ORCL Stock Shifts From Revenue Miss to Record Highs: Oracle’s Cloud Pivot Pays Off
Although revenue from Oracle's most recent quarter was disappointing, a daring new cloud projection has turned the tide, driving shares...
Quick overview
- Oracle's aggressive upward revision of its cloud infrastructure forecast has driven shares to record highs above $290.
- The company expects cloud revenue to grow 77% this fiscal year, reaching $18 billion, with long-term projections climbing to $144 billion in four years.
- Despite a slight revenue miss in Q2, Oracle's strong cloud momentum and record remaining performance obligations of $455 billion signal robust future growth.
- Oracle's strategic pivot towards cloud and AI positions it as a serious competitor in the market, with a clear vision for sustained growth.
Although revenue from Oracle’s most recent quarter was disappointing, a daring new cloud projection has turned the tide, driving shares to all-time highs above $290 and putting the $300 level within sight.
Cloud Forecast Sparks Market Optimism
The real catalyst behind the surge was Oracle CEO Safra Catz’s announcement of an aggressive upward revision to the company’s cloud infrastructure outlook. Building on the extraordinary growth in remaining performance obligations, now at $455 billion, Catz revealed that Oracle expects cloud infrastructure revenue to grow 77% this fiscal year, reaching $18 billion.
Looking further ahead, management projects a climb to $32 billion, then $73 billion, $114 billion, and eventually $144 billion within the next four years. For investors, the scale of this long-term roadmap underscores Oracle’s confidence that AI-driven demand for cloud services is not only sustainable but accelerating. So, it’s not demand from humans then, meaning AI is trading with itself like in the movies.
Market Performance and Stock Momentum
Oracle has been one of the standout performers in 2024, rising more than 120% from its April lows to $261 by late July. Strong buying momentum was consistently supported by the 20-day simple moving average throughout that climb.
The summer months, however, brought a reversal, with Oracle slipping under its 50-day average in August and retreating toward $225, erasing a large part of its earlier gains. September has seen a renewed push higher, and the release of the Q2 report combined with the upgraded forecast has propelled the stock back above its moving averages and into record-breaking territory.
Oracle Q2 Earnings Snapshot
- Total Revenue: $14.9 billion for fiscal Q1 2026, up 14% YoY, but slightly below analyst estimates.
- Cloud Revenue: Advanced 28% YoY to $7.2 billion, highlighting continued demand for cloud infrastructure and software services.
- Net Income: Stable at $2.9 billion, showing Oracle’s ability to hold profitability even with rising costs.
- Diluted EPS: Increased 1.9% YoY to $1.01, providing modest earnings growth.
- Operating Income: Rose 7% to $4.2 billion, reflecting operating leverage despite higher investments in AI-driven infrastructure.
- RPO (Remaining Performance Obligations): Surged 359% to a record $455 billion, signaling strong future revenue visibility from long-term contracts.
Key Takeaways
- Oracle’s results show continued cloud momentum, with the segment now making up nearly half of total revenues.
- The massive growth in RPO is a standout figure, underscoring customer commitment and Oracle’s strengthening market position in enterprise cloud and AI.
- While revenue slightly missed expectations, stable income and operating growth demonstrate resilience.
- Modest EPS growth suggests Oracle is prioritizing reinvestment into infrastructure and expansion rather than near-term profit maximization.
Earnings Highlights and Strategic Pivot
While the headline results for the second quarter showed a modest revenue miss, the underlying growth trends were far more encouraging. Cloud revenue expanded nearly 30% year over year, while booked revenue in the form of RPO reached an unprecedented $455 billion.
Profitability remained steady, with income and operating margins showing resilience despite the company’s heavy reinvestment into cloud and AI initiatives. Together, these results reinforce Oracle’s pivot toward being a cloud-first enterprise provider and highlight its strategy of leaning into AI adoption to secure market share.
Conclusion: Despite a small shortfall in revenue expectations, Oracle’s decisive forecast revision and the sheer size of its cloud backlog have reshaped investor sentiment. The stock now stands at record highs, with traders eyeing a clean break above the $300 level in the weeks ahead.
More importantly, Oracle has laid out a vision that positions it not only as a serious competitor in cloud infrastructure but potentially as a leader in scaling AI-driven enterprise demand. For both short-term traders and long-term investors, Oracle’s message is clear: its growth story is only just beginning.
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