How Oracle’s Cloud Partnerships Are Driving a 63% Stock Surge in 2025

Thinking about what to do with Oracle stock right now? You’re not alone. With the share price closing at $280.83, Oracle is fresh off a run that has caught the attention of long-term investors and newcomers alike. Over the past year, the stock has soared 63.5%. If you zoom out even further, it’s put up a staggering 430.1% gain across five years. Even the year-to-date return is eye-catching, up 69.1% in 2024 so far, even though these gains have been peppered with moments of short-term pullback, like a slight dip of 0.9% in the past month.

What’s fueling all this? Recent headlines have highlighted Oracle’s expanding presence in cloud infrastructure and strategic partnerships, signaling fresh growth avenues that investors haven’t always associated with this legacy software giant. Market sentiment seems to have shifted, with many seeing Oracle as a serious contender in the competition for enterprise cloud customers. This has increased enthusiasm and may have led the market to reassess its risks and prospects.

But with Wall Street optimism often come tough questions, especially around whether all this excitement is baked too heavily into the price. Oracle’s current value score sits at 1 out of 6 based on a standard undervaluation check, meaning it only meets one marker of being undervalued right now. So, is the stock worth its current premium, or are investors buying into hype?

Let’s break down the different methods analysts use to value Oracle, and see where the numbers really stand. If you want the best tool for understanding whether Oracle is a buy, make sure to stick around for the approach at the very end of this article.

Oracle scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Oracle Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's underlying value by projecting its expected future cash flows and discounting those amounts back to their present value. This approach aims to capture what Oracle’s future profits are truly worth right now rather than relying on current market sentiment.

According to recent data, Oracle’s latest twelve-month Free Cash Flow stands at $5.84 Billion. Analysts have made projections for the coming years, with future estimates peaking at $22.06 Billion by 2030 based on forecasted growth and extrapolation. While analysts provide concrete estimates through 2029, further projections up to 2035 are extrapolated and factored into the model to get a longer-term view on cash generation.

Story Continues

After running these numbers through a 2 Stage Free Cash Flow to Equity model, the model lands on an intrinsic fair value for Oracle of $226.93 per share. When set against today’s share price of $280.83, this means the stock is trading roughly 23.8% above its estimated fair value. In other words, it is currently considered overvalued by the DCF approach.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Oracle.ORCL Discounted Cash Flow as at Oct 2025

Our Discounted Cash Flow (DCF) analysis suggests Oracle may be overvalued by 23.8%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Oracle Price vs Earnings (PE Ratio)

For profitable companies like Oracle, the Price-to-Earnings (PE) ratio is a widely used valuation yardstick. It measures the price investors are willing to pay for each dollar of current earnings, making it especially useful for established businesses that show consistent profitability.

What is considered a "fair" PE ratio can vary depending on a company’s future growth potential and the risks it faces. Generally, higher expected earnings growth or a lower risk profile can justify a higher PE ratio. Companies with slower growth or higher uncertainties usually command lower multiples.

Currently, Oracle trades at a PE ratio of 64.35x. For comparison, the average PE ratio among software industry peers is 34.25x. Close peers average a loftier 80.71x. However, simply stacking Oracle against its peers or industry misses the nuances unique to its business.

That is where Simply Wall St’s "Fair Ratio" comes in. This proprietary metric estimates what Oracle’s PE ratio should be, factoring in its earnings growth outlook, industry trends, profit margins, market cap, and company-specific risks. This approach provides a more tailored benchmark than blunt comparisons with industry or peer averages.

Oracle’s Fair Ratio is calculated at 62.67x, almost identical to its actual PE. Since the difference between the Fair Ratio and the actual multiple is so slim, this suggests the market is currently valuing Oracle about right on an earnings basis.

Result: ABOUT RIGHTNYSE:ORCL PE Ratio as at Oct 2025

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

Upgrade Your Decision Making: Choose your Oracle Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your way of putting a story behind the numbers, combining your view of Oracle’s future prospects with data like estimated fair value, projected revenues, earnings, and profit margins. Rather than treating valuation as a rigid number, Narratives help you connect what matters to you, such as new cloud deals or AI product launches, to a financial forecast and a fair value, making your decisions more informed and personal.

Narratives are easy to use and available to millions of investors on the Simply Wall St Community page. They give you a living framework that reacts when new information hits the market, so your perspective is always up to date. By expressing your Narrative, you can quickly compare your calculated fair value to Oracle’s current share price, helping you decide when it may be time to buy, hold, or sell.

For example, one Narrative on Oracle sees a fair value of $212 per share, based on steady cloud growth and AI leadership, while another, more bullish Narrative forecasts $344, driven by rapid AI adoption and international expansion. Narratives capture those different investment stories, ensuring your view is grounded in both data and what you believe will shape Oracle’s future.

For Oracle, we will make it really easy for you with previews of two leading Oracle Narratives:

🐂 Oracle Bull Case

Fair value: $344.07

Current price vs fair value: 18.4% below this narrative's fair value

Forecast revenue growth: 32.6%

Strong demand for AI and unique integrated offerings drives cloud revenue growth and expanding enterprise adoption. Growing backlog and migration of customers to Oracle Cloud support stability, higher margins, and multi-year visibility. Key risks include reliance on ongoing AI demand, heavy CapEx investment, margin pressure, and intense competition from major cloud providers.

🐻 Oracle Bear Case

Fair value: $212.00

Current price vs fair value: 32.5% above this narrative's fair value

Forecast revenue growth: 14.4%

Oracle's cloud business is gaining ground, but faces fierce competition from AWS, Azure, and Google Cloud, making rapid scaling critical and challenging. Investments in AI and industry-specific solutions support the long-term growth story, but heavy debt and economic cycles pose real risks. This narrative views Oracle as a resilient enterprise IT leader, but with significant execution risks and valuations already factoring in optimistic scenarios.

Do you think there's more to the story for Oracle? Create your own Narrative to let the Community know!NYSE:ORCL Community Fair Values as at Oct 2025

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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