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ORCL's Cloud Database Gains Steam: Is it the Next Revenue Pillar?
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Key Takeaways
ORCL expects cloud database services to become its third key pillar of long-term revenue growth.
Autonomous database revenues jumped 47% as ORCL ramps up migration to scalable cloud solutions.
ORCL plans $25B in FY26 capex to build 47 multi-cloud centers and meet $138B in obligations.
Oracle (ORCL - Free Report) has taken critical steps to advance its database capabilities. As the company experiences enterprise shifts from on-premise databases to the cloud, it anticipates cloud database services to become the third pillar for revenue growth.
In the fourth quarter of fiscal 2025, cloud database services rose 31% year over year and now have annualized revenues of $2.6 billion as usage continues to grow.
ORCL’s launch of the Oracle 23 AI platform has enhanced enterprise functionality through secured training of business data with AI models. The company’s flexibility to run its databases anywhere, with embedded AI and analytics via training of popular models, explains its growing popularity among enterprises seeking scalable and secure solutions globally.
To further boost its database command, ORCL is actively migrating customers to its Autonomous databases, which are designed to be more self-managing and cost-efficient. This transition has been visible, as Autonomous database consumption revenues rose 47% on top of 27% growth reported last year. These initiatives are expected to drive cloud consumption, directly impacting top-line growth.
ORCL’s capital expenditure for fiscal 2026 is expected to exceed the $25 billion mark, with a focus on building 47 multi-cloud data centers. This infrastructure expansion is critical for supporting the surging demand for Autonomous databases and Oracle 23AI, as well as fulfilling the $138 billion in remaining performance obligations.
Our model estimate for ORCL’s fiscal 2026 cloud services and license revenues is pegged at approximately $52 billion, indicating year-over-year growth of 17.3%.
ORCL Faces Stiff Competition in the Cloud Segment
Oracle is facing stiff competition from Amazon’s (AMZN - Free Report) AWS and Microsoft’s (MSFT - Free Report) Azure in cloud database services.
Amazon’s AWS is the leading provider of cloud infrastructure to enterprises. The company recently launched Nova Premier, a multimodal model designed to handle complex tasks like coding and natural language processing. Amazon plans to invest over $1 billion to build AI-enabled data centers in Ohio and Georgia, further strengthening AWS as a key profit driver for the company.
Microsoft Azure commands a significant portion of the cloud space with its expertise in delivering scalable solutions across infrastructure, software and platforms. The company’s presence in more than 70 announced Azure regions has strengthened its position, and Microsoft further plans to invest $80 billion in developing AI-focused data centers globally.
ORCL’s Share Price Performance, Valuation and Estimates
ORCL’s shares have appreciated 43.3% in the year-to-date period, outperforming both the Zacks Computer and Technology sector’s return of 7% and the Zacks Computer-Software industry’s growth of 16.4%.
ORCL’s YTD Price Performance
Image Source: Zacks Investment Research
Oracle trades at a three-year EV/EBITDA of 28.69X, substantially above the industry average of 20.07X. ORCL has a Value Score of F.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $6.71 per share, which has remained steady over the past seven days. This indicates an 11.28% increase from the figure reported in the year-ago quarter.
Image: Bigstock
ORCL's Cloud Database Gains Steam: Is it the Next Revenue Pillar?
Key Takeaways
Oracle (ORCL - Free Report) has taken critical steps to advance its database capabilities. As the company experiences enterprise shifts from on-premise databases to the cloud, it anticipates cloud database services to become the third pillar for revenue growth.
In the fourth quarter of fiscal 2025, cloud database services rose 31% year over year and now have annualized revenues of $2.6 billion as usage continues to grow.
ORCL’s launch of the Oracle 23 AI platform has enhanced enterprise functionality through secured training of business data with AI models. The company’s flexibility to run its databases anywhere, with embedded AI and analytics via training of popular models, explains its growing popularity among enterprises seeking scalable and secure solutions globally.
To further boost its database command, ORCL is actively migrating customers to its Autonomous databases, which are designed to be more self-managing and cost-efficient. This transition has been visible, as Autonomous database consumption revenues rose 47% on top of 27% growth reported last year. These initiatives are expected to drive cloud consumption, directly impacting top-line growth.
ORCL’s capital expenditure for fiscal 2026 is expected to exceed the $25 billion mark, with a focus on building 47 multi-cloud data centers. This infrastructure expansion is critical for supporting the surging demand for Autonomous databases and Oracle 23AI, as well as fulfilling the $138 billion in remaining performance obligations.
Our model estimate for ORCL’s fiscal 2026 cloud services and license revenues is pegged at approximately $52 billion, indicating year-over-year growth of 17.3%.
ORCL Faces Stiff Competition in the Cloud Segment
Oracle is facing stiff competition from Amazon’s (AMZN - Free Report) AWS and Microsoft’s (MSFT - Free Report) Azure in cloud database services.
Amazon’s AWS is the leading provider of cloud infrastructure to enterprises. The company recently launched Nova Premier, a multimodal model designed to handle complex tasks like coding and natural language processing. Amazon plans to invest over $1 billion to build AI-enabled data centers in Ohio and Georgia, further strengthening AWS as a key profit driver for the company.
Microsoft Azure commands a significant portion of the cloud space with its expertise in delivering scalable solutions across infrastructure, software and platforms. The company’s presence in more than 70 announced Azure regions has strengthened its position, and Microsoft further plans to invest $80 billion in developing AI-focused data centers globally.
ORCL’s Share Price Performance, Valuation and Estimates
ORCL’s shares have appreciated 43.3% in the year-to-date period, outperforming both the Zacks Computer and Technology sector’s return of 7% and the Zacks Computer-Software industry’s growth of 16.4%.
ORCL’s YTD Price Performance
Image Source: Zacks Investment Research
Oracle trades at a three-year EV/EBITDA of 28.69X, substantially above the industry average of 20.07X. ORCL has a Value Score of F.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $6.71 per share, which has remained steady over the past seven days. This indicates an 11.28% increase from the figure reported in the year-ago quarter.
Oracle Corporation Price and Consensus
Oracle Corporation price-consensus-chart | Oracle Corporation Quote
ORCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.