Oracle Stock Surges to All-Time High After Strong Earnings
Oracle's shares soared nearly 15% on Thursday, hitting a record closing price and marking their best one-day performance since 2021. The surge follows the company's impressive fiscal fourth-quarter results and an upbeat forecast, both driven by robust growth in its cloud business.
Quarterly Results Exceed Expectations
Revenue for Oracle rose 11% year-over-year, reaching $15.9 billion — surpassing the consensus estimate of $15.59 billion. Adjusted earnings per share came in at $1.70, topping analysts’ predictions of $1.64. These solid numbers have prompted several analyst firms to raise their price targets, with one notable upgrade pushing the target up to $190 from $130.
Cloud Business Growth Spurs Optimism
Oracle’s increasing footprint in cloud infrastructure is at the heart of its momentum. Although Oracle’s cloud revenue, at around $3 billion in the recent quarter, remains smaller than major players like Google—which clocks over $12 billion in cloud-related sales—its growth rate is notably faster. Moreover, Oracle is gaining traction by enabling its database services across multiple cloud platforms, a factor its Chairman highlighted:
“The growth rate in multi-cloud is astonishing... Our database is moving rapidly to the cloud, empowered by AI capabilities, and customers can run it wherever they prefer,” he said.
Promising Long-Term Revenue Pipeline
Oracle’s remaining performance obligations (RPO)—a forward-looking metric for expected recognized revenue—climbed 41% year-over-year to $138 billion. CEO Safra Catz forecasted that RPO could more than double by fiscal 2026, with revenue projected to exceed $67 billion, outperforming the consensus estimate.
Looking further ahead, Oracle is anticipating revenues surpassing $104 billion by fiscal 2029, a target set last year. These ambitious goals are partly buoyed by emerging opportunities such as OpenAI’s Stargate AI data center project, which aims to inject $500 billion into AI infrastructure over four years. While Stargate's contributions are not yet factored into current revenue forecasts, Oracle’s leadership acknowledges their potential to significantly accelerate growth.
Challenges in Meeting Cloud Demand
Despite the promising outlook, Oracle faces hurdles around capacity constraints. CEO Catz acknowledged that "demand continues to dramatically outstrip supply," especially in sourcing key hardware like graphics processing units. This imbalance tempers expectations for near-term acceleration, as some analysts caution about the potential impact on growth momentum.
For instance, RBC analysts, while raising their price target to $195 from $145, emphasize caution, noting the challenges in capacity could limit meaningful acceleration soon.
What’s Next for Oracle?
Oracle’s remarkable stock rally and improved forecasts underscore a broader transformation as it strengthens its position in the competitive cloud market. By embracing multi-cloud deployment and harnessing AI innovations within its database services, the company is riding a new wave of enterprise demand arguably unmatched since the internet boom of the late 1990s.
However, sustained success will depend on addressing supply constraints and capitalizing on massive investments in emerging AI infrastructures. The months ahead will be critical for Oracle to deliver on these prospects and justify the rising investor confidence reflected in its soaring stock price.
