Oracle stock has surged, but concerns about high valuation and slowing growth suggest a sell.

From Nasdaq: 2024-11-27 10:50:00

Oracle’s stock has surged 52.9% in the past six months, outperforming the sector and S&P 500. However, the high valuation of 8.61X sales raises concerns about future growth. Revenue estimates for 2025 show modest increases, indicating limited upside potential. Cloud revenue growth is slowing, and high CapEx could impact margins and cash flow.

The multi-cloud strategy with Amazon, Microsoft, and Google may indicate weakness in Oracle’s standalone cloud business. Concerns about financial performance include reliance on accounting changes to boost results. Debt levels and capital expenditure plans could strain the balance sheet. Risks include decelerating growth rates and margin pressure from infrastructure investments.

Investors should consider reducing positions in Oracle due to high valuation, slowing growth, and heavy capital expenditure commitments. Waiting for a better entry point is advisable. Oracle’s strategic initiatives show promise, but the current price level seems overly optimistic. The Zacks Rank is #4 (Sell). Watch for further updates on Zacks Investment Research.



Read more at Nasdaq: Is Oracle Stock a Buy, Sell or Hold at a P/S Multiple of 8.61X?