Oracle (ORCL) is riding high after releasing fiscal fourth-quarter results that exceeded Wall Street expectations and unveiling aggressive growth targets for the year ahead.
On Thursday morning, the tech giant’s stock surged over 13%, becoming the top performer in the S&P 500, with shares trading above $201—an all-time high. CEO Safra Catz struck a confident tone, forecasting “dramatically higher” revenue growth in fiscal 2026, powered by explosive demand for AI-focused cloud infrastructure.
A Strong Finish to Fiscal 2025
Oracle closed out its fiscal 2025 on a high note. The company reported adjusted earnings of $1.70 per share, beating analysts’ expectations by six cents. Revenue rose 11% year-over-year to $15.9 billion, marking its first quarter of double-digit growth in two years. The standout performer was Oracle’s cloud infrastructure unit, which saw sales jump 52% compared to the same period last year.
This performance helped lift investor sentiment, especially after Oracle had missed earnings expectations in three of the prior four quarters. The average analyst price target for Oracle stock climbed nearly $20 overnight to about $194.
Yet despite the positive results, the company is leaning into long-term investments rather than near-term profits. Oracle spent nearly $9.1 billion—roughly 60% of its revenue—on capital expenditures in the fourth quarter alone, pushing its full-year capex to $21.2 billion. It plans to increase that figure another 18% to $25 billion in fiscal 2026.
A Bold Bet on Cloud Infrastructure
Oracle’s strategy hinges on becoming a dominant player in cloud computing, particularly in powering artificial intelligence workloads. The company expects total cloud revenue to grow by 40% in fiscal 2026, up from 24% this year. Cloud infrastructure revenue is projected to rise more than 70%, up from 50% growth in fiscal 2025.
These aren’t just numbers—they represent a massive effort to capitalize on soaring enterprise demand for AI training and inference capabilities. Oracle’s data center business, which supports these functions, is expanding rapidly. According to Catz, the company is still turning away prospective clients because demand exceeds available capacity.
Chairman Larry Ellison was even more ambitious in his outlook. “Oracle will be the No. 1 cloud database company. Oracle will be the No. 1 cloud applications company. And Oracle will be the No. 1 builder and operator of cloud infrastructure data centers,” he declared during the earnings call.
A potential game-changer is Oracle’s participation in Project Stargate, a $500 billion U.S.-backed AI initiative that also involves OpenAI, SoftBank, and MGX. While Oracle hasn’t included Stargate’s contributions in its current growth forecasts, analysts believe the project could significantly boost future performance.
Can Oracle Deliver on Lofty Forecasts?
Analysts were quick to respond to Oracle’s bullish forecast. Jefferies, Guggenheim, and KeyBanc Capital Markets all raised their price targets, with some reaching as high as $225 per share. About 63% of analysts covering the stock now rate it a Buy—well above the S&P 500 average of 55%, per FactSet.
Still, there is some skepticism. KeyBanc’s Jackson Ader noted that Oracle fell short of its growth targets last year and may now be investing aggressively to catch up, rather than to meet real-time demand. However, he also acknowledged that the company’s backlog—its remaining performance obligations—is growing fast enough that it could still beat expectations. Oracle expects its backlog to double to $275 billion in fiscal 2026.
Even with negative free cash flow last year due to heavy spending, Oracle’s management maintains that long-term gains will justify the short-term squeeze. Guggenheim analyst John DiFucci said Oracle’s combination of cost efficiency and superior tech gives him confidence in its future free cash flow trajectory. Evercore ISI’s Kirk Materne also expressed support, though he warned that the company’s margin profile could come under pressure.
Conclusion
Oracle’s Q4 report marks a turning point for a company that had recently struggled to meet its own lofty targets. With AI and cloud infrastructure driving demand, the company is doubling down on its transformation into a cloud-first, AI-ready enterprise. While not without risk—especially with negative free cash flow and sky-high capex—the enthusiasm on Wall Street signals growing belief in Oracle’s long-term vision. Investors will now wait to see if Oracle can turn forecasts into results.
Analysts were quick to respond to Oracle’s bullish forecast. Jefferies, Guggenheim, and KeyBanc Capital Markets all raised their price targets, with some reaching as high as $225 per share. About 63% of analysts covering the stock now rate it a Buy—well above the S&P 500 average of 55%, per FactSet.
Still, there is some skepticism. KeyBanc’s Jackson Ader noted that Oracle fell short of its growth targets last year and may now be investing aggressively to catch up, rather than to meet real-time demand. However, he also acknowledged that the company’s backlog—its remaining performance obligations—is growing fast enough that it could still beat expectations. Oracle expects its backlog to double to $275 billion in fiscal 2026.
Even with negative free cash flow last year due to heavy spending, Oracle’s management maintains that long-term gains will justify the short-term squeeze. Guggenheim analyst John DiFucci said Oracle’s combination of cost efficiency and superior tech gives him confidence in its future free cash flow trajectory. Evercore ISI’s Kirk Materne also expressed support, though he warned that the company’s margin profile could come under pressure.
Conclusion
Oracle’s Q4 report marks a turning point for a company that had recently struggled to meet its own lofty targets. With AI and cloud infrastructure driving demand, the company is doubling down on its transformation into a cloud-first, AI-ready enterprise. While not without risk—especially with negative free cash flow and sky-high capex—the enthusiasm on Wall Street signals growing belief in Oracle’s long-term vision. Investors will now wait to see if Oracle can turn forecasts into results.
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