Oracle Shares Surge to Record High on Strong Cloud Growth, Upbeat Outlook

The company sees the growth rate of cloud infrastructure accelerating from 50 percent in fiscal 2025 to more than 70 percent in fiscal 2026.

Oracle's logo is seen at the Mobile World Congress in Barcelona, Spain, on Feb. 27, 2024. Pau Barrena/AFP via Getty Images

News Analysis

Oracle Corporation maintained its growth momentum in the fourth quarter of fiscal 2025, driven by a strong performance from its cloud and license support business segment. The company’s shares exceeded their all-time high during the June 12 trading on the back of its upbeat outlook.

After the market closed on June 11, the Austin, Texas-based database management company reported total revenue of $15.9 billion for the quarter, an 11 percent increase from the same period in fiscal 2024.

That’s ahead of analysts’ estimates and marked an acceleration from the 6 percent of the third quarter, thanks to a strong showing in the Cloud services and license support segment, which grew 14 percent year over year to $11.7 billion.

Earnings per share were $1.70, up from $1.47 in the previous quarter, also beating analysts’ estimates of $1.64.

In addition, the company offered a rosy outlook for fiscal year 2026, projecting continued revenue growth driven by momentum in cloud services and cloud infrastructure.

“FY25 was a very good year—but we believe FY26 will be even better as our revenue growth rates will be dramatically higher,” Oracle CEO Safra Catz said in a comment following the release of the company’s financial report.

“We expect our total cloud growth rate—applications plus infrastructure—will increase from 24 percent in FY25 to over 40 percent in FY26.”

Catz sees the growth rate of cloud infrastructure accelerating from 50 percent in fiscal 2025 to more than 70 percent in fiscal 2026.

“Oracle is well on its way to being not only the world’s largest cloud application company—but also one of the world’s largest cloud infrastructure companies,” she said.

Oracle’s shares surged on June 12. As of 12:35 p.m. ET, the stock was up by 14.26 percent to $201.7, exceeding the all-time high it reached on Nov. 21, 2024. It has outperformed the broader market, rising by more than 42.38 percent over the past year and more than 285 percent over the past five years, compared with about 10 percent and 96 percent, respectively, for the S&P 500 Index over the same periods.

Michael Ashley Schulman, chief investment officer and a founding partner of Running Point Capital Advisors, sees Oracle morphing from database master to a multi-cloud conjurer.

“The 115 percent [quarter-to-quarter] pop in multi-cloud database revenue from AWS, Google, and Azure, plus triple-digit Cloud@Customer growth, tells [chief information officers] they can keep their data where it lives and still hitch a ride on Oracle’s Gen 2 AI infrastructure,” he told The Epoch Times via email, offering further insight into the company’s growth strategy.

“In other words, no more forklift migrations—plug your data into Larry-Link. Competitors like Snowflake and MongoDB now face a Red-Pill reality where Oracle is suddenly cool again.”

However, Oracle’s aggressive growth strategy requires a significant amount of capital expenditure (CapEx), which has pushed the company’s free cash flow into negative territory.

That doesn’t concern Catz, as most of the investments are for revenue-generating equipment being deployed in data centers rather than for land or buildings.

“I expect that FY 2026 CapEx will be higher at over $25 billion as we work to meet demand from our backlog,” she explained during the company’s conference call.

“As we bring more capacity online, our revenue and profit growth will further accelerate.”

Still, having more capacity and higher total revenue and profit does not necessarily translate into higher profitability.

Oracle’s gross margin, a measure of the company’s profitability before paying operating expenses and other current business costs, has declined from 81 percent in 2010 to 71 percent in 2025.

Over the same period, the company’s net profit margin, a measure of its profitability after paying all expenses, including income taxes, dropped from around 25 percent to around 22 percent.

One explanation for the decline in the company’s profitability is the nature of the company’s growth strategy, which relies most heavily on the acquisition of other companies.

These acquisitions typically occur at a market premium, resulting in an inefficient allocation of capital. That’s when the returns the company earns from its investments lag behind the cost of capital raised to finance them.

According to Gurufocus.com, Oracle’s return on investing capital, a measure of how well a company generates cash flow relative to the capital it has invested in its business, was 10.46 percent. That’s below the company’s weighted average cost of capital of 12.34 percent.

The company failed to deliver superior market returns to shareholders, as its returns did not exceed its cost of capital—undermining value creation and raising doubts about its ability to generate long-term shareholder value.

Still, Schulman remains optimistic about the company’s future but casts a wary eye on debt.

“For investors, the after-hours pop (shares up ~7  percent) says Wall Street heard the message,” he said.

“CapEx went complete Death Star at $21 billion, but cash flow still climbed 12 percent to $20.8 billion, and the dividend holds at a steady $0.50,” Schulman said. “But be mindful of the long-term debt ($85 billion).”