In This Article:
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Oracle stock has been recovering nicely in recent weeks from its 2025 slump, and it could receive another shot in the arm from the release of its quarterly results in mid-June.
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The tech giant's growth is on track to accelerate in the current and upcoming fiscal years.
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Oracle's growth potential and valuation indicate that it could make investors richer over the next couple of years.
Following a difficult start to the year, Oracle (NYSE: ORCL) stock has been resurgent in recent weeks, rising nearly 35% since April 21 amid the broader recovery in technology stocks. Over the same period, the Nasdaq Composite index recorded an 22% gain.
The database and cloud infrastructure provider is expected to table its fiscal 2025 fourth-quarter results in mid-June. That report could give its recent rally a nice boost.
Oracle stock took a hit earlier this year after its fiscal Q3 results and fiscal Q4 guidance missed analysts' expectations. The company is expecting its top line to increase by 9% in fiscal Q4. Its overall revenue for fiscal 2025 is expected to grow by 8% to just over $57 billion.
However, investors can expect a significant acceleration in Oracle's growth beginning in fiscal 2026 thanks to the terrific demand for the company's cloud infrastructure, which is being used by customers for both artificial intelligence (AI) training and inference. Oracle claims that its cloud infrastructure is faster and cheaper than rivals, and the high-speed networking capability of that infrastructure makes the company's platform ideal for tackling AI workloads.
This explains why the demand for Oracle Cloud Infrastructure (OCI) is "dramatically" exceeding supply, according to CEO Safra Catz. Although the company has just a 3% market share in the global cloud market, the company is touting its 51% growth in OCI revenue in fiscal Q3, which Catz points out was "a much higher growth rate than any of our hyperscaler competitors."
As a result, the company has been investing aggressively to boost its cloud infrastructure capacity so that it can meet the increasing demand for AI workloads from existing customers, while also catering to the new customers that are migrating to its platform in hopes of increasing its market share.
In March, management said it expected Oracle's capital expenditures for fiscal 2025 would be about $16 billion, more than double its capex in fiscal 2024. That massive increase is justified by the rate at which Oracle is signing new cloud contracts. The company's remaining performance obligation -- the total value of contracts it has signed, but has yet to fulfill -- increased an impressive 63% year over year to $130 billion at the end of Q3.