Stock jumps 13% after Q4 earnings beat; infrastructure growth set to accelerate above 70% in FY26
Oracle Corporation (NYSE: ORCL) shares soared 13.31% on Thursday to close at a record high of US$199.86, after the software and cloud giant posted stronger-than-expected fourth quarter results and laid out ambitious growth targets for its cloud infrastructure business.
Driven by continued enterprise demand for AI workloads and cloud-based database services, Oracle reported fiscal Q4 revenue of US$15.9bn, up 11% year-on-year and ahead of the US$15.59bn consensus. Adjusted earnings per share of US$1.70 also topped expectations.
Chairman Larry Ellison and CEO Safra Catz offered bullish long-term guidance, with cloud infrastructure (IaaS) revenue expected to rise more than 70% in the current fiscal year, accelerating from 52% growth in the May quarter. Total cloud revenue—including applications—grew 27% in Q4 to US$6.7bn.
“FY25 was a very good year — but we believe FY26 will be even better as our revenue growth rates will be dramatically higher,” said Catz, forecasting total cloud revenue growth above 40% and full-year revenue exceeding US$67bn.
Oracle’s bet on AI fuels confidence
Oracle’s momentum is closely tied to its expanding role as a supplier of cloud capacity for artificial intelligence. The company has inked deals with OpenAI, Meta, Elon Musk’s xAI, and recently Temu, the Chinese e-commerce giant owned by PDD Holdings, which is migrating its infrastructure to Oracle Cloud.
Ellison said Oracle received an unprecedented order from a client seeking all available capacity, noting: “We never got an order like that before.”
Much of the AI-driven optimism surrounds Oracle’s role in the OpenAI Stargate project, a massive AI data centre initiative expected to drive up to US$500bn in investments over four years. Although Oracle’s earnings guidance does not yet include Stargate, executives indicated that any upside from the project would be incremental to current forecasts.
“If Stargate turns out to be everything as advertised, then we’ve understated our RPO growth,” Ellison said.
Infrastructure expansion and CapEx surge
Oracle’s remaining performance obligations (RPO)—a key measure of future revenue—stood at US$138bn at the end of Q4, up 41% year-on-year. CEO Safra Catz projected that figure could more than double in FY26.
To meet surging demand, Oracle said it plans to increase capital expenditures to more than US$25bn this fiscal year, up from US$21.2bn in FY25. Ellison claimed the company is on track to build more cloud infrastructure data centres “than all of our competitors combined”, with 47 new multi-cloud sites and 30 dedicated Oracle Cloud@Customer facilities planned.
“The reason demand continues to outstrip supply is we can only build these data centres, build these computers, so fast,” Ellison told analysts.
While the scale of investment has weighed on free cash flow—which came in negative for the year—the company’s operating cash flow reached US$20.8bn, up 12%.
Analysts react
Piper Sandler raised its price target on Oracle to US$190, calling it a “new wave of enterprise popularity not seen since the dot-com era.” RBC boosted its target to US$195, citing strong demand but cautioning on near-term supply constraints.
Jefferies analyst Brent Thill described Catz’s long-term guidance as the most “exceptional” part of the update, pointing to bookings growth tied to AI and multi-cloud database services.
Oracle is increasingly positioning itself as an AI-native enterprise platform, integrating AI capabilities into its database products. Revenue from its Autonomous Database service grew 47% year-on-year, while overall cloud database services hit an annualised run rate of US$2.6bn.
Outlook
Despite a slight Q4 miss on infrastructure revenue—due more to capacity limitations than demand—Oracle’s outlook has reassured investors. With cloud infrastructure growth set to accelerate, and early momentum from AI-linked demand, the company is emerging as a formidable challenger to the likes of Amazon, Microsoft and Google in the cloud arms race.
“We are the destination for everyone who wants AI workloads, who want database workloads, who want applications,” Catz said. “And we are still in a position where supply is not meeting demand.”
