This One Number Has Investors Excited About Oracle Stock. Can ORCL Reach $400?
Oracle Corporation (ORCL) shares surged 9% after the company delivered a standout quarter this week, signaling accelerating momentum across its cloud, artificial intelligence (AI), infrastructure, and database businesses. The strong earnings report highlighted the company’s successful transition from a legacy software vendor into a leading cloud and AI infrastructure provider. This sudden growth in ORCL stock, which…
Oracle Corporation (ORCL) shares surged 9% after the company delivered a standout quarter this week, signaling accelerating momentum across its cloud, artificial intelligence (AI), infrastructure, and database businesses. The strong earnings report highlighted the company’s successful transition from a legacy software vendor into a leading cloud and AI infrastructure provider. This sudden growth in ORCL stock, which is otherwise down 20.19% year-to-date (YTD), also reflects investor optimism that Oracle’s AI-driven growth could sustain strong revenue and earnings expansion in the coming years.
Much of this investor enthusiasm stems from one massive number revealed in Oracle’s results. Even Wall Street is optimistic that the stock can soar to $400 over the next year. Let’s find out if it can.
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Oracle reported a standout third quarter of fiscal 2026, with organic total revenue and adjusted EPS both rising 20% or more for the first time in more than 15 years. Total revenue surged 22% to $17.2 billion with a 21% increase in adjusted earnings to $1.79 per share, surpassing consensus estimates. Earlier, Oracle relied mainly on licensing sales, which were more cyclical. It appears that the company’s transition to a recurring revenue model for cloud subscriptions and infrastructure services is paying off, as earnings are now more predictable and scalable.
What surprised investors in Q3 earnings is the extraordinary growth in its emerging infrastructure businesses. Multicloud database revenue surged 531% year-over-year (YOY), while AI infrastructure revenue increased 243% over the same period from last year. Oracle has formed collaborations with major cloud providers such as Microsoft (MSFT), Alphabet (GOOG) (GOOGL), and Amazon (AMZN), enabling clients to run Oracle databases across various clouds. This multicloud strategy is generating significant demand from enterprises seeking flexibility without losing Oracle’s database technology. Furthermore, management stressed that demand for AI infrastructure, such as GPUs and high-performance computing capacity, continues to outpace supply.
Oracle’s staggering $553 billion remaining performance obligation (RPO) is probably what piqued investors’ interest in the company again. RPO represents contracted future revenue yet to be realized. Management said the backlog, which rose 325% YOY, reflects enormous demand for AI infrastructure and cloud services. To fuel future growth, Oracle and its partners have lined up more than 10 gigawatts of data center power capacity slated to come online over the next three years.
Interestingly, more than 90% of this capacity is already funded by partners, reducing the financial burden on Oracle. The company also signed over $29 billion in new contracts using innovative infrastructure financing models that allow customers to contribute hardware or provide upfront payments. This enables Oracle to grow quickly while retaining high profitability. Analysts expect Oracle’s earnings to rise by 36.59% in fiscal 2026.
Despite this strong operational performance, there are a few areas investors should monitor. Oracle has been investing aggressively in data centers and AI infrastructure to serve rising cloud demand. Even if revenue surges, this can temporarily pressure cash flow. The company generated negative free cash flow of $24.7 million during the quarter. At the same time, the company holds a debt-to-equity ratio of about 3.28, which is high. But an interest coverage ratio of 4.96 suggests its current earnings can manage those interest payments without immediate financial strain.
On the balance sheet, it currently holds about $39.1 billion in liquid funds that can be used for operations, investments, debt payments, or acquisitions.
Overall, Wall Street rates Oracle stock a consensus “Strong Buy.” Out of the 42 analysts covering the stock, 32 rate it a “Strong Buy,” one says it is a “Moderate Buy,” eight rate it a “Hold,” and one says it is a “Strong Sell.” The average target price for Oracle stock is $264.92, representing potential upside of 70.8% from its current levels. Many analysts have assigned a high price estimate of $400 for ORCL stock, which suggests it has an upside potential of 158% over the next year.
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The bullish case sits on explosive growth in AI infrastructure, rapid expansion of multicloud database services, a vast backlog of contracted revenue, and increasingly predictable recurring revenue streams. If Oracle continues to scale its AI and cloud businesses at the current pace, analysts believe the company could sustain strong double-digit revenue and earnings growth for several years. However, for ORCL to reach $400 would likely require continued execution, sustained demand for AI infrastructure, and broader market support for high-growth tech stocks.
I believe while the path to $400 might take some time, Oracle’s transformation into an AI-driven cloud powerhouse is gaining serious momentum, making it an excellent buy-and-hold AI stock for the next decade or so.
On the date of publication, Sushree Mohanty 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
