ii view: Oracle full of optimism for 2026
Upping capital expenditure and highly ambitious in two of the world’s technology arenas. Analyst Keith Bowman assesses prospects for this database software mammoth.
13th June 2025 11:52
by Keith Bowman from interactive investor
Fourth-quarter results to 31 May
- Revenue up 11% to $15.9 billion
- Adjusted earnings up 7% to $1.19 per share
- Quarterly dividend of $0.50 per share, unchanged from the previous quarter
Chief executive Safra Catz said: “FY25 was a very good year - but we believe FY26 will be even better as our revenue
growth rates will be dramatically higher.”
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ii round-up:
Database software and cloud data-hosting provider Oracle Corp (NYSE:ORCL) increased growth forecasts for 2026, driven by high demand from organisations globally to provide software and hosting facilities for their own artificial intelligence (AI) offerings.
Pushed by demand from companies such as Chinese retailer Temu, Oracle now expects full-year 2026 revenues of $67 billion (£49.4 billion). That’s up from $57 billion over this latest year to 31 May (FY2025) and ahead of existing analyst estimates of $65 billion.
Shares for the S&P 500 company rose around 13% in post-results trading having come into this latest news up by close to a third over the last year. The S&P 500 index is up around 11% over that time. Shares for fellow software and data hosting mammoth, Microsoft Corp (NASDAQ:MSFT), have gained by 8% during that time.
Oracle provides database software and data-centre hosting facilities for organisations. The rate of cloud growth, which includes both software applications and infrastructure, is expected by management to increase from 24% over the 2025 year just gone to over 40% for the 2026 year ahead.
Total revenues for the fourth quarter just gone to late May rose 11% to $15.9 billion, driving a 7% increase in adjusted earnings to $1.19 per share. Both beat analysts’ forecasts.
In January, President Donald Trump announced plans to invest billions of dollars in AI infrastructure in the US in collaboration with Oracle, OpenAI and SoftBank. The first initiative of the joint venture, called Stargate, will be to construct data centres in Texas with work having already begun.
Currently operating 23 multi-cloud data centres, Oracle plans to build an additional 47 over the next 12 months. Capital expenditure for FY 2026 is expected to reach $25 billion, up 18% on the FY 2025 and comfortably ahead of prior Wall Street estimates of close to $20 billion.
Oracle is targeting revenues of $104 billion by the full year 2029, near on double the current level. First-quarter results are likely to be announced mid-September.
ii view:
Started in 1977, Oracle today serves over 400,000 customers including companies such as Chinese car maker BYD Co Ltd Class H (SEHK:1211), the UK Ministry of Defence, PayPal Holdings Inc (NASDAQ:PYPL), Macy's Inc (NYSE:M) and Walmart Inc (NYSE:WMT). Pioneering the first Structured Query Language (SQL) database, Oracle has grown both organically and via more than 150 acquisitions costing around $110 billion.
For investors, increased capital expenditure going forward is not guaranteed to generate success. The tough economic backdrop will be heightening customers’ desire to obtain value for money.
A forecast future dividend yield of around 0.8% sits below the 2.4% yield forecast for rival International Business Machines Corp (NYSE:IBM), while an estimated future price earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap.
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More favourably, the broad corporate push towards using AI in conjunction with Oracle’s own database software and data-centre hosting facilities is likely to offer continued demand support. A partnership with the US government is now under way. A wide diversity in both customer types and geographical locations exists, while growth by acquisition over time has been successfully achieved.
On balance, and while risks remain, Oracle’s ambition to be not only the world’s largest cloud application company, but also one of the world’s largest cloud infrastructure or hosting companies, is likely to mean investors stay firmly supportive.
Positives:
- Product and customer sector diversity
- Own investment programme
Negatives:
- Acquisitions come with risk
- Currency moves can impact
The average rating of stock market analysts:
Strong hold
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