Ask Your Advisor: Should I upgrade my portfolio with Oracle?

Investing in businesses with a large moat, strategically built over time, can pay off big-time. The problem is finding those businesses reliably and not get distracted by exciting new trends that may not last.

Today we see a high-velocity shift driven by rapid cloud adoption, AI integration, cybersecurity demands, and the digital modernization of both private and public institutions.

Oracle Corporation is in the middle of it all. You may ask the same question sent to us by some clients: “Does Oracle deserve a spot in my bond portfolio?”

Here’s what you need to know.

Oracle Corporation is one of the world’s largest enterprise software and cloud infrastructure providers, with a dominant presence in:

• Database management systems (ranked #1 globally according to the DB-Engines Ranking)
• Cloud infrastructure and services
• Enterprise applications (finance, human resources, supply chain, and customer data)
• Hardware systems

The company operates primarily under a subscription-based revenue model, generating recurring and predictable income across software, infrastructure, and services.

Its end-users include a broad spectrum of banks, hospitals, telecom firms, governments, and multinational enterprises, underscoring the mission-critical nature of its technology.

Moreover, its credit rating is within two notches from investment-grade rating, according to some credit rating agencies.

1. Strong and consistent financial performance

Oracle continues to demonstrate steady growth across key financial metrics:

Oracle’s growing margins and declining leverage ratio reflect improved operational efficiency and disciplined cost management. The company’s broad enterprise footprint provides resiliency through economic cycles.

2. Deep market penetration and high switching sosts

Oracle’s database solutions remain industry-standard, particularly among large enterprises. Because its systems power essential business functions, from banking transactions to telecommunications billing, clients face high switching costs, making Oracle’s cash flows sticky.

Additionally, the company’s cloud-based applications and infrastructure services continue to be adopted by many enterprises as they migrate legacy systems to the cloud.

3. Significant growth catalysts ahead

Oracle is positioned to benefit from several powerful catalysts:

• USD 300-billion cloud contract with OpenAI. A major driver of future cloud infrastructure growth due to massive AI-related compute demand.
• Potential operational role in TikTok US. Expected to strengthen Oracle’s presence in high-security cloud services.
• Strong demand for enterprise cloud adoption. Particularly among governments, financial institutions, and regulated industries.
• Recent bond issuance met with strong investor reception, tightening 5 to 7 basis points, a sign of confidence in the company’s credit story.

Management has also reaffirmed its commitment to maintaining investment-grade status, recognizing that access to low-cost capital is essential for long-term strategic growth.

4. Improving leverage despite expansion

While Oracle carries large debt, leverage has improved steadily from 4.7x to 3.9x between 2023 and 2025. That means the company’s profits are growing much faster than its debt.

Though cash flows are expected to be soft in the near term due to major expansion and cloud infrastructure investments, these expenditures directly support high-growth verticals and long-term competitiveness.

5. Risk-adjusted opportunity with defensive characteristics

Key risks include:

• Large receivable exposure tied to the OpenAI contract
• Short-term negative cash flows
• Mixed rating outlook due to debt levels

However, these risks are tempered by:

• A strong track record of execution
• Highly diversified global customer base
• High recurrence of revenue
• Mission-critical nature of Oracle technologies

Oracle also has no history of calling bonds, and given the current rate environment and spread levels, early calls remain unlikely, supporting yield stability for investors.

Given the current interest rate environment and Oracle’s credit fundamentals, investors may consider the following bonds (as of the March 13, 2026 quotation):

For investors seeking:

• Shorter duration exposure, invest in ORCL 3.25 2027.
• Balanced yield and moderate tenor, invest in ORCL 4.80 2028.
• Higher yield pickup with longer tenor, invest in ORCL 6.15 2029.

Additionally, comparable bonds across peers show that Oracle offers competitive spreads, especially on an asset swap basis.

Oracle stands at the center of global digital infrastructure. It powers the databases, applications, and cloud systems that run the modern economy.

With consistent financial performance, strong industry positioning, and meaningful growth catalysts on the horizon, Oracle offers investors a unique blend of stability, defensiveness, and forward-looking opportunity.

If you wish to act on these opportunities, reach out to your Relationship Manager or Investment Specialist.

MARIA CHRISTINA “YNA” VIRTUDAZO is an Investment Counselor at Metrobank’s Institutional Investors Coverage Division. Her work involves analyzing High Net Worth clients’ portfolios and providing actionable insights and recommendations to better enhance their portfolios’ overall returns. She is a licensed Fixed Income Market Salesperson of the Securities and Exchange Commission and a certified Unit Investment Trust Fund (UITF) salesperson. She graduated with a bachelor’s degree in business administration from the University of the Philippines – Diliman. She spends her free time listening to K-pop, writing fanfiction, and watching Netflix series and K-dramas