/Oracle%20Corp_%20logo%20on%20phone-by%20WonderPix%20via%20Shutterstock.jpg)
Valued at $394 billion, Oracle (ORCL) provides a comprehensive suite of software solutions, cloud services, and hardware products. Oracle’s success has been largely due to co-founder Larry Ellison’s aggressive sales tactics and approach, which included early adoption of cloud computing and advances in artificial intelligence (AI).
Recently, Oracle reported stellar results for the third quarter of its fiscal 2025 fueled by rising demand for cloud infrastructure, AI solutions, and multi-cloud database services. Despite a strong quarter, Oracle stock is down 17% year-to-date, driven by the stock market’s volatility this year.
However, this dip could be an appealing opportunity for long-term investors willing to put up with short-term fluctuations.
The Bull Case for Oracle
Oracle’s cloud database services experienced remarkable growth in the third quarter, with autonomous database consumption revenue increasing by 42%, contributing to total cloud database revenue of $2.3 billion. Oracle has also expanded its partnerships with Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN), with plans to launch an additional 40 cloud regions, strengthening its position in the multi-cloud space.
Notably, infrastructure-as-a-service (IaaS) revenue increased by 51% year-over-year to $2.7 billion, contributing to total cloud revenue of $6.2 billion, up 25%. Software-as-a-service (SaaS) revenue rose by 10% to $3.6 billion. Oracle reported total quarterly revenues of $14.1 billion, representing an 8% increase year-over-year. Adjusted earnings per share (EPS) were $1.47, up 4%.
During the Q3 earnings call, CEO Safra Catz stated that the company had its most successful booking quarter ever, adding $48 billion to its backlog. The total backlog of $130 billion is expected to result in a 15% revenue increase in fiscal 2026. Oracle’s investments in AI have improved its market position. The company’s AI-driven cloud services are becoming increasingly popular, with projects such as Stargate aiming to build massive data centers to power AI systems. This initiative, on which it is partnered with Nvidia (NVDA) and OpenAI, reflects Oracle’s ambition to lead in AI training and infrastructure. Management stated that its backlog does not include any contributions from Stargate, implying that the project’s financial impact will be significant once contracts begin to flow in.
Oracle’s strategic investments and collaborations demonstrate its growing AI footprint, which may drive earnings in the near future. Notably, the company is developing a massive 64,000 GPU liquid-cooled Nvidia GB200 cluster and has signed a multibillion-dollar contract with Advanced Micro Devices (AMD) for 30,000 MI355X GPUs. Furthermore, management stated that Oracle’s AI Data Platform, which is integrated with AI models from OpenAI, xAI, and Meta Platforms (META), is designed to extract valuable insights from Oracle databases while maintaining data security and privacy.
Looking ahead, Oracle expects total cloud infrastructure revenue to increase by more than 50% in fiscal year 2025, with an even faster acceleration in fiscal year 2026. Catz stated that the company has “a clear line of sight” to meet its $66 billion revenue target for fiscal year 2026, with an expected 20% growth rate in fiscal year 2027. Furthermore, as Catz noted on the earnings call, there is enormous demand, and the company anticipates “extremely significant numbers” in the coming months.
Another green flag is that Oracle continues to reward shareholders with stock buybacks and dividend increases. This quarter, the company repurchased nearly 1 million shares for $150 million, while also increasing its quarterly dividend by 25% to $0.50 per share. Oracle has a forward dividend yield of 1.46%, compared to the tech sector’s average yield of 1.37%. Furthermore, the low forward payout ratio of 24.7% indicates that dividends are sustainable.
What Does Wall Street Say About Oracle Stock?
Following the fiscal Q3 results, Mizuho Securities analyst Siti Panigrahi reaffirmed a “Buy” rating on Oracle. The analyst believes Oracle’s strong backlog growth and successful multi-cloud strategy point to significant medium-term success. Panigrahi added that Oracle, with a favorable risk/reward profile and a price target of $210, is well-positioned to meet its medium-term revenue and earnings growth targets.
On Wall Street, Oracle stock is rated a "Moderate Buy.” Of the 34 analysts, 21 rate it a "Strong Buy," and 13 rate it a "Hold.” Based on its average analyst target price of $186.50, the stock has upside potential of 36% from current levels. Plus, its high target price of $246 implies that the stock could rise as much as 80% over the next 12 months.
Oracle is well-positioned for long-term financial strength and market leadership thanks to record-breaking cloud bookings, accelerated AI-driven infrastructure growth, and strategic multi-cloud expansion.
