Oracle's long-term outlook impresses investors
2min read Oracle Corporation's recent presentation provided a bullish long-term outlook, driving strong investor enthusiasm and leading to a notable rally in the stock. The company raised its fiscal 2026 revenue target to at least $66 billion, surpassing the previous target of $65 billion. Even more significantly, Oracle unveiled an ambitious fiscal 2029 revenue target of $104 billion, which implies a robust compound annual growth rate (CAGR) of 16% from FY26 to FY29. This growth projection highlights the company's confidence in its cloud infrastructure and AI-driven business segments as key drivers of future expansion.
Cloud services were a standout in Oracle’s recent earnings, with cloud infrastructure revenue growing 45% to $2.2 billion in the quarter ending August 31. The cloud application business also performed well, increasing by 10% to $3.5 billion. These figures underscore Oracle’s strategic pivot towards cloud computing and AI, areas where the company sees substantial opportunity for continued growth. Oracle’s partnerships with major players like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) further position the company to capitalize on growing cloud adoption trends.
The release of new AI features, including Oracle Database 23ai, has been another driver of optimism. These advancements, along with Oracle’s flexibility in deployment (especially through Oracle Database@AWS), are expected to accelerate cloud migrations, providing a significant revenue uplift. Oracle's reputation for handling generative AI workloads, with clients like Elon Musk's xAI, has reinforced its position in this space. Analysts believe that Oracle’s cloud offering, particularly in AI, has a competitive edge due to its strong capabilities in training and network costs.
Investor sentiment was buoyed further by Oracle's record-high revenue backlog. The company now boasts a $99 billion remaining performance obligation (RPO), reflecting a 52% year-over-year increase. This backlog provides strong visibility into future revenue streams, and analysts have pointed to it as a clear indicator of the company's growing traction in the cloud space. Evercore noted that Oracle's full-stack architecture, which provides an integrated offering from applications to infrastructure, has been a significant advantage, particularly in regions with strict data sovereignty regulations.
The stock price action has been reflective of the market’s positive response to Oracle’s long-term guidance. Following Monday’s earnings report, the stock rallied from $142 to $156. Over the next few days, shares surged to the $174 area after the company provided its long-term outlook. However, some profit-taking has occurred since, with shares slipping back to $164, signaling a natural pullback after the impressive run. Despite this, analysts remain bullish, with TDCowen and Evercore both raising their price targets to $190, reflecting confidence in Oracle’s growth prospects.
Analyst commentary has been overwhelmingly positive. TDCowen noted that Oracle’s FY26 and FY29 revenue targets are backed by a growing cloud and AI backlog, and that the company’s ability to deliver substantial growth over the next several years is becoming increasingly clear. Evercore echoed this sentiment, emphasizing the accelerating momentum in Oracle’s cloud business and its ability to win big customer contracts, thanks in part to the flexibility of its cloud architecture. Both firms maintain a Buy rating, with expectations of further upside as Oracle executes on its long-term goals.
In conclusion, Oracle's long-term guidance and strong near-term results have positioned the company as a major player in the cloud and AI markets. The raised FY26 and FY29 revenue targets, coupled with impressive backlog growth, demonstrate Oracle’s confidence in its strategic direction. While the stock has experienced some profit-taking after its recent run, analysts see continued potential for upside, with the company's cloud infrastructure business providing significant growth opportunities over the coming years.
