Palantir Is Worth About as Much as Oracle on Less Than a Tenth of Oracle's Revenue
Palantir Is Worth About as Much as Oracle on Less Than a Tenth of Oracle's Revenue
Daniel Sparks, The Motley FoolWed, September 30, 2026 at 3:06 AM UTC
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Image source: Getty Images.Key Points -
Palantir's market cap of around $447 billion today is a bit over Oracle's $425 billion.
Palantir made around $3 billion in the past 12 months, while Oracle earned about $18.7 billion.
Oracle sold $20 billion in new stock last quarter to help fund its data center build-out.
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On the surface, Palantir(NASDAQ:PLTR) and Oracle(NYSE:ORCL) today have almost the same price tag. As I write, Palantir's market cap is about $447 billion with a share price near $186, while Oracle's is about $425 billion at about $140 a share.
Getting here took a brutal year for Oracle. Its stock has lost about half its value in the past 12 months, while Palantir's shares are up a little in the same stretch.
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Under these similar values, though, sit two very different companies. Palantir took in around $6.2 billion in revenue over the last 12 months, less than a tenth of Oracle's $71.8 billion. And it made around $3 billion, versus Oracle's $18.7 billion.
So investors paying around the same for both businesses are betting on very different amounts of future growth. I think one of these bets is much easier to win than the other.
Palantir: profits that nearly quadrupled
Showing how fast the data analytics software business is scaling, Palantir's net income rose from around $327 million in the second quarter of 2025 to about $609 million in the fourth quarter, then to about $1.06 billion in the second quarter of 2026. Over the past 12 months, profit was around $3 billion, nearly four times the $763 million it made in the previous 12 months. Management expects 2026 revenue of about $8.15 billion, around 82% higher than in 2025.
Palantir also ended June with about $9.2 billion in cash and short-term Treasuries and no borrowings on its balance sheet.
At around 160 times earnings, though, Palantir's stock costs over seven times as much as Oracle's per dollar of profit.
For Palantir to trade at Oracle's price-to-earnings ratio of about 22 without its share price dropping, it'd need to earn about $22 billion a year -- more than Oracle earns now. Getting there in five years would take profit growth averaging around 48% annually.
Granted, that rate is slower than what Palantir just posted. But five straight years of it is rare for any company, and rivals might make it tougher.
When Oracle reported quarterly results earlier this month, it introduced an AI data platform that it said "fully automates the creation of Enterprise Ontologies" (models of how a business and its data fit together). Oracle's own release credited Palantir with pioneering that approach.
Oracle: accelerating growth, negative cash flow
Oracle's growth has sped up, too. Revenue climbed 17% over fiscal 2026 (the year ended May 31, 2026). By the fiscal fourth quarter, year-over-year growth had accelerated to 21%. In the fiscal first quarter of 2027 (the period ended Aug. 31, 2026), revenue jumped 30% to $19.3 billion, driven by a 121% gain in cloud infrastructure revenue.
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Given that growth, Oracle's stock looks modestly priced. Management expects non-GAAP (adjusted) earnings per share of $8.10 this fiscal year, around 19% above the $6.83 it made in fiscal 2026 excluding one-time investment gains, including the sale of its stake in chip designer Ampere. Shares cost around 17 times that expected profit. Put another way, at this price, Oracle arguably doesn't need much growth after this year.
Oracle's issue is paying for that growth. In fiscal Q1, capital spending of $28.5 billion topped the $23.1 billion of cash its operations took in, and free cash flow over fiscal 2026 was a negative $23.7 billion. Plus, the company sold $20 billion of stock using an at-the-market program in the quarter, issuing around 141 million new shares and lifting its share count by about 5%. At the end of August, Oracle had about $125 billion of notes payable and other borrowings against about $37 billion of cash and marketable securities.
Which price is easier to justify?
Including debt and cash, the gap flips: the market values Oracle's whole business at about $505 billion, versus around $438 billion for Palantir.
Still, investors are asking much less of Oracle. At today's price, it mostly has to deliver the earnings management already expects, while Palantir has to grow its profit at around 48% a year for five years.
True, Palantir is arguably the better business. It kept 55% of its second-quarter revenue as net income, and it doesn't have Oracle's debt or its spending burden. But at a price-to-earnings ratio around 160, even years of strong results could fall short of what investors are paying for.
Of the two, Oracle's price is the easier one to live up to, and I think this makes it the more reasonable stock of the pair now. But I'd still want to see its spending start producing free cash flow before buying shares.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle and Palantir Technologies. The Motley Fool has a disclosure policy.
Source: “AOL Money”
