Is ORCL Stock Poised for Growth Amid Rising AI Infrastructure Demand?

Oracle’s ORCL positioning in the artificial intelligence infrastructure market presents a complex investment picture as the company navigates unprecedented demand against escalating capital requirements. The database software provider reported second-quarter fiscal 2026 results that underscored both the opportunity and challenge ahead.

Cloud infrastructure revenues surged 68% year over year to reach $4.1 billion, with GPU-related revenues jumping 177% as customers secured computing capacity for AI workloads. Total remaining performance obligations climbed 438% to $523 billion, driven primarily by commitments from major technology companies, including Meta and NVIDIA. The metric expanded by $68 billion sequentially during the quarter, reflecting accelerating contract signings.

However, the aggressive expansion strategy carries significant financial implications. Oracle now projects capital expenditures of approximately $50 billion for fiscal 2026, up from an earlier $35 billion estimate and substantially above the prior year's $21.2 billion. Free cash flow turned negative by approximately $10 billion in the November quarter, exceeding analyst expectations by a considerable margin.

The company's collaboration with the Department of Energy, announced in December 2025, and its flagship Stargate supercluster project with OpenAI demonstrate Oracle's infrastructure ambitions. The recently unveiled Zettascale10 system promises multi-gigawatt AI capacity, connecting hundreds of thousands of GPUs across distributed data centers.

Whether Oracle can convert its substantial contract backlog into profitable revenue streams while managing debt levels remains the central question for investors evaluating the stock's growth potential amid surging AI infrastructure demand.

Hyperscaler Rivals Accelerate AI Infrastructure Investments

Microsoft MSFT and Amazon AMZN are pursuing parallel AI infrastructure buildouts with significantly higher capital commitments. Microsoft projects $120 billion in capital expenditure for 2026, anchored by Azure's sustained growth momentum between 31% and 40% throughout 2025. Microsoft's AI services contributed nearly 20 percentage points to Azure's expansion as the company deepened its OpenAI partnership. Amazon announced plans to spend $125 billion on capital expenditures in 2025, up from $83 billion in 2024, with the vast majority directed toward AI infrastructure for AWS. Amazon's strategic focus includes custom Trainium and Inferentia chips to reduce reliance on third-party GPU suppliers. Both Microsoft and Amazon maintain stronger balance sheets compared to Oracle's leveraged position, though Amazon faces uncertainty around monetizing its custom silicon investments.

ORCL’s Price Performance, Valuation & Estimates

Shares of Oracle have lost 6.1% in the past six-month period, underperforming the Zacks Computer and Technology sector’s appreciation of 20.4% and the Zacks Computer - Software industry’s 1.6% decline.

ORCL’s 6-Month Price Performance

From a valuation standpoint, ORCL stock is currently trading at a premium with a trailing 12-month Price/Earnings ratio of 34.77x, which is higher than the industry average of 34.19x. Oracle carries a Value Score of D.

ORCL’s Valuation

The Zacks Consensus Estimate for ORCL’s fiscal 2026 earnings is pegged at $7.33 per share, marking an upward revision of 7.6% over the past 30 days. The earnings figure suggests 21.56% growth over the figure reported in fiscal 2025.

Oracle Corporation Price and Consensus

Oracle Corporation price-consensus-chart | Oracle Corporation Quote

ORCL stock 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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