Oracle Stock Soars 40%, Set for Biggest Gain Since 1992

Oracle (ORCL) experienced a remarkable surge, with shares soaring 40% on Wednesday following the release of unexpectedly strong cloud demand figures. This trajectory positions the software giant for a potentially record-breaking single-day gain, propelling it ever closer to the coveted $1 trillion market capitalization milestone. Currently valued at approximately $950 billion, Oracle’s ascent reflects growing investor confidence in its cloud infrastructure strategy and its pivotal role in the rapidly expanding artificial intelligence (AI) landscape.

The company’s fiscal report highlighted a staggering $455 billion in remaining performance obligations (RPO), a 359% increase year-over-year. This metric, representing the future revenue under contract, signals robust and sustained demand for Oracle’s cloud services. Ben Reitzes of Melius Research characterized the backlog as “historic,” emphasizing the Street’s initial RPO expectations of around $180 billion, which Oracle significantly surpassed.

Oracle’s ascendancy has been significantly fueled by the AI boom. Its cloud infrastructure business, coupled with access to Nvidia’s GPUs – essential components for processing intensive AI workloads – has positioned it as a key player in supporting the development and deployment of AI applications. However, the competitive landscape remains intensely contested, with Oracle vying for market share against formidable rivals like Microsoft (MSFT), Amazon (AMZN), and Google (GOOGL) in the fiercely competitive cloud computing arena. While the access to Nvidia’s GPU is key, Oracle’s advantage also hinges on its ability to offer specialized cloud solutions tailored to AI workloads including optimized database management and high-performance computing capabilities. Oracle’s recent investments in its Gen2 Cloud Infrastructure are likely playing a critical role in this surge in demand as well.

The impressive performance is also set to substantially boost the net worth of Oracle’s founder, Larry Ellison. Speculation suggests that he may be on the verge of overtaking Tesla CEO Elon Musk as the world’s wealthiest individual, further underscoring the magnitude of Oracle’s recent success.

Oracle is now projecting $18 billion in cloud infrastructure revenue for fiscal year 2026, with ambitious targets escalating to $32 billion, $73 billion, $114 billion, and $144 billion in the subsequent four years. Such exponential growth projections have left industry analysts in awe, with Gil Luria of D.A. Davidson describing the figures as “absolutely staggering.” Wells Fargo analysts lauded the results as a “momentous confirmation” of the AI-driven investment narrative, while Deutsche Bank analysts hailed Oracle’s performance as “truly awesome,” reaffirming the company’s leading position in AI infrastructure.

Deutsche Bank reiterated their buy rating on Oracle, significantly raising their price target from $240 to $335. The firm noted that Oracle’s F1Q results were virtually unmatched in their level of revision and clarity, in their near 20 years covering the software industry. These revised targets reflects the market re-rating the company for its potential to benefit from the expansion of the Artificial Intelligence industry.

Bank of America analysts echoed this bullish sentiment, upgrading Oracle to a buy rating, emphasizing the company’s “exceptional backlog” as evidence of its growing importance as “a key AI enabler.” They acknowledged ongoing debates regarding the profitability of AI workloads but affirmed that Oracle is demonstrably capturing market share within the rapidly expanding AI infrastructure market. Key aspects to consider that may result in increased profitablity include factors such as infrastructure efficiency, workload optimization, and pricing strategies that take advantage of peak usage.

Despite the glowing cloud revenue outlook, Oracle’s broader first-quarter report revealed some challenges. The company’s adjusted earnings per share of $1.47 fell slightly short of the $1.48 consensus estimate, while revenue of $14.93 billion missed the $15.04 billion expected. However, the market appears to be prioritizing the future potential represented by Oracle’s cloud business and its strategic positioning in the AI revolution, more so than any current performance headwinds.