Oracle Moves Up Pre-Market : (ORCL) Stock Gains on Strong Earnings and Guidance

Oracle's stock price (NYSE: ORCL) is riding a wave of momentum during this morning's pre-market, fueled by earnings that displayed robust cloud growth and strategic positioning in the burgeoning artificial intelligence (AI) landscape. ORCL is currently trading at $190, up 7.72% from yesteday's close as the tech giant's recent fourth-quarter fiscal 2025 results, coupled with ambitious forward-looking guidance, have sent ripples of optimism through Wall Street.

The company reported adjusted earnings per share of $1.70, comfortably exceeding the consensus estimate of $1.64. Revenue for the quarter landed at $15.9 billion, also surpassing expectations of $15.59 billion. These figures, while impressive, are merely the preamble to what Oracle's leadership believes is a period of accelerated growth.

CEO Safra Catz, in an uncharacteristically bold statement, declared that fiscal year 2026 will be “even better” than FY25, predicting a dramatic surge in revenue growth rates.

“FY25 was a very good year, but we believe FY26 will be even better as our revenue growth rates will be dramatically higher. We expect our total cloud growth rate, applications plus infrastructure, will increase from 24% in FY25 to over 40% in FY26.”

Safra Catz, Oracle CEO

The engine driving this optimism is Oracle's cloud business. Catz forecasts total cloud growth, encompassing both applications and infrastructure, to leap from 24% in FY25 to over 40% in FY26. Even more ambitious is the projection for Oracle Cloud Infrastructure (OCI), which is expected to see its growth rate climb from 50% to over 70% in the same period.

The remaining performance obligation (RPO), a key indicator of future revenue, is anticipated to grow by more than 100% in FY26, signaling strong demand and long-term commitments from customers. Chairman and CTO Larry Ellison echoed this sentiment, confidently asserting that Oracle is on track to become not only the world's largest cloud application company but also a dominant force in cloud infrastructure.

A significant catalyst for Oracle's cloud growth is its multi-cloud strategy. Ellison highlighted the impressive 115% growth in multi-cloud database revenue from Amazon, Google, and Azure between Q3 and Q4.

Oracle is aggressively expanding its multi-cloud footprint, with 23 data centers currently live and an additional 47 under construction over the next 12 months. This strategy allows customers to leverage Oracle's database technology across different cloud providers, offering flexibility and avoiding vendor lock-in. The growth of Oracle Cloud@Customer datacenters, up 104% year-over-year, further demonstrates the demand for Oracle's cloud services within customers' own data centers. Overall, OCI consumption revenue grew by a staggering 62% in Q4, and the company expects this growth rate to accelerate in FY26.

Oracle's strategic embrace of AI is also a crucial factor in its growth trajectory. The company is investing heavily in AI infrastructure, including partnerships with NVIDIA and significant capital expenditure on data centers.

What Do ORCL Bears Say?

While the prevailing narrative surrounding Oracle is overwhelmingly positive, a dose of skepticism is warranted. The projected growth rates, particularly for OCI, are exceptionally ambitious. Can Oracle truly sustain a 70%+ growth rate in OCI amidst intense competition and a potentially slowing global economy?

Furthermore, while Oracle's multi-cloud strategy is gaining traction, it also presents challenges. Managing data and applications across multiple cloud environments can be complex and costly for customers. There is a risk that Oracle's multi-cloud approach could become a niche offering rather than a mainstream solution.

While the company has made strides in simplifying its cloud offerings, lingering perceptions could hinder its long-term growth. The sheer scale of capital expenditure, $25 billion, also poses a risk if the returns on these investments do not materialize as anticipated.

What Next

Despite any potential headwinds, Oracle's Q1 guidance reinforces the bullish sentiment.

The company projects Q1 EPS of $1.44-$1.48, slightly below the consensus of $1.48, but anticipates revenue growth of 11%-13% and cloud revenue growth of 26%-30%.

Oracle's future success hinges on its ability to execute its ambitious growth strategy, navigate the competitive landscape, and maintain its technological edge. While the company's recent performance and optimistic outlook are encouraging, investors should remain vigilant and carefully assess the risks and opportunities before making investment decisions.