Oracle (ORCL) stock has been soaring for the past two months, having secured several major cloud service deals, including one projected to generate over $30 billion in annual revenue beginning in fiscal year 2028. The stock has set record all-time highs for several days in a row after breaking through long-standing resistance around $190 per share.
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To put this into perspective, Oracle reported $57.4 billion in revenue for the year ended June 2025. The $30 billion figure represents nearly 10% of the entire $330 billion cloud infrastructure services market in 2024, highlighting Oracle’s emergence as a significant force in this rapidly growing sector. With these deals expected to materialize in the coming years, there’s a strong case for further upside in ORCL stock, reinforcing a Bullish outlook.
Project Stargate: Oracle’s Central Role
Oracle’s landmark $30 billion cloud services deal is tied to Project Stargate, a major initiative first announced in January 2025 with a $500 billion investment commitment over four years. Oracle was named a key partner in the project, alongside SoftBank (SFTBY), OpenAI, and MGX.
This $30 billion annual contract is believed to be the first significant commercial agreement resulting directly from Project Stargate. While Oracle initially withheld the client’s identity, it was later confirmed to be OpenAI—a logical fit given OpenAI’s enormous demand for computing power to support its AI models.
Accelerating Cloud Momentum & Market Position
Oracle currently holds a relatively modest share of the cloud infrastructure market—estimated at 3% to 4% in 2024/2025—but its recent $30 billion deal marks a key validation of its cloud strategy and positions it to narrow the gap with industry giants like Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL).
Even before this agreement, Oracle’s cloud business was gaining strong momentum, with total cloud revenue (IaaS plus SaaS) reaching $6.7 billion, a 27% year-over-year increase. Looking ahead, Oracle expects its Cloud Infrastructure (IaaS) growth rate to accelerate from 50% in FY25 to over 70% in FY26.
ORCL’s Comparative Performance Shows a Growing Revenue Gap
It’s important to note that the $30 billion deal was announced during Oracle’s fiscal Q1 2026 (June 2025), but it isn’t expected to generate revenue until fiscal year 2028. This creates a gap between the market’s immediate optimism and the actual financial impact.
In this context, I see potential for a sustained upward re-rating of Oracle’s stock as FY28 approaches and the revenue materializes. However, there’s also downside risk if execution is delayed or if the dynamics of the AI market shift unexpectedly.
Meanwhile, ORCL’s valuation is already feeling the brunt of its ultra-hot share price. Yes, Oracle’s valuation is frothy, but when viewed in the context of its growth prospects, it’s easier to stomach. Its current Price-to-Earnings (P/E) ratio of 53.5 trades at an 82% premium to its peers in the Information Technology sector. Take a look at ORCL and its market peers, as sourced from TipRanks data.
A close peer, Microsoft, trades at a P/E of 38.38. Both companies have similar expectations for forward revenue growth, which is expected to be around 14%. However, Oracle’s growth, as evidenced by the most recent deal, is set to boom. $30 billion in annual revenue starting in fiscal year 2028 represents a 52.3% increase from its last full year.
Beyond OpenAI: Expanding AI Partnerships & Ambition
Significantly, Oracle’s AI partnerships extend well beyond OpenAI. The company has also teamed up with xAI to bring the Grok-3 large language model to its cloud platform and formed a strategic alliance with IBM (IBM) to integrate Watson X AI tools. To support the surging demand for its AI infrastructure, Oracle plans to invest $25 billion in capital expenditures in fiscal year 2026.
The company’s ambitions are bold. CTO Larry Ellison declared that Oracle aims to “build and operate more cloud infrastructure data centers than all of our cloud infrastructure competitors combined.” While this may sound overly ambitious, Oracle’s central role in Project Stargate and its landmark deal with OpenAI underscores that these aspirations deserve to be taken seriously.
What is ORCL’s 12-Month Target Price?
On Wall Street, ORCL has a Moderate Buy consensus rating based on 22 Buy, 11 Hold, and zero Sell ratings over the past three months. ORCL’s average stock price target of $224.04 implies a downside potential of almost 5% over the next twelve months.
Earlier this month, analyst Mark Moerdler from Bernstein gave ORCL a Buy rating and increased his price target from $225 to $269. His optimism was multifaceted, citing Oracle’s growth in the cloud segment, robust financial targets, and potential in AI training.
On the other side of the aisle, Citi analyst Tyler Radke issued a Hold rating on ORCL stock, expressing caution over the stock’s valuation and the company’s profitability. He does believe the recent deal is “clearly an incremental positive,” however.
ORCL Flies High as Major AI Player in the Making
Oracle’s $30 billion deal with OpenAI is a game-changer, signaling its rapid ascent as a serious contender in the expansive cloud infrastructure space. While the stock isn’t cheap by conventional metrics, the valuation appears justifiable—provided Oracle successfully executes on scaling its cloud operations to meet surging demand.
That said, several risks remain. Major hyperscalers like Microsoft won’t cede ground without a fight, and Oracle will also have to navigate a complex and shifting geopolitical and regulatory environment. Securing a $30 billion contract highlights Oracle’s potential, but delivering on that scale while maintaining financial discipline amid significant capital investments will be a major challenge.
Overall, Oracle is well-positioned to become a dominant force in cloud infrastructure, cementing its place as a core “AI stock” in the years ahead.