Oracle Unveils AI Agents in Cloud Apps: Buy the Stock Now or Wait?

Oracle ORCL has positioned itself at the forefront of enterprise artificial intelligence (AI) with its ambitious rollout of AI agents across cloud applications. Following impressive first-quarter fiscal 2026 results that showcased explosive growth in cloud infrastructure bookings, the company is betting heavily that agentic AI will drive the next wave of enterprise software adoption. However, investors evaluating Oracle's premium valuation should carefully weigh the timeline for monetizing these innovations against current market expectations.

The Agentic AI Opportunity

In March 2025, Oracle introduced AI Agent Studio for Fusion Applications, a comprehensive platform enabling customers and partners to create, extend, deploy, and manage AI agents across enterprise operations. The platform includes more than 50 pre-packaged AI agents addressing workflows in finance, human resources, supply chain, sales, and customer service, with built-in validation tools and security frameworks.

Oracle recently expanded its customer experience capabilities with 16 new role-based AI agents embedded within Oracle Fusion Cloud CX applications, demonstrating the company's commitment to systematically building out its agent ecosystem. These latest additions span critical revenue-generating functions, including three marketing agents, such as the Account Product Fit Agent that helps prioritize customers most likely to purchase, six sales agents, including the Deal Advisor Agent that surfaces expert guidance to close deals faster, and seven service agents, like the Triage Agent that intelligently analyzes and prioritizes service requests. Running on Oracle Cloud Infrastructure, these agents are prebuilt, natively integrated within existing workflows, and provided at no additional cost to Fusion Applications customers, removing a significant barrier to adoption that competitors often face with premium AI pricing.

Oracle has also strengthened its AI foundation through partnerships, including an August 2025 collaboration with Google Cloud to offer Gemini models via Oracle Cloud Infrastructure's Generative AI service. These strategic moves demonstrate Oracle's commitment to providing enterprise customers with flexible model choices while maintaining the security and compliance standards demanded by regulated industries.

The appeal of AI agents lies in their potential to execute complex, multi-step workflows autonomously, moving beyond the assistive role of generative AI chatbots toward systems that can make decisions and take actions. For Oracle's extensive customer base, agents embedded directly within familiar applications could drive significant productivity gains without requiring wholesale system changes.

Strong Financial Foundation Meets AI Innovation

Oracle delivered first-quarter fiscal 2026 results in September that exceeded expectations in key areas, with total revenues reaching $14.9 billion, representing 12% year-over-year growth. Notably, the company's remaining performance obligations surged 359% to $455 billion, driven by four multi-billion dollar contracts signed during the quarter. This unprecedented backlog provides substantial revenue visibility and validates Oracle's cloud infrastructure strategy, particularly as artificial intelligence workloads drive demand for computing capacity.

The company projects cloud infrastructure revenues to grow 77% to $18 billion in fiscal 2026, with ambitious targets of $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years. These projections reflect management's confidence that Oracle's differentiated approach to cloud infrastructure, emphasizing security and performance alongside AI capabilities, can capture meaningful market share from established hyperscalers.

The Zacks Consensus Estimate for fiscal 2026 revenues is currently pegged at $66.84 billion, suggesting growth of 16.44% from the year-ago quarter’s reported figure. The consensus mark for fiscal 2026 earnings is pegged at $6.77 per share, up 0.6% over the past 30 days.

Oracle Corporation Price and Consensus

Oracle Corporation price-consensus-chart | Oracle Corporation Quote

Valuation Considerations and Competitive Landscape

Oracle's stock performance has been extraordinary, with shares gaining 75% year to date, dramatically outperforming the broader Zacks Computer and Technology sector’s growth of 24.1%. This remarkable appreciation has left major cloud competitors trailing significantly, with Microsoft MSFT advancing 25.4%, Alphabet GOOGL climbing 32.3% and Amazon AMZN rising just 0.7% over the same period.

ORCL Outperforms Sectors, Peers YTD

The divergence in stock performance between Oracle and these hyperscale competitors merits careful consideration. While Microsoft, Amazon, and Google possess substantially larger cloud market shares and deeper AI research capabilities, Oracle's focused approach on database-centric workloads and embedded application agents may represent a defensible competitive position.

However, such outsized gains relative to peers pursuing similar agentic AI strategies raise important questions about Oracle’s valuation sustainability. Oracle currently trades at a price-to-earnings ratio of 43.09 times, notably above the Zacks Computer-Software industry average of 37.9 times and substantially elevated compared to Oracle's own five-year median of 23.46 times. This premium valuation reflects market enthusiasm for Oracle's cloud infrastructure momentum and AI agent capabilities, yet also assumes flawless execution against formidable competition.

ORCL’s Premium P/E Depicts Stretched Valuation

Microsoft has embedded AI agents throughout its Microsoft 365 Copilot platform and Azure cloud services, leveraging its partnership with OpenAI to deliver agentic capabilities across productivity applications. Similarly, Amazon Web Services has introduced AI agents through Amazon Bedrock, enabling enterprises to build and deploy autonomous agents that can complete multi-step tasks. Google Cloud has also expanded its agentic AI offerings through Vertex AI Agent Builder, allowing customers to create specialized agents that integrate with enterprise data and workflows.

Investment Perspective

For existing Oracle shareholders, the combination of robust cloud infrastructure momentum and innovative AI agent capabilities justifies maintaining positions through near-term volatility. The company's technology investments and customer relationships position it well to capitalize on enterprise AI adoption over the coming years. However, prospective investors may benefit from patience. Oracle's premium valuation leaves little room for disappointment, whether from integration challenges, competitive pressures, or macroeconomic headwinds affecting enterprise technology spending. Given current valuation multiples and the early stage of AI agent monetization, waiting for a more attractive risk-reward balance appears prudent. The opportunity to invest in Oracle's AI transformation will likely persist throughout 2025, potentially at more favorable valuations as the market digests execution updates and competitive dynamics. Oracle 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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