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QS Research · Michael Burry's Scion Capital analyst template · 2006

ORACLE CORP (ORCL)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: WATCH

Conviction low · base case +27% · downside -33% · upside +69%

At $122.28, Oracle trades at 14.3x TTM EV/EBITDA versus 17.3x for the lowest profitable software peer, while TTM revenue is $71.78B and TTM EBITDA is $32.48B. Base case using 17.3x gives EV $561.9B, equity $468.7B, and $155.0 per share (+27%); upside using 22.1x gives $206.6 (+69%); downside using 4.75x EV/Sales gives $81.96 (-33%). The base is below the +30% long threshold and the downside is worse than -25%, so the long rule fails; the short rule also fails because upside exceeds +25%. The market may be overpricing the negative FCF (-$28.72B TTM) and dilution, but debt and leases keep the downside too high, so we watch.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    Oracle makes money through three businesses—cloud and software (formerly cloud and license), hardware, and services—selling cloud subscriptions, software licenses and support, hardware and support, and professional services. Cloud revenue rose from 37% of total revenue in FY2024 to 51% in FY2026, with cloud infrastructure at 53% of cloud revenue in FY2026. The company has shifted from the FY2021 on-premise and cloud license model toward AI-enhanced cloud applications and infrastructure, as total revenue grew from $40.48B in FY2021 to $67.36B in FY2026 and capex from $2.13B to $55.66B.

  2. ✓ 2. Competitive advantage

    Oracle faces intense competition in all aspects of its business, per its FY2026 10-K, with major competitors including Microsoft, Amazon, SAP, and Salesforce, and low barriers to entry in many market segments. The company does not state a durable competitive advantage; key competitive factors are total cost of ownership, performance, and reliability. Despite competition, revenue grew from $40.48B in FY2021 to $67.36B in FY2026, and operating income from $15.21B to $20.61B (with a dip in FY2022). The sources lack margin or return data to assess the durability of any advantage.

  3. ✓ 3. 10-Q takeaways

    Oracle's Q1 FY2027 (ended Aug 31, 2026) revenue grew 30% y/y to $19.3B, driven by cloud infrastructure; total operating margin improved to 35% from 29%. Cloud and software segment margin declined to 55% from 60% on heavy infrastructure spending, and interest expense surged 55% to $1.4B. Guidance points to continued cloud revenue growth and elevated infrastructure investments, while the 10-Q risk factor update added no specific new risks.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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