Why Oracle Stock Skyrocketed Higher Today

Key Points

• Oracle reported results that fell short of Wall Street's expectations.

• However, the company's backlog exploded higher, sending the stock into orbit.

• Oracle stock has seen a commensurate increase in its valuation.

• 10 stocks we like better than Oracle ›

Shares of Oracle (NYSE: ORCL) charged sharply higher on Wednesday, soaring as much as 41.3% in early trading. As of 10:42 a.m. ET, the stock was still up 39.1%.

The catalyst that sent the enterprise database, cloud, and artificial intelligence (AI) specialist higher was robust quarterly results and an eye-popping forecast.

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Image source: Getty Images.

The start of something big

Oracle reported the results for its fiscal 2026 first quarter (ended Aug. 31), and investors cheered. Revenue of $14.9 billion grew 12% year over year, resulting in adjusted earnings per share (EPS) of $1.47, up 6%. Both metrics accelerated compared to Q4. Driving the results was strong demand for cloud infrastructure services to support customer AI adoption, which jumped 55% to $3.3 billion.

For context, analysts' consensus estimates were calling for total revenue of $15 billion and adjusted EPS of $1.48, so Oracle missed Wall Street's expectations on both counts.

The big news was the explosive growth of Oracle's backlog. The company's remaining performance obligation (RPO) -- or contractually obligated sales that haven't yet been recognized as revenue -- surged 359% to a record $455 billion, as Oracle signed four multibillion-dollar contracts during the quarter.

Furthermore, the company provided a glimpse into its five-year financial plan, which was illuminating. Oracle expects its cloud infrastructure services segment -- which competes with Amazon Web Services, Alphabet's Google Cloud, and Microsoft Azure -- to grow 77% in fiscal 2026, and that's just the tip of the iceberg:

• Fiscal 2027 cloud revenue of $32 billion, up 78%
• Fiscal 2028 cloud revenue of $73 billion, up 128%
• Fiscal 2029 cloud revenue of $144 billion, up 97%

This growth is far outpacing that of its "big three" rivals, suggesting Oracle was gaining market share. It also shows that the company's cloud growth will soon dwarf its legacy businesses.

Oracle's AI and cloud focus is paying off

Management was clear that there was more to come. CEO Safra Catz said in a press release that demand for Oracle cloud continued to accelerate and said the company expects to ink "several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars."

After Oracle barreled higher today, the stock is now selling for 42 times next year's earnings (as of this writing), with investors assigning a significant premium in the wake of its blockbuster forecast.

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Danny Vena has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.