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Oracle Solidifies AI Infrastructure Positioning: Will it Drive Growth?
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Key Takeaways
Oracle expands AI push with U.S. defense deal, OCI Enterprise AI launch and multicloud partnerships.
Oracle reports $553B RPO (up 325% YoY). Its cloud revenues rise 44% to $8.9B and IaaS is up 84%.
Oracle commits $50B capex, raises $30B, and targets $90B revenues by fiscal 2027.
Oracle Corporation (ORCL - Free Report) has reinforced its AI infrastructure positioning through a series of announcements in April and May 2026. On May 1, 2026, Oracle entered into an agreement with the U.S. Department of War to deploy advanced AI capabilities on classified networks, leveraging its 10 cloud regions dedicated to U.S. government customers at DISA IL2 through Top Secret and Special Access Program levels. A May 8, 2026 update detailed the launch of OCI Enterprise AI, with access to models including Grok 4.3 and NVIDIA Nemotron 3 Nano Omni, alongside SoftBank's adoption of OCI for a sovereign cloud platform in Japan.
On April 9, 2026, Oracle had introduced Platinum and Diamond-tier availability for Oracle AI Database to support mission-critical workloads. Additional April announcements included expanded multicloud connectivity with AWS and a deeper Google Cloud partnership through the Oracle AI Database Agent for Gemini Enterprise.
These developments build on third-quarter fiscal 2026 results released on March 10, 2026. Remaining Performance Obligations (RPO) at the end of the quarter were $553 billion, up 325% year over year and $29 billion higher sequentially, with most of the increase tied to large-scale AI contracts. Cloud revenues rose 44% to $8.9 billion, Cloud Infrastructure (IaaS) revenues jumped 84% to $4.9 billion and multicloud database revenues surged 531%. Total revenues climbed 22% to $17.2 billion, while non-GAAP EPS rose 21% to $1.79.
The expansion remains capital-intensive. Oracle reaffirmed fiscal 2026 capital expenditure guidance of $50 billion against revenue guidance of $67 billion and raised $30 billion in February through investment-grade bonds and mandatory convertible preferred stock. Customer prepayments and customer-supplied GPUs are absorbing much of the new build cost. Oracle has lifted fiscal 2027 revenue guidance to $90 billion, with fourth-quarter fiscal 2026 cloud revenues expected to grow 46-50%.
Peer Comparison: Microsoft and Alphabet's AI Infrastructure Push
Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) are scaling AI infrastructure at comparable intensity. Microsoft reported 40% Azure and other cloud services growth in its fiscal third quarter ended March 31, 2026, with the company guiding roughly $190 billion in calendar 2026 capital expenditure. Alphabet's Google Cloud revenues jumped 63% year over year to $20 billion in first-quarter 2026, while cloud backlog nearly doubled sequentially to more than $460 billion. Alphabet raised its 2026 capex range to $180-$190 billion, signaling Google Cloud capacity remains demand-constrained. Compared with Oracle's $553 billion RPO, Microsoft and Alphabet operate at materially larger absolute cloud revenue scales.
ORCL’s Price Performance, Valuation & Estimates
Shares of Oracle have lost 14.6% in the past six-month period, underperforming the Zacks Computer and Technology sector’s appreciation of 17.5%.
ORCL’s 6-Month Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ORCL stock is currently trading at a premium with a trailing 12-month Price/Earnings ratio of 31.51x, which is higher than the Zacks Computer - Software industry average of 25.47x. 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 $7.46 per share, marking an upward revision of 0.5% over the past 30 days. The earnings figure suggests 23.71% growth over the figure reported in fiscal 2025.
View the Zacks #1 Rank List
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Oracle Solidifies AI Infrastructure Positioning: Will it Drive Growth?
Key Takeaways
Oracle Corporation (ORCL - Free Report) has reinforced its AI infrastructure positioning through a series of announcements in April and May 2026. On May 1, 2026, Oracle entered into an agreement with the U.S. Department of War to deploy advanced AI capabilities on classified networks, leveraging its 10 cloud regions dedicated to U.S. government customers at DISA IL2 through Top Secret and Special Access Program levels. A May 8, 2026 update detailed the launch of OCI Enterprise AI, with access to models including Grok 4.3 and NVIDIA Nemotron 3 Nano Omni, alongside SoftBank's adoption of OCI for a sovereign cloud platform in Japan.
On April 9, 2026, Oracle had introduced Platinum and Diamond-tier availability for Oracle AI Database to support mission-critical workloads. Additional April announcements included expanded multicloud connectivity with AWS and a deeper Google Cloud partnership through the Oracle AI Database Agent for Gemini Enterprise.
These developments build on third-quarter fiscal 2026 results released on March 10, 2026. Remaining Performance Obligations (RPO) at the end of the quarter were $553 billion, up 325% year over year and $29 billion higher sequentially, with most of the increase tied to large-scale AI contracts. Cloud revenues rose 44% to $8.9 billion, Cloud Infrastructure (IaaS) revenues jumped 84% to $4.9 billion and multicloud database revenues surged 531%. Total revenues climbed 22% to $17.2 billion, while non-GAAP EPS rose 21% to $1.79.
The expansion remains capital-intensive. Oracle reaffirmed fiscal 2026 capital expenditure guidance of $50 billion against revenue guidance of $67 billion and raised $30 billion in February through investment-grade bonds and mandatory convertible preferred stock. Customer prepayments and customer-supplied GPUs are absorbing much of the new build cost. Oracle has lifted fiscal 2027 revenue guidance to $90 billion, with fourth-quarter fiscal 2026 cloud revenues expected to grow 46-50%.
Peer Comparison: Microsoft and Alphabet's AI Infrastructure Push
Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) are scaling AI infrastructure at comparable intensity. Microsoft reported 40% Azure and other cloud services growth in its fiscal third quarter ended March 31, 2026, with the company guiding roughly $190 billion in calendar 2026 capital expenditure. Alphabet's Google Cloud revenues jumped 63% year over year to $20 billion in first-quarter 2026, while cloud backlog nearly doubled sequentially to more than $460 billion. Alphabet raised its 2026 capex range to $180-$190 billion, signaling Google Cloud capacity remains demand-constrained. Compared with Oracle's $553 billion RPO, Microsoft and Alphabet operate at materially larger absolute cloud revenue scales.
ORCL’s Price Performance, Valuation & Estimates
Shares of Oracle have lost 14.6% in the past six-month period, underperforming the Zacks Computer and Technology sector’s appreciation of 17.5%.
ORCL’s 6-Month Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ORCL stock is currently trading at a premium with a trailing 12-month Price/Earnings ratio of 31.51x, which is higher than the Zacks Computer - Software industry average of 25.47x. 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 $7.46 per share, marking an upward revision of 0.5% over the past 30 days. The earnings figure suggests 23.71% 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.