Downgrade Oracle Stock Amid Elevated Valuations

29 days ago

Parkev Tatevosian, CFA

"When the forward PE jumped to around 50 is when I started sending out alarm signals and I downgraded Oracle stock. Remember to start 2025 I had rated Oracle stock as one of the best stocks to buy this year and after the price increased by 50% and the valuations reached these upper levels I downgraded Oracle stock and warned investors that the valuation is getting stretched but now it's back down at near 25 where it was trading at to begin the year and Oracle is arguably in a better position today than it was to begin 2025 because the company has signed significantly more orders. They've delivered on a large percentage of those orders and the overall industry for artificial intelligence turned out the demand even though it was exceptionally high coming into 2025. The results were even better than expected if you can imagine right."

The speaker explains that after Oracle's forward PE spiked from around 25 to 50, he issued alarm signals and downgraded the stock, citing stretched valuations and concerns over Oracle's ability to convert massive orders into profits. Despite the downgrade, he notes that the current valuation has normalized and the company appears in a better position relative to the start of 2025 due to significant order bookings and improved AI demand, although the elevated capital expenditure continues to raise concerns.

Related Stocks