Oracle Surges: What's Driving the Sudden Rally

Oracle's (NYSE: ORCL) stock has rallied 27% over the past two weeks. Let's see what catalysts drove its stock higher, and if it can maintain its momentum over the next few months.

Why did Oracle's stock soar?

The biggest catalyst for Oracle's stock was the expansion of its partnership with Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google on July 30. Google will integrate its advanced Gemini AI models into Oracle's AI Agent Studio, enabling Oracle's Cloud Infrastructure (OCI) customers to build and deploy AI agents with Google's AI software.

Image source: Getty Images.

OCI has been Oracle's primary growth engine over the past year. In fiscal 2026 (which ended on May 31), its cloud infrastructure revenue surged 77% to $18.1 billion, accounting for 27% of its top line, as more companies used its high-peformance GPU clusters to power AI applications.

OCI is much smaller than Amazon (NASDAQ: AMZN) Web Services (AWS), Microsoft (NASDAQ: MSFT) Azure, and Google Cloud, but it integrates its services into those larger cloud infrastructure platforms so that its enterprise customers can run their workloads seamlessly across multiple cloud providers without being locked into a single ecosystem. Its expanded partnership with Google complements that strategy and increases its exposure to the AI market.

Another major catalyst was Microsoft's impressive earnings report on July 29. For fiscal 2026 (which ended on June 30), Azure's annual revenue surpassed $100 billion for the first time as Microsoft 365 Copilot reached more than 30 million paid seats. That robust growth suggests the AI supercycle -- which is driving most of Oracle's growth -- isn't slowing down. Lastly, hopes for milder macro headwinds drove more investors back toward higher-growth tech stocks.

Can Oracle maintain that momentum?

From fiscal 2026 to fiscal 2029, analysts expect Oracle's revenue and EPS to grow at CAGRs of 39% and 30%, respectively. Those are incredible growth rates for a stock that trades at 22 times this year's earnings. Most of that growth should be fueled by OCI, which will directly profit from soaring AI workloads, its enterprise resource planning (ERP) services, and the growing usage of its cloud-based database services. All of those tailwinds should offset the ongoing decline of its on-premise software business -- which it's actively replacing with its cloud-based versions.

Oracle's stock is still down more than 40% this year, due to concerns about its soaring capex, ballooning debt, and its overwhelming dependence on a handful of high-growth AI companies like OpenAI and Meta Platforms. Those concerns are valid, but Oracle's spending spree could pay off as it expands its AI-oriented cloud ecosystem. Therefore, it's still a great growth stock to buy -- as long as you can stomach the near-term volatility.

Leo Sun has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle. The Motley Fool has a disclosure policy.