Oracle's Cloud Revenue Up 28% YoY, Services Register First YoY Growth in Several Quarters.

Oracle's cloud revenue rose 28% year-over-year, with services registering its first year-over-year growth in several quarters. The company's cloud revenue growth indicates a shift towards cloud-based services, which are expected to drive future growth.

Oracle's (ORCL) latest earnings report for the second quarter of 2025 highlights a significant shift towards cloud-based services, with cloud revenue rising by 28% year-over-year. This growth marks the first year-over-year increase in several quarters, signaling a strategic pivot for the tech giant.

The company reported a total cloud revenue of $5.9 billion, up 24% year-over-year, driven by surging demand for AI workloads and strategic partnerships. Notably, Oracle's cloud infrastructure revenue surged 52% year-over-year to $2.4 billion, underscoring the company's growing relevance in the AI-driven cloud era [1].

Oracle's cloud growth is expected to accelerate further, with management raising FY2026 revenue guidance to $66 billion and expecting cloud growth to exceed 40%. This trajectory positions Oracle to capture a larger share of the $90 billion global cloud market, where AWS (30% share), Microsoft Azure (20%), and Google Cloud (13%) dominate [3].

While Oracle's earnings-driven dip has created a 7% post-market selloff, a deeper analysis reveals a compelling contrarian opportunity. The company's valuation metrics suggest undervaluation in key metrics, with an EV/EBITDA multiple of 21.89x contrasting with undervalued cash flow metrics (P/FCF 15.44) below historical averages [2]. For value investors, the key question is whether Oracle's cloud growth can justify its premium valuation over time.

Oracle's strategic investments, including the acquisition of HashiCorp and the launch of the Oracle 23 AI database, signal a pivot towards AI-driven cloud solutions. The Meta partnership further validates Oracle's infrastructure capabilities, potentially opening doors to other AI-first enterprises. While analysts warn of rising capital expenditures—expected to double in FY2025—this investment is critical to scaling cloud capacity and maintaining competitive pricing [1].

In conclusion, Oracle's cloud revenue growth indicates a shift towards cloud-based services, positioning the company to capitalize on the AI revolution. Despite near-term earnings-driven dips, Oracle's long-term value lies in its ability to monetize this transition—a process that is only just beginning.

References:

Oracle: Why the Earnings-Driven Dip Is a Buying Opportunity Amid a Transformative Cloud Transition^[1] Oracle (ORCL) Q2 2025 earnings report [https://www.cnbc.com/2024/12/09/oracle-orcl-q2-earnings-report-2025.html]
Upbit’s GIWA Could Spur Ethereum Layer-2 Growth in South Korea While Raising Centralization Concerns^[2] Is ORCL Stock a Buy, Sell or Hold at an EV/EBITDA Multiple of 21.89x [https://www.nasdaq.com/articles/orcl-stock-buy-sell-or-hold-ev-ebitda-multiple-2189x]
Oracle: All Important Fundamental Metrics Say Buy [https://fastgraphs.com/blog/oracle-all-important-fundamental-metrics-say-buy/]