Will Broad Cloud Access Boost Momentum for Oracle's Hardware Business?

Oracle ORCL is leveraging its partnerships with top cloud providers to accelerate the momentum of its hardware business. By integrating Exadata X11M systems and Autonomous Database infrastructure into data centers operated by Amazon Web Services (AWS), Microsoft Azure and Google Cloud, the company’s multicloud strategy enables enterprises to access its high-performance database services within their preferred ecosystems. This approach reduces dependency on Oracle’s own cloud while significantly expanding its hardware reach across global markets.

Recent initiatives highlight this expansion. Oracle Database@Google Cloud launched in Japan, offering Exadata-powered services through Google’s data centers, while Oracle Database@AWS allows seamless database workload migration to AWS’ scalable infrastructure. These moves are expected to boost the hardware segment’s top-line growth through the sale and installation of Exadata systems, storage servers and database machines, along with hardware costs capitalized and recovered over time via cloud subscriptions.

To further meet rising demand, Oracle is aligning its hardware with AI growth by integrating Nvidia’s latest GPUs and committing more than $40 billion to procure 400,000 Nvidia GB200 chips for its Stargate AI data center in Texas. Planned investments of $2 billion in Germany and $1 billion in the Netherlands underscore its commitment to scaling high-performance infrastructure through advanced hardware solutions.

Oracle’s hardware revenues are projected to reach $3 billion in fiscal 2026, following a 6.82% year-over-year increase in fourth-quarter fiscal 2025, highlighting the strength of its partnership-led growth model.

Oracle Faces Tough Competition in Hardware Space

Oracle faces stiff competition in advanced Hardware solutions from players like Hewlett-Packard HPE and Dell Technologies DELL.

Hewlett-Packard offers powerful hardware solutions that support advanced computing, storage and networking facilities along with AI workloads. Hewlett-Packard’s ProLiant Gen11 servers, featuring AMD EPYC Genoa chips and liquid-cooled GB200 NVL72 racks, target demanding AI workloads. With innovations like the XD690 housing eight NVIDIA GPUs, Hewlett-Packard delivers hybrid-cloud, energy-efficient hardware that rivals Oracle’s Exadata in modern enterprise environments.

Dell Technologies offers PowerEdge servers and PowerStore/PowerMax storage as flexible alternatives to Oracle’s Exadata. While Exadata can deliver up to 36× higher I/O performance, Dell Technologies drives appeal through its VxRail hyper-converged systems, offering flexibility and cost savings. A major power company switched from Exadata to Dell Technologies’ VxRail, reducing Oracle licensing exposure and saving over $5 million in total project costs.

ORCL’s Price Performance, Valuation & Estimates

Shares of Oracle have appreciated 47.3% year to date, underperforming both the Zacks Computer and Technology sector’s return of 9.5% and the Zacks Computer - Software industry’s appreciation of 19.2%.

ORCL’s YTD Price Performance

From a valuation standpoint, ORCL appears overvalued, trading at a trailing 12-month EV/EBITDA multiple of 30.15x, significantly higher than the Zacks industry’s average of 20.55x. Oracle carries a Value Score of F.

ORCL’s Valuation

The Zacks Consensus Estimate for ORCL’s fiscal 2026 revenues is pegged at $66.57 billion, indicating 15.97% year-over-year growth. The consensus mark for ORCL’s 2026 earnings is pegged at $6.73 per share, increased by a couple of cents over the past 30 days. The earnings figure suggests 11.61% growth over the figure reported in fiscal 2025.

ORCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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