Oracle's Cloud Infrastructure Surge Positions It as a Potential AI Revolution Winner

1 Magnificent Growth Stock to Buy Before It Soars Higher After This Event | The Motley Fool

Oracle (ORCL -2.73%) stock has been in fine form on the market over the past couple of months, gaining 77% from its April 21 52-week low. And it looks like this technology giant is primed for more upside following the release of its latest quarterly report. Oracle reported its fiscal 2025 fourth-quarter results (for the three months ended May 31) on June 11. The market reacted positively, pushing the price higher for reasons that aren't all that surprising. Oracle, which made its name by selling database management software, now benefits from the tremendous demand for its cloud infrastructure services. The company not only delivered better-than-expected numbers, but it also issued solid guidance that points toward an even better year. Let's take a look at Oracle's latest report and why it may be a good idea to buy the stock right away. Oracle ended fiscal 2025 with $57.4 billion in annual revenue, up 9% in constant currency terms. The company expects to deliver at least $67 billion in revenue in fiscal 2026 (a jump of almost 17%). Don't be surprised to see Oracle clock even stronger growth, as only some of the company's artificial intelligence (AI)-related catalysts are baked into the guidance. On the earnings call, Oracle Chief Technology Officer Larry Ellison said that the company's revenue pipeline could be much larger than what it is projected in the earnings report. The cloud giant reported a 41% year-over-year increase in its remaining performance obligations (RPO) in fiscal Q4 to $138 billion. RPO refers to the total value of Oracle's contracts that are yet to be fulfilled at the end of a quarter, and the massive increase in this metric explains why it is expecting a stronger top-line increase this year. CEO Safra Catz projects the company's RPO will more than double in fiscal 2026, outpacing the projected growth in its revenue, which can set the stage for years of strong growth for the company. This massive increase in Oracle's RPO can be attributed to the stunning demand for its cloud infrastructure, which is being used for AI training and inference purposes by customers. According to Ellison, Oracle could be understating its RPO if the $500 billion Stargate AI infrastructure project it is a part of pans out as expected. Oracle is one of the key technology partners and funders of the OpenAI-led venture that's backed by SoftBank and Abu Dhabi-based MGX, and it will "closely collaborate to build and operate" AI infrastructure as a part of this project. Meanwhile, the booming demand for cloud AI infrastructure to train and deploy AI applications in general is going to be a long-term tailwind for Oracle, which is finding it difficult to deploy enough capacity to meet the demand. Ellison told analysts on the earnings call that one of its customers wanted to buy Oracle's entire cloud capacity. Not surprisingly, Oracle is going to build 30 dedicated data centers in fiscal 2026, apart from the existing 29 that it already has. It also plans to increase its MultiCloud data centers, which it operates with other major cloud computing providers such as Amazon, Alphabet's Google, and Microsoft, from the current strength of 23 by building another 47 MultiCloud data centers over the next year. This focus on capacity expansion is the reason why the company is forecasting Oracle Cloud Infrastructure (OCI) revenue to grow at a faster pace of 70% in fiscal 2026, following a 50% jump last year. In all, Oracle could be at the beginning of a terrific growth curve, considering the potential catalysts such as Stargate and the opportunity in the cloud infrastructure-as-a-service (IaaS) market that's expected to generate a whopping $712 billion in revenue by 2032, growing at an annual rate of 21%. Oracle delivered non-GAAP (adjusted) net income of $6.03 per share in fiscal 2025, an increase of 8.5% from the prior year. Investors should note that the company's capital expenses more than tripled during the year to $21.2 billion. Its forecast of $25 billion in capital expenses for fiscal 2026, which points toward a slower increase from last year, explains why analysts expect faster bottom-line growth from Oracle this year, and beyond. Moreover, the company seems on its way to crushing its own long-term expectations. Oracle pointed out last year that it expects to hit $66 billion in revenue in fiscal 2026, but its forecast points toward a bigger jump. Also, Oracle expects its bottom line to grow at an annual pace of more than 20% through fiscal 2029. Oracle could eventually do better than that as the market it is serving is massive and the revenue pipeline it is building is remarkable. All this makes Oracle a top AI stock to buy right now as it is trading at just 31 times forward earnings. That's in line with the Nasdaq-100 index's earnings multiple, suggesting that investors can buy Oracle right now at a very attractive valuation, considering the healthy upside it could deliver in the long run.

Could This Cloud Company Be a Surprise Winner of the AI Revolution? | The Motley Fool

Artificial intelligence (AI) stocks have led the overall market higher over the past couple of years as investors bet on the ability of AI to supercharge companies' growth, and the movement continues. The AI market, set to reach into the trillions of dollars in a few years, still is in its early stages, and today's most-watched players, such as Nvidia and software company Palantir Technologies, won't be the only ones to benefit. In fact, cloud company Oracle (ORCL -2.11%) could be a surprise winner of the AI revolution, and here's why. So, first, a little background on Oracle. The company has been around since the late 1970s and has become a leader in database management software. But Oracle didn't stand still and has since expanded into various areas, for example bringing its database to the cloud in 2013, and in more recent times, providing cloud infrastructure for AI customers. Over time, this has helped Oracle increase both annual revenue and net income into the billions of dollars -- and in recent years, both have taken off amid the AI boom. Customers come to Oracle for cloud capacity, and what sets this player apart is that it provides them with great flexibility. For example, Oracle offers a multicloud service that allows users the opportunity to simultaneously use services from various cloud providers together. Another option, Oracle Alloy, lets customers operate their own clouds for their customers. On top of this, Oracle also offers a full portfolio of AI-driven cloud applications to help with everything from supply chain management to customer relations. Now, let's consider the clues that suggest Oracle will be a surprise winner of the AI revolution. First, I'm saying "surprise" winner because Oracle hasn't been as much in the spotlight as the tech giants known as the Magnificent Seven. These players led market gains last year, and most are heavily present in the area of AI. Meanwhile, Oracle's AI business has been growing in leaps and bounds, pushing it into the league of those AI leaders. I'll use the recent quarter as an example. Oracle's cloud infrastructure revenue soared 52% to $3 billion, and all other segments also generated double-digit growth. But one of the most encouraging figures of all is the remaining performance obligations (RPO), or the yet-to-be billed revenue coming from signed contracts -- it's important because it offers us visibility on revenue ahead. In the quarter, Oracle said RPO surged 41% to $138 billion. Finally, another clue that makes me optimistic about the future is a comment made by chairman and chief technology officer Larry Ellison. In the recent earnings call, Ellison said demand for cloud infrastructure "seems almost insatiable." He added: "I mean I don't know how to describe it. I've never seen anything remotely like this." Ellison offered an anecdote, saying a recent customer asked for all of Oracle's available capacity regardless of its location. It's important to note that messages from other leading tech companies support Ellison's comments. Leading chip designer Nvidia has spoken of soaring demand for its chips, and AI players such as Meta Platforms and Alphabet have reiterated their multi-billion-dollar AI spending plans for the year. AI software analysis company Palantir also has spoken of unrelenting demand in recent quarters. All of this illustrates the strength of AI demand -- and the AI market growth forecast I mentioned earlier implies the momentum should continue for quite some time. Now, let's consider Oracle's valuation. Today, the stock trades for 29 times forward earnings estimates, down from a high of more than 30 but above its average level over the past year. But it's key to remember the following: Revenue has been surging, the current valuation is reasonable for a growth stock, and the points I've talked about above should support further growth. All of this means that Oracle, so far a company that hasn't drawn the most attention in this AI race, could become a surprise winner of the AI revolution as it unfolds.

Better Artificial Intelligence (AI) Stock: CoreWeave vs. Oracle | The Motley Fool

The demand for cloud computing infrastructure used to help train artificial intelligence (AI) models and deploy them into production is increasing at an incredible pace. It's one of the main reasons why shares of CoreWeave (CRWV -7.63%) and Oracle (ORCL -2.20%) have been in fine form on the stock market in 2025. Both companies rent out AI-focused data centers powered by premium graphics processing units (GPUs) from the likes of Nvidia, AMD, and others. To meet the increasing demand, both companies are quickly adding significant new data center capacity. The size of the cloud infrastructure market is expected to grow from around $178 billion this year to more than $1.1 trillion in 2033, with AI set to play a key role in this remarkable growth. Oracle and CoreWeave aim to help investors take advantage of this massive opportunity. Both stocks have real potential for outsized performance, but if you have to choose just one of these AI stocks, which one should you buy? Let's find out. Oracle's stock price is up 50% over the past 12 months, and it seems set for more upside going forward, given the impressive pace at which the demand for its cloud infrastructure is increasing. The company released its fiscal 2025 fourth-quarter results (for the three months ended May 31) earlier this month, and it reported a solid 41% year-over-year increase in its remaining performance obligations (RPO) to a whopping $138 billion. RPO refers to the total value of a company's contracts yet to be fulfilled, which means that Oracle is sitting on a huge revenue pipeline that could help it grow at a much stronger pace following last year's top-line increase of 8% (totalling $57.4 billion). Not surprisingly, Oracle expects its revenue growth rate in fiscal 2026 to almost double. The company's Oracle Cloud Infrastructure (OCI) segment will play a central role in driving this acceleration as its revenue is expected to increase by 70% in fiscal 2026, following a 51% increase in fiscal 2025. What's more, Oracle management points out that it may be understating its RPO growth as the contracts from the $500 billion Stargate AI infrastructure project are yet to reflect in its revenue pipeline. As a result, Oracle is going to continue investing aggressively in building more capacity, increasing its capital expenditure to about $25 billion in the current fiscal year from just above $21 billion in the previous one. The company points out that its revenue and earnings growth will keep getting better as it brings online more data centers to satiate the AI-fueled demand for cloud infrastructure. So, it is easy to see why analysts have raised their revenue growth expectations from Oracle and are expecting its top-line growth to gather stronger momentum over the next couple of fiscal years. As such, Oracle is set to remain a top cloud AI stock going forward, but can it outperform CoreWeave? While Oracle is an established player in the cloud infrastructure market, CoreWeave went public in March of this year. What's worth noting is that CoreWeave stock has delivered phenomenal gains of more than 300% to investors in its short life as a public company, and that's not surprising as the company has been growing at a stunning pace. CoreWeave released its Q1 results in May, and it reported a massive 420% year-over-year increase in revenue to $981 million. Just like Oracle, the company's revenue backlog has been increasing at a nice pace, and it is focused on adding more capacity to meet the booming demand for its cloud AI infrastructure. CoreWeave ended Q1 with a revenue backlog of almost $26 billion, up by 63% from the year-ago period. This was faster than the growth in Oracle's RPO. Major tech giants such as OpenAI and IBM have been tapping CoreWeave's infrastructure for AI model training and running inference applications. OpenAI, for instance, signed a deal worth $11.2 billion with CoreWeave last quarter. Additionally, one of its existing customers extended its contract with CoreWeave to the tune of $4 billion. This explains why the company is scrambling to increase its data center capacity. It is forecasting $20 billion to $23 billion in capital expenditure this year as compared to last year's outlay of $8.3 billion. CoreWeave's capex, therefore, will be close to what Oracle is planning in the current fiscal year. That's a smart thing to do, considering the impressive revenue backlog that CoreWeave is sitting on. It is worth noting that CoreWeave intends to increase its data center power capacity by almost 4x based on its current contracts, which should enable the company to meet the fast-improving end-market demand. CoreWeave's revenue forecast of $5 billion for the current year points toward a big increase from last year's top line of $1.9 billion. As the company brings online more capacity, it is easy to see why its revenue growth is expected to remain robust over the next couple of years as well. CoreWeave sees its addressable market reaching a whopping $400 billion by 2028, so the probability of faster growth in the company's top line cannot be ruled out, thanks to its aggressive capacity expansion. Hence, there is a good chance that CoreWeave's growth will be much faster than that of Oracle's going forward. While both companies are set to grow at a healthy pace, CoreWeave's growth is on track to outpace Oracle's by a huge margin. However, investors will have to pay a rich premium to buy CoreWeave stock as it is trading at just under 30 times sales, which is almost 3x when compared to Oracle's price-to-sales ratio. Also, CoreWeave isn't profitable yet because of the huge investments that it is making in AI infrastructure, though analysts expect it to get into the black in the next couple of years. Oracle, on the other hand, trades at 30 times forward earnings, which is just above the 28.6 times forward earnings that the tech-laden Nasdaq-100 index is trading at. The good part is that Oracle's earnings are expected to increase at a faster pace of 21% in the next fiscal year, following a 12% jump in the current one. So, investors looking for an AI stock that isn't all that expensive but has the potential to deliver steady growth can consider taking a closer look at Oracle. Meanwhile, those looking for potentially bigger gains and are willing to pay an expensive multiple could be interested in CoreWeave stock, given its tremendous growth, which seems sustainable.

Oracle: Maintaining Buy Rating On Strong OCI Momentum And Unique Position In Multi-Cloud

While high CapEx and debt levels are risks, they reflect surging demand; the Stargate project could further accelerate Oracle's leadership in AI cloud infrastructure. A few months ago, I published the article The Cloud Underdog? Why Oracle's 3% Market Share Signals a Strong Upside. In this article, I explained why I believe Oracle (NYSE:ORCL) has the potential to expand its I am a 33-year-old investor and former hedge fund trader with a background in software engineering and finance. My career began in a small investment house where I trained as an analyst, gaining fundamental insights into the financial markets. I then transitioned into programming, working as a software engineer at Check Point, where I sharpened my technical skills. This combination of analytical and technical experience eventually led me to a hedge fund, where I traded U.S. equities for seven years, specializing in long-short strategies focused on macroeconomic trends and tech stocks. My primary area of expertise lies in growth stocks within the technology sector. I seek out companies with the potential for above-market returns over the medium term, prioritizing innovation, scalability, and market disruptiveness. Additionally, I employ a long-short strategy on indices, leveraging macroeconomic analysis to navigate market cycles. I am motivated to write on Seeking Alpha to share insights and analyses that offer investors a balanced view of market opportunities and risks. My goal is to build a community of informed readers who can benefit from my approach to growth stocks and macroeconomic trends. Analyst's Disclosure:I/we have a beneficial long position in the shares of ORCL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.