Oracle Corporation

New York Stock Exchange
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Bullish +65

Oracle Stock Rises 32% in 3 Months on Cloud Strength: Buy Now or Hold? - May 21, 2026 - Zacks Investment Research

📈 ORCL shares rose 32% in three months, outperforming the Zacks Computer and Technology sector.

💰 Fiscal 2027 revenue guidance raised to $90 billion due to sustained AI compute demand.

🚀 Q3 FY26 total revenues grew 22% to $17.2 billion, with cloud revenues up 44% to $8.9 billion.

⚡ Cloud Infrastructure revenues surged 84% to $4.9 billion, driving overall growth.

💵 Non-GAAP EPS of $1.79 beat guidance; GAAP net income reached $3.7 billion.

📊 Multicloud database revenues soared 531% year over year to record levels.

🤝 RPO grew 325% sequentially to $553 billion, indicating strong future revenue visibility.

🏛️ Oracle secured a major deal with the U.S. Department of War for classified network AI deployment.

🌐 OCI Enterprise AI launched on May 8, 2026, supporting sovereign cloud platforms in Japan.

💸 Capital expenditure plan fixed at $50 billion for fiscal 2026, requiring significant financing.

📉 Software revenues grew only 3% in USD, lagging behind infrastructure growth.

⚖️ Stock trades at a premium P/E of 31.73x compared to the industry average of 25.9x.

🛡️ Intense competition from AWS, Azure, and Google Cloud pressures pricing power.

📉 Zacks Rank remains #3 (Hold) due to valuation concerns and high capital commitments.

💰 Board declared a quarterly cash dividend of 50 cents per share payable April 24, 2026.

Bullish Signals
  • Oracle raised fiscal 2027 revenue guidance to $90 billion, signaling confidence in long-term AI-driven growth.
  • Q3 FY26 marked the first quarter in over 15 years with double-digit organic revenue and EPS growth simultaneously.
  • Cloud Infrastructure revenues exploded 84% to $4.9 billion, demonstrating massive adoption of Oracle's cloud stack.
  • Non-GAAP EPS of $1.79 exceeded analyst expectations, validating management's operational execution.
  • Remaining Performance Obligations jumped 325% sequentially to $553 billion, providing a strong revenue floor.
  • Oracle successfully expanded its AI Database availability on Google Cloud to 15 global regions.
  • The company secured a high-value contract with the U.S. Department of War for classified network AI workloads.
  • OCI Enterprise AI launch confirms partnerships with major model providers like NVIDIA and xAI (Grok).
  • Fusion Cloud ERP grew 17% and NetSuite expanded 14%, showing strength in application software.
  • Management maintained the $50 billion capex plan, indicating commitment to building necessary AI infrastructure.
Risk Factors
  • Soaring capital expenditures of $50 billion for fiscal 2026 are putting significant pressure on free cash flow.
  • The company recently raised up to $50 billion in debt and equity financing, increasing its leverage profile.
  • Software revenues grew only 3% in USD, falling behind the explosive growth seen in infrastructure segments.
  • Cloud Application revenues increased at a restrained 13%, lagging behind the 44% cloud total growth.
  • Stock valuation has stretched to a trailing 12-month P/E of 31.73x, well above the industry average of 25.9x.
  • Intense competition from AWS, Azure, and Google Cloud creates significant pressure on pricing and market share.
  • Operating successfully in classified and regulated environments requires sustained execution discipline that is yet to be proven over quarters.
  • Zacks maintains a 'Hold' rating due to concerns that profitability may struggle to keep pace with revenue ambitions.
Full Analysis
Oracle (ORCL) shares have surged 32% over the past three months, driven by strong cloud revenue growth and ambitious management targets. The company raised its fiscal 2027 revenue guidance to $90 billion, citing structural tailwinds from AI compute and inferencing demand that outpace supply. Fiscal third-quarter 2026 results were robust, with total revenues rising 22% to $17.2 billion, marking the first quarter in over 15 years where both organic revenue and non-GAAP EPS grew by 20% or more in USD. Cloud revenues specifically climbed 44% to $8.9 billion, led by an 84% surge in Cloud Infrastructure revenues to $4.9 billion. Non-GAAP earnings per share reached $1.79, beating guidance, while GAAP net income hit $3.7 billion. The company also saw massive growth in multicloud database revenues (up 531%) and Remaining Performance Obligations (RPO) increased by 325% to $553 billion. Fusion Cloud ERP grew 17%, and NetSuite expanded 14%, indicating broad-based success across key segments. Looking ahead, Oracle guided fiscal fourth-quarter 2026 total revenue growth between 19% and 21%, with cloud revenues projected to expand 46% to 50%. The company maintained its fiscal 2026 revenue target of $67 billion and a $50 billion capital expenditure plan. However, this aggressive investment strategy introduces financial risks, including pressure on free cash flow and a growing debt load from recent financing efforts. Analysts note that while momentum is strong, the stock's valuation has stretched to a trailing 12-month P/E of 31.73x, leading Zacks to maintain a 'Hold' rating. Oracle continues to expand its AI footprint with new availability regions for its AI Database on Google Cloud and a significant agreement with the U.S. Department of War to deploy advanced AI capabilities on classified networks. Recent product launches include OCI Enterprise AI, offering access to frontier models like Grok 4.3. Despite these wins, intense competition from AWS, Azure, and Google Cloud pressures pricing and market share ambitions. The company faces a critical test of execution discipline as it balances high-growth infrastructure investments with the need to maintain profitability in a contested market.