Can Oracle's Expanding Contract Pipeline Drive Its Next Growth Phase?

Oracle ORCL is gearing up for its next phase of growth, backed by an expanding contract pipeline and a surge in demand for cloud and AI infrastructure. In the first quarter of fiscal 2026, management disclosed several multi-billion-dollar deals with top AI leaders, including OpenAI, Meta, NVIDIA, AMD and xAI, underscoring the company’s rising influence in the AI infrastructure space. These contracts have already translated into a 359% year-over-year surge in Remaining Performance Obligations (RPO) and are expected to exceed half a trillion dollars in the coming quarters.

Oracle shares closed up 3% on Thursday as it called for more business in core categories and confirmed a cloud-computing deal with social media giant Meta. The maker of database software sees $20 billion in artificial intelligence-powered database and AI data platform revenues in the 2030 fiscal year, up from $2.4 billion in fiscal 2025 and $3 billion in fiscal 2026.

Recently, Oracle and Google Cloud have expanded their partnership to bring Google’s Gemini 2.5 and other advanced AI models to Oracle Cloud Infrastructure (OCI) via Vertex AI, covering video, image, speech, music and industry models like MedLM.

Oracle’s outlook remains ambitious. Management projects OCI revenues will grow 77% to $18 billion in fiscal 2026, with the long-term plan to reach $144 billion by 2030, most of which is already secured through existing agreements.

The Zacks model reflects similar optimism, forecasting total revenue growth of 16.5% in fiscal 2026 and 21.7% in fiscal 2027. With a swelling backlog, deep AI partnerships and multi-cloud expansion, Oracle’s contract pipeline appears well-positioned to power sustained, long-term growth.

How Rivals Stack Up Against Oracle

Alphabet’s GOOGL expanding cloud and AI ecosystem continues to strengthen its competitive edge over Oracle. As of June 30, 2025, Alphabet reported a $108.2 billion revenue backlog, primarily driven by Google Cloud. Alphabet expects to recognize 55% of this backlog within 24 months. Major wins like Meta’s $10 billion AI deal and TCS’ partnership expansion underscore Alphabet’s accelerating enterprise adoption and growing leadership in AI infrastructure.

Microsoft MSFT remains Oracle’s fiercest rival, backed by a $368 billion commercial RPO, up 37% year over year in the fourth-quarter fiscal 2025, reflecting a strong and expanding contract pipeline. Fueled by surging demand for Azure and Copilot, Microsoft continues to secure major AI and cloud deals, including a recent $14 billion agreement with Nscale for 200,000 Nvidia GB300 GPUs. Its scale, AI depth and global reach solidify enduring leadership in enterprise cloud.

ORCL’s Price Performance, Valuation & Estimates

Shares of Oracle have surged 83.7% year to date, outperforming both the Zacks Computer and Technology sector’s return of 23% and the Zacks Computer - Software industry’s rise of 19.9%.

ORCL’s YTD Price Performance

From a valuation standpoint, ORCL stock is currently trading at a premium with a forward 12-month Price/Earnings ratio of 42.91x, which is higher than the industry average of 33.01x. Oracle carries a Value Score of D.

ORCL’s Valuation

The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $6.77 per share, marking an upward revision of two cents over the past 30 days. The earnings figure suggests 12.27% growth over the figure reported in fiscal 2025.

ORCL stock currently carries a Zacks Rank #2 (Buy). 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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