Is It Too Late to Buy Oracle Stock?

Key Points

• Oracle's bookings exploded this quarter, pointing to demand that far outstrips today's reported revenue.

• Management laid out an aggressive multiyear plan for cloud infrastructure that can justify a premium valuation.

• A combination of scale, cash generation, and multicloud momentum strengthens the tech stock's bull case.

• 10 stocks we like better than Oracle ›

Oracle (NYSE: ORCL) just delivered one of the most eye-catching updates in large-cap tech. Shares ripped higher on Wednesday after the database pioneer and cloud infrastructure provider revealed a bookings spike that reframes the growth outlook. The headline wasn't a modest guidance tweak or a one-off. It was a flood of contracted demand arriving all at once.

The question for investors is simple: After a move like this, is it too late to buy into this compelling growth story? The short answer is no. The stock is more expensive, but the scale and visibility of future revenue suggest Oracle can grow into today's valuation as new capacity comes online and customers start consuming what they've already signed up for.

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A bookings surge that dwarfs recent growth

In the first quarter of fiscal 2026 (the period ended Aug. 31), Oracle's total remaining performance obligations (RPO), or contracted revenue not yet recognized, rose 359% year over year to $455 billion. Quarterly revenue, by contrast, increased 12% to $14.9 billion, with cloud revenue up 28% to $7.2 billion and infrastructure as a service (IaaS) up 55% to $3.3 billion. Management said in its earnings release that it "signed four multibillion-dollar contracts with three different customers" during the quarter, driving the remaining performance RPO spike.

"It was an astonishing quarter -- and demand for Oracle Cloud Infrastructure continues to build," CEO Safra Catz said.

Much of this demand is tied to artificial intelligence workloads, which require massive amounts of compute and storage capacity that Oracle's infrastructure is increasingly being selected to handle.

The step-function change in bookings also towers over Oracle's recent trend. Just last quarter (fiscal Q4 2025), RPO was up 41% to $138 billion, and cloud infrastructure revenue grew 52% to $3 billion -- strong figures that now look pedestrian next to the newest data. That context helps explain the market's reaction: Investors are recalibrating for a larger, longer runway of contracted revenue.

Oracle paired the bookings jump with an unusually specific multiyear plan. Catz previewed a sharp increase in Oracle Cloud Infrastructure revenue -- up 77% this fiscal year to $18 billion -- followed by a ramp to $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years.

Oracle Chairman Larry Ellison added that "multicloud" database revenue tied to large partners grew 1,529% in the quarter, and that Oracle will deliver dozens more data centers to those partners to meet demand. He also emphasized that artificial intelligence (AI) companies are among the most important drivers of this growth, leaning on Oracle's partnerships with Nvidia and others to deliver the scale required for model training and inference. These are forward-looking targets, but most of the five-year forecast is already embedded in reported RPO, according to management.

Valuation looks rich, but the math can work

After Wednesday's jump, Oracle's market capitalization is over $900 billion. That's a big number -- and it puts a spotlight on valuation. Based on Oracle's trailing-12-month non-GAAP earnings of $6.11 per share and today's price, the stock trades at roughly 54 times earnings. A valuation multiple like this requires confidence that revenue and earnings will accelerate as the RPO turns into consumption and as new capacity ramps.

There are risks investors should weigh. Converting enormous bookings into revenue depends on data center build-outs, supply of advanced chips, and customers' implementation timelines. The spending required to meet demand could pressure margins at points, and Oracle still competes head-to-head with hyperscalers on core workloads. AI demand is also unpredictable. While it's fueling today's surge, the landscape is evolving quickly, and competition could introduce volatility in how these contracts convert to recognized revenue over time. Also worth highlighting is the pace of reported revenue (up 12% this quarter), which is well below the bookings surge; it will take time for recognized revenue to catch up.

But the core story is getting harder to dismiss. Oracle is already demonstrating healthy growth in IaaS, stable momentum in applications, and strong cash generation -- operating cash flow over the last 12 months was $21.5 billion. The company also continues to return cash through a $0.50 quarterly dividend. If even a conservative slice of the RPO converts on schedule while Oracle Cloud Infrastructure grows anywhere near management's near-term plan, earnings power two years from now should look materially different from how it looks today.

Put simply, the stock didn't just pop on hype. It jumped because Oracle's contracted demand base and multiyear visibility look meaningfully larger than they did a quarter ago. That does not remove execution risk, and it does not guarantee linear results. It does, however, support the case that today's premium can be earned down by faster growth, and that it isn't too late for investors willing to own the story through the build-out and the ramp.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Oracle. The Motley Fool has a disclosure policy.