Despite not capturing the same level of market attention as some of its mega-cap technology sector peers, Oracle (ORCL +2.02%) has quietly emerged as a major winner in the artificial intelligence (AI) revolution. A surge in demand for the company's infrastructure solutions and broader software applications has powered shares to a fantastic 53% return in the past year.
There's a lot to like about this cloud computing giant, but can the recent rally keep going? Let's discuss whether Oracle stock is a buy right now.
NYSE: ORCL
Key Data Points
Capitalizing on AI cloud infrastructure demand
The data-intensive requirements for companies building out their AI capabilities have made Oracle's ecosystem of products and services more important than ever. This includes Oracle's hybrid cloud solutions, spanning infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS) offerings. The integrated platform represents a critical component of the AI value chain, enabling data storage, scalable computing for model training, and seamless deployment of AI applications.
The growth trends have been solid. For Oracle's last reported fiscal 2025 second quarter (for the period ended Nov. 30, 2024), total revenue climbed by 9% year over year, while adjusted earnings per share (EPS) was up 10% from the prior-year quarter. Within the top line, the bigger story was the 52% increase in cloud infrastructure revenue, reflecting what management described as a record level of AI demand, including with an increasing rate of new customers.
The financial metric that stands out is Oracle's remaining performance obligation (RPO), which reached a record $97 billion, up 49% from last year. This indicator, a measure of the contract backlog not yet recognized as revenue, provides some confidence for a growth runway. For the year ahead, management is guiding for double-digit revenue growth, with an acceleration expected into fiscal 2026.
The ongoing shift toward more value-added high-tech services should also help lift margins and earnings. That outlook is reflected in Wall Street analyst estimates tracked by Yahoo! Finance, which forecast Oracle's EPS growth to outpace the sales momentum with a 10.6% increase this year and 14.1% next year.
| Metric | 2025 Estimate | 2026 Estimate |
|---|---|---|
| Revenue | $57.7 billion | $65.0 billion |
| Revenue growth (YOY) | 9% | 12.6% |
| Adjusted EPS | $6.15 | $7.02 |
| Adjusted EPS growth (YOY) | 10.6% | 14.1% |
Data source: Yahoo! Finance. YOY = year over year.
The Stargate Initiative growth driver
Perhaps the most important development for Oracle this year is its role within the Stargate Initiative. The AI infrastructure project, announced by the new Trump administration, aims to maintain the leadership role of the United States in cutting-edge technology through policy and regulatory support that recognizes its strategic importance to national security.
Funded through an initial planned investment of $100 billion by the Japanese holding group SoftBank, the joint venture includes Oracle and OpenAI and is focused on the development and construction of data centers to power advanced AI models. Oracle stands to benefit significantly as a key technology provider. It's partnering with OpenAI, which has committed to shifting its AI workloads to the Oracle Cloud Infrastructure as a new growth driver over the next several years.
The Stargate Initiative may go a long way toward helping to reaffirm Oracle's previously issued financial targets, incremental to its organic opportunities. The company expects to reach more than $104 billion in revenue by fiscal 2029, which is nearly double the $53 billion result in fiscal 2024. Oracle also expects EPS to accelerate above a 20% annual growth rate in the next five years.
Source: Oracle.
A bullish outlook for Oracle stock
What I like about Oracle is its broader exposure to high-level themes in technology as a global leader in the ongoing digital transformation.
The company remains a major player in cybersecurity and data privacy, while its flagship Autonomous Database platform, with multiple industry-specific solutions, is now being used with AI and machine learning to deliver even greater productivity benefits. That layer of diversification beyond cloud infrastructure is what makes the stock a compelling investment. With the stock trading at a forward price-to-earnings ratio of 25 times its consensus 2026 EPS, Oracle could prove to be a bargain if the expected growth acceleration materializes through its ability to capture market share as a high-performance hyperscaler.
Overall, Oracle is well-positioned to continue rewarding shareholders as it executes its profitable growth strategy, and the stock deserves a spot within diversified investor portfolios with upside in 2025.
