Oracle Corporation (NYSE:ORCL) recently delivered impressive fiscal Q1 results, showcasing robust revenue growth and free cash flow. Following the earnings release, ORCL stock rose 2.6%, closing at $161.38, with further gains pushing the after-hours price to $171.70. Investors and analysts alike are eager to assess whether Oracle stock is still undervalued and if there’s more upside in the months ahead. This article will examine the Oracle stock forecast and explore how the company’s foray into AI and cloud services may shape its future growth.

Oracle’s Fiscal Q1 Earnings: Solid Performance

Oracle’s fiscal Q1 2025 results highlighted an 8% year-over-year (YoY) revenue increase, driven by its expanding AI infrastructure and cloud services. The company projected its fiscal 2026 revenue to reach $66 billion, an upgrade from its previous forecast of $65 billion. This represents a growth rate of nearly 13.7% YoY, reflecting Oracle’s strong positioning in the enterprise technology space.

The company’s free cash flow (FCF) for the trailing twelve months (TTM) came in at $11.3 billion, equating to an impressive 21% FCF margin based on its $53.8 billion revenue for the same period. While this FCF figure is slightly lower than the previous quarter’s $11.8 billion, Oracle remains highly efficient at generating cash flow from its operations. Analysts project that Oracle’s FCF could increase to nearly $14 billion in fiscal 2026, assuming the company maintains its current 21% margin. This suggests significant potential for further growth in the stock’s value.

Oracle’s Strategic Push Into AI and Cloud Infrastructure

A major growth driver for Oracle is its push into artificial intelligence (AI) and cloud infrastructure. The company has been helping businesses transition from traditional on-premise database storage to Oracle’s cloud services, a move that has boosted its revenue and long-term outlook. Oracle’s AI infrastructure is gaining traction as enterprises increasingly adopt AI-powered tools for data management and processing.

This focus on cloud services and AI-driven growth will be crucial in determining Oracle’s future performance. Analysts have pointed out that the company is well-positioned to capitalize on the increasing demand for AI infrastructure, which could lead to a sustained boost in its stock price.

Analysts Remain Bullish on Oracle Stock

Several analysts have provided optimistic forecasts for Oracle stock based on its strong performance and growth potential. With a current price target averaging $246.61, analysts see an upside of over 10.7% from current levels. In particular, Oracle’s projected $14 billion in free cash flow for fiscal 2026 could drive its market capitalization up by more than $107 billion, implying a potential 24% rise in its stock price. This would bring Oracle’s price target to approximately $200 per share, offering substantial upside for long-term investors.

Oracle’s current free cash flow yield of 2.52% makes it an attractive option for value investors, as it demonstrates the company’s ability to generate significant cash relative to its market cap. Should Oracle hit its free cash flow projections for fiscal 2026, this yield could further strengthen, supporting a higher stock valuation.

Oracle Stock Valuation: Is ORCL Still Cheap?

Despite its recent rise, Oracle stock still appears undervalued compared to its peers in the enterprise software sector. Its forward price-to-earnings (P/E) ratio of 30.8x is higher than its five-year average of 26.6x but remains lower than some of its closest competitors, given Oracle’s robust growth prospects.

Notably, Oracle’s growing role in AI infrastructure sets it apart from traditional enterprise software firms, positioning it for future gains as businesses increasingly turn to cloud-based AI solutions. This shift in focus has been a key driver behind Oracle’s strong earnings performance, and it may continue to fuel long-term growth in the stock.

Conclusion: Why Oracle’s Stock Forecast Remains Positive

Oracle’s fiscal Q1 results reflect strong fundamentals, with consistent revenue growth and significant free cash flow generation. The company’s aggressive push into AI and cloud services has bolstered its long-term growth prospects, making it an attractive option for investors seeking exposure to the enterprise technology space.

While Oracle stock has risen significantly in recent months, analysts believe there’s still substantial upside. With a price target of $200 per share, driven by its projected $14 billion in free cash flow for fiscal 2026, Oracle remains an undervalued gem in the tech sector. As the company continues to execute its AI and cloud strategies, Oracle stock could offer significant returns for long-term investors.

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