The Zacks Analyst Blog Oracle, Amazon, Microsoft and Alphabet

Oracle's Valuation and Growth Prospects - Oracle's stock has gained 52 9% over the past six months significantly outperforming the Zacks Computer and Technology sector 8 1% and the S&P 500 13 1% [2] - The stock trades at a price-to-sales multiple of 8 61X compared to the industry average of 8 02X indicating an elevated valuation [3] - Fiscal 2025 revenue is estimated at $58 02 billion with a year-over-year growth of 9 55$6 20 per share [4] - Earnings estimates have only increased by 0 2% over the past 60 days suggesting limited upside potential [4] Cloud Growth and Competitive Landscape - Oracle's total cloud revenues grew 22% to $5 6 billion but Infrastructure-as-a-Service revenue growth decelerated to 46$2 3 billion [6] - The company is aggressively expanding data center infrastructure including facilities exceeding a gigawatt which could pressure margins and free cash flow [6] - Oracle has $11 billion in cash and marketable securities with first-quarter operating cash flow of$7 4 billion but intensive capital requirements may impact future free cash flow [9] Multi-Cloud Strategy and Financial Performance - Oracle's multi-cloud strategy includes partnerships with Amazon Web Services Microsoft Azure and Google Cloud potentially signaling weakness in its standalone cloud infrastructure [7] - First-quarter operating income grew 14% with an operating margin of 43% but profitability metrics were artificially inflated by accounting changes reducing operating expenses by $197 million [8] Conclusion - Oracle's current valuation of 8 61X sales appears unsustainable given its growth rates and capital requirements [11] - Investors are advised to wait for a more attractive entry point as the current price level reflects an overly optimistic scenario [11]