Over the years, Oracle Corporation (NYSE: ORCL) has transitioned from an on-premises, product-focused business model to a subscription-based services platform. The company’s unique approach to cloud technology, with a focus on infrastructure, has positioned it to meet the growing demand for AI workload processing. For the cloud infrastructure business, the management projects strong revenue growth in FY25, exceeding last year’s 50% increase.
The tech giant’s fourth-quarter report is slated for release on Wednesday, June 11, at 4:05 pm ET. It is estimated that adjusted earnings edged up to $1.64 per share in Q4 from $1.63 per share in the year-ago quarter. The consensus revenue estimate for Q4 is $15.58 billion, which represents a 9% year-over-year increase. In the most recent quarter, both revenue and earnings fell short of expectations, marking their second consecutive miss.
The Stock
After rebounding from a ten-month low in mid-April, Oracle’s shares have maintained an uptrend, growing about 12% over the past month. The average stock price for the past 12 months is $157.40. 2024 was a strong year for the stock, and its value almost tripled in the past five years. However, the valuation is favorable from an investment perspective, given the company’s ability to leverage the significant momentum in the cloud and AI markets.
“We now have a clear line of sight to our future revenue growth. We remain very confident and committed to total cloud infrastructure revenue for fiscal year 2025, growing faster than the 50% reported last year. And it will be even faster for fiscal year 2026, likely a lot faster. Our confidence in meeting our $66 billion revenue target for FY ’26 is now stronger than ever and represents around a 15% growth rate. And more importantly, I now expect that our fiscal year ’27 growth rate will be around 20%, which is even higher than I previously guided,” Oracle’s CEO Safra Ada Catz said at the Q3 earnings call.
In the third quarter, adjusted earnings, excluding one-off items, were $1.47 per share, compared to $1.41 per share in Q3 2024. On a reported basis, the company posted a net income of $2.94 billion or $1.02 per share for the quarter, vs. $2.40 billion or $0.85 per share in the year-ago quarter. The bottom-line growth was driven by an increase in revenues to $14.13 billion in the February quarter from $13.28 billion in the same period a year earlier. A 10% growth in Cloud Services and License Support, which accounts for more than 75% of total revenues, more than offset weakness in other business segments.
Outlook
The company expects its huge sales backlog of $130 billion to catalyze revenue growth in the current fiscal year. For long-term growth, Oracle bets big on its Stargate joint venture with OpenAI, SoftBank, and MGX to deliver AI infrastructure across the US. It looks well-positioned to tap into the secular momentum in generative AI.
ORCL experienced high volatility in recent months, and the last closing price almost matches the stock’s value at the beginning of the year. The shares traded slightly lower on Wednesday afternoon.
