1 Reason Today Might Be the Best Time to Buy Oracle Stock
Key Points
Oracle's remaining performance obligations increased 438% year over year in the recent quarter.
Analysts expect the company's revenue to grow at an annualized rate of 31% over the next five years.
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Oracle (NYSE: ORCL) shares currently trade about 43% below their recent highs. This sell-off comes amid accelerating demand for artificial intelligence (AI), with Oracle's remaining performance obligations increasing by 15% just over the previous quarter.
The accelerating growth in orders signals insatiable demand for AI cloud services, making now a great time to buy the stock while it's trading at a discounted valuation.
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Why buy Oracle stock
Chairman and Chief Technology Officer Larry Ellison said on the recent earnings call, "Training AI models on public data is the largest, fastest-growing business in history." Oracle's remaining performance obligations grew 438% over the year-ago quarter.
The amount of contracted revenue expected to be realized in the next 12 months increased 40% year over year, indicating that Oracle should experience accelerating revenue growth in the coming quarters.
Oracle is well-positioned to deliver returns to investors. Businesses are turning to its cloud services due to its leadership in database management and enterprise applications. The stock's current valuation undervalues Oracle's competitive position. The shares are trading at 28 times forward earnings estimates, which is not expensive for a business expected to grow at high-double-digit rates for the foreseeable future.
Analysts expect Oracle's revenue to grow at an annualized rate of 31% through fiscal 2030, which is likely to lead to exceptional growth in earnings per share and drive outstanding returns for investors.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.
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