Oracle Shares Surge Amid Strong Cloud Infrastructure Performance and Multibillion-Dollar Contracts

Oracle's stock is soaring 79% year-to-date and rose 39% on Sept. 10 after announcing Q1 FY22 results, which beat expectations. The company's cloud infrastructure unit is expected to surge 77% this year, and it posted a huge surge in bookings and signed four multibillion-dollar contracts. Its remaining performance obligations surged 359% to $455 billion. Oracle expects to deliver 71 data centers to Microsoft, Alphabet, and Amazon over the next few years.

Oracle's stock (ORCL) has been on a remarkable run this year, soaring 79% year-to-date and rising 39% on September 10 after announcing its Q1 FY22 results. The enterprise software giant's shares have dramatically outperformed the broader Zacks Computer and Technology sector, leaving competitors like Microsoft (MSFT), Alphabet (GOOGL)-owned Google, and Amazon (AMZN) trailing behind Is Now the Time to Buy Oracle Stock After Its Q1 Earnings-Fueled Run?^[1].

The company's cloud infrastructure unit is expected to surge 77% this year, driven by a significant increase in bookings and the signing of four multibillion-dollar contracts. This growth has been fueled by the strong adoption of Oracle Cloud infrastructure, as evidenced by a 359% increase in remaining performance obligations (RPO) to $455 billion Oracle’s Earnings Call Highlights Cloud Growth and AI Leadership^[2].

Oracle's Q1 FY22 earnings call highlighted the company's robust performance in the cloud sector. The company reported a remarkable 27% increase in total cloud revenue, reaching $7.2 billion. The cloud infrastructure segment alone saw a 54% rise to $3.3 billion, while cloud database services grew by 32%, with annualized revenues nearing $2.8 billion Oracle’s Earnings Call Highlights Cloud Growth and AI Leadership^[2].

The company's ambitious future revenue projections underscore its confidence in its growth trajectory. Oracle expects Oracle Cloud Infrastructure to grow 77% to $18 billion in the current fiscal year, with projections reaching $144 billion over the next four years Oracle’s Earnings Call Highlights Cloud Growth and AI Leadership^[2].

Despite these impressive results, Oracle faces challenges such as negative free cash flow and a slight decline in software revenue. The company's capital expenditures for FY2026 are expected to reach approximately $35 billion, reflecting its substantial investment in future capabilities Oracle’s Earnings Call Highlights Cloud Growth and AI Leadership^[2].

Investment Recommendation

For existing shareholders, holding Oracle stock appears prudent given the company's strong cloud momentum and expanding AI capabilities. The multi-year growth trajectory supported by substantial customer commitments provides visibility that justifies maintaining positions despite elevated valuations. However, new investors should consider waiting for a more attractive entry point, potentially in the $260-$280 range, which would align valuations closer to historical norms while still reflecting the improved growth profile Is Now the Time to Buy Oracle Stock After Its Q1 Earnings-Fueled Run?^[1].