Oracle’s momentum reflects a key competitive advantage in the cloud market: data security. Enterprises want to use AI to boost productivity, but it’s also essential that they keep their data private and secure when using AI models from OpenAI, Anthropic, and others. <\/p>\n Its cloud infrastructure is differentiated from other hyperscalers through its secure data-isolation architecture. This separates the cloud control computers from the customer’s compute nodes. This allows an enterprise to control its data behind its own firewall, which seems to be a key selling point driving greater demand for Oracle’s cloud business. <\/p>\n Oracle provides the data center infrastructure for AI training and inference, along with industry expertise for running enterprise software. It essentially serves as the customer’s digital hub. <\/p>\n CEO Mike Sicilia hinted at a huge opportunity for Oracle<\/a>: \u2028”We’re on the front end of one of the most interesting times in the technology business.” Oracle’s cloud revenue trajectory in recent quarters suggests that customers are moving past the testing stage of AI and actively implementing it to run their businesses. <\/p>\n Growth and value outweigh the risks <\/p>\n Building data centers is capital-intensive. Oracle’s capital expenditures are growing faster than the cash it is generating from operations. It has also issued more debt to fund its data center build-out. Its total debt has increased by $57 billion over the last year, while its free cash flow has tanked to negative $23.7 billion on a trailing 12-month basis. <\/p>\n Story Continues <\/p>\n The lower free cash flow and higher debt load have raised concerns around Oracle’s financial health<\/a>. However, the company’s debt-to-equity ratio has declined from 5.3 to 3.9. This shows Oracle shifting from a debt-heavy business to an asset-heavy one focused on owning data center infrastructure for an AI-driven economy. <\/p>\n Importantly, Oracle is not spending without contracts in place. Remaining performance obligations, which are contracted revenue, ended the quarter at $638 billion. Once the data center infrastructure is in place and Oracle fulfills this demand, earnings and free cash flow should grow significantly. <\/p>\n The stock’s forward price-to-earnings multiple has dropped to 17, while analysts have raised their earnings growth estimates to 28% annually over the next few years. The stock looks undervalued, but, of course, the shares could hit new lows before rebounding. <\/p>\n A slowdown in data center spending is a risk that would likely pressure the stock. But from a long-term perspective, the company’s advantages in the cloud market and lower valuation could deliver outstanding compounding returns for investors. <\/p>\n Should you buy stock in Oracle right now? <\/p>\n Before you buy stock in Oracle, consider this: <\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Oracle wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. <\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $396,542!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,299,961!* <\/p>\n Now, it’s worth noting\u00a0Stock Advisor’s total average return is 931% \u2014 a market-crushing outperformance compared to 210% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of July 15, 2026. <\/p>\n John Ballard<\/a> 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<\/a>. <\/p>\n<\/a> Image source: The Motley Fool. Oracle’s cloud advantage <\/p>\n