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Why Oracle Stock Soared: Cloud Growth and AI Investments Ignite Momentum

Julian CruzThursday, May 1, 2025 7:36 pm ET

10min read

Oracle’s stock surged over 3% today, driven by a cocktail of strong financial results, strategic AI advancements, and speculation about a potential acquisition. The rally underscores investor optimism about the company’s shift toward cloud computing and its growing role in the AI infrastructure boom. Let’s dissect the key factors fueling this momentum.

The Earnings Surprise: Cloud Dominance and Record Backlog

Oracle’s fiscal Q3 2025 results, released earlier this week, highlighted robust growth across its cloud businesses. Total revenue hit $14.1 billion, a 6% year-over-year increase, with cloud infrastructure (IaaS) revenue soaring 49% to $2.7 billion. The star performer, however, was the $130 billion Remaining Performance Obligations (RPO)—a record backlog of contracted work that rose 62% year-over-year. This metric signals a “huge sales backlog,” as CEO Safra Catz noted, positioning oracle to deliver 15% revenue growth in fiscal 2026.

The RPO surge stems from AI-driven demand, with customers signing multi-cloud contracts and leveraging Oracle’s infrastructure for training large language models.

AI and Cloud: The Growth Engine

Oracle’s AI initiatives are central to its strategy. The newly launched Oracle AI Data Platform integrates leading models like OpenAI’s ChatGPT and Meta’s Llama directly into its databases, enabling secure analysis of private data. This platform is already driving results:
- Database MultiCloud revenue jumped 92% in the last three months, as enterprises adopt hybrid cloud setups.
- AI training GPU usage rose 244% year-over-year, reflecting surging demand for Oracle’s infrastructure.

CEO Larry Ellison announced plans to double data center capacity in 2025, a move to meet growing AI workload demands. Management also hinted at a potential “Stargate contract”—a high-profile AI infrastructure deal that could further accelerate cloud growth.

Strategic Moves and Speculation: Olo Acquisition Buzz

Speculation about Oracle’s potential acquisition of Olo, a $1.2 billion restaurant software firm, added fuel to today’s rally. While unconfirmed, the rumor aligns with Oracle’s history of strategic acquisitions, such as the $5.3 billion 2014 purchase of Micros Systems. Investors see synergy potential in Oracle’s existing restaurant and retail tech ecosystem, which already includes NetSuite and Fusion ERP.

Dividend Boost and Analyst Optimism

Oracle’s 25% dividend hike to $0.50 per share reinforced its financial strength. With $5.8 billion in trailing free cash flow and a fortress-like balance sheet, the company can fund both dividends and infrastructure expansion.

Analysts are bullish. Barclays’ Raimo Lenschow upgraded Oracle to “Overweight”, citing its AI partnerships and cloud transitions as long-term growth drivers. Even cautious observers acknowledge the stock’s IBD Composite Rating of 81/99 and Relative Strength Rating of 86/99, which reflect strong investor sentiment.

Risks on the Horizon

Despite the optimism, challenges remain:
- Legacy business decline: Cloud license and on-premise revenue fell 10% year-over-year, signaling a painful but necessary shift to subscription models.
- Execution risks: Doubling data center capacity and delivering on AI partnerships require flawless execution.

Conclusion: A Strong Foundation for Growth

Oracle’s stock surge today is no fluke. The company’s $130 billion RPO, AI-driven cloud infrastructure, and strategic moves like the AI Data Platform position it to capitalize on the AI boom. With 49% IaaS revenue growth and a dividend boost signaling financial health, investors have ample reason to be bullish.

While risks like margin pressures and competition with AWS and Azure linger, Oracle’s execution to date—backed by record RPO growth and a 92% rise in Database MultiCloud revenue—suggests it’s well-equipped to navigate them. For investors focused on the next wave of enterprise tech, Oracle’s stock remains a compelling play on cloud and AI dominance.

In short, Oracle’s ascent isn’t just about today—it’s about owning the infrastructure of tomorrow.

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