Oracle Turns Higher on Bold FY26 Cloud Outlook After Mixed Q4 Start

Oracle wrapped up its fiscal fourth quarter with results that delivered modest top- and bottom-line beats, but it was the company’s robust outlook for fiscal 2026 that ultimately stole the show. Initially, the stock fell approximately 3% after hours, trading down to $171 on a slight miss in Infrastructure-as-a-Service (IaaS) growth. However, the stock staged an impressive rebound following bullish commentary from management, particularly around accelerated cloud growth and significant Remaining Performance Obligations (RPO) momentum expected in the year ahead. The report underscores a shift in investor focus from quarterly headline beats to Oracle’s longer-term AI-driven transformation.

Ask Aime: Oracle's Q4 results beat expectations, yet its long-term AI vision lifts the stock.

For Q4, Oracle posted adjusted earnings per share of $1.70, topping consensus estimates of $1.64. Revenue came in at $15.9 billion, ahead of the $15.6 billion forecast, and up 11% year-over-year. On a GAAP basis, earnings were $1.19 per share. Cloud revenue, which combines IaaS and SaaS, reached $6.7 billion for the quarter, a 27% increase. Within that, IaaS revenue rose 52% to $3.0 billion—slightly below the 54% expected—while SaaS grew 12% to $3.7 billion, just shy of the 13% projection. Oracle’s ERP businesses continued to show strength, with both Fusion and NetSuite ERP units generating $1.0 billion each, rising 22% and 18% respectively.

The standout metric was Oracle’s RPO, which rose 41% year-over-year to $138 billion, surpassing the $136 billion consensus estimate. The company had posted a record-setting $33 billion sequential increase in RPO last quarter, and the latest figure reinforced investor optimism about Oracle’s visibility into future revenue streams. Free cash flow landed around $3 billion for the quarter, aligning with expectations, while CapEx totaled approximately $3.8 billion, reflecting continued investment in Oracle’s AI and cloud infrastructure.

Full-year results for fiscal 2025 reflected steady expansion. Total revenue rose 8% to $57.4 billion, with cloud services and license support contributing $44.0 billion, up 12%. Non-GAAP operating income was $25.0 billion and non-GAAP EPS totaled $6.03, showing the earnings power of Oracle’s cloud pivot despite elevated CapEx. Operating cash flow for the year increased 12% to $20.8 billion.

However, it was the outlook for FY26 that reinvigorated investor sentiment. CEO Safra Catz projected a dramatic increase in Oracle’s total cloud growth rate—from 24% in FY25 to over 40% in FY26. She also forecast IaaS growth of over 70%, up from 50% this year, and said RPO could more than double next year. “FY25 was a very good year—but we believe FY26 will be even better,” Catz said. The bullish tone reflects rising demand for Oracle’s AI infrastructure and increasing confidence in its ability to execute on long-term initiatives.

Ask Aime: Oracle's Q4 Earnings and FY26 Outlook

Oracle Chairman and CTO Larry Ellison reinforced this view by pointing to a 115% sequential increase in multi-cloud database revenue from Amazon, Google, and Azure in Q4. He added that Oracle now has 23 multicloud datacenters live and 47 more under construction. The company also operates 29 Oracle Cloud@Customer dedicated datacenters, with 30 more planned in FY26. Revenue from these deployments rose 104% year-over-year, while OCI consumption revenue surged 62% in Q4. Ellison stated that OCI revenue growth is “skyrocketing” and poised to accelerate further in the coming year.

Heading into earnings, investors were focused on whether Oracle could deliver on ambitious cloud growth targets, demonstrate margin stability under a CapEx-heavy model, and convert its massive RPO backlog into recognized revenue. While the slight IaaS miss prompted some initial hesitation, management’s guidance appears to have reassured the market.

Analysts had varied views leading into the report. Piper Sandler had lowered its price target due to skepticism about near-term execution, while BMO Capital raised its target to $200 but flagged pressure on FY26 and FY27 margins due to increased depreciation. KeyBanc and Citizens remained bullish on Oracle’s AI momentum and record RPO growth, citing Oracle’s expanded data center presence in Texas and Salt Lake City. Mizuho praised Oracle’s execution of the AI supercluster model and called the stock’s 23x forward earnings valuation compelling given its growth prospects.

Watch: AInvest's ORCL preview to see how the company matched up to expectations.

CFRA’s Angelo Zino also maintained a bullish stance, highlighting easing supply constraints, strong OCI momentum, and expected acceleration in revenue growth heading into FY26. Despite missing six of the last seven quarters on revenue, Oracle’s long-term visibility has kept investors engaged. The combination of a surging RPO, expanding cloud footprint, and demand for AI compute infrastructure suggests Oracle is well-positioned to evolve beyond its legacy roots.

With shares having traded mostly sideways in recent months, the Q4 results and FY26 outlook may serve as a catalyst. If Oracle can deliver on its bold projections and continue executing on initiatives like Project Stargate, the narrative could shift decisively in favor of its transformation into a leading cloud and AI platform.