Oracle CEO Safra Catz Just Delivered Incredible News for Nvidia Stock Investors

Key Points

• Oracle delivered robust fiscal 2026 first-quarter results, but its outlook was even more telling.

• The numbers clearly show that the implementation of AI continues to accelerate.

• As the gold standard for AI chips, Nvidia stands to profit from the ongoing adoption of AI.

• 10 stocks we like better than Nvidia ›

It's been a wild ride for Nvidia (NASDAQ: NVDA) investors over the past few years. The advent of artificial intelligence (AI) in early 2023 represented an unprecedented opportunity for the chipmaker, and it has clearly delivered. The stock has gained more than 1,100%, as Nvidia's graphics processing units (GPUs) provided the computational horsepower needed for generative AI. In the years since, the company's revenue surged 673% and its net income soared 1,770%, vaulting Nvidia to a $4 trillion market cap, the first company to ever surpass this lofty benchmark.

In recent months, however, the popular narrative is that AI adoption has peaked, with innovation being outpaced by hype. As a result, some investors have taken a step back, concerned that the implementation of AI is losing steam.

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Oracle (NYSE: ORCL) just delivered the surest indication yet that the adoption of AI continues to accelerate.

Image source: Getty Images.

A stunning forecast

At first glance, the results of Oracle's fiscal 2026 first quarter (ended Aug. 31) were mostly unremarkable, though both sales and profit growth accelerated sequentially. Revenue of $14.9 billion climbed 12% year over year, fueling adjusted earnings per share (EPS) that increased 6% to $1.47. The results fell short of Wall Street's expectations, as analysts' consensus estimates were calling for revenue of $15 billion and EPS of $1.48.

Beyond the headline numbers was a flurry of dealmaking that drove an incredible increase in Oracle's backlog. CEO Safra Catz revealed that the company's remaining performance obligation (RPO) -- which represents a pipeline of future earnings -- rose to a record $455 billion, surging 359%. Driving the increase were several multi-billion-dollar contracts signed during the quarter. That's not all. Catz went on to say: "[W]e expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars."

However, the devil is in the details, as the old saying goes, and the details are telling. The vast majority of the increase is coming courtesy of Oracle Cloud Infrastructure (OCI), which competes in cloud computing with the likes of Amazon Web Services, Alphabet's Google Cloud, and Microsoft Azure. Revenue from OCI grew 51% year over year in the current quarter. But that's just the beginning.

For the full year 2026, Oracle raised its revenue forecast for OCI and now expects growth of 77%. Furthermore, the company is guiding for impressive growth over the next three fiscal years:

• Fiscal 2027 cloud revenue increasing 78% to $32 billion
• Fiscal 2028 cloud revenue increasing 128% to $73 billion
• Fiscal 2029 cloud revenue increasing 97% to $144 billion

This outlook suggests that the "Big Three" of cloud computing may soon become the Big Four.

What does this have to do with Nvidia?

Beyond the fabulous news for Oracle investors, the results provide a snapshot of what's happening more broadly across the AI landscape.

Nvidia CEO Jensen Huang recently made a startling pronouncement, predicting that data center spending to support AI will soar from an expected $600 billion this year to between $3 trillion and $4 trillion by 2030.

Oracle's blockbuster forecast seems to support that assertion. Additionally, in recent months, the company's Big Three rivals have announced plans to ratchet up capital expenditure (capex) spending beyond what had previously been announced, to support the increasing demand for AI among their respective customers. This spending will likely translate to additional sales growth for Nvidia, since its chips are the gold standard for AI processing in data centers and the cloud.

Going a step further, Oracle's results show that demand for AI is going beyond the largest hyperscalers, moving downstream, as it were. Enterprise-level businesses looking to implement AI in their operations will need AI chips capable of supporting those operations, which will increase the need for Nvidia's cutting-edge GPUs as well.

The popular narrative in recent months has been that the adoption of AI is slowing. The astonishing increase in Oracle's backlog and increasing reports of higher capex spending provide evidence that the naysayers are simply wrong.

Nvidia is the dominant supplier for the data center GPU market, controlling a 92% share, according to IoT Analytics. Opportunities abound as AI expands beyond the biggest players, and Nvidia is well-positioned to benefit from that expansion, as its chips are the industry standard for AI training and inference.

The AI race has fueled a stratospheric rise in Nvidia stock. Since the dawn of generative AI in early 2023, the stock has soared 1,110% (as of this writing) and I believe there's more to come. The stock is currently trading for 28 times next year's expected earnings, an attractive price for the company powering the AI revolution.

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Danny Vena has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.