Oracle Q1: 20x Earnings Is Too Cheap For 120% Cloud Growth

Kenio Fontes 3.16K Followers Follow Summary Oracle Corporation delivered solid Q1 results, with revenue of $19.35B and EPS 10% above expectations, supporting a continued buy rating. Cloud infrastructure led with 121% growth, driving total cloud revenue up 62% YoY to 60% of total revenue, offsetting legacy business declines. Operating income rose 57% on 30% revenue growth, but heavy CapEx of $28.5B outpaced operating cash flow, resulting in negative proxy free cash flow. Despite volatility and high CapEx, ORCL’s forward P/E of 19–20x is attractive given strong AI-driven growth and the potential for EPS compounding at a 30–40% CAGR. Mesut Dogan/iStock Editorial via Getty Images Since my last article on Oracle Corporation ( ORCL ), the stock has declined roughly 14%. Even if the picture of other timeframes is uglier (such as a 54% decline in the last year), I believe that This article was written by Kenio Fontes 3.16K Followers Follow Equity Research Analyst with a broad career in the financial market, covered both Brazilian and global stocks. As a value investor, my analysis is primarily fundamental, focusing on identifying undervalued stocks with growth potential. Feel free to reach out for collaborations or to connect! Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.