The cloud giant's stock looks cheap on earnings. So why would an index fund beat it?
The cloud giant's stock looks cheap on earnings.
So why would an index fund beat it?
Oracle (ORCL -4.64%) stock was near $130 as of this writing, about 60% off its record close at $328.33 on Sept. 10, 2025. Shares are down 33% this year, but the S&P 500 (^GSPC -1.09%) returned about 13% through September.
A fall this sharp makes the stock tempting, and on earnings it's arguably cheap.
But I think Oracle's cash flow statement matters more over the next few years. The cloud giant is spending more on its artificial intelligence (AI) build-out than its business takes in, and it plans to spend even more this fiscal year.
My prediction is that Oracle stock trails a fund tracking the S&P 500 from now through 2030.
The spending is still climbing
Oracle's spending already topped its cash last fiscal year (the company's fiscal years end May 31). Capital expenditures were $55.7 billion in fiscal 2026, while operating cash flow grew 54% to $32.0 billion. That put free cash flow at negative $23.7 billion.
The pace keeps rising. Quarterly capital expenditures climbed over most of fiscal 2026, from $8.5 billion in the first quarter to $18.6 billion in the third, before slipping to $16.5 billion in the fourth. Then spending surged to $28.5 billion in the fiscal first quarter of 2027 (the quarter ended Aug. 31, 2026), more than triple the year-ago total.
For the full fiscal year, management is still guiding for capital expenditures of $90 billion to $95 billion. Customers will fund part of that up front. Even net of customer prepayments and timing effects, though, Oracle plans to spend as much as $70 billion this fiscal year. On the same basis, it spent around $48 billion in fiscal 2026.
Averytin News Financial update.