its proprietary view of what a P/E might look like after accounting for factors such as earnings growth, margins, industry, market cap and company specific risks.

This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for those business characteristics rather than assuming all software peers deserve similar multiples. With Oracle’s current P/E at 33.51x versus a Fair Ratio of 55.24x, the shares screen as undervalued on this measure.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your story about a company, where you connect what you believe about its business to numbers such as fair value and your estimates for future revenue, earnings and margins. On Simply Wall St, millions of investors build these Narratives on the Community page, linking a company’s story to a financial forecast and then to a fair value that can be compared directly to the current share price to help decide whether it might be a time to buy, hold or sell. Narratives on the platform update automatically when new information comes in, such as news or earnings, so your view can stay aligned with the latest data rather than a static spreadsheet. For Oracle, one investor might use a higher fair value based on stronger growth assumptions while another might set a lower fair value using more conservative forecasts, and the platform simply shows both views side by side with their implied upside or downside relative to today’s price.

Do you think there’s more to the story for Oracle? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ORCL.

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