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Will Oracle's NetSuite Division Accelerate Revenue Growth?
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Key Takeaways
Oracle's NetSuite division hit $1 billion in Q1 FY26 revenues, growing 16% year over year.
The platform integrates 100 AI agents to automate processes for mid-market businesses moving to cloud.
NetSuite faces strong competition from MSFT Dynamics 365 and SAP in the crowded cloud ERP market.
Oracle’s (ORCL - Free Report) NetSuite division demonstrates sustained momentum in the mid-market enterprise segment, where businesses are transitioning from legacy on-premises systems to cloud-based platforms. The platform functions as a multi-tenant, AI-enabled system that centralizes business functions and delivers real-time insights, making it attractive for mid-sized organizations. This positioning allows NetSuite to capture demand from companies seeking modernization without the complexity of larger enterprise platforms.
The company’s NetSuite Cloud ERP division reached $1 billion in revenues during the first quarter of fiscal 2026, registering growth of 16% in USD and 15% in constant currency. This performance positions NetSuite as a significant contributor to Oracle's broader cloud momentum, which saw total cloud revenues climb 28% year over year to $7.2 billion during the quarter.
Oracle has integrated artificial intelligence capabilities across NetSuite, embedding more than 100 AI agents designed to automate processes and enhance operational efficiency. These features address a critical market shift where traditional on-premises systems cannot fully utilize advanced AI functionality, prompting businesses to migrate to cloud solutions. The integration of AI-driven automation tools strengthens NetSuite's competitive positioning as enterprises prioritize digital transformation initiatives.
The division benefits from Oracle's expanding cloud infrastructure, which provides enhanced platform reliability and geographic reach. Oracle's Remaining Performance Obligations surged 359% year over year to $455 billion, indicating robust future revenue potential. However, NetSuite primarily targets mid-sized businesses, which represents a narrower addressable market compared to Oracle's infrastructure services that serve enterprises of all sizes. NetSuite’s division also faces market saturation challenges, making it harder to maintain acceleration rates comparable to newer, high-growth cloud infrastructure offerings.
Competitive Landscape in Cloud ERP
Microsoft's (MSFT - Free Report) Dynamics 365 platform competes directly with NetSuite in the cloud ERP space, leveraging deep integration with the broader Microsoft ecosystem, including Office 365, Teams, and Azure. Microsoft's cloud applications business has demonstrated strong momentum, benefiting from its established enterprise relationships and comprehensive productivity suite. Meanwhile, SAP (SAP - Free Report) commands approximately 17% of the global ERP market as of early September 2025, surpassing Oracle's market share. SAP has accelerated its cloud transformation strategy, with cloud ERP sales and order backlog rising substantially amid growing AI adoption. Both Microsoft and SAP offer industry-specific modules and extensive partner networks, intensifying competition for mid-market and enterprise customers. The rivalry underscores the challenge Oracle faces in expanding NetSuite's market position against these established competitors with significant resources and customer bases.
ORCL’s Price Performance, Valuation & Estimates
Shares of Oracle have returned 20.2% year to date against the Zacks Computer and Technology sector’s return of 6.3% and the Zacks Computer - Software industry’s growth of 25%.
ORCL’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ORCL stock is currently trading at a premium with a forward 12-month Price/Sales ratio of 7.64x, which is higher than the industry average of 7.36x. Oracle carries a Value Score of D.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $6.81 per share, marking an upward revision of one cent over the past 30 days. The earnings figure suggests 12.94% growth over the figure reported in fiscal 2025.
Image: Bigstock
Will Oracle's NetSuite Division Accelerate Revenue Growth?
Key Takeaways
Oracle’s (ORCL - Free Report) NetSuite division demonstrates sustained momentum in the mid-market enterprise segment, where businesses are transitioning from legacy on-premises systems to cloud-based platforms. The platform functions as a multi-tenant, AI-enabled system that centralizes business functions and delivers real-time insights, making it attractive for mid-sized organizations. This positioning allows NetSuite to capture demand from companies seeking modernization without the complexity of larger enterprise platforms.
The company’s NetSuite Cloud ERP division reached $1 billion in revenues during the first quarter of fiscal 2026, registering growth of 16% in USD and 15% in constant currency. This performance positions NetSuite as a significant contributor to Oracle's broader cloud momentum, which saw total cloud revenues climb 28% year over year to $7.2 billion during the quarter.
Oracle has integrated artificial intelligence capabilities across NetSuite, embedding more than 100 AI agents designed to automate processes and enhance operational efficiency. These features address a critical market shift where traditional on-premises systems cannot fully utilize advanced AI functionality, prompting businesses to migrate to cloud solutions. The integration of AI-driven automation tools strengthens NetSuite's competitive positioning as enterprises prioritize digital transformation initiatives.
The division benefits from Oracle's expanding cloud infrastructure, which provides enhanced platform reliability and geographic reach. Oracle's Remaining Performance Obligations surged 359% year over year to $455 billion, indicating robust future revenue potential. However, NetSuite primarily targets mid-sized businesses, which represents a narrower addressable market compared to Oracle's infrastructure services that serve enterprises of all sizes. NetSuite’s division also faces market saturation challenges, making it harder to maintain acceleration rates comparable to newer, high-growth cloud infrastructure offerings.
Competitive Landscape in Cloud ERP
Microsoft's (MSFT - Free Report) Dynamics 365 platform competes directly with NetSuite in the cloud ERP space, leveraging deep integration with the broader Microsoft ecosystem, including Office 365, Teams, and Azure. Microsoft's cloud applications business has demonstrated strong momentum, benefiting from its established enterprise relationships and comprehensive productivity suite. Meanwhile, SAP (SAP - Free Report) commands approximately 17% of the global ERP market as of early September 2025, surpassing Oracle's market share. SAP has accelerated its cloud transformation strategy, with cloud ERP sales and order backlog rising substantially amid growing AI adoption. Both Microsoft and SAP offer industry-specific modules and extensive partner networks, intensifying competition for mid-market and enterprise customers. The rivalry underscores the challenge Oracle faces in expanding NetSuite's market position against these established competitors with significant resources and customer bases.
ORCL’s Price Performance, Valuation & Estimates
Shares of Oracle have returned 20.2% year to date against the Zacks Computer and Technology sector’s return of 6.3% and the Zacks Computer - Software industry’s growth of 25%.
ORCL’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ORCL stock is currently trading at a premium with a forward 12-month Price/Sales ratio of 7.64x, which is higher than the industry average of 7.36x. Oracle carries a Value Score of D.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $6.81 per share, marking an upward revision of one cent over the past 30 days. The earnings figure suggests 12.94% growth over the figure reported in fiscal 2025.
Oracle Corporation Price and Consensus
Oracle Corporation price-consensus-chart | Oracle Corporation Quote
ORCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.