Oracle Stock: 5 Reasons This AI Powerhouse Is a Long-Term Buy

Core Insights - Oracle's recent price correction presents an investment opportunity as the market adjusts its outlook rather than reversing it, with a focus on the long-term application of AI technology [1][3] Financial Performance - Oracle's Q3 revenue reached $14.13 billion, falling short of consensus estimates by 180 basis points, primarily due to weaknesses in legacy businesses, but showing a 6.4% annual growth [3] - The Services and Systems Support segment grew by 10%, while Cloud License and On-Premise revenues contracted by 10%. Total cloud services grew by 23%, with IaaS growing by 49% [4] Business Outlook - Oracle reported $48 billion in new contracts and a 92% sequential increase in business from major hyperscalers, with a backlog increase of 62% to $130 billion. Revenue growth is forecasted to accelerate to 15% in F2026 and 20% in F2027 [5][6] - The cautious outlook is influenced by increased demand from hyperscalers and significant AI partnerships [6] Product Development - Oracle introduced the Oracle AI Data Platform, linking leading AI models to its database, facilitating AI model training with advanced vectorizing tools [7][8] Financial Health - Oracle's balance sheet shows increased cash and assets, with shareholder equity nearly doubling to $17.2 billion and a reduction in debt leverage from 8x to 5x [11] - The company authorized a 25% increase in dividends, now worth $2.00 annually, with a yield of about 1.3% [12] Analyst Sentiment - Analysts maintain a Moderate Buy rating for Oracle, with a forecasted 20% upside despite recent price target reductions [13] - Institutional buying activity reached a multiyear high, with buying outpacing selling by approximately $4.5 billion [14]