On Sept. 10, Oracle (ORCL +0.87%) stock popped 36% in response to a massive increase in customer orders for Oracle's cloud services.
Oracle forecasts that revenue from its Oracle Cloud Infrastructure (OCI) segment could grow from around $10 billion in its last fiscal year (fiscal 2025), to $18 billion in its current fiscal year (fiscal 2026), $32 billion in fiscal 2027, $73 billion in fiscal 2028, $114 billion in fiscal 2029, and $144 billion in fiscal 2030 -- corresponding with calendar year 2031.
For context, Amazon Web Services (AWS) generated over $60 billion in net sales in the first half of 2025 -- so a $120 billion annual run rate. Microsoft, which just wrapped up its fiscal 2025 year, reported $106 billion in Intelligent Cloud revenue. And Alphabet's Google Cloud generated $26 billion in revenue in the first half of 2025. This means that OCI is forecast to exceed the current size of Google Cloud within three years, the current size of Microsoft Azure within four years, and the current size of AWS within five years.
Here's why Oracle is winning cloud contracts from leading artificial intelligence (AI) companies like OpenAI, and why the company could become the top cloud for AI within the next five years.
Image source: Getty Images.
The future of cloud computing
Oracle's push into cloud infrastructure is arguably its boldest bet in the company's history. Oracle isn't cutting corners, either; it is bringing on dozens of data centers online in just a few years. It has built 34 multicloud data centers and should have another 37 online in less than a year.
These multicloud data centers are unique because they allow an organization to use services or workloads from two or more cloud providers, such as AWS, Microsoft Azure, Google Cloud, and OCI. All of these clouds can work with the Oracle database. The idea is to allow customers to select the best cloud service for each task.
AWS, Azure, and Google Cloud all have multicloud strategies too, but the big difference is that Oracle is embedding native versions of its infrastructure (Oracle Autonomous Database and Exadata Database Service) inside the big three clouds to boost performance and decrease latency. Examples include Oracle Database@AWS, Oracle Database@Azure, and Oracle Database@Google Cloud. The "big three" are more about managing workloads rather than integrating them natively.
The buildout of OCI as a formidable alternative to the big three, paired with Oracle's ultra-modern data centers, put Oracle on the cutting edge of data center workflow. According to Oracle, OCI can achieve 50% better price-to-performance and 3.5 times time savings for high-performance cloud computing workflows compared to the previous generation of computing.
NYSE: ORCL
Key Data Points
Race to the clouds
Oracle is purpose-building its cloud from scratch specifically for AI, whereas the majority of AWS, Microsoft Azure, and Google Cloud handle non-AI tasks, like basic compute and storage, database and analytics, networking, etc. So while Oracle will likely become the biggest cloud for AI if it hits its fiscal 2030 OCI revenue target of $144 billion, it still may be a smaller cloud by total revenue compared to the more established giants.
Still, Oracle is achieving milestones that are impossible to ignore -- laying the foundation for Oracle to be the go-to cloud for AI. It exited the recent quarter with a 359% increase in its contract backlog, bringing the total to $455 billion. Reports indicate that Oracle landed a multiyear $300 billion contract with OpenAI. To afford that deal, OpenAI will need to start generating more cash flow.
On Sept. 11 -- two days after Oracle reported earnings -- OpenAI and Microsoft released a joint statement to transition OpenAI from a pure-play nonprofit to a nonprofit owning a majority stake in a Public Benefit Corporation (PBC). A PBC is like a corporation with mission-backed guardrails. The aim is to generate a profit, but only if it fulfills a mission. Still, OpenAI's transition could allow it to raise billions more in funding, which would presumably help fund its deal with OCI even if OpenAI isn't generating positive free cash flow.
OpenAI, as the cornerstone of Oracle's backlog, has its pros and cons. On the one hand, it demonstrates that one of the most cutting-edge AI companies recognizes the value in what Oracle is building. But it also adds concentration risk to Oracle's projections. And if OpenAI's targets don't go as planned, Oracle's forecast could fall apart.
A high-risk, high-potential-reward AI play
Oracle is attracting massive deals from the big three cloud players with its multicloud offering. It has also built an attractive pricing model for customers specifically looking for high-performance computing to train AI models.
With customers lining up at the door, including a jewel in OpenAI, all Oracle has to do now is scale its infrastructure. It's become the best restaurant in town with reservations booked years in advance. The demand is undeniable, especially given these are multibillion-dollar, multiyear contracts.
Given Oracle's extremely pricey valuation, investors should only consider the stock if they have a high risk tolerance, a long-term time horizon, and believe that Oracle's multicloud offering will be the premier option for AI customers. If that thesis plays out, Oracle will likely be worth considerably more in the future than it is today, even after the stock has nearly doubled over the last year and more than quadrupled over the last three years.
