Story Stocks^®

A very good week for Oracle (ORCL) has turned into an even better one after Bloomberg reported that the database and cloud software company raised its FY26 revenue guidance to at least $66.0 bln during a Financial Analyst meeting yesterday. The bullish outlook, which largely hinges on the robust demand within ORCL's cloud infrastructure business (OCI), comes on the heels of a solid Q1 earnings report that featured an EPS beat and impressive Remaining Performance Obligations (RPO) growth of 53%. Fueled by these two catalysts, shares of ORCL have surged by 20% this week.

• Looking further out on the horizon, ORCL said that $104 bln in revenue in FY29 is an attainable goal as it expands its cloud infrastructure business and as it capitalizes on an ever-increasing amount of AI use cases. When thinking about major cloud providers, the three hyperscalers -- Microsoft (MSFT), Google (GOOG), and Amazon Web Services (AMZN) -- immediately come to mind, but ORCL is becoming a very formidable player in the space.
• As an alternative to the big three hyperscalers, OCI provides customers with virtual machines and servers to run complex workloads, and it provides them with a variety of storage offerings that can manage massive volumes of data. Additionally, OCI has been launching new AI tools, such as OCI Vision and Oracle Machine Learning, that help businesses leverage data analytics and automation. Lastly, OCI also houses the company's cloud application products, including its Human Capital Management (HCM) and Enterprise Resource Planning (ERP) products.
• When ORCL issued Q1 results on Monday night, it reported that cloud infrastructure revenue surged by 45% yr/yr to $2.2 bln, bolstered by a 56% increase in OCI consumption revenue. In fact, growth would have been even stronger if ORCL had greater capacity. On that note, the company is planning to double its capex in FY25 compared to FY24 in support of its buildout of 77 more cloud regions. For some context, ORCL currently has 85 operational cloud regions.
• MSFT, GOOG, and AMZN aren't just competitors of ORCL, but they're also customers as they run ORCL's database software on their cloud platforms. In addition to its Q1 results and guidance, ORCL also announced a new deal with Amazon Web Services (AWS), allowing AWS customers to access Oracle Autonomous Database on dedicated infrastructure and Oracle Exadata Database Service within AWS.

The long journey from an on-premise database software developer to a cloud software and infrastructure company has been a difficult one at times for ORCL and its shareholders, but its transition is in full swing now and stronger growth is finally a reality.