Oracle’s (ORCL) shift from a legacy enterprise software company to a go-to infrastructure provider for artificial intelligence (AI) workloads has dramatically accelerated its growth trajectory. This is reflected in its financials and the handful of large AI contracts during the first quarter of fiscal 2026.
Oracle has entered fiscal 2026 with strong momentum, positioning itself as a key player in the AI space. While its first-quarter results were mixed, the company’s underlying business remains solid, with the demand for Oracle’s cloud infrastructure building at a significantly higher pace. The company now counts some of the largest names in AI and cloud space among its customers, and the scale of its recent bookings points to years of massive growth ahead, which will likely drive its share price higher.
The headline number from the quarter was Oracle’s remaining performance obligations (RPO), essentially its contracted but not-yet-recognized revenue. This figure soared to $455 billion, representing a 359% increase from last year and a $317 billion jump from just the prior quarter. To put it plainly, this is a locked-in demand that gives investors high visibility into Oracle’s future earnings power. Cloud RPO alone grew nearly 500% year over year, an acceleration from already strong growth in fiscal 2025. Notably, ORCL signed four multibillion-dollar contracts with three different customers in Q1.
Investor enthusiasm was evident in the market, with Oracle shares rising more than 40% in morning trading following the report.
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Oracle’s cloud business has emerged as the company’s primary growth engine, showing solid momentum in revenue and adoption. In the first quarter, total cloud revenue rose 27% to $7.2 billion, while cloud infrastructure revenue soared 54% to $3.3 billion. Demand for Oracle Cloud Infrastructure (OCI) has been robust, climbing 57%, and management noted that it currently outpaces supply. With more multibillion-dollar deals in the pipeline, Oracle expects its RPO to exceed the half-trillion-dollar mark soon, reflecting the scale of the opportunity ahead.
The company’s database segment also delivered impressive results, generating nearly $2.8 billion on an annualized basis, up 32% year over year. The Autonomous Database grew 43%, but the real standout was multi-cloud database revenue, which surged 1,529% as Oracle deepened integrations with AWS, Microsoft Azure, and Google Cloud. This demonstrates Oracle’s ability to capitalize on the growing demand for flexible, cross-platform cloud solutions.
Looking ahead, Oracle sees massive growth for OCI. Management projects cloud infrastructure revenue to climb 77% this fiscal year to $18 billion, with expectations for continued rapid expansion over the next several years. It is targeting $32 billion, $73 billion, $114 billion, and ultimately $144 billion in the next four years. Much of this growth is already reflected in the company’s RPO, offering credibility to the ambitious roadmap.
Further, with 34 multi-cloud data centers already operational across AWS, Azure, and Google Cloud and another 37 in development, Oracle is well-positioned to capitalize on the hybrid and multi-cloud opportunities.
Oracle is well-positioned for strong growth over the next few years. At the same time, its profitability is expected to accelerate. This optimism stems from its record RPO and Oracle’s ongoing AI-driven efficiency initiatives. While free cash flow remains somewhat constrained due to heavy capital expenditures, investors should view this as a temporary phase tied to Oracle’s cloud expansion, rather than a structural weakness.
Notably, the highest price target on Oracle shares is $410, courtesy of Citi analyst Tyler Radke, a target that doesn’t look far-fetched when one considers the scale of Oracle’s RPO, its rapid cloud infrastructure expansion, and its strengthening partnerships across the AI ecosystem.
With record-breaking RPO, a rapidly expanding OCI business, and strategic multi-cloud partnerships, Oracle is setting the stage for significant growth. While near-term results may exhibit some variability due to ongoing investments, the long-term trajectory indicates stronger profitability and significant value creation for shareholders.
Given its solid growth prospects in the AI and cloud markets, investors should continue holding ORCL stock as it still has upside potential.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
