Oracle (ORCL) has been on a remarkable run over the past four months. Since hitting a 52-week low of $118.86 in April, the stock has soared 108%, setting fresh highs on an almost daily basis. The rally is being driven by Oracle’s exceptional momentum in cloud services and AI-powered solutions, supported by strong enterprise demand.
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More importantly, even after such a surge, ORCL still doesn’t appear overvalued given its revitalized potential for accelerated earnings growth. That’s why I remain bullish on the stock.
Cloud Infrastructure: The Engine of Oracle’s Growth
Oracle’s cloud infrastructure business, OCI, is firing on all cylinders, and it’s no surprise why. In their latest earnings call, CEO Safra Catz highlighted that OCI revenue jumped 52% year-over-year to $3 billion, with consumption revenue soaring 62%. That’s on top of 42% growth the previous year! Enterprises are clearly flocking to Oracle’s cloud for its cost efficiency and flexibility, especially for AI workloads.
For example, Chinese retailer Temu, owned by PDD Holdings Inc. (PDD), recently moved its infrastructure to OCI, and Oracle’s partnership with OpenAI’s Stargate project underscores its role in the development of enormous AI data centers. With $138 billion in remaining performance obligations (RPO), up 41% from last year, Oracle is locked in for explosive growth.
I believe this success can be attributed to Oracle’s engineering decisions, which prioritize enterprise needs and offer lower costs and deployment flexibility compared to other hyperscalers. Catz noted that OCI’s non-cancelable bookings give them confidence for over 70% revenue growth in fiscal 2026. That’s a signal that Oracle’s cloud infrastructure is becoming a go-to for businesses scaling AI and database workloads, setting the stage for sustained momentum.
AI-Powered Database Solutions: A Game-Changer
Another massive driver of Oracle’s rally is its AI-integrated database solutions, particularly the Oracle Autonomous Database. In the most recent fiscal Q4-2025, cloud database services revenue grew 31% to an annualized $2.6 billion, with Autonomous Database consumption revenue up a whopping 47%.
Why does this matter? Enterprises need robust databases to handle AI’s massive datasets, and Oracle’s offering stands out with built-in security and flexibility across OCI, private clouds, or partner clouds like Azure and Google. Larry Ellison, Oracle’s Chairman, emphasized that multi-cloud database revenue from partners like Amazon (AMZN) and Alphabet (GOOGL) grew 115% from Q3 to Q4.
This is the story of Oracle becoming the backbone for AI-driven enterprises. The company’s 23 live cloud regions for database services, with 47 more planned, show it’s scaling fast to meet demand. I don’t think Ellison’s bold claim that Oracle will be the “number one cloud database company” is just bravado, but rather it’s backed by a 56% surge in cloud RPO, signaling a pipeline stuffed with future revenue. Oracle’s database prowess is a key reason this stock keeps climbing.
Oracle’s Valuation is Not as Pricey as Investors Think
With ORCL more than doubling from its lows and now trading at about 37x forward earnings, some folks might think it’s getting frothy. But let’s unpack this. Oracle’s profitability is soaring, thanks to AI tailwinds. Last quarter, adjusted EPS hit $1.70, beating estimates by $0.06, and full-year operating income grew 9% to $25 billion. The gross profit margin was also at a stellar 71.1%, reflecting Oracle’s ability to monetize its AI and cloud offerings efficiently, especially as cloud services now account for 77% of total revenue.
The AI boom is pushing demand that’s “almost insatiable,” as Ellison put it, with Oracle welcoming unprecedented orders for cloud capacity. This sets up double-digit EPS growth potential, especially with fiscal 2026 revenue guidance at over $67 billion, a 16% jump. So even at today’s somewhat elevated multiple, ORCL isn’t really overvalued either when you consider the high-margin, high-growth AI environment and its key role in it.
Is Oracle a Buy, Hold, or Sell?
There are 34 analysts offering price targets on ORCL stock via TipRanks, with a fairly bullish consensus. Today, the stock carries a Moderate Buy consensus rating based on 24 Buy and 10 Hold ratings over the past three months.
Notably, not a single analyst rates the stock a Sell. ORCL’s average stock price target of $249.03 indicates Wall Street expects sideways trade from ORCL over the next twelve months.
Oracle’s Rally is Sustainable in the Cloud Era
All in all, I believe Oracle’s run isn’t just a short-term hype cycle, but the result of real momentum in cloud infrastructure and AI-powered databases, backed by sticky enterprise demand and long-term contracts. The company is scaling fast, securing huge RPO, and expanding its multi-cloud reach, all while sustaining strong profitability.
At roughly 37x forward earnings, ORCL may look pricey at first glance, but the growth trajectory tells a different story. With accelerating adoption across AI workloads and unmatched database capabilities, I see Oracle as one of the most compelling plays in this new cloud era, and so I remain Bullish on its future.