When it comes to cloud computing, Oracle (ORCL +12.74%) has long been an afterthought to the big three players in the space: Amazon's AWS, Microsoft's Azure, and Alphabet's Google Cloud. However, Oracle is starting to make some noise in the segment and is putting up stats that suggest it is now the fastest grower in the space.
Let's delve into Oracle's fiscal Q4 results to see how cloud computing is powering its results and what it means for investors moving forward.
Cloud revenue growth to accelerate
While Oracle saw its cloud infrastructure (OCI) revenue soar 52% year over year in its fiscal 2025 Q4 to $3 billion, what got investors excited was the company's forecast that its cloud infrastructure revenue would soar by more than 70% in fiscal 2026. Meanwhile, Oracle founder Larry Ellison boasted that the company will "build and operate more cloud infrastructure data centers than all of [its] cloud infrastructure competitors combined."
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The company pointed to its strong remaining performance obligations (RPO) as a reason for the confidence in its growth outlook, noting that most of these contracts are non-cancellable. In the quarter, RPO jumped 41% to a whopping $138 billion. It said cloud RPO climbed 56% and is now nearly 80% of its total RPO. More importantly, it is looking for about a third of the RPO to be recognized as revenue over the next year.
Oracle said that demand for its OCI services continues to "dramatically" outpace supply, with consumption revenue soaring 62% year over year. As such, it plans to increase its capital expenditures (capex) to more than $25 billion in fiscal 2026 to help meet increasing demand. It said most of this spending will be on revenue-generating equipment that is going into data centers and not for land or buildings.
The company also highlighted the strength of its cloud database services, which saw revenue climb 31% year over year, and its autonomous database, which saw consumption revenue surge 47%. It said that its database service being accessible across multiple cloud providers gives it a competitive advantage in the market.
For its fiscal 2025 Q4 ended May 31, Oracle's overall revenue rose 11% year over year to $15.9 billion, which handily topped the $15.6 billion analyst consensus, as compiled by LSEG. Cloud revenue increased 27% year over year to $6.7 billion. Within the cloud segment, cloud infrastructure revenue surged 52% to $3 billion, as mentioned above, while cloud application revenue increased 12% to $3.7 billion.
Adjusted earnings per share (EPS), meanwhile, rose 4% to $1.70. That topped the $1.64 analyst consensus.
Looking ahead, Oracle forecasts fiscal 2026 revenue to increase by 16% in constant currency to more than $67 billion, with cloud revenue growing by more than 30% in constant currency. That's a big acceleration in growth from the 9% overall revenue increase in constant currency and the 24% cloud revenue growth it saw in 2025. Meanwhile, it's expecting its RPO to more than double on the year.
For fiscal Q1, it guided for revenue to increase by between 12% to 14% and cloud revenue to climb by between 26% to 30%. Adjusted EPS is projected to rise by between 45% and 7%.
NYSE: ORCL
Key Data Points
Can the stock's momentum continue?
While Oracle's OCI business still trails No. 3 player Google Cloud by a wide margin in terms of revenue, and it isn't spending nearly as much in capex as its larger cloud competitors, the company is nonetheless still making a lot of noise in the space. Its projected 70% OCI growth this fiscal year is much higher than its larger competitors, with Microsoft and Alphabet tending to have between low to mid-30% cloud computing revenue growth and Amazon in the high teens.
The momentum in its cloud business, meanwhile, is helping accelerate the company's overall growth as well. With the company projecting mid-teen overall revenue growth this year, it is no longer a sleepy giant. It is looking to return to being a growth stock.
From a valuation perspective, Oracle trades at a forward P/E of just under 30 based on 2026 fiscal-year analyst estimates, while its price/earnings-to-growth (PEG) ratio is below 0.4. A PEG ratio under 1 is typically viewed as undervalued.
However, unlike most large-cap tech stocks, Oracle does carry a lot of debt. It ended its fiscal year with net debt of $81.4 billion. Meanwhile, it spent all of the operating cash flow it generated ($20.8 billion) on capex ($21.2 billion). This is one reason why it can't accelerate its data center infrastructure investments by much more than it already is spending.
Balancing it all out, I think the shift from more of a value stock to a growth stock should help propel the stock higher, especially as Oracle becomes one of the best ways to play the trend in cloud computing. Throw in the potential of the Stargate project, which isn't off the ground yet, and the stock can really start to cook.
