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Oracle vs Microsoft Stock: Is Oracle Really Cheap in 2026?

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Oracle vs Microsoft Stock: Is Oracle Really Cheap in 2026?

Independent research for informational purposes only. Not investment advice.

All calculations presented in this article are based on data sourced from SEC filings and the company’s official website.

The Short Answer of Oracle vs Microsoft Stock

As of 21 Oct 2026MicrosoftOracle
Share price$531.87$131.14
Market value$3,949B$398B
Net debt as % of market value, FY2026 year-end1.3%35.3%
P/E, last four quarters29.5x21.0x
Return on operating capital, FY202629.8%14.7%
Long-run growth the price assumes7.40%7.24%
Price change, 12 months+2.7%−52.3%

Is Oracle Really the Cheaper Stock?

Last four quartersMicrosoftOracleGap
P/E (market value ÷ net income)29.5x21.0x8.5 turns
P/E on enterprise value (÷ operating income after tax)29.8x26.3x3.5 turns

What Each Company Earns on Its Capital

FY2026MicrosoftOracle
Profit margin (operating income after tax ÷ sales)38.4%32.4%
Turnover (sales ÷ average operating capital)0.78x0.45x
Return on operating capital29.8%14.7%
Three bar charts comparing Oracle and Microsoft for FY2026: Oracle has a lower after-tax profit margin (32.4% vs 38.4%) and slower capital turnover (0.45× vs 0.78×), so its return on operating capital is 14.7% against Microsoft's 29.8%, about half, though still above the 10% capital cost.
Three line charts comparing Oracle and Microsoft from FY2022 to FY2026: after-tax margins rose (Oracle 22.7% to 32.4%, Microsoft 36.5% to 38.4%), but capital turnover fell (Oracle 0.86× to 0.45×, Microsoft 1.69× to 0.78×), so returns on operating capital declined, Oracle from 19.6% to 14.7% and Microsoft from 61.7% to 29.8%.

What Growth Each Price Is Assuming

Long-run growthMicrosoft value per share% of priceOracle value per share% of price
2%$213.0240.1%$53.5240.8%
3% (Conservative case)$234.9444.2%$59.3745.3%
4%$264.1749.7%$67.1751.2%
5% (Base case)$305.0957.4%$78.0959.6%
6%$366.4668.9%$94.4772.0%
7% (Growth case)$468.7688.1%$121.7792.9%
7.5%$550.59103.5%$143.61109.5%
8%$673.35126.6%$176.37134.5%
Growth the price assumes7.40%100%7.24%100%

Why Oracle’s Stock Swings So Hard

Why Did Oracle Stock Fall Over 50% While Microsoft Hit a Record?

DateOracle priceGrowth assumedMicrosoft priceGrowth assumed
21 Oct 2025$275.159.07%$517.667.90%
21 Jan 2026$173.888.51%$444.117.50%
21 Jun 2026$184.298.09%$379.407.02%
21 Jul 2026$127.057.13%$397.756.37%
21 Oct 2026$131.147.24%$531.877.40%
Line chart of long-run growth implied by price at a 10% required return, 21 Oct 2025 to 21 Oct 2026: Oracle falls from 9.07% to 7.24% (−1.83 points) after its share price drops 52.3%, while Microsoft slips from 7.90% to 7.40% (−0.50 points) and ends slightly above Oracle.

Who Pays for the AI Build-Out, and Is the Dividend Covered?

FY2026MicrosoftOracle
Cash from operations$182.9B$32.0B
Capital spending$115.9B$55.7B
Left over+$67.0B−$23.7B
Operating capital growth+37%+50%
Net debt, prior year → year-end$17.6B → $52.0B$97.7B → $140.5B

Microsoft used its own funds and had $67.0 billion remaining. Oracle spent $23.7 billion more on capital than its operations brought in. Microsoft’s cloud spending is also covered in our Microsoft vs Amazon AWS cloud growth comparison. However, in June–August 2026, it issued new shares worth approximately $19.9 billion, according to its Q1 FY2027 report.

For an owner, it’s the difference between growing a bakery from savings and on a loan. This is the question behind most AI spending today, and we look at it across the big names to see whether AI stocks are a good investment in 2026.

Dividend Check: Oracle vs Microsoft

DividendMicrosoftOracle
Quarterly dividend per share$0.98$0.50
Yearly rate$3.92$2.00
Yield at 21 Oct 2026 price0.74%1.5%
Yearly cost at current rateAbout $29.1BAbout $6.0B
FY2026 cash left after capital spending+$67.0B−$23.7B
Covered by that cash?Yes, 2.3 timesNo

How Much of Each Backlog Rides on OpenAI?

ORCL vs MSFT: Latest Quarters Side by Side

Latest quarterMicrosoft, Apr–Jun 2026Oracle, Jun–Aug 2026
Sales$90.0B$19.3B
Sales growth vs a year earlier17.7%29.6%
Operating capital growth vs a year earlier36.9%60.8%
Return on operating capital, last four quarters29.8%14.6%

What Could Go Right or Wrong

Growth Case and Conservative Case

 Growth caseConservative case
OracleReturn climbs from about 15% to 20%: today’s price needs only about 5.0% growthReturn stays near 15%, growth settles at 3%: $59.37, or 45% of price
MicrosoftReturn stays near 30%, growth runs at 7.5%: $550.59, or 104% of priceReturn slides to 20%: today’s price needs about 8.6% growth

The Bottom Line

Frequently Asked Questions

Is Microsoft bigger than Oracle?

Yes. As of 21st October 2026, the market capitalization of Microsoft stands at $3,949 billion, whereas Oracle’s is $398 billion, representing a ratio of nearly 10:1. Microsoft’s sales of $90.0 billion in the latest reported quarters (April–June and June–August 2026) were about 4.7 times Oracle’s $19.3 billion.

Is Oracle stock cheap right now?

On P/E, yes: 21 times earnings vs. Microsoft’s 29.5. Count its debt and the gap narrows to 26.3 versus 29.8. Oracle’s price still assumes 7.24% long-run growth, less than Microsoft’s 7.40% growth, but on half the return on capital.

Why is Oracle stock down so much over the past year?

It wasn’t due to the fact that sales dropped; they increased 29.6% in the latest quarter. In FY2026, Oracle’s capital expenditure exceeded its operating cash flow by $23.7 billion, net debt increased to $140.5 billion, and return on operating capital dropped to 14.7%.

How exposed are Oracle and Microsoft to OpenAI?

Both are exposed in reality. A substantial proportion of Oracle’s backlog is reported to be from OpenAI, and Microsoft is reportedly a significant investor and partner of OpenAI. For accurate, up-to-date numbers, refer to the most recent filing by each company.

Did Warren Buffett ever own Oracle stock?

Yes, briefly. In July–September 2018, Berkshire Hathaway acquired approximately 41.4 million Oracle shares, valued at approximately $2.1 billion at 30 September 2018. It exited the whole stake in October–December 2018, as its next quarterly filing showed on 14 February 2019.

Sources

Company filings and announcements

  • Oracle Q1 FY2027 earnings release tables (8-K Exhibit 99.1)
    About $19.9B of new shares issued in Jun–Aug 2026
    View Source
  • Oracle Form 8-K, 10 Sep 2026
    $0.50 quarterly common dividend and $1,625 preferred dividend
    View Source
  • Oracle Form 10-Q, quarter ended 31 Aug 2026
    3,023,736,000 common shares at 7 Sep 2026
    View Source
  • Oracle Form 10-Q, quarter ended 28 Feb 2026
    Mandatory convertible preferred terms (50,000 shares, $100,000 each)
    View Source
  • Microsoft press release, 15 Sep 2026
    Quarterly dividend raised to $0.98
    View Source

News coverage

  • Fortune, 14 Feb 2019
    Berkshire Hathaway exits its Oracle stake
    View Source
  • CNBC, 14 Feb 2019
    Berkshire Hathaway exits its Oracle stake
    View Source

About the Author

Usama Ali

Usama Ali is the founder of Financial Beings and an independent equity analyst active since 2020. His work is influenced by Benjamin Graham, Stephen Penman, Aswath Damodaran, Peter Lynch, and behavioral finance research from Daniel Kahneman, focusing on valuation and market expectations.

Disclaimer & Editorial Disclosure

The content published on Financial Beings is for informational and educational purposes only. It does not constitute financial, investment, legal, or other professional advice, and should not be construed as a recommendation or solicitation to buy, sell, or hold any security or financial instrument.

Financial Beings is an independent editorial publication and is not registered as an investment adviser with any regulatory authority, including the SEC, BaFin, or any other financial supervisory body. All analysis reflects the independent views of the author based on publicly available data, including SEC filings and official company websites.

All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Market conditions, valuations, and company fundamentals may change materially after the date of publication.

Financial Beings does not accept sponsored content, paid stock promotions, or compensation from any company discussed in its research. The author holds no positions in the securities discussed in this article unless explicitly stated otherwise. Readers should conduct their own independent research and consult a qualified financial adviser before making any investment decision.

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