Free Trial

Will Oracle's Cloud and AI Deals Propel It to New Highs?

Bucharest, Romania - June 25, 2020: Oracle logo is seen on top of an architectural metal fence at ground floor of SkyTower office building in Bucharest, Romania. Image for editorial use only. — Stock Editorial Photography

Key Points

  • Oracle's massive 67% rally in the last year may be due to the company's significant developments in the AI database and cloud spaces.
  • The company is dominant in the emerging MultiCloud space and recently revealed a major partnership with an estimated $30 billion in annual revenue.
  • Still, investors should consider concerns about overvaluation, capital needs, and more before buying in.
  • MarketBeat previews top five stocks to own in August.

Oracle Today

Oracle Corporation stock logo
ORCLORCL 90-day performance
Oracle
$236.03 +0.72 (+0.31%)
As of 03:39 PM Eastern
This is a fair market value price provided by Polygon.io. Learn more.
52-Week Range
$118.86
$241.44
Dividend Yield
0.85%
P/E Ratio
54.36
Price Target
$209.33

Shares of enterprise computing, cloud, and data management pathbreaker Oracle Corp. NYSE: ORCL climbed by an astonishing two-thirds in the last year, repeatedly setting record highs (and making co-founder Larry Ellison the second-wealthiest person in the world in the process). As analysts from Jefferies, D.A. Davidson, Bernstein, and elsewhere raised their price targets for ORCL shares recently, it appears the company's upward momentum may continue.

Indeed, Oracle has many things working in its favor, including a successful cloud database offering, massive AI infrastructure improvements, flagship cloud services agreements, and key strategic partnerships. However, investors considering a new or larger position in ORCL should be cautious, as the market may have overestimated the company's growth potential, especially after shares have already risen by 67% in the past 12 months. Further, concerns about upcoming capital needs and margin hits after federal government discounts might be a cause for hesitation.

Massive Cloud Growth, With No Signs of Slowing

A major driver of Oracle's recent success is its expanding cloud database services. The company has rapidly grown its cloud and MultiCloud divisions, both in applications and infrastructure, with a 24% growth rate for fiscal 2025. It projects this to increase to over 40% in fiscal 2026. Specifically, cloud infrastructure growth is expected to rise from 50% in fiscal 2025 to 70% in the next fiscal year.

Meanwhile, the company's unique MultiCloud offerings, which allow customers to leverage the advantages of multiple cloud providers simultaneously, also generated notable revenue growth. Its multicloud database revenue from Amazon, Google, and Azure increased by 115% sequentially in the fourth quarter of fiscal 2025. The firm plans to triple the number of MultiCloud data centers next year.

Cloud database services are quickly becoming one of Oracle's main revenue sources, with a 31% year-over-year growth in the latest quarter, totaling $2.6 billion in revenue. Thanks to heightened AI integration through the company's Oracle 23 platform, Oracle's database services are gaining popularity among enterprise customers, helping the company stand out from competitors.

Agreements and Partnerships Drive Optimism

Oracle's recent growth may largely stem from its discreet announcement through Form 8-K regarding a new MultiCloud deal, projected to generate over $30 billion annually. Given that the company's total revenue for fiscal 2025 was $57.4 billion, this contract is highly significant, even though the revenue increase won't impact figures until fiscal 2028. Additionally, partnerships with AI companies Kanverse.ai and PrimeVigilance are expected to further expand Oracle's presence in the cloud industry.

Watch Out for Capital Stretch, Short-Term Margins, and Lofty Valuation

Oracle Stock Forecast Today

12-Month Stock Price Forecast:
$209.33
-11.21% Downside
Moderate Buy
Based on 33 Analyst Ratings
Current Price$235.77
High Forecast$275.00
Average Forecast$209.33
Low Forecast$130.00
Oracle Stock Forecast Details

All of the added AI infrastructure has understandably lifted Oracle's expenditures, and the company's capital expenditures for fiscal 2026 could be higher than $25 billion. At the same time, the company will want to maintain its dividend and engage in share buybacks, all of which will stretch its available capital further. Combined, these factors may negatively impact the company's free cash flow and force it to raise billions in the years to come.

More immediately, investors might worry about Oracle's steep 75% discounts on some of its services to U.S. federal government agencies. This move could pressure the company's margins and potentially unsettle investors as it waits for revenue from the $30-billion contract mentioned above.

Additionally, Oracle's trailing P/E ratio of 54.1 is about half again higher than it was in mid-2024, suggesting that the market has already priced in at least a portion of the benefits listed above into ORCL shares. Investors should beware of the tremendous hype surrounding this company, which may threaten to overshadow its very real growth drivers.

Believe the Hype—Oracle Could Continue to Rise

With the above risks in mind, investors serious about holding Oracle for a longer timeframe may take heart in the company's new dominance in the database, cloud, and MultiCloud spaces. There are ample signs to suggest it will be a crucial part of the AI and data industries as they continue to balloon in the coming years.

Should You Invest $1,000 in Oracle Right Now?

Before you consider Oracle, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Oracle wasn't on the list.

While Oracle currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

7 Stocks to Buy And Hold Forever Cover

Enter your email address and we'll send you MarketBeat's list of seven stocks and why their long-term outlooks are very promising.

Get This Free Report
Nathan Reiff
About The Author

Nathan Reiff

Contributing Author

Fundamental Analysis, ETFs, Consumer Staples, Dividends

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRankâ„¢Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Oracle (ORCL)
4.5945 of 5 stars
$237.831.1%0.84%54.80Moderate Buy$209.33
Amazon.com (AMZN)
4.5976 of 5 stars
$222.630.0%0.09%36.25Moderate Buy$247.17
Compare These Stocks  Add These Stocks to My Watchlist 

Featured Articles and Offers

Related Videos

Magnificent 7 Stocks Shift Toward Stability and Selective Growth
5 Stocks to BUY NOW in May 2025
3 Tech Stocks to Buy Now—And 3 You’ll Regret Keeping

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines